.
There are two likely causes for the downfall of powers.
(No, decadence and sodomy aren't exactly likely causes.)
The most popular one is military defeat of really large scale, but that's often preceded by and overshadowing the other likely reason - economic decline.
Economic decline (relative decline, not necessarily absolute decline!) is most easily 'achieved' by waste of resources. Insufficient investment in education, infrastructure and tools leads to a long-term decline in output - or at least a sub-standard growth.
We (well, according to statcounter at least most of 'us') live in market economies - usually with a hefty government activity (the U.S. is no exception to this in my opinion).
There are two nodes for the determination whether the society is (too) wasteful or not: The treasury and the financial sector.
The treasury's responsibility is to keep waste low in the executive's spending - and to help the parliament in directing the state's resources to the most advantageous activities. High deficit spending and low share of investment in the state budget are warning indicators.
The financial sector- most importantly banks - has the mission to allocate the resources (money) as efficiently as possible. It shall determine the interest rates - these should be as closely to the expected value of return as possible. This includes a proper assessment of risk.
Now let's look at our present situation, 'crisis'.
The financial sector has done much damage and received much criticism, but the very basic and near-total failure in the core mission of the financial sector isn't among the usual accusations. The financial sector was not only wasteful and excessive - that happens to all sectors to some degree. It was the contrary of what it should have been! 'It' didn't allocate resources effectively and this is not 'just' a world economy crisis - we see a fundamental failure.
Think of cops going to plunder stores, doctors injecting poison all the time or flight controllers playing 'crash the planes'.
The socialized risks in this crisis are apparently now summing up to 8,500 billion USD - 8.5 trillion $ (in the United States alone!
* Fed: $ 5,500 billion
* FDIC: $ 1,539 billion
* government: $ 947 billion
* Federal Housing Administration: $ 300 billion
* Fannie and Freddie: $ 200 billion
(These aren't sums of losses, but the quantity of risky guarantees and investments.)
The other opportunity to ruin your society is still government spending, and pointing at the utterly useless and unnecessary latest Iraq War with its USD 1.8 to 3 trillion price tag should be enough to question the sanity in this area. The U.S. government is just one of many Western governments, of course - but large-scale public debt and even greater pension obligations are rampant problems among developed countries.
Many empires and other powers in history failed long before being finally being defeated on a battlefield. The failure was usually economical.
Look at your favorite failed empire - Roman Empire, Spanish Empire, British Empire, Chinese Empire, Mayas or whatever - they failed either for dynastic problems (breaking apart because of lack of a unitary government) or they suffered from a slow decline due to economical suffocation by wasteful behavior.
I've got no interest in predicting doom - but we need to scrutinise our ways. Our societies are great, but not invulnerable - and certainly not secured against failure by destiny.
S O
There are two likely causes for the downfall of powers.
(No, decadence and sodomy aren't exactly likely causes.)
The most popular one is military defeat of really large scale, but that's often preceded by and overshadowing the other likely reason - economic decline.
Economic decline (relative decline, not necessarily absolute decline!) is most easily 'achieved' by waste of resources. Insufficient investment in education, infrastructure and tools leads to a long-term decline in output - or at least a sub-standard growth.
We (well, according to statcounter at least most of 'us') live in market economies - usually with a hefty government activity (the U.S. is no exception to this in my opinion).
There are two nodes for the determination whether the society is (too) wasteful or not: The treasury and the financial sector.
The treasury's responsibility is to keep waste low in the executive's spending - and to help the parliament in directing the state's resources to the most advantageous activities. High deficit spending and low share of investment in the state budget are warning indicators.
The financial sector- most importantly banks - has the mission to allocate the resources (money) as efficiently as possible. It shall determine the interest rates - these should be as closely to the expected value of return as possible. This includes a proper assessment of risk.
Now let's look at our present situation, 'crisis'.
The financial sector has done much damage and received much criticism, but the very basic and near-total failure in the core mission of the financial sector isn't among the usual accusations. The financial sector was not only wasteful and excessive - that happens to all sectors to some degree. It was the contrary of what it should have been! 'It' didn't allocate resources effectively and this is not 'just' a world economy crisis - we see a fundamental failure.
Think of cops going to plunder stores, doctors injecting poison all the time or flight controllers playing 'crash the planes'.
The socialized risks in this crisis are apparently now summing up to 8,500 billion USD - 8.5 trillion $ (in the United States alone!
* Fed: $ 5,500 billion
* FDIC: $ 1,539 billion
* government: $ 947 billion
* Federal Housing Administration: $ 300 billion
* Fannie and Freddie: $ 200 billion
(These aren't sums of losses, but the quantity of risky guarantees and investments.)
The other opportunity to ruin your society is still government spending, and pointing at the utterly useless and unnecessary latest Iraq War with its USD 1.8 to 3 trillion price tag should be enough to question the sanity in this area. The U.S. government is just one of many Western governments, of course - but large-scale public debt and even greater pension obligations are rampant problems among developed countries.
Many empires and other powers in history failed long before being finally being defeated on a battlefield. The failure was usually economical.
Look at your favorite failed empire - Roman Empire, Spanish Empire, British Empire, Chinese Empire, Mayas or whatever - they failed either for dynastic problems (breaking apart because of lack of a unitary government) or they suffered from a slow decline due to economical suffocation by wasteful behavior.
I've got no interest in predicting doom - but we need to scrutinise our ways. Our societies are great, but not invulnerable - and certainly not secured against failure by destiny.
S O
Der Untergang des Abendlandes?
ReplyDeleteEher 'Bedeutungsverlust'.
ReplyDeleteRather equivalent to the downfall of the Spanish empire after the 16th century.
Spain didn't crumble, but waste of resources turned it from a super-rich empire that controlled almost all of Latin America to a small power in the early 19th century that pretty much missed industrialization and experienced final defeat in 1898.