The Art of the New Cold War Newsletter
The Decline and Fall of the Roman Empire, its lessons for America, and how America can avoid Rome’s fate. Part II
Welcome to the The Art of the New Cold War Newsletter.
In this special edition, we explore the decline and fall of the Roman Empire, its lessons for America, and how America can avoid Rome’s fate. This is Part II of our continuing multi part series. If you missed Part I, you can find it here: Part I
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Topic: The Decline and Fall of the Roman Empire, what lessons it holds for America, and how America can avoid Rome’s fate. Part II
In this Part II of our series comparing America to the Roman Empire’s decline and fall, we explore the second of the 8 main causes generally agreed upon by historians as responsible for Rome’s ultimate demise, and its application to modern day America: Economic troubles and overreliance on slave labor.
As explained by the History Channel:
“Even as Rome was under attack from outside forces, it was also crumbling from within thanks to a severe financial crisis. Constant wars and overspending had significantly lightened imperial coffers, and oppressive taxation and inflation had widened the gap between rich and poor. In the hope of avoiding the taxman, many members of the wealthy classes had even fled to the countryside and set up independent fiefdoms. At the same time, the empire was rocked by a labor deficit. Rome’s economy depended on slaves to till its fields and work as craftsmen.”
The above description sounds in certain respects eerily similar to the America of the last two decades. America has, for example, suffered a historically severe Financial Crisis, engaged in forever wars that have drained its coffers, accumulated an ever ballooning national debt with no signs of shrinking, massive gaps between the rich and the poor, and most recently, on top of it all, runaway inflation.
Below, we will discuss the major economic issues threatening America, and what needs to be done to fix them so that America can not only avoid Rome’s fate, but even thrive again.
We begin with the 2008-2009 Financial Crisis and its aftermath.
The 2008-2009 Financial Crisis
Slightly over a decade ago, America suffered a severe financial crisis caused by the collapse of the housing market. In US history, the “Great Recession” is second only to the Great Depression in its devastation to the American economy. And though America eventually recovered, the crisis and the drastic actions taken to save and resuscitate the world’s largest economy, caused deep and long lasting economic, social, and political scars and distortions, that reverberate even to the present.
For many, the American Dream--literally their very homes--vanished due to the Financial Crisis along with their jobs and the dignity and purpose that came along with them. To add even greater insult to injury, Americans watched the same Wall Street bankers responsible for the disaster, through the reckless creation of Frankenstein securities, get away Scot free with golden parachutes to boot. Far from punishing the financial sector at all, the US government provided it with generous bailouts, and then stuck the American people holding the bill. Some financial companies, like private equity giant Blackstone, even made a killing gobbling up all those foreclosed homes and then renting them back at higher rates to the poor folks that lost them in the first place. A cruel irony to say the least.
The financial crisis engendered profound distrust in government, the entire economic system, and the so-called experts and elites that ran them both. Especially as it became crystal clear that the system was completely rigged in their favor; if not in fact set up entirely for their benefit. As bankers like then Treasury Secretary Hank Paulson who stood on the right side of the perpetual revolving door between Wall Street and the government, funneled mountains of taxpayer money to their old firms and colleagues. While ordinary Americans received lower wages, a falling standard of living, and a much harder time buying or renting a home. Not to mention a ballooning national debt on top of it all.
As a result, the Financial Crisis called the entire idea of capitalism itself into question. With the bailouts directly contradicting shibboleths espoused for decades by free market evangelists, now begging for exactly the opposite! Even worse, the bailouts essentially allowed the financial sector’s losses to be socialized, while their gains continued to be privatized. The whole system appeared to be one giant double standard: free enterprise for the poor, socialism for the rich.
The Rise of Woke Capitalism
Predictably, the Financial Crisis sparked anti-capitalist, Leftist movements like Occupy Wall Street, advocating for extreme forms of wealth redistribution, and calls for capitalism to be replaced with socialism, or worse, communism. These calls further evolved in the subsequent Covid pandemic, along with other so called social and economic justice related issues. Together, they bred the conditions for a new and increasingly toxic form of identity politics to emerge and gain hold in America, which has now morphed into a form of cultural McCarthyism, with those running afoul blacklisted, or in the modern parlance, cancelled.
But as Vivek Ramaswamy discusses in his excellent new book Woke, Inc. instead however of fighting back against these anti-capitalist movements and the Leftist groups who lead them, as they may have in the past, Wall Street and US corporations have taken an entirely different tact, and struck a Faustian bargain with the extreme Leftists.
For their part, corporations embraced and even advanced the far Left’s extreme identity politics and so-called social and economic justice related initiatives, even generously funding leftist organizations dedicated to them, making, it should be noted, many Leftists quite rich in the process. In return, the Left would not materially harm the corporations’ businesses or their profits. Such, as for example, by calling for the break up of massive monopolies, particularly in the Tech industry, that had grown to amass unfathomable power over American society. There would be occasional sacrifices of course, especially those aligning with the Left’s political and societal goals, such as purging corporate executives unable to get with the new program, or who attempted to rebel against it, or simply happened to be of the wrong persuasion. But so long as the corporations paid sufficient lip service, adopted the right words, and made the appropriate performative genuflections to the exalted Left and its myriad causes, they were largely spared from its wrath.
In fact, all in all, for corporations, this turned out to be quite a good deal, as they learned quickly how to leverage fashionable social values, and virtue signaling, to generate even greater profits. While at the same time, it allowed them to disguise their greed for those profits. For as Ramaswamy writes in his book, social causes served as a form of reputational or moral laundering for companies’ profit-seeking.
Likewise, it has been quite advantageous for the Leftists as well. It enabled them to secure heretofore unimaginable amounts of funding to support an entire Woke Industry, gainfully employing—and enriching—armies of activists. It has also helped the Left achieve aims that proved impossible through the electoral and legislative process, and have brought what were once widely considered extremist views, long confined only to the outer recesses of Leftist think tanks and Academia, into the mainstream.
So, it was that “Woke Capitalism” was born in America, or “Woke, Inc.” as Ramaswamy calls it, through the fusing of far-left identity politics with massive corporate power. And as this new Leviathan grew monstrously, it has perpetuated a brutal new monoculture and cultural Marxism in America, that brokers no dissent, and has served to divide the nation, with those on the wrong side thoroughly ostracized, canceled, and branded forevermore with one or more of the Left’s favorite scarlet letters.
Though we will delve much further into the dangers of this new religion (cult) of Wokeism on American society and culture in other sections of our multi part series, it has had severe economic consequences for America as well.
To that end, the Left is seeking to create a new economic system that rewards identity over merit, with equality of opportunity replaced by equity of outcome. That is, that certain economic outcomes deemed desirable by the Left should be predetermined, regardless of the consequences, and regardless of merit. Thus creating an economic, and socioeconomic system of the Left’s designed preference based upon identity characteristics.
This has spread already into the classroom, where America’s future workforce will be built, with profound implications for America’s economic future. As set forth in a recent article in the Economist magazine:
“Wokeness’s next frontier, with the greatest potential to make a mark on the future, will be the classroom. In California’s recently approved ethnic-studies curriculum, which may become a high-school graduation requirement, one lesson plan aims to help students “dispel the model-minority myth” (the idea that to dwell on Asian-American success is wrong). Roughly one-sixth of the state’s proposed new maths instruction framework is devoted to social justice. It approvingly quotes from studies suggesting that word problems about boys and girls knitting scarves be accompanied by a debate about gender norms. Last month the governor of Oregon signed a bill eliminating high-school graduation requirements of proficiency in reading, writing and maths until 2024—justified as necessary to promote equity for non-white students.”
In a hyper competitive world, where STEM disciplines drive future national economic and global power—a fact China is well aware of and is pumping out STEM graduates in record numbers—not only are American classrooms not concentrating nearly enough on them, but are now even watering them down in the name of social and economic justice. And further still, excellent students in STEM, and other subjects, are being held back so as not to eclipse their peers. Recently, for example, NYC announced that it was ending its gifted and talented program for that very reason. In fact, even the very idea of educational excellence is now being called into question, if not completely sacrificed at the altar of Wokeism, with merit now equated to “Privilege.” And grades and test scores castigated as tools of oppression.
Moreover, schools now spend an inordinate amount of valuable classroom time indoctrinating kids on how to be Woke, instead of teaching them valuable skills for the future. California even made Critical Race theory a requirement for high school graduation! Employers already bemoan the lack of in demand skills of US graduates, and this will only serve to force employers to continue to look outside of America for the talent to fulfill their needs, as American students become more adept at the intricacies of intersectionality than at basic math.
Finally, while corporations currently profit from their alliance with the Leftists, it is akin to riding a tiger that one must keep riding for fear that if they fall off they will be eaten. And as we have seen, the Left relishes nothing more than devouring its own. To the Leftists, this alliance with corporate power is but a temporary means to a permeant end. Once corporations have served their purpose and are no longer needed, they will again become the enemy. The time will come, perhaps very soon, when the Left turns on their corporate benefactors, who have helped them rise and grow strong, and they will be brought to heel in the name of socialism. For in the end, that is what Woke Capitalism is: a transitory pathway to identity based socialism.
The Fading Middle Class
The truth is that many, especially the young, would not be turning away from capitalism, and seduced by the Siren Song of socialism peddled by the Left, if not for the fact that capitalism was not working the way it should for them. The difficulties of affording a decent place to live; crippling student loan debt for degrees qualifying one only for work as a Starbuck’s barista; extortionary health insurance bills; and skyrocketing prices for even the most basic necessities like gas and groceries. All of these hit the young especially hard, and socialism offers a ready made solution to them all—have the rich pay for everything! To a young person struggling to make their way in the world, sharing a small cramped apartment with several roommates, and living on a diet consisting largely of Ramen Noodles, that surely sounds very appealing. Moreover, as we have set forth, there is evidence for the idea that the US economic system is rigged in favor of the moneyed elites, and proof to support the narrative that capitalism has failed.
Of course, young people often struggle when they are just coming up in the world, not just in America, but everywhere, one may even call it a universal rite of passage, or paying your dues, earning your stripes, etc. You are not supposed to get the big job or the fancy car right away. You have to work for it. You have to earn it.
It is not simply the young, however, who are struggling to afford the basics of a good decent Middle Class life. A life many Americans saw their parents enjoy, and believed their birthright. Indeed, it was once commonly accepted that children would have it better than their parents. But that Middle Class life of old is now increasingly difficult to achieve and out of reach for many Americans. A reason President Trump’s famous slogan “Make America Great Again,” resonated. For many Americans realized, even if only at an instinctual level, that America is not the place that it once was.
And in fact, the Middle Class itself is being squeezed out, as America becomes with every passing year ever more bifurcated into the rich elite and the poor serfs. As Peter Thiel once aptly described it, the middle class is caught in a veritable pincer movement between the rich and the poor. To further the point, according to recent Federal Reserve Data for the first time in US history the top 1% has a larger share of wealth than the entire Middle Class.
If young people did not also see older people struggling perhaps they would have more hope for the future, and for capitalism. But instead they have a real sense that the opportunities in America are not what they once were, and that contrary to improving upon the standard of living of their parents the opposite is now occurring. Where the Boomers got great job stability, pensions, and endless opportunity in an optimistic country overflowing with it, Gen Z and Millennials have received instead nonstop turmoil and social media. Perhaps, this is why many have become so nostalgic for the early 2000s, the 90s, and even the 80s. They pine for simpler less chaotic times and for the security they provided. To the “Glory Days” of an America more united, more affordable, and happier.
Outsourcing and Globalization
While the Financial Crisis, and now Covid, shown a glaring light on the power divide between America’s elites, including its largest multinational corporations, and the American people, along with their increasingly diverging interests, it was in many respects just part and parcel of what had been done to the American people for decades.
Through trade deals like NAFTA and actions like championing China’s entry into the World Trade Organization (WTO), the US government all but green lighted corporations to outsource American jobs overseas in favor of low wage foreign labor. While simultaneously allowing the US market to be flooded with cheap foreign goods made by essentially slave labor that undercut and decimated US small businesses.
This all occurred despite US politicians, like President Bill Clinton, adamantly claiming that it would not when these policies were initially sold to the American people. Clinton even called China’s entry into the WTO at the time an economic “one-way street,” benefitting American workers, consumers, and investors. Turns out it was a “one way street”, but in the other direction, with the vast majority of the benefits accruing to China, while the losses were borne by America’s small businesses and workers.
As a direct result of these terrible decisions, America’s once mighty manufacturing sector was decimated along with the good jobs that once sustained whole towns and cities and supported entire families. This weakened America not only economically, but from a national security standpoint as well, by making America dependent on far flung supply chains, in places like China; a fact severely exposed during Covid. It also caused massive trade deficits to grow, as America hardly makes anything the rest of the world wants anymore, and imports vastly more than it exports.
Nor is it simply low cost, low skill goods or textiles that are now made elsewhere, but the most strategically important industries once dominated by the US, like semiconductors, and even those invented by the US, like solar panels. This occurred because America simply did not care enough to try and keep these industries and the good jobs that came with them, while other nations did everything possible to obtain them, including through the provision of enormous government subsidies and other incentives. Soon these nations came to dominate these industries, and many more like them, as they built economies of scale and gained valuable experience and skills in manufacturing, while in turn America’s own atrophied for lack of use and care. Thus, this was not simply an accidental occurrence, but a conscious choice on the part of America’s policymakers.
America’s workers, once the backbone of America who built the nation into the industrial powerhouse of the world, are now amongst the biggest economic losers, as America all but stopped investing in the actual building of things. And many regular Americans have found the good jobs that they or their parents once had, that allowed for a decent middle class life, gone. In their stead, are lower wage service jobs. Until even they too were being replaced.
Mass Immigration
America not only replaced much of its workforce particularly in manufacturing with labor overseas, but just as it imported cheap foreign goods, it also imported cheap workers through mass immigration to do many other jobs. Business even came to rely on the importation of cheap foreign labor through immigration (legal & illegal) in lieu of investing in the skills of the existing citizenry and in labor enhancing technology.
Just as the Roman Empire overly relied and became dependent upon slave labor to fuel its economy, a factor ultimately leading to its downfall, America has similarly become dependent upon the mass immigration of low wage labor into the country. And just as the Roman Empire was forced at great costs to continue to conquer people and nations to acquire the slave labor to fuel its economy, America likewise has been compelled to keep its borders wide open to mass immigration.
Like Rome, this mass immigration of cheap labor has come at great costs to America. As I write in my book The Art of the New Cold War:
“Mass immigration, however, has also not been without significant costs to America. Including the fraying of social cohesion, which has grown throughout the years. As the U.S. immigration system went from tightly controlled to a veritable free for all, with millions of people entering the country illegally, or by exploiting gaping loopholes. Causing many Americans to sour on immigration all together, as their government appears unable to control the nation’s borders or even determine who enters the country. Immigrants also compete with U.S. citizens, displacing jobs and lowering wages, a problem particularly acute in lower skilled jobs susceptible to low wage immigrant labor. Coupled with competition from low-cost labor in China, cheap immigrant labor has dealt a devastating blow to many U.S. workers. Low wage immigrant labor has also increased economic inequality in America. By not only depressing wage rates for workers but increasing the economic returns to capital disproportionately benefiting from low wage labor.”
Unfettered mass immigration has been perpetrated against the American people under the guise that immigrants do jobs that American citizens will not. This is of course untrue, or, more precisely wrongly stated. What is really meant is that low wage immigrants do certain jobs for less money than U.S. citizens are willing to accept to perform those same jobs. If paid more for these jobs, however, many more Americans would almost certainly willingly perform them. Thus, the issue is one of business not wanting to pay more for certain jobs. Not Americans’ unwillingness to do them.
Another reason commonly proffered for endless open border polices and mass immigration is that America is a nation of immigrants. And by extension no American has any right to deny others the same opportunity to live in America that they, or their ancestors had. But what is forgotten, or intentionally left unsaid, is that America is also a nation of citizens. It is not merely a collection of random, disconnected individuals from other places who simply happen to find themselves on the same plot of land.
Author Michael Anton in his excellent book, “The Stakes”, provides a very useful and instructive analogy in this regard. He argues that America, like any nation state, is in essence a membership organization, with citizens being the members. And like any membership organization, be it a Trade Association, Chamber of Commerce, or the Elks, existing members set the terms and conditions for membership, and at their discretion invite new members to join the organization based upon those terms and conditions. The organization is run for the benefit of the existing members, conferring upon them certain privileges not provided to non-members. Otherwise, what would be the point of membership. Potential new members must not only add value to the existing membership, but also must subscribe to the organization’s core mission and values.
Likewise, Americans have every right to decide who becomes a citizen, and set the terms and conditions of doing so. Americans may also deny people who are not members, that is who are not citizens, any of the benefits and privileges of citizenship. This includes not only privileges like voting, but also working in the country, and even entering and staying in the country.
Additionally, Americans have a right to expect, and even to demand, that would be citizens enhance their lives and economic well being and the nation as a whole. For it is, after all, for their benefit that America exists, not for the rest of the world, or for those who are not citizens. This is nothing other than the foundation of a nation which has no reason to exist unless it favors its own to the detriment of others. This is in fact the very point of a nation.
Returning then to the membership analogy, why would members allow non-members to not only enjoy the benefits of membership, but indeed by doing so actually significantly diminish the benefits of existing members? This makes no sense. And yet, as we see, this is precisely what is occurring in America. Non-citizens are taking jobs, lowering wages for citizens, raising costs of social programs and stretching thin public resources.
The Left, and big business interests, however, hardly give any thought or care whatsoever as to whether immigration, legal or illegal, actually enhances the lives of existing Americans, or the nation as a whole. Or, whether it in fact does exactly the opposite. For example, by suppressing the wages of US workers. A fact even a recent report by the Biden Administration admits is the case.
But many on the Left not only view immigration into America as an eternal and uninfringeable right, but to them the very idea of protecting the nation’s borders, or even having borders at all, and determining who, how, and when a person enters, and whether or not they stay, is intolerable. They believe that borders should instead be wide open, with no enforcement whatsoever. A sentiment some big business interests also share, as it provides them with an endless supply of cheap labor to exploit. They also believe that citizens and non-citizens alike should be on equal footing, and that non-citizens should even be granted every benefit and right of citizens. Indeed, in many ways they advocate for the complete erasure of any distinction between them.
This is intended, in essence, to strip America of its sovereignty and divorce it from its nationhood. A process which the Left, elites, and multinational corporations have been trying, unfortunately quite successfully, to do to America and Americans for decades. And it is at the very heart of America’s economic problems. Conversely though, its reversal also provides for the solution to them.
The Antidote: Patriotic Capitalism. Back to the Future.
Now that we have diagnosed some of the significant economic issues currently plaguing America, and even threatening the Republic’s very existence, as it did Rome, what can be done about it? Is there an antidote?
I believe that there is. And I believe, like much else, it can be found in America’s past. For just as Rome declined and then fell largely because it got away from what made it so great in the first place, so too has America. This is true in numerous respects, including from an economic perspective.
The secret sauce that built America into the greatest economy the world had ever seen, with the biggest and most prosperous Middle Class in history, has been known by different names. Some call it Economic Nationalism or Neo-Mercantilism, or as Henry Clay famously dubbed it the American System. I have taken to calling it Patriotic Capitalism, and discuss it at length in The Art of the New Cold War Newsletter, Patriotic Capitalism, which I encourage you to read for greater detail than I will provide here.
Regardless, of what one may call it, the features of this secret sauce are basically the same: Protection of domestic markets and industries through tariffs and other trade barriers; government enhancement, funding, and development of key strategic industries and cutting edge technologies; and strong manufacturing and mercantilist policies that favor exports over imports. This is what made America rich and powerful. And ironically is the very same formula that has been copied by China in its own meteoric rise.
Over the last few decades, however, America has abandoned this formula in favor of neo-liberalism. Americans have been fooled into believing that the secret sauce that allowed America to flourish for nearly two centuries and grow into the mightiest nation on earth, would actually destroy America’s economy. And that only by embracing its exact opposite, that is neoliberalism—free markets, free trade, unfettered globalization and perpetually open borders—would America’s economy grow.
This lie has been peddled to the American people by those multinational corporations and cosmopolitan elites who benefit from neoliberalism disproportionately, and do so at the expense of America and average American citizens. For while these elites and multinationals have prospered through neoliberalism, to the majority of the American people, as we have seen, neoliberalism, and the policies that have furthered it, have meant quite the opposite. They have resulted in American jobs shipped overseas; lower wages for American workers; US manufacturing decimated; small businesses crushed; slowing growth, innovation, and overall economic dynamism; reduced upward mobility and extreme inequality; a disappearing middle class; unaffordable homes, healthcare, and other basic goods; a severe lack of social cohesion; and critical supply chains located in hostile far off places.
It has also allowed the American economy, and by extension the country, to become beholden to and run for the benefit of global interests, not American interests. Neoliberalism, in many ways the catalyst for globalization, has made corporate America disloyal to US interests, and, as S. George Marano wrote recently, put “capital over country.”
Indeed, many of the the largest “American companies” are increasingly divorced from America. Seeing themselves instead as global or multinational, they view America simply another market for their goods and services, not their homeland for whom they owe any real debt or loyalty. And instead of investing in America, these companies go where labor is the cheapest, and park their money outside of America in tax havens, through corporate inversions—a process by which companies, primarily based in the U.S., relocate operations overseas to reduce their income tax burden. And while America still needs its largest companies to produce jobs, products, and overall economic activity in the country, these companies increasingly no longer depend upon America or its market in nearly the same way. As Intel’s former chairman Craig Barrett once put it bluntly, “Intel can move wherever it must to thrive, but I sometimes wonder how my grandchildren will earn a living.”
This mentality has had profound implications for America, and as S. George Marano writes, “corrupted the political, military and social aspects that made the US a superpower.” To that end, instead of investing in building up America and American power, US corporations and Wall Street have poured massive amounts of capital and investment into places like China, helping to build it into the great rival and threat to America that it is today. Worse still, to protect their huge investments in China, Wall Street and these corporations have formed a powerful China Lobby in Washington to block any US governmental actions that could be detrimental to China, even when taking those actions were in America’s best interests.
Therefore, Patriotic Capitalism, as I define it, is not only about a return to the secret sauce that made America so great, but also, about the restoration of the principle of national preference in America’s political economy. If America is to right the ship, and gain what it has lost, capitalism can no longer be divorced from patriotism, as it has been. It cannot be separated from the interests of the nation and its citizens. The two must be inextricably intertwined again.
This will require a new robust Pro America Industrial Policy. As I wrote previously:
“Therefore, the US government must forcibly seek to realign the economic interests of US companies with the nation’s through a robust pro-America industrial policy to create patriotic capitalism utilizing a wide variety of carrots and sticks.
For example, by making it far more expensive and onerous for US companies to outsource American jobs and manufacturing, especially in strategically important industries, while at the same time providing financial advantages, like reasonable tax incentives, for those that do not. America should also enact punitive measures for outsourcing companies including being barred from accessing taxpayer funding or financing, and curtailment of the ability to transfer data through data privacy laws. While federal pension and public investment funds should be required to invest in America and American companies, whether exclusively, or at a very high percentage, and the Buy American Act further strengthened. These actions will not only serve to level the playing field by taking away competitive cost advantages of outsourcing but make it more advantageous and profitable to hire U.S. workers.”
The goal of these actions, and many more like them, which I detail more fully in my book, is to bind US companies once again to America’s national interests and prosperity. In the long run, it will also make these companies, and their American workers, even richer, stronger, and more prosperous. For Patriotic Capitalism is not about tearing companies or businesses down, far from. It is about building them up alongside America, and giving them every advantage possible to succeed and innovate in America with American workers, and then to conquer world markets.
Finally, Patriotic Capitalism will renew faith in capitalism generally by rebuilding America’s great Middle Class, while also helping to create again a desperately needed sense of national purpose. And by doing so, foster social cohesion by replacing the Left’s corrosive identity politics with the common cohesive identity of America. This will not only help America avoid Rome’s fate, but usher in a new American economic Golden Age.