Part II of a multi-part series on the global rise of Farcism. Part I, "The Silver Curtain" can be viewed here.
As a profession, divining the intentions of third parties has a long and somewhat ignominious history. One need but train the dim spotlight of memory on the personages of Grigori Rasputin, Arthur Neville Chamberlain, the Iranian Desk at the Central Intelligence Agency in 1978 and those Jewish voters in the United States who cast their ballots for the current administration to come to the conclusion that such predictions can be dangerous- and for more than the just the prognosticators. Against this backdrop- or perhaps even despite it- it may well be constructive to project the potential consequences implied by a somewhat hyperventilating article by Marie Woolf and Jonathan Oliver that appeared on the Times Online website today, dramatically entitled "Labour Hid 'Scorched Earth' Debts With Billions." Sayth Woolf and Oliver:
Billions of pounds in public money was committed in the run-up to the [British] election campaign in a deliberate strategy to boost Labour’s chances at the ballot box and sabotage the next government.
One former Labour minister told The Sunday Times: “There was collusion between ministers and civil servants to get as many contracts signed off as possible before the election was called.”
One former adviser to the schools department said there was a deliberate policy of “scorched earth”. “The atmosphere was ‘pull up all the railways, burn the grain stores, leave nothing for the Tories’,” he added.
Putting aside for a moment the Churchillian tone of the Times' declarations, they outline some very interesting implications for the study of Farcism as a political strategy. One is tempted to invoke a quote often (and apparently erroneously) attributed to Alexander Tytler:[fn]The earliest usage appears to date back only to 1951 in a letter to the editor printed in the Daily Oklahoman which attributes it to "...a somewhat obscure Scotsman named Tytler...."[/fn]
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.
As it turns out, this is hardly the worst of it. It would appear that a sort of "poison pill" for austerity can be planted by a departing party sufficiently dedicated to purchasing the good will of the electorate with a structured program of profligate spending on social programs. Properly laid, the financial satchel charges placed by professional political sappers may well assure that an incoming leadership with aspirations to fiscal responsibility will be greeted with, not just displeasure, but violent opposition. (See e.g., Greece). More concerning, there may literally be no way out of a dangerous fiscal path with a sufficiently tainted budget structure.
Even beginning from less than complete cynicism, as one examines these issues one begins to feel that a deeper stratagem may well underlie what I will call simple "largess leverage" (the buying of votes via federal spending). One further discovers that, far from being novel, the method itself goes back at least as far as (and actually, quite obviously much further than) 146 BC in the form of the "Land Act," cunningly (and, as it happens, fatally) dreamed up by the Roman Tribune-to-be Tiberius Gracchus.
The Land Act proposed to cap the amount of land an individual could own and give away wide swaths of the remainder, generally owned by the wealthiest and oldest families in Rome or (after the death of King Attalus III, who bequeathed his entire and rather extensive kingdom to "the Senate and the People of Rome,") the state, to a long list of veterans of the Roman Legions who found themselves now somewhat idle after the conclusion of the Fourth Macedonian and Third Punic wars.
Of course, permitting a large population of armed, well-trained men with a demonstrated propensity for violence to wander about aimlessly without financial security or some sort of concrete (and less than destructive) personal aspirations to pursue is never a good idea. (See: Iraqi Army). Add a sudden influx to the capital of idle workers formerly expanding the glory of Rome abroad and the consequent unemployment and the matter becomes critical. Even so, a deeper and more complex group of interrelated effects beyond mere unemployment mitigation can be sketched with a bit of gentle analysis.
Creating for one's self a new constituency, indebted to you from the start and, suddenly, newly empowered as landholders, is never a bad idea. To the extent one can give these new constituents a deeper, and more permanent voice in politics, one has created a near permanent power base that is likely to endure even beyond the government that created it.
The prospect of the Act so horrified the Roman aristocracy along with the older elements of the Senate (a Venn diagram of these two bodies would actually still overlap significantly in this time) that the Senators took up arms and killed Tiberius along with a few hundred of his followers in broad daylight in the middle of the forum.
Admittedly, Tiberius was not an entirely innocent victim here. His very public murder followed some rather dubious political maneuvering both personally and by his supporters, including the forcible abduction of a Tribune mid-speech from behind no less a pulpit than the Senate podium before he could utter the word that would have killed the Land Act (that word, of course, was "Veto"). He also stood, somewhat unprecedentedly at the time, for a second term as Tribune. The Senate was not amused.
Several scholars focused on this period in Roman history mark this abduction as the first act of violence that sparked the beginning of the fall of the Roman Republic and describe it as one link in the chain that eventually permitted Gaius Julius Caesar to assume power.
Interestingly, it was Caesar's acquisition of censorial powers that permitted him to pack the Senate with cronies and further dilute its power, before, when that was not quite enough, simply and overtly expanding the Senate's size to almost totally thin the influence of the aristocracy on the body. As with Tiberius, these acts so enraged certain elements of the Senate as to, once again, inspire a dramatically public and bloody assassination. One is almost reminded of the sorts of redistricting wars that occasionally dominate American politics, or the urge of the Executive Branch to control (as it now appears to) the Census. (Though, for good or for ill, knifings on the floor of the Senate are somewhat rarer today).
Without, for the moment, going so far as to assert any sort of deliberate scheme underlying these actions, it will be seen that these strategies (as they are clearly too long-term in their apparent effect to be relegated to the rank of "tactics") have aligned themselves into a keen symbiosis improbably well in recent years. The fact that the United States is now a mere three percentage points away from an electorate defined by a majority that pays no income tax at all is a remarkable development. Likewise, the literally massive expansion of employees on the federal payroll, along with the dramatic inflation of their salaries bears notice. Innumerable examples of similar measures will doubtless readily present themselves to the astute Zero Hedge reader.
Of course, one expects resistance from opposition parties to such overt power shifts in either direction. Blanket immunity and citizenship for immigrants in the United States illegally, for instance, consistently faces dramatic and spirited resistance when proposed. Republicans obviously fear the sudden enfranchisement of some 12 million new voters probably disposed to vote democratic. Efforts as direct as the appointment of Supreme Court Justices see significant scrutiny and attention (actually packing the court no longer seems as viable as it did in 1937). Occasionally, however, there comes along an issue that bears at least casually beneficial prospects for both parties. Enabling widespread home ownership, for example, may create a legion of grateful democrats, or it may create a new group of land owners with newly conservative leanings that might push them to vote republican. It will be noticed that, for more than fifteen years, no one in either party opposed the American Dream of Home Ownership™ with any sort of volume. These, of course, are the most dangerous of largess leverage programs. No one wants to vote against Roman Veterans, after all. There are, suddenly, strong incentives to use any means necessary, no matter how strange or absurd, to concoct any excuse, to weave any political web, to continue to spend, spend, spend and then spend. Farcism defined.
Like taking candy from small children, once installed these entitlements are neigh impossible to revoke. The tantrums likely to confront Britain and the United States may not reach Greek proportions, but one finds it difficult to imagine that the next party to navigate the fiscal event horizon of the federal budget will not be violently sucked in. Consider what it might be like facing the sort of numbers outlined in Edmund Conway's review of the IMF's recent cross-country Fiscal Monitor report:
...note how the US needs a 12pc of GDP chunk chopped out of its structural deficit (ie adjusted for the economic cycle). That’s $1.7 trillion. Wow – that’s not far off Britain’s total annual economic output.
Now imagine that the prior administration systematically concealed large expenditures in byzantine accounting mazes, and as the newly coronated opposition party leverages the well developed human tendency for envy to call for "fairness" and "income equality." "Farcism" almost leaps to the lips.
One of the more elegant critiques to "Starve the Beast" fiscal theory[fn]The prospect that significant tax cuts will force a bloated federal government to shrink in proportion to reduced tax receipts. The term appears to originate with a Wall Street Journal article from 1985.[/fn] is that a reduction in taxes without immediate spending reductions actually makes existing programs and social spending cheaper to the current tax base- which is now paying less to get the same government services. In effect, this is an increase in the degree to which these programs are subsidized for existing taxpayers. This, in turn, makes it actually more difficult to remove or cut these programs politically. This may explain why William Niskanen finds that tax cuts without simultaneous spending cuts generally result in spending increases in the next year.[fn]Niskanen, W. A., and Van Doren, P. (2004) “Some Intriguing Findings about Federal Spending.” Paper presented at the annual meeting of the Public Choice Society, Baltimore, March 11–14.[/fn]
Combine with this the fact that highly progressive tax structures, such as that in the United States, tend to reduce the political backlash caused by tax raises, given that these hikes falls predominantly on a small and unsympathetic fraction of the electorate, and it becomes exceedingly difficult to imagine how even the best intentioned, fiscally conservative administration could lower taxes or reduce federal spending. This effect is significantly augmented by increases in the size and scope of federal programs- and the cheaper these are the more impact they have.
Highly progressive tax structures also exacerbate the volatility of tax receipts in times of economic downturn. This has the perverse effect of encouraging tax hikes, which disproportionately impact the small population on the far right side of the income curve, to smooth the volatility. The potential feedback loop boggles the mind.
Taking in the picture of what seems to be an almost politically suicidal path towards spending increases by Congress and the present administration and laying it aside these structural elements of the Federal budget it is just possible to imagine that even the retirement of several prominent democratic legislators and sweep of both houses of Congress by some fictitious fiscally responsible party will have little real effect on the fiscal death spiral that now threatens to grip the United States.
Even a casual exploration of the similarities between the later years of the Roman Republic and the political machinations that destroyed it and led, eventually, to decay and collapse, gives one cause to wonder: Are Farcism's contemporary practitioners simply acting out an inevitable progression of democracies or republics, or are they shrewd students of ancient history?