Empires are built through
the creation or acquisition of wealth. The Roman Empire came about
through the productivity of its people and its subsequent acquisition of wealth
from those that it invaded. The Spanish Empire began with productivity and
expanded through the use of its large armada of ships, looting the New World of
its gold. The British Empire began through localized productivity and grew
through its creation of colonies worldwide—colonies that it exploited, bringing
the wealth back to England to make it the wealthiest country in the world.
In the Victorian Age, we
Brits were proud to say, “There will always be an England,” and “The sun never
sets on the British Empire.” So,
where did we go wrong? Why are we no longer the world’s foremost empire? Why
have we lost not only the majority of our colonies, but also the majority of
our wealth?
Well,
first, let’s take a peek back at the other aforementioned empires and see how
they fared. Rome was arguably the greatest empire the world has ever seen.
Industrious Romans organized large armies that went to other parts of the
world, subjugating them and seizing the wealth that they had built up over
generations. And as long as there were further conquerable lands just over the
next hill, this approach was very effective. However, once Rome faced
diminishing returns on new lands to conquer, it became evident that those lands
it had conquered had to be maintained and defended, even though there was
little further wealth that could be confiscated.
The conquered lands needed
costly militaries and bureaucracies in place to keep them subjugated but were
no longer paying for themselves. The “colonies” were running
at a loss. Meanwhile, Rome itself had become very spoiled. Its politicians kept
promising more in the way of “bread and circuses” to the voters, in order to
maintain their political office. So, the coffers were being drained by both the
colonies and at home. Finally, in a bid to keep from losing their power, Roman leaders
entered into highly expensive wars. This was the final economic crippler and
the empire self-destructed.
Spain was a highly productive
nation that attacked its neighbours successfully and built up its wealth, then
became far wealthier when it sailed west, raiding the Americas of the silver
and gold that they had spent hundreds of years accumulating. The sudden
addition of this wealth allowed the Spanish kings to be lavish to the people
and, as in Rome, the Spanish became very spoiled indeed. But once the gold and
silver that was coming out of the New World was down to a trickle, the funding
for maintaining the empire began to dry up. Worse, old enemies from Europe were
knocking at the door, hoping to even old scores. In a bid to retain the empire,
the king entered into extensive warfare in Europe, rapidly draining the royal
purse and, like Rome, the Spanish Empire self-destructed.
In the Victorian era, the
British Empire was unmatched in the world. It entered the industrial revolution
and was highly productive. In addition, it was pulling wealth from its colonies
in the form of mining, farming and industry. But, like other countries in Europe,
it dove into World War I quickly and, since warfare always diminishes
productivity at home whilst it demands major expense abroad, the British Empire
was knocked down to one knee by the end of the war.
Then, in 1939, the game was
afoot again and Britain was drawn into a second world war. By the end of the
war, it could still be said that there would always be an England, but its
wealth had been drained off and, one by one, its colonies jumped ship. The days
of empire were gone.
Into the breach stepped the US. At the
beginning of World War I, the US took no part in the fighting, but, as it had
experienced its own industrial revolution, it supplied goods, food, and
armaments to Britain and her allies. Because the pound and other European
currencies could not be trusted not to inflate, payment was made in gold and
silver. So the US was expanding its productivity into a guaranteed market,
selling at top dollar, using the profits to create larger, more efficient
factories, and getting
paid in gold.
Then, in 1939, it all happened again. Although the US eventually joined
both wars, they did so much later than Britain and her allies. At the end of
World War II, the US had a lively young workforce, as they had lost fewer men
to the war. They also had modern factories, which had been paid for by other
nations, that could now be used to produce peacetime goods for themselves and
the rest of the world more efficiently than anyone else.
And (and
this is a very big “and”) by 1945 they owned or controlled three quarters of the world’s
gold, as they’d drained it away from the warring nations in the
early days of the war. This allowed the US to invite the post-war
leaders to Bretton Woods to explain that, as the holders of the world’s wealth,
they’d dictate what the world’s default currency would be: the dollar.
But this was all threatened by
the fact that, when the now-poorer nations of the world sold their goods to the
US, they, too, beginning with the French, wished to be paid in gold.
And so, in the subsequent years, the gold in Fort Knox was beginning to
travel back to the east, from whence it had come in previous years. In 1971,
this flow was shut off, as the US, still the foremost empire, had the power to
simply remove all intrinsic value from the dollar and turn it into a fiat
currency. Payment in gold ended.
Fast-forward
to the post-millennium era and we see that America, like the previous empires,
ended its acquisition of gold after World War II, yet its people became spoiled
by political leaders who promised ever-increasing bread and circuses. The
productivity that led to its initial strength was dying off, and it was
spending more than it was bringing in. Finally, it sought to maintain its
hegemony through warfare, thereby creating a dramatic drain to its wealth.
Like other empires before it, the US is now on the verge of
relinquishing the crown of empire. If there’s any difference
this time around, it’s that its collapse will very likely be far more
spectacular than that of previous empires. However, just as in previous collapses, those who least
understand that the collapse is around the corner are those who are closest to
its centre. Clearly, the majority of Americans are worried about their future
yet cannot conceive of their country as a second-rate power. And those who hold
the reins of that power tend to be the most deluded, delving ever-deeper into
debt at an ever-faster rate, whilst expanding welfare and warfare without any
concept of how it might all be paid for.
It’s understandable, therefore, that those of us who are on the outside
looking in find it easier to observe objectively from afar and see the coming
self-destruction of yet another empire.
As
stated in the first line of this essay, “empires are built through the creation
or acquisition of wealth.” They
tend to end through the gradual elimination of the free-market system, the
metamorphosis to a welfare state, and, finally, through the destruction of wealth
through costly warfare.
Does this indicate the “end
of the world”? Not at all. The world did not end with the fall of Rome, Spain,
England, or any one of the many other empires. The productive people simply
moved to a different geographical location—one that encourages free-market
opportunity. The wealth moved with them, then grew, as the free market allowed
productive people to make it grow.
Freedom and opportunity still
exist and indeed flourish. All that’s changing is the locations where they are
to be found.
Reprinted
with permission from International Man.
Copyright
© International
Man
