Masters Series: How Empires Die
Editor's note: An empire can't change course, even when it's headed for disaster. That's what's happening to the U.S. Empire today.
Bill Bonner is the founder of our corporate affiliate Agora Inc. We've featured his thoughts on "zombies," Western financial folly, and who really wins and loses in a "stimulus" economy many times in our Masters Series. This weekend, we're sharing some excerpts from his recently updated book, Empire of Debt.
In the book, he and co-author Addison Wiggin examine how the U.S. Empire's 200-year reign is coming to an end. As we showed you yesterday, its financial model of foreign entanglements, bigger budgets, and increasing debt is leading to a massive collapse.
Read on to see how empires die…
How Empires Die
By Bill Bonner, author, Empire of Debt
Just when we thought we'd seen everything, along comes a column from none other than the president of Russia, Vladimir Putin.
Putin took the extraordinary action of writing directly to the American people through the medium of The New York Times, warning the U.S. not to do something stupid.
Here's the key point of Putin's comments:
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Ineffective and pointless? He ought to know. That was what the Soviet Union was for years.
The Soviet Union was an empire, the successor of Imperial Russia. It lasted 70 years. Then it went "kaput." There are a number of ideas about why and when empires die. But Putin, of all people, put his finger on the important one: In today's world, force doesn't pay.
The typical empire lifespan is about 100-200 years. If you put the beginning of the U.S. empire at the defeat of the southern states in 1865... It has already nearly reached its life expectancy.
On the other hand, you could say that the empire really didn't begin until Teddy Roosevelt invaded the Philippines. That might give it a few more years. Or you might look at some of the long-lived outliers, such as Rome, and add on a few years more.
Edward Gibbon wrote the book on imperial decay. His Decline and Fall of the Roman Empire identified several things that brought on the end, including the rise of Christianity.
Many historians focus on what Paul Kennedy called "imperial overstretch" as the culprit. Others tend to concentrate on environmental degradation and energy depletion. Mancur Olson described how some people become parasitic, draining an empire of its energy and other resources. Hyman Minsky developed his famous "stability leads to instability" dictum, which helped explain how an empire was endangered by its own success.
But Joseph Tainter described a process in which empires confront problems and find solutions. But the solutions add complexity, which tends to be expensive. The increase in complexity, designed to maintain stability and the status quo then causes the empire to become "fragile," to use the expression recently made famous by Nassim Taleb.
Then all it takes is an unexpected shock, and the empire collapses.
A common element of these explanations is the return on investment in resources. As… an economy matures, it tends to become rigid, burdened with debt and overheads, and saddled with unnecessary rules, unproductive industries, and leech-like people.
As time goes by, more and more people find ways to game the system, using the police power of government to gain special privileges and advantages. Over time, fewer and fewer activities remain genuinely productive and those few must support more and more activities that are not.
The zombies multiply, in other words. Then the empire's fate is sealed. It can't change course – even when it is obvious that it is headed for disaster.
Editor's note: Your income, your assets, and your family's standard of living all depend on the U.S. Empire. But that empire is crumbling. If you want to learn more about the impending collapse – and what steps to take to protect yourself, your family, and your wealth from the coming changes in American life – you must read Empire of Debt. Get your copy here.