Art Cashin seems to think the old maxim all roads lead to Rome is alive and well today — and the country’s demise is analogous for the U.S. In his note out this morning, Art Cashin picks up commentary from Dennis Gartman of the Gartman Letter.
In his report, Gartman seems to compare the current tax structure to that of Rome, when the government over powered private industries, hiked taxes, and subsidized the poor.
In the end, people fled.
And this isn’t the first time a trader has referenced Rome. Recently Jeff Gundlach drew parallels to the empire in his own commentary.
From Cashin’s morning report:
Too Good Not To Pass Along – Our good friend and fellow trading floor veteran, Dennis Gartman, had an absolutely marvellous citation in the Gartman Letter this morning. Now, anything in the Gartman Letter is usually worth quoting but the timeliness of this virtually jumped off the page. It is a citation of historians, Will and Ariel Durant on the decline of the Roman Empire.
Rome had its socialist interlude under Diocletian. Faced with increasing poverty and restlessness among the masses, and with the imminent danger of barbarian invasion, he issued in A.D. 3 an edictum de pretiis, which denounced monopolists for keeping goods from the market to raise prices, and set maximum prices and wages for all important articles and services. Extensive public works were undertaken to put the unemployed to work, and food was distributed gratis, or at reduced prices, to the poor. The government – which already owned most mines, quarries, and salt deposits – brought nearly all major industries and guilds under detailed control. “In every large town,” we are told, “the state became a powerful employer, standing head and shoulders above the private industrialists, who were in any case crushed by taxation.” When businessmen predicted ruin, Diocletian explained that the barbarians were at the gate, and that individual liberty had to be shelved until collective liberty could be made secure. The socialism of Diocletian was a war economy, made possible by fear of foreign attack. Other factors equal, internal liberty varies inversely with external danger.
The task of controlling men in economic detail proved too much for Diocletian’s expanding, expensive, and corrupt bureaucracy. To support this officialdom – the army, the courts, public works, and the dole – taxation rose to such heights that people lost the incentive to work or earn, and an erosive contest began between lawyers finding devices to evade taxes and lawyers formulating laws to prevent evasion. Thousands of Romans, to escape the tax gatherer, fled over the frontiers to seek refuge among the barbarians. Seeking to check this elusive mobility and to facilitate regulation and taxation, the government issued decrees binding the peasant to his field and the worker to his shop until all their debts and taxes had been paid. In this and other ways medieval serfdom began.
Read it. Put it down. Pick it up and reread it again. Repeat several times. There are many lessons here, many important lessons. (We think the date, however, is a typo. Diocletian ruled from 284 to 305)
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