The Economy: When Falls Rome ...

Flushed with arrogance, ancient Romans inscribed on their Coliseum, “When falls the Coliseum, then falls Rome; when falls Rome, then falls all the world.” It was unimaginable to most Romans that an empire stretching from Babylon to London could ever fall. Because Rome had been the center of the world all of their lives—and for centuries before that—they made an assumption—that Rome would last forever.
Most of us alive today have lived in a worldwide American Empire that we cannot imagine falling either. We, too, have built our lives on an assumption—that this new society (built like Rome’s on the spoils of war) will continue as it is—a society and an economy founded on the premise that the affluent American middle class can only continue to thrive and grow.
In my lifetime, I have seen politicians and civil rights leaders challenge the distribution of that affluence. Others have challenged barriers that kept certain groups as outsiders. No one in my memory has EVER challenged the fundamental assumption that the American life style, that American prosperity is here to stay—until “falls all the world”.
We forget that for most of our history, we were far from a prosperous world empire. We owed everybody money. Life on our frontier was brutish and sometimes short. From Jamestown (1607) through the 1800s, we were a traditional society with a handful of very rich at the top, a relatively small class of the “middling sort” who made their living as artisans and professionals, and a larger group of laborers at the bottom.
Throughout the 1800s, the American factory workers tended to earn $6.00 for a 72 hour week. Since he couldn’t really live on that, his wife worked too—for an additional $1.75. His kids, older than ten, worked for $1.25 a week.
You almost might say Henry Ford began the creation of the huge modern middle class when he doubled the wages of his factory workers at a stroke. He had the wit to see that if they all went out and bought Fords it would make him even richer than he was.
The two very successful world wars made us creditors and holders of the majority of the world’s assets. I remember my dad telling me after World War II that we were six percent of the planet’s population, but we used 50% of its energy.
You could have said almost the same thing for money, manufactured goods (machines, TVs, vacuum cleaners, refrigerators—luxuries to the rest of humanity) and sheer military power. Between the wars had come Depression laws that enabled labor unions to fight for higher wages.
After the second big war, millions of G.I.s took college credit and bought homes with their veterans’ benefits. We were creating cadre to run our new empire. An empire it was! We seized British oil fields all over the Middle East; wherever a European Empire began to totter, we were there to gather in the dropping fruit.
In one of the most brilliant strokes of all, we launched the Marshall Plan which tied Europe and Japan tightly to us and our own economy. Their currencies were no longer backed by gold specie—but by stacks of American paper dollars.
This became true all over the planet—Latin America, Asia, Africa. When necessary we employed subversion (Guatemala and Iran). Occasionally we used force (Korea, Vietnam, Lebanon and Jordan). Like Rome, we were masters of our known universe. (Like Rome which fought an eternal hot and cold war with Parthia [Iran], we had the Soviet Union to keep us on our toes.)
With the exception of a few wicked folk like Castro, Stalin, Ho Chi Minh or Mao, decent people everywhere acknowledged the beneficence of our culture and our economy and the propriety of our ascendance. Like Rome we had brought peace and prosperity to the barbarian world outside our borders.
Such was our assumption. More tomorrow.