Rome, China, the United States and the Cycles of History
I don’t read much fiction. Rather I find that if you just observe the times we are living in and compare it to history, it provides you with storylines that are more riveting than anything most authors can imagine. I am just finishing a great book given to me by a friend: Lost to the West: The Forgotten Byzantine Empire That Rescued Western Civilization, by Lars Brownworth. It’s the tale of how history has mostly ignored the important role of how the eastern Roman Empire centered in Constantinople endured as the hub of western culture for more than 1,000 years after the collapse of the western Roman Empire. It’s the story of how governments become bloated and corrupt over time and eventually collapse. It starts in 286 AD when emperor Diocletian appointed fellow officer Maximian as co-emperor to rule in the western empire, while Diocletian ruled in the east. Diocletian's reign stabilized the empire and marked the end of the Crisis of the Third Century, when the Roman Empire nearly collapsed under the combined pressures of barbarian invasions, civil wars, political instability, debasement of currency, and economic depression. In 486 AD, the Western Empire succumbed to these ongoing pressures but the Eastern Empire endured for another millennium, laying credence to how decentralization is the medicine that fixes sick bloated centralized governments. In fact, I wrote a little book about this very topic called Locally Grown: The Art of Sustainable Government that you should check out 😊
I am not the only one who sees the cautionary tale for the United States regarding the Roman Empire. After all, history is really the story of the rise and fall of empires. The arc of history, while generally upward in terms of average living standards, still bends towards human nature which doesn’t change. A small minority of humans seem to have the most influence and they are at once greedy, evil, power hungry as well as caring, enlightened, innovative and dedicated. We call them leaders as well as revolutionaries. History pivots around these people. All revolutions are typically driven by a small percentage of hard-core loyalists who are supported by about 1/3 of the population. That suggests most citizens observe from the sideline, events that don’t directly affect them and are likely to submit to whatever authority is in power, at least for a while. The Who song, “Won’t Get Fooled Again,” sums it up brilliantly. “Meet the New Boss, Same as the Old Boss.”
Now I am not suggesting the United States is on the verge of collapse, but the warning signs are very troubling. The Great Migration period in the 4th-7th century where Germanic and Asiatic peoples poured into the Roman Empire as it imploded from within. With it came marauding armies that laid the foundation for the development of new states on the European continent during the Middle Ages. In the U.S., the migrant invasion of our southern border is breathtaking in both its scope and the how the current governing class encourages it. I doubt that these migrants will be followed by an army immediately, but I have no doubt there are plenty of future terrorists and criminals among the millions now pouring through our southern border. In any case, this great migration is sure to change American culture forever, and not all in good ways.
An important reason for the 4th-7th century Great Migration was climate change. In that case, there was climate cooling (versus warming now) which caused frequent crop failures and decreased mortality rates and people rushed to warmer Roman territory. Pandemics like plague also contributed to a significant decline in population as people began crowding into southern Europe. However, the main reason for the collapse of the Roman Empire was a corrupt, bloated centralized authoritarian government that became unsustainable. The first phase was debauching the currency, which was then gold and silver. At its low point, the content of Rome’s main silver currency was about 2% silver. This debasement caused rampant inflation and rising levels of taxation forcing many to simply abandon their farms and businesses. Increasingly the values of military strength, free trade and republican government was replaced by festivals, bread and circus and the overall enjoyment of life for those who could afford it.
Any of this sound familiar?
How History Repeats
If you have been listening or reading my stuff over the past three years, you know than one of my favorite books is, The Fourth Turning. It describes how human history repeats in roughly 100-year cycles that can be measured. It takes the form of a sine wave that is comprised of four, roughly 25-30 year periods or turnings that, together, comprise a long human life.
The first two turnings emerge from a prior calamitous period or fourth turning, and they are characterized by an upward trend of productivity gains that produce rising prosperity, social cohesion, low debt levels, lower income inequality and a generally peaceful world order.
These are the prosperous and enjoyable periods. When they are taken to excess, as they always are, the excesses lead to periods of destruction and restructuring, characterized by economic depression, low social and political cohesion, high debt levels, larger income inequality and the struggle to maintain an overextended government under the challenge of emerging rivals. This is a painful period of fighting, destruction, and then a restructuring that ushers in a new order which sets the stage for a new prosperous period of rebuilding.
The cycles of history are interesting in that they occur within other countries and within the different generations of people within those countries. It builds from the bottom-up as the historicity of the new generation become “out-of-phase” with older generation. The friction between these generations and countries is what creates “history.” My Uncle Johnny, who passed away last year, lived through an entire cycle of four turnings in his 99 years on this earth. It began as a young man who fought in the last fourth turning, World War II. Then Uncle John’s kids, nieces and nephews became the hippies who rebelled against war in the 70’s.
Similar to how out-of-phase sine waves from the sun, power lines and electrical storms interfere with your AM radio, multi-country and multi-generational waves collide to create out-of-phase historical static where things are become chaotic. However, as you get closer to the source, the waves become in-phase which reflect historical cohesion and peaceful prosperity. The following diagram illustrates.
In my opinion, we are in the midst of a fourth turning where America will look much different on the other side. The overwhelming majority of us are not prepared for what is coming because we’ve not seen anything like it in our lifetime. We are prone not to believe in dire outcomes if we haven’t already experienced it. Conspiracy theory some with say. This is a fatal human flaw. This is where history comes in handy, but we’ve mostly stopped teaching history seriously in our schools and, as the old adage goes, “Those who forget history are doomed to repeat it.”
The Chinese Historical Cycle
So, what does all this have to do with China? Well, there is bi-partisan consensus that China is now America’s primary rival. I have a slightly different take. China is certainly our most powerful economic and military adversary, but we cannot ignore Russia, Iran, North Korea who, while not economic threats, certainly are military and terrorist threats. I think of it as America, the land of the free, against authoritarianism in all its forms. That said, China is the emerging leader of the authoritarians and actively partner with the others in “an enemy of my enemy, is my friend” kind of relationship. For that reason, it’s important to focus on China.
In my December 2020 podcast episode, Civil Disobedience, I cited an essay in which billionaire hedge fund founder, Ray Dalio, offers his opinion on where America sits on the continuum of historical cycles. Below is a chart from that essay comparing the US and China sine waves.
Since the end of the last fourth turning with WW II, China has become the world’s 2nd largest economic and military power. It owes it growth to three major factors:
1. The Chinese Communist Party (CCP) learning from the collapse of the Soviet Union and opening its economy to elements of capitalism while retaining political control.
2. China being included in the World Trade Organization in the 1990’s and American companies massive outsourcing of manufacturing to cheap Chinese labor.
3. Decades of failed American foreign policy foolishly believing the CCP would moderate its authoritarian rule as it saw the benefits of capitalism and free markets.
So here we are. China flexing its muscle around the world while America retreats from its 76 years of leadership of the free world. Now this doesn’t mean that China is immune from the risk of the historical cycles. It is in an earlier part of the cycle than the United States. As the chart below shows, China is in the later innings of its massive economic expansion.
The Chinese economy has benefitted greatly from the Pax Americana. It has grown its middle class from nothing to more than 700 million people. For some perspective, that’s more than double the entire population of the entire United States. However, with that rapid state-sponsored economic growth has come familiar problems like debt bubbles and income inequality. Nearly 500 million Chinese still live in poverty even as China has produced 698 billionaires, nearly as many as in the United States. China has also accumulated a massive amount of debt that financial markets believe would be back stopped by the CCP as it has been for the last 25 years. Recently, China’s largest property development firm, Evergrande, is bankrupt and the CCP appears to be willing to let it fail. Evergrande is really a miniature of the entire Chinese economy that is driven by debt-fueled building of everything from houses, to roads, airports and other infrastructure. According to the Bank for International Settlements, China is one of only three countries (alongside Greece and Singapore) to add nonfinancial debt amounting to more than 100% of GDP since 2011. It now has about the same level of debt to GDP as the U.S., despite a significantly weaker financial system.
Like Evergrande, China’s economic model has also run out of road, and the process of putting it on a new track could be even more disruptive in the long-term. China has tried several times to rebalance its economy away from debt-driven construction toward consumption and service industries. It has had some success, but every time there is a slowdown, it returns to the tried-and-tested model of jacking up debt and investment to boost growth. Keep in mind that, like all authoritarian regimes, the CCP fears the mob and there are still half a billion Chinese living in poverty who didn’t benefit from the great expansion.
This time it may be different as President Xi Jinping has secured all the levers of state power in a way we have not seen since Mao. According to a recent WSJ article, “Xi Jinping Aims to Rein In Chinese Capitalism, Hew to Mao’s Socialist Vision,
“A close examination of Mr. Xi’s writings and his discussions with party officials show the Chinese President is not just trying to rein in a few big tech and other companies and show who is boss in China. He is trying to roll back China’s decades-long evolution toward Western-style capitalism and put the country on a different path entirely.
… he is trying forcefully to get China back to the vision of Mao Zedong, who saw capitalism as a transitory phase on the road to socialism. “China has entered a new stage of development,” Mr. Xi declared in a speech in January. The goal, he said, is to build China into a “modern socialist power.”
But we shouldn’t be fooled by Xi’s pivot to Marxist doctrine as means to achieve the utopia of “common prosperity.” Marxism and Socialism has never been about common prosperity but rather about control of the many by the few, for the benefit of the few. It’s no different than the corrupt monarchy that the 1917 Communist Revolution violently replaced. Any lip service paid to utopian “proletariat rule” is simply a tool used in the larger goal of unchallenged party control. And once something has outlived its usefulness in keeping party control, it is discarded. Just like the pivot to state-sponsored capitalism was decades ago was a tool to achieve the larger objective. Now that the CCP sees the corrupt excesses resulting from the moral hazard created by a state-sponsored debt binge, the capitalism tool has outlived its usefulness. “Capitalism with Chinese characteristics” did its job of creating enough prosperity to bulk up the CCP military and surveillance state, the real guarantors of its power. But it was never really free market capitalism, was it? Oh well.
The Collision of the Historical Waves: Freedom vs. Authoritarianism
Like all authoritarian regimes, the CCP is guilty of massive violations of human rights that are abhorrent to the tradition liberty and individual rights. However, the CCP is not stupid. The Chinese have been around for more than 5,000 years which has imbued their culture with many practical lessons learned the hard way. Take some time to read The Art of War, the Tao Te Ching or the writings of Confucius. They are timeless classics created more than 2,200 years ago that demonstrate deep insight into human nature. However, unlike the United States, China has no history of democratic self-rule. Its entire history, except for Hong Kong and Taiwan, has been of authoritarian rule whether by dynastic emperors or the Communist Party. Individual rights are always subservient to the desires of the state. Centralized rule is the guarantor of this reality. This explains why the CCP has been so fixated in crushing Hong Kong and Taiwan, intolerable examples of the power of Chinese freedom.
Two hundred forty-five years of American history is a blip when compared to 5,000 years of Chinese history. And yet, in such a short period of time, the United States has showed the superiority of individual freedom and decentralized governance in creating common prosperity. Which makes it frustrating to witness the growth of centralized federal government and the subsequent reduction in freedom American citizens have accepted over many decades. We have now reached the point where many political leaders in this country believe that rights are granted by the state rather than being God-given inalienable rights as described by our Constitution. Just like the CCP, these so-called leaders, use the language of democracy as a tool in service of the consolidation of party power. The democratic concepts of “the common good” and “the consent of the governed” are twisted to divide us by race, class and other demographics. Classic divide and conquer tactics that the Roman Empire and Vladimir Lenin understood well. Cradle-to-grave entitlements, unsustainable debt, pandemic fear mongering, surveillance of citizens, censorship of free speech, encouragement of civil disorder, weakening of our military. These are all tools for control of the many, by the few. It seems like “Marxism with American Characteristics.”
With such a long, if imperfect, history of the success, why would Americans want to abandon the principles that got them there? This is the $64,000 question. There are those that believe that success was the result of an intentionally created racist society that exploited human labor. Therefore, all the principles that drove that success must be discarded at all costs. I believe that America has an ugly racist history that must be taught in school. It also must be taught that great blood was spilled eliminating slavery and treasure spent helping to correct past economic inequality. America updated its commitment to eradicate the vestiges of racism in the 1960s with the Civil Rights Act and spent trillions on “Great Society” social welfare programs that remain with us today. Citizens don’t realize that we spend nearly 70% of our entire federal government budget on social welfare programs that show mixed results at best. So, what’s the answer? The current governing class think it’s spending another $5.5 trillion that we don’t have, on more “Great Society” programs. Doesn’t seem to make sense unless there is some other reason they’re not telling us. Hmmm.
Most Americans don’t believe we continue to be a racist society, and many are starting to push back and challenge the cancel culture brown shirts who spout this nonsense. In a recent summer episode of his popular HBO series, Bill Maher, a pragmatic liberal and funny comedian, decries the concept of “Progressophobia.” Maher defines it as: “a brain disorder that strikes liberals and makes them incapable of recognizing progress. It’s like situational blindness, only what you can’t see is that your dorm in 2021 is way better than the South before the Civil War.”
“In 1958,” he continued, “only 4% of Americans approved of interracial marriage. Now Gallup doesn’t even bother asking. But the last time they did, in 2013, 87% approved. An overwhelming majority of Americans now say they want to live in a multiracial neighborhood. That is a sea change from when I was a kid.”
Then Bill came in with the data: “In a country that’s 14% black, 18% of the incoming class at Harvard is black. And since 2017, white students are not even a majority in our public colleges. Employees of color make up 47% of Microsoft, 50% of Target, 55% of the Gap, as companies become desperate to look like their TV commercials.” Maher is just saying what most of us are observing and thinking. I mean, our two biggest national sports, football and basketball, are over 75% black guys. We don’t think that’s racist. They’re the best players and it’s a narrow funnel of excellence. It’s a perfect example of meritocracy. So why are some powerful people falling over themselves, trying to eliminate color-blind meritocracy from all other parts of our culture, calling it a racist principle? Hmmm.
Politicians and their institutional cronies who spout this systemic racism, white supremacy nonsense don’t really believe it either. But they know it has historically been an effective tool to divide us while consolidating power for themselves. If one cannot compete in a free market, the next move is to tear down the free market. This is done by declaring endless grievance and victimhood for those willing to trade votes for a spot at the government trough. Trading freedom for the illusion of security is an age-old Faustian bargain that the CCP knows well. Vladimir Lenin referred to these people as “useful idiots.” Unfortunately, the joke is that all of it is unsustainable and when the state has acquired enough power, those expecting their government goodies will be betrayed by the elite who always runs things. Same as it ever was.
When China invades Taiwan, will the American President utter a few token words of protest and then accept it? Will our academic institutions continue to accept major Chinese philanthropy and investment, while they look the other was as Chinese “students” infiltrate our work force and laboratories to steal our technology? Why would America withdraw from the world and focus instead on intentionally weakening itself through government dependency? I am sure Xi and his allies are sizing up this opportunity as we speak. Maybe the collision of the Chinese and American historical cycles are less out-of-phase than I thought. Maybe they are aligned! American government may be becoming more like China, not less. We could be “merging” rather than a “colliding” with China. Sounds pretty scary.
What to Do?
I’ve posed lots of questions for which we will get answers soon, because, if history doesn’t repeat, at least it rhymes. Empires will continue to crumble for similar reasons causing hardship for the vast majority who are unprepared. I do worry that this is the end of a historical cycle where, for the first-time, nuclear weapons are everywhere. I pray that the better angels of world leaders prevail in preventing a war where, in what President Kennedy said in 1962, “…even the fruits of victory would be ashes in our mouth.” At this point in the historical cycle, a lot of things (like crushing national debt) are already baked in and we have to start thinking about the aftermath. What and how to build back better, to borrow a term. Unfortunately, that term is being used by people whose version of it is actually the hand pushing us over the edge.
However, we must remain optimistic. History has shown that humanity is clever and always bounces back. Down cycles turn into upward cycles just like they do in nature. It takes about 8 minutes for waves of sunlight to travel 93 million miles to power life on Earth. The words you are reading or listening to now are powered by sine waves of energy that have been brilliantly harnessed in technology that improves our lives. The rhythm of life is cyclical. Any hope we have in mitigating the negative consequences of current and future fourth turnings lie with aligning our societies more with how nature works.
I provide lots of examples how to do this in my book. But it starts by moving away from authoritarian centralized federal government, and to more decentralized, bottom-up, “Locally Grown” government. Without any human control, the mathematics of decentralization powers our real economy and real society. And when things break down, local is all you have left. To be clear, I’m not saying NO federal government, just back to something resembling the boundaries established in our Constitution. That will be a monumental task because lots of people have become rich and powerful from big government and they won’t go quietly.
The second thing we must do is protect the goose that lays the golden eggs of prosperity. That goose is called Freedom of Speech, the constitutional carrying beam for our American house. This means defending the right of citizens to speak about things we don’t agree with. The antidote for bad speech, is more speech, not less. This is no small task given the extent to which censorship has infiltrated our media, college campuses and legal system. On that note, I will be moving from Facebook and Twitter to Substack to build my audience because Facebook won’t let me advertise. Li’l o’l me. Hmmm.
There are a few more big changes we need to make that I will talk about in depth in the coming months. Some of them are movements that may take a generation to change things, like taking back our schools from teachers unions. Unions control the curriculum that teaches our kids a lot of bad ideas at the expense of curriculum that helps them become responsible self-sustaining citizens. Like any centralized authority, unions exist to increase their own power and they have half the DC politicians their back pockets. This is coming from a guy whose was the product of great public schools and a father who taught in those schools. We need great teachers and need to reward them well for their critical work, but unions are the wrong model. In my humble opinion, if we really want to strengthen our country for all its citizens, eliminating the teacher’s unions (and all public sector unions for that matter) is the single most important thing we can do. More on that later.
Well, I think I have said enough for now. Here’s a quick recap. History repeats and unfortunately, we are on the downhill run of the latest cycle. But remain optimistic because we have a system with a demonstrated track record of success. China has emerged as a powerful rival, but its authoritarian system will remain its Achilles Heel. Remain vigilant and start thinking about what happens after we get through the coming hard times. And remember, United We Stand, Divided We Fall, Each One for the Other, and All for All.