SMALL STATE, GREAT DEPRESSION.

CIVILIZATION IS ABOUT THE PUBLIC THING DOMINATING THE PRIVATE URGE. OR WHY THE USA NEEDS TO GROW ITS CIVILIAN STATE. SUSTAINABLY.

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Overview and the Roman analogy: President Johnson’s attempt to impose and grow a “Great Society” while bombing the hell out of Vietnam, brought up an adverse reaction (from the same crowd that had fed the hysterical anti-intellectualism of McCarthyism before: Nixon was Joseph McCarthy’s right hand man). That reaction became the essential folly of American politics, a systematic undermining of progress, and even sustainability, under the cover of a crafty propaganda. That essential folly consisted in privatizing and profitizing everything, while dismantling the State, and growing a malignant plutocracy on the quivering flesh of the dying public sector. The essential idea was that a better State is a smaller State, with a bigger plutocracy, while keeping an enormous worldwide military in charge of oil procurement and juicy deals. We have seen that show before: it was called Rome. (OK, Rome did not use exactly the same oil, but its trade in distant commodities was huge, and absolutely necessary to sustain the core of the empire.)

We demolish that folly, with an arsenal of philosophical, geographical and historical considerations. Yes, Rome took five centuries to collapse, but Rome had no rivals, so it took a while for the vultures to gather. The US collapse, if left unchecked by imaginative measures, will be much faster. (Remember how fast the USSR went down? Partly as a consequence of its civilizing mission in Afghanistan? Although the USA would not explode in small pieces anymore than Russia did, quick impoverishment through a dollar collapse is entirely imaginable.)

To be against the State is, fundamentally, to be against civilization. Indeed, civilization is fundamentally a move of the private towards the public, a move from small groups towards the collective.

Under the corrupting spell of the plutocracy, this aspect of philosophical economy, that civilization is a move towards the collective, has been neglected, precisely so that plutocracy would blossom beyond the reasonable. This analysis, supported by hard data, has a very practical political consequence for the Obama administration: the size of the State ought to grow in the USA, to improve both the economy and the civilizational level. To do so, consumption and energy taxes have to be allowed to assume their proper role of enforced savings and investment. This is what it will take to escape the plutocratic trap Rome fell into.

The Imperial Roman State shrank first, turning to ever greater fascism to keep on going, but, in the end, it was unable to provide basic services, and, finally, in spite, and because, of a huge military surge, it was unable to defend itself against its foreign enemies.

Why did the whole process of decline of the State occur to start with? Because of the growth of tremendous plutocracy occurred at the detriment of the State (this also happened in the USA since Nixon). Simply put, the richest Romans found ways to pay much less taxes than needed to have the State keep on going (just like money manipulators in the present USA). The progeny of this rich class became the main ingredient and inspiration of the “feudal” class of the Middle Ages (in the USA they would be the present “CEO class” and “Wall Street”).

Not only could not the Roman State sustain itself on its reduced tax base, but the intellectual class got nearly exterminated. Superficially it looks as if Christianity was the cause, but it was not the ultimate source of that destruction of the mind. Indeed, there is nothing plutocracy distrusts more than the sort of wild, ferocious, uncensored thinking on which civilizational supremacy is founded. That is why great civilizations sink when plutocracy gets too powerful: all too often, the first thing plutocracy does, when it acquires control of the State, is to decapitate thinking, because it is just clever enough to realize that intellectuals can give good reasons to the People for not accepting the rule of money. That, of course, is self defeating, because, after a while nobody has any correct ideas anymore (and that is exactly what happened with Rome).

Another example of the defeat of the mind, somewhat similar to Rome: Egypt was long at the very forward edge of civilization (among other things, a lot of “Greek” mathematics seems to have originated in Egypt, and Egypt was first to use steam for power). Egypt seems to have become way too plutocratic, and too theocratic; it certainly became brain dead as Rome did later to a great extent. So Egypt was civilizationally left behind by the excited and excitable, “Dionysian” Greek City-states; after nearly a millennium of that intellectual rigidity down in Egypt, the Greeks took control. The Egyptian State  had become too small mentally.

Rome became too small mentally very quickly. The Roman depression was first intellectual and ethical. Then all the rest of society got corrupted (several striking mileposts of corruption were passed under emperor-philosopher Marcus Aurelius).

The present mental depression in the USA is quite similar (the mileposts had to do with the plutocracy’s arrogance, just as now). It is crowned by an economic depression. Rome had a complicated mix of civil wars, plagues, depressions, spectacular victories, economic re-expansions, etc… The irreversible destruction of the State was at the hands of an ever more selfish and demented plutocracy, but the way down in Rome was immensely complex: intellectuals fled to Persia, or the extremities of the empire, then some came back, and in many places only military events were able to crush a still expanding economy. Finally pieces of the disintegrated empire were able to re-expand in all ways (under the Arab Caliphate, or the Franks, or even Constantinople).

The fundamental reason for the decay of Rome was that when the State gets too small, the public sector cannot support the private sector anymore, and the later collapses too. Thus not only is there an optimal size for the State, but there is a LOWER BOUND TO THE SIZE OF THE STATE ALLOWING THE SURVIVAL of the civilization that supports it.

Indeed, whereas many civilizations have thrived superbly without much private sector [Incas, Constantinople, Stalin, etc.], if the State gets too small, a vicious circle is engaged, of ever diminishing returns and one ends down the drain of civil war and collapse [like Easter Island, or the Mayas, or Rome, not too speak of various Muslim states]. Under President Lincoln, the weakening of the American State was refused, and war was accepted instead. Hence a horrible, very violent civil war that made the French revolution look reasonable in comparison. That helped the USA not follow down the same road as the Mayas. (Europe is building itself as a super State, but using only the law and forever talking; this is an approach whose time has come, since war was tried ever since the Carolingians, and did not work.)

Dangerously approaching that lower bound is exactly what is happening presently in the USA. The way out is to grow the State, from the bottom up (and not the other way, from the top down, by reorganizing the plutocracy, as Rome did many times, starting with Sulla and Augustus, the plutocratic friendly method that Thatcher-Reagan imitated). Bottom up construction is exactly what Barack Obama is doing, with its “recovery and reinvestment plan”. In this first stage, it’s actually more of a People salvage plan.
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CIVILIZATION IS THE PUBLIC THING:
By the very origin of the word “civilization”, civilization has to do with the concept of city [townsman = civis in Latin]. Civilization is not about anything below (“sub”) a city (“urbs” for Rome, “civitas” for other cities), thus civilization is fundamentally not about suburbia. Hence, when, in the last few decades, US society abandoned the cities, and fled to suburbia, it made a move away from civilization. Of course it did not help that this flight was motivated by (legal) tax evasion, racism, and aversion to the poor (since it cost to move out, the poor were left behind, the fundamental idea). It was also an aversion to public life, to public debate. What else in a country where an “argument” is semantically equated to assault? The concept of a city is a human grouping, where economies of scale, but also richness of scale, wealth of ideas and debate, are achieved. And only there (OK, now we have the internet).

CIVILIZATION REQUIRES PUBLIC SERVICE, because it is about living in public, precisely because one is served by the public, hence it is, by reciprocity, about serving the public (since one is here to be served by the public to start with!). These basic truths should be basic ingredients in economic thinking, but they have been overlooked. All too much economics has become all about equations that mean nothing human, or even real.

Those truths have been overlooked for the obvious reason that flaunting them does not help the plutocracy, which is financing most people who think about the economy in the USA. Those economists (not Marx!), roll out the profit motive, and little else besides. And by “profit” they mean money (hence power onto others, which is all what money is). One thing those worthies forgot, though, is that there is profit simply by living in public. There are NON FINANCIAL PROFITS to living in public. But these non financial profits are important, because they led to the creation of cities. Not every profit is financial, indeed. Fundamentally, humans are animals, and animals find a lot of activities profitable, that have nothing to do with financial profit (for the good, simple, and amusing reason that animals do not have finance; well, OK, the way things are going, Americans do not have finances either.).

Because of the public nature of the city, intrinsic to its attraction, civilization employs a mix of the public economic activity and the private economic activity.  To understand the nature of a civilization, one has to think here in depth about a few entangled concept, among them: private, public, job, compensation, profit. A job is fundamentally a service one gives to other(s), in exchange of what, one gets compensated by reciprocated services (not necessarily the same, and often in the form of money, the universal exchanger for services). If, of course, what one provides is not viewed as a service, one is not compensated. So jobs vary in diverse societies. Tanzania just outlawed (2009) traditional faith healing. That involved chopping albino people into pieces and preparing drinks with special properties with those (40 were butchered this way since mid 2007).

Thus, although many societies reward their thinkers, including many societies of “savages”, others, typically of the plutocratic type, do not. But then no civilization can survive without thinkers, Athens, and even Rome, had top philosophers as advisers to the political leaders. The USA has a “national science advisor”, but no official “national philosophical advisor”. Still the USA is confronted to serious philosophical riddles, some very practical. Scientific problems should not be so problematic, because, after all, science is about what is known for sure.
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THE PRIVATE ECONOMY IS SUBORDINATED TO THE PUBLIC ONE:
Under the influence of the Neo-Cons puppet masters and their Thatcher-Reagans, many influential people, and not just in the West, got persuaded to go along a program of PRIVATIZATION OF EVERYTHING. One could say: financialization of everything, an ugly word to go with an ugly concept. The plutocracy rewarded them well, for this stroke of genius, which ignored most of human neurology. In Russia, the application of that concept, pushed by American economists, brought the country in a decade from “communism” to plutocracy.

(Actually the plutocrats pushed their insolence to invent their own word for one of their techniques, securitization, where they bundled together the properties of the public, so that they could buy and sell them). For quite a while, this privatization worked well, just as when a plane cuts off the engines, it keeps on flying. In this case, the engines were dropped off, so the plane, much lighter, flew higher, and captains Thatcher and Reagan, and their admirers, proclaimed victory on gravity.

Private is what functions best with the free market, motivated first by financial profit, public what functions best according to law, regulation, monopoly power, and plain and simple power-. For example when the State does not have the monopoly on the military, one gets a civil war. This happened at the end of the Roman republic, when, in practice, a few of the richest people each owned a part of the Roman army. Four centuries later, the Roman empire collapsed when the rich disconnected from the rest of society, with so much riches grabbed by, and for themselves, that the Roman army left outside was too small to defend the empire.

The private sector is less important than the public sector: Stalin fought Hitler with monstrous efficiency, and no private sector. Hitler mostly worked with a greedy private sector, with the result that he found himself with hundreds of half completed weapons projects at the end of the war. None of this non sense in the USA: Roosevelt installed a command economy run by a young Canadian, with very few weapon systems, and a total monopolization of the socioeconomy.

Now of course, the entire idea of plutocracy is to subordinate the public to the private. That is exactly what happened as the plutocracy hypnotized the entire US economy, and that was the program of the Neo-Cons, who, in the end, were just employees of the richest.
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QUANTITATIVE AND QUALITATIVE ARGUMENT FOR A BIGGER AMERICAN STATE:
So if the idea of the State cannot be dissociated from the idea of civilization, the next question, that no serious American economist seems to have considered, is this: IS THE US STATE BIG ENOUGH TO INSURE THE CONTINUATION OF CIVILIZATION? The answer is, clearly, NO. Everything indicates that the State should be grown massively in the USA (not in Europe). (When Barack Obama broached the subject, he felt obliged to express his automatic desire to not grow the State, according to the general standards of what passes for reasonable in the USA. Recently he has become more subtle: if it’s a bad program, it shall be cut, if it is a good program it shall be expanded.)

The total size of the US government is 36% of US GDP (Federal State plus regional states), but the USA spends at least 5% of that on the military (more than half of the World’s military expenditures). So we are left, in the USA, with a civilian State sector that is about 31% of GDP. That is two-third of the relative size of the States in large European countries. Those have government that are 45% of GDP. Two of these, France and Germany, are resisting better to the recession than the third one, Britain, mostly because they are more industrial and technological [Germany is the world number one exporter]. France and Germany have top notch industries, because their governments made them so. Trust the French and Germans to know where real power comes from.

There is plenty of evidence that the US State is too small to provide the country with the infrastructure it needs for its private civilian economy. The best example is health care: private US companies are supposed to provide it, a subject of endless hilarity around the planet. In general US health care does only one thing really better: make a few of the rich richer. US health care costs twice more, and does less well, than its European comparisons.

Another example is the US schooling system: at this rate of descent into illiteracy, an acculturation, one will soon have to import Indians to teach English and logic to Americans. Also US science, for decades the best financed in the world, now is not so [European are running many basic experiments that the USA does not plan to, but the reciprocal is not true].

Trains are the most basic part of transportation (even in the USA, their GDP transport contribution is the highest). But, whereas the subsidy for roads is above 110 billions, that for trains is one billion (1%).  France is presently building four high speed train lines [for 250 mph. 400 kilometers per hour trains], and is in the diverse stage of elaborating and planning several others. Such lines are immensely expensive. The USA does not seem to have the money for them. The first French high speed train line was publicly financed, twenty-five years ago, the others have been self financed with private capital. It’s the same picture around Europe, even in Russia (equipping itself with French and German trains, with technology and industrial transfers built in the deal).

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GIANT US MILITARY SPENDING IN PEACETIME IS NOT IN THE BEST STRATEGIC INTEREST OF THE USA:

Now to the suggestion that the USA needs a modern civilian economy, rather than a giant military, the Neo-Cons usually reply that they defend the free world, so the USA has a huge military budget, that the Europeans do not have, but profit from hypocritically.

There is some truth in this, but not much (besides France and Britain and their German sidekick have enough of a military punch to defend Europe as long as Russia or the USA don’t go completely crazy with their 10,000 rather unlawful nuclear warheads). But the research and development budgets for some defense systems (such as nuclear weapons) are absolutely gigantic, and undermine technological investment capability elsewhere.

Rather than piling the weapons high, it would be much more cost effective to negotiate effective disarmament treaties. Those can work.

An example: before W.W.I, there was an arms race between Britain, Germany and France (between the UK and Germany on the seas, between France and Germany on the land, although the later two nearly got in a sea battle earlier in Morocco). Effective disarmament treaties would have weakened the fascist Prussian army, simply by shrinking it. The huge “Prussian General Staff” (or more exactly the top six generals) was the direct cause of the First World War [the Sarajevo assassination was just a spark in a powder magazine, where most of the power was the Prussian military mind: it would not have exploded into a world war if the combustible material of giant military structures and build-ups had been removed prior to said spark].

The best defense for the USA and the West would be better treaties. So the bottom line is that the USA is doing its giant military thing, its giant military build-up, not for defense, but for other reason(s).

The later Roman empire also did the giant military thing: the Roman army was way bigger, by a factor of at least two, in the Fourth century than under Augustus (four centuries earlier). But it was also much less effective: troops deployed in battle against Barbarians kept on shrinking, because most troops were always somewhere else. Rome presented an early case of military-industrial complex gone nuts.

At least one thing is “positive” so far this time: the US army has kept a technological edge (which Rome did not keep; although higher tech saved both the Franks and Constantinople against Islam). Nevertheless, the fact remains that the Late Roman empire was economically weakened by its giant military, and the same argument can be made for the USA today. Closer to us, that was exactly the main problem of the Soviet Union, and that was so obvious that even the otherwise clueless Carter-Reagan crowd played that card very well, first by using Muslim Fundamentalists to fight the socialists and then Soviets in Afghanistan, and engaging an arms race, until the Soviet Union was spent to death. In their befuddled brains, the notion that the same could happen to the USA, on an even larger scale, has not blossomed yet. In their opinion, imperial overstretch happens only to others. Now the overstretch is measured with the quotient of military spending over civilian spending getting too high, that is, too militarized a public sector, or, equivalently, and neurophilosophically speaking, the quotient of intellectual fascism over general intelligence getting too high.

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ECONOMIC STABILIZERS IN EUROPE, THANKS TO BIG STATES, BUT FEW OF THEM IN THE USA:

Now that a severe recession has become obvious for all too see (it’s actually 10 years old for the middle class), the absence of economic stabilizers is going to compound the crisis in the USA. In more socialized, populist Europe, government social programs kick in and ENFORCE ECONOMIC ACTIVITY. OK, these are not activities that are motivated by financial profit, but they are economic activities nevertheless, and, it turns out that these activities that cannot, that do not need the profit motive are  the most important ones: financial profit is the cherry on the cake, it’s not the cake of life.

Thus, the most vital sectors of economic activity are legally mandated ones in Europe, and, as the profit economy collapses, this mandatory, legislated economic activity kicks in to compensate (they involve State mandated food distribution, at home for the old, etc.).

As Paul Krugman puts it for the case of health care: “The whole world is in recession. But the United States is the only wealthy country in which the economic catastrophe will also be a health care catastrophe – in which millions of people will lose their health insurance along with their jobs, and therefore lose access to essential care.”(NYT, IHT, January 30, 2009.)

Obama’s so called “Recovery and Reinvestment Plan” seems in part a desperate attempt to throw in emergency spending to stabilize the disaster. Indeed the governors of the States have cut down their spending as their revenues collapse, so they are making a bad situation worse. The State of California (one of the world’s largest economies), has “furloughed” its workers two days a month. This means that State workers will not show up at work for 10% of their monthly employment, and will get a proportional income cut of 10%. Europe has economic stabilizers, the USA has economic destabilizers.
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LOSING CIVILIZATIONAL LEADERSHIP:
Cities, from the start, were at the forefront of technology and civilization (in the usual sense). Technology and psychological progress and knowledge made them possible. Cities were created mostly for cultural reasons, be it only that of growing a better economy. Conversely, as the Greco-Roman empire went down, its cities went down first [for various reasons, military devastation being prominent]. Cities have only be made possible by keeping technologically ahead of their competition. The same is true for any state, any civilization.
Let me explain. The Roman republic rose, like the Greeks before, as the Phoenicians or the Cretans before that, and Sumer or Egypt even earlier on, or the Indus civilization, because it was more technologically advanced. Technological supremacy then allowed those civilizations to persist for a while. Conversely these civilizations went down when the technological competition caught up with them [with the exception of Sumer and Crete that were mainly destroyed naturally]. Egypt dominated in science and technology for three millennia. When it lost that supremacy to the Greeks, the Greeks naturally came in, and led a dying Egyptian civilization.

When the Roman legions persistently out maneuvered and destroyed the Macedonian phalanx, because they used superior military technology, Macedonia was crushed, and the Hellenistic world became Rome’s possession. Reciprocally, when, four centuries later, Roman armor was unable to arrest enough superpowerful Central Asian arrows, the Sassanids (Persians) could be held back only at what proved to be unbearable cost [and that cost was not just financial and economic; it included further militarization and fascization of Rome]. That loss of the military technological edge the Romans had occurred also with the Germans: at the same time that a Roman emperor was captured by the Persians, to be made into a living stool, for months, before being tortured to death, the Franks became the crack soldiers of the Roman empire, because of their astounding mastery of their amazing weaponry.

Thus the decline and fall of Rome was fundamentally a loss of technological leadership that came from a loss of civilizational leadership (the great emperor Julian, the fighting philosopher, saw this, as he tried to reverse the Christian superstition, but the penetration of a lance put an early end to that).

The propensity to lose civilizational leadership occurred probably way early, when the Roman republic, little intellectually inclined, and already under the spell of its arrogant plutocracy, crushed the Greek cities, and even its military allies, such as Athens (circa 146 BCE). This led Rome to lose any hope for sustaining the technological and civilizational capability that the best of Greece had retained. Greece had been submitted, with lots of difficulty, to various Macedonian, or post Macedonian, “Hellenistic” fascist regimes, ever since Alexander and his father; this had lasted two centuries, but the perfidious, hyper materialistic violence of Rome made the loss of the best of Greece irreversible.

The best course for Rome would have been to set Greece completely free, especially Athens and Corinth, and learn from them with humility. Instead Roman plutocracy crushed them (in an obvious class struggle). After the plutocracy had disposed of the Greek intellectuals, making them into stools thereafter, it remained to starve the Roman State. Although gold, bread and games were showered on the People, it was to put them to sleep (the same has happened in the USA). In truth, Roman plutocracy was so interested by its own profits, that it was ready to risk the empire rather than paying enough taxes. When German tribes threatened to invade the core of the empire at the apogee of its powers, in the Second century (circa 160 CE) , emperor Marcus Aurelius had to sell the imperial palace’s cutlery to rise funds for the Roman army (!). By then the plutocracy had eaten away the Roman republic ethical substance for three centuries, and it showed with a total loss of ethical control, even in the direst straights.

So, to survive, the USA needs to NOT do like Rome. The USA needs to keep on being a leader in civilization and technology. This will start with schools, to make American children into first class intellects (right now Finland and Korea are leading): the US States have been busy saving money by cutting school budgets. The US Federal education budget is tiny, and Obama has moved in to replace the collapsing State budgets. Good. Now, when Obama will have finished throwing a few trillions to stop the devastation, he will have to regain technological leadership, and that will mean financing serious, state of the art heavy industry.

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Conclusion: IF YOU WANT TO GROW CIVILIZATION, GROW THE STATE, AND ENFORCE EFFICIENCY WITH ALL ENCOMPASSING WASTE TAXES: To finance green, sustainable, energy, Obama will need sustainable money. Massive borrowing can go only that far. No sustainable money, no sustainable green. Lots of money, lots of green. A reasoning even US capitalists can empathize with. So Obama will needs an energy users’ taxes. Namely a tax on carbon, as in Europe. Yes, that will grow the government. So what? What’s wrong with growing civilization? Especially when it is the only way out of a death spiral?

Civilization is more than the ability to bomb people on the other side of the earth. Enough of that already. The USA needs to grow its civilian economy massively, and the public sector first of all, these areas were the profit motive, and private capital, or private initiative are not enough, or can’t wait long enough, to be the prime motivators. Immense public works need to be done, the hour is late, thinking has not been damaged so much, yet, that there is no coming back. That sorry state of affair is what happened to Rome at some point.
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Patrice Ayme
Patriceayme.com
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Notes: 1) If, as I claimed, civilization is essentially the Thing-Public (in Latin: Res-publica, republic), am I saying that regimes that are not republics are not civilized? Well, yes. It is no accident that Plato named his major work in political philosophy, “The Republic”. His republic was rather fascist, but still it was a republic.

This perception of civilization as the republic has been strong in the West, for two millennia. The Roman empire maintained the fiction for many centuries, that the republic was still going on. Italian history shows that the idea and practice of the republic never died; the Roman Senate went on until the Seventh century (it went on until the 1300s in Constantinople), and soon the Venetian republic was a march state of the Imperium Francorum. The Franks themselves maintained forever the myth that their kings were elected, until the arrogant French absolute monarchy of Louis XIII, and XIV, rose in all its horror (soon to collapse, within two generations into the French revolution). By the Tenth century a serious effort was made to reinstate the Roman Senate. The Holly German Emperors (namely the German speaking Eastern Francs) were elected throughout, and so on, and so forth. Thus, in the West, monarchy was never really legitimate (Britain is a republic disguised in a pseudo monarchy) Constitution).

2) One can grow the State by borrowing for profitable investments. But one cannot borrow money for chronic expenses for everyday spending. So it is OK to borrow for building power lines, high speed trains or solar plants, but it’s not OK to use borrowed money to pay for health care, or schools. A lot of the present “recovery and reinvestment plan” of Obama presently does just that, though: borrowing for recurring expenses. France got addicted to that hopeless technique under some loose (socialist and conservative) governments in recent decades. So State borrowing was used to pay for the general budget of the French State. The result was a dearth of valuable investment, and the fact that the entire tax on income is now used to serve the interest on the debt. (Still, under Euro guidelines, the total debt of France was limited around 66% of GDP, whereas the reasonable prediction for 2009 US debt is above 90% of GDP, absent new taxes (this is with an expected stimulus + TARP of 2 US$ trillion)).

Hence France lost most of her public sector investing capability (and ran her infrastructure growth mostly on the private sector, an unusual situation for France). Thus French growth slowed down enormously. The same would quickly happen to the USA, if it persisted to use borrowing for everyday expenses. Now, in the case of Rome, a combination of welfare and high unemployment  plus tax evasion by the rich, demolished the economy while weakening the State. Ultimately, most of Italy fell out of the economy of the empire. It would have been much better to tax everybody, while giving work to everybody (but that was not the agenda of the Roman plutocracy, which was not unhappy that so many people had no work, hence no power, thus making them unable to come back to democracy). Indirect, unavoidable taxes are best to tax everybody. With indirect taxes, there would have been no need for those horrible Roman income tax collectors (they would throw tax evaders, and their relatives and children into slavery). Nowadays, it is very easy to rise indirect taxes (two dollars a gallon on gas, or .1% on financial transaction, or 15% AVT are easy to set up). It was hard to raise indirect taxes in Rome (especially after the currency economy collapsed, and the Roman State reverted to bartering in commodities to feed its army!).

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3) Another side of the conspiracy against the State: Nixon invented HMOs, and financed those private companies with public money. That started the massive shrinkage of the State. Now Nixon fully connected with the plutocracy. Nixon was the right hand man of McCarthy, and became the VP of Eisenhower. The later seemed often to be president in name only. The Dulles brothers were in charge (one at the CIA, one at State). This puts in a different light the complaints of Eisenhower about the military-industrial complex (as he was leaving office). Now the Dulles were lawyers to the Nazis (before the war), and employers of many of them after. While the Dulles had been major employees of the Bush crowd, which had supported Hitler with so much enthusiasm. All in all, this constitutes the major conspiracy of the Twentieth century, and so it is no wonder that the “height of irresponsibility” (of giving themselves more than 18 billion dollars of bonuses with taxpayer money to celebrate huge losses to the taxpayers of the order of several trillions) that Barack Obama talked about is, in the light of such mighty tradition, very small potato. The sort of power that is used to set up drug trading over entire countries to finance black ops (that was done in Bolivia, Pakistan, Afghanistan, etc.), or set up world plots with the Nazis, let alone Stalin or Ibn Saud or Iranian Shiites, finds this sort of nice little bonuses, well, quaint… That is why, once again, if Barack Obama wants change one can believe in, he will authorize an inquest about what really happened during the Bush years. I claim it was just a chapter in a much larger book. Let the truth roll…

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4) Maybe it’s time to think about what to do to get out of deflation…
The USA got out of deflation with a command economy in 1942. Roosevelt and Galbraith decided what people would be working on, and work they did.
The Great depression in the late nineteenth century was much longer (although it also ended with a sort of world war, the Spanish-American war). Maybe because no huge command economy was put in place.
Notice that the European economic stabilizers of the social programs should act like a command economy… If things get worse.

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5) Let me insist on one theme that keep resurfacing in some comments to the preceding essay:

I was not trying to say that, the bigger the State, the better. This would not be true: clearly Constantinople was a case in point (it did less well in the periods when the weight of the State was too great). Middle Age Japan is also a counter example (below the Samurai class, people were nothing, they did not even have names), so Japan fell behind, not just Europe, but China and Korea, or even the Mongols (in a sense).

But I did say that there is a minimal size for the State in civilization. This minimum size was breached by Rome, various Muslim Caliphates, the Mayas, with catastrophic consequences. Below that lower bound, the State dissolves (Rome, Caliphates), or explodes under external shocks (Rome, Caliphates, Mayas, imperial China). Notice that the Japanese State reacted fiercely and powerfully to the Europeans, and was not invaded, or dictated to. There is also no doubt that, had Stalin’s dictatorship be just a tiny bit smaller or weaker, the Nazis would have wiped it out (a last surge of the Soviet State during the battle of Moscow won the war, but it was very close, as total panic and despondency had set in during November 1941; then fierceness from the NKVD and the Soviet State infrastructure saved the situation.)

Clearly the present USA is close to that lower bound for the size of the State. Part of Obama’s stimulus is stealthily trying to correct this on a permanent basis. It may be better to explain what is going on.

Patrice Ayme
http://patriceayme.com/

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6 Responses to “SMALL STATE, GREAT DEPRESSION.”

  1. Sapient Says:

    Hi. I was intrigued by a comment you made at another site, but saw your post here and quit reading it immediately because the parenthetical in the first sentence contains an egregious error: You meant Joseph McCarthy, not Eugene McCarthy. Please correct this so that you don’t disillusion future readers.

    • Patrice Ayme Says:

      Thanks! You are of course completely right. That paragraph was added on the spur of the moment, obviously without enough care. That was a pretty spectacular typo. The context made it clear though, who I really meant by “McCarthy”. It’s ironical that the two family names are the same. Typos do happen: I am writing all this alone (several thousand pages on several sites by now). The worst typo, which has occured, is to forget a “not”, thus transforming an assertion into its exact opposite.

      A flurry of details is the only thing that can provide context. I try, to the best of my knowledge, to transmit facts I know are true. But I nevertheless often check them some more, especially dates. Ultimately, I try to transmit the contexts themselves, knowing full well that people will often make up stories about one and any detail. The later point was demonstrated spectacularly in split brain experiments (for example, the right brain will act from some instruction given to it, and when the left brain is asked why it stood up (say), it will make up a totally unrelated story). It is impossible to keep on telling unrelated tales when confronted to entire contexts.

      Anyway, thanks again, and my apologies. I hope you can come over that typo, and read my essays again in the future, and contribute again!

      Patrice

  2. Carl-Johan Roth, Sweden Says:

    “Now to the suggestion that the USA needs a modern civilian economy, rather than a giant military, the Neo-Cons usually reply that they defend the free world, so the USA has a huge military budget, that the Europeans do not have, but profit from hypocritically.”

    The american suggestion about military expenditure is completely wrong. A great example of a country with a big welfare state and a big military is Sweden during the 50s to 80s. The swedish military budget was at times (in percent of the national budget) number three and four in the world (North Korea and Israel were usually number one and two) and we still managed to have a welfare state that few other countires could match. The American response was that Sweden (obliviously socialist since we opposed the Vietnam War and remained neutral throughout the Cold War) had high suicide rates. This is of course a lie. The Swedish suicide rates are actually lower than average. My point is that a big state and a big military can co-exist in a democratic succesful economy.

  3. Imelda Blahnik Says:

    Very interesting post, very thoughtful analysis of the importance of the “public thing” to civilization.

    I found your blog through your link in the Shrill One’s comments section. I look forward to combing through it.

    Do you have any suggestions for good English language news analysis about what the French are doing or did do re Dexia?

    The Obama Administration’s bipartisan capitulations and finger-in-the-wind hesitation are distressing.

    • Patrice Ayme Says:

      Thanks for the appreciation! Last I heard, the giant private bank BNP (largest in Europe at the time) bought the Belgian part of the giant Benelux bank Fortis (BNP also owns a part of Dexia). Fortis was nationalized, then quickly sold to BNP. Things are moving fast. The French idea will be to throw bad managements out, provide cash as needed, nationalize, and sell right back ASAP to profitable banks (that would be banks that avoided subprime and derivatives). The French government declared it was not in the business of bank management, but neither is it in the business of Transferring Assets to Rich People. So nationalization is just a half way house, starting with throwing out bad upper management.
      Obama seems to be of the opinion that all the problems of Washington come from people talking mean to each other. Instead it has come from the exact opposite; people not telling the Neo Conservatives, Nixonians, Reaganites, plutocrats, etc. a few fundamental truths, and in the meanest manner. Contrarily to what Obama seems to believe, it’s bipartisanship that made the attack on Iraq possible.

      In the first few days, the Obama policies on TARP, Iran, Afghanistan, and tax cuts have been identical to the policies followed for many years, that have led the USA, and the world, into the hole. Obama needs a strong push from the forces of progress to reestablish a balance.
      Those who tried to reestablish torture, more than three centuries after it was made unlawful in England, should be judged. What Washington needs is more justice, less corruption, and more partisans of progress, fighting for change that delivers.

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