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c1ue
04-20-07, 02:46 PM
I was reading up on some history - this latest being a review of the Golden Era of Spain.

The interesting part was how the conquest of the New World seems to share characteristics with what is happening now.

A quick review: After Cortes and Pizarro respectively overthrew the Aztec and Incan empires, several decades passed where galleons filled with Aztec and Incan gold and silver regularly pilgramaged to Spain.

In addition to the hard currency, the exploited native populations also created other goods for general consumption - given that freight was very cheap due to the high-value other cargoes.

The consequence was that inflation rose in Spain, the middle classes were destroyed (middle class being the artisan/journeyman economic groups), and the gap between rich and poor widened enormously.

In addition to the gap, the overall creativity in Spain declined in most technical/scientific arts although 'high' art did yield such luminaries as El Greco and Velasquez. This period also included (although was slightly preceded) by the start of the Spanish Inquisition.

So how does this tie into the US today?

Incan and Aztec gold and silver --> Helicopter drops of money and/or money supply inflation

Cheap labor abroad with low (relatively speaking) freight costs --> Outsourcing of domestic production capacity abroad

Widening gap between wealthiest 1% and poorest 50% --> Check

Stratification of economic status --> Not quite Check, but definitely in progress

Military pre-eminence via economic superiority --> Check

National focus disrupted by foreign adventures in Netherlands and with England --> Iraq perhaps? Iran to come?

In fact, I would argue that the US consumption of world 'savings' today - much as happened in 1927-1929 - is no different than galleon drops of gold and silver!

The gold devaluation but more importantly the destruction of all competing industrial countries by WWI and WWII is what saved the US from the Great Depression. Carter/Volcker did it in the '80's.

Any possibility of someone doing it now? and how?

Spain had a nice 100 years, but was never the same after that. In fact, Spain was right down there with Turkey for many years in the European community despite having a key position controlling the access to the Mediterranean and having a relatively large population in a single state (only France was bigger as a single political entity).

The end of the American empire?

Tet
04-20-07, 07:22 PM
Good comparison, ever wonder why the Pirates always worked for the King or Queen of England?

DemonD
04-20-07, 09:50 PM
There are a couple of significant differences IMO.

1. USA is not a monarchy. (Although we could argue it's run by bankers, it's still not a monarchy.)

2. The world is much more globalized and integrated now than it was then.

3. Related to point #2, inflation is happening everywhere, not just the US, and while we might be bad at it, I believe places like China and Russia are running at inflation numbers much higher than the US.

4. Spain's rise came out of the Renaissance, which was a golden era for a lot of Europe. Also, there were (and are) many other countries which have invaded, conquered, saber-rattled, and fought for spheres of influence over the past 500 years, including the US but also of course England, France, Portugal, Spain, Germany, Russia, China, Japan, etc. Some have fared better than others. The point I'm making here is that you are making a literal comparison in a sociopolitical vacuum. Portugal, from what I hear, is one of the worst countries in Europe in terms of their economy. France and Germany seem to be doing quite alright, even with their problems, with all of their own military adventures. And why not make the simplest comparison - to England? How many times has England extended her reach around the world over the past 500 years... ever hear the phrase "The sun never sets on the British Empire"? A quick wiki search shows that this originally was termed to describe the Spanish Empire of the 16th century.

In other words the USA now is not Spain of the 16th century. It is not even the old Roman Empire, as Rome fell in many parts because their water supplies were depleted as the visigoths destroyed the aqueducts. I'm not sure if there is a good comparison to "USA now" to any historic empire or country, but I can say with some assurances that Spain in the 16th century isn't it. (Besides the USA did all their Indian raping, pillaging, and killing in the 19th century, along with our own gold rush. See Andrew Jackson.)

bart
04-21-07, 05:13 PM
I'm not sure if there is a good comparison to "USA now" to any historic empire or country
...


There are some striking similarities between the US now and Britain in the early 20th century.

c1ue
04-21-07, 05:29 PM
1. USA is not a monarchy. (Although we could argue it's run by bankers, it's still not a monarchy.)


True, but if we restrict ourselves to identical political structures, then only classical Athens would be a candidate. I would posit that the government structure only matters if one of the two compared governments acts in a way which fundamentally the other cannot.

In this case, while Spain was a monarchy, in reality most of the royal and upper layers of society were the true forces of government. This is not so different than the oligarchy of American society. Blood vs. money...



2. The world is much more globalized and integrated now than it was then.


Certainly there were no fiber optic cables going through both major oceans, but Spain did have a ship-based economy located in multiple continents. Slower, but still quite global. Either way, it is unclear to me why globalization/integration either ameliorates or exacerbates the situation.


3. Related to point #2, inflation is happening everywhere, not just the US, and while we might be bad at it, I believe places like China and Russia are running at inflation numbers much higher than the US.

But your mom smells! Or at least, that is how I read your comment.

Does another country's higher inflation somehow forgive ours? Don't these other countries also have higher growth rates and thus should have higher inflation?

You are also assuming that the inflation Spain experienced was localized. It was not, as gold and silver were common currencies then.



4. Spain's rise came out of the Renaissance, which was a golden era for a lot of Europe. Also, there were (and are) many other countries which have invaded, conquered, saber-rattled, and fought for spheres of influence over the past 500 years, including the US but also of course England, France, Portugal, Spain, Germany, Russia, China, Japan, etc. Some have fared better than others. The point I'm making here is that you are making a literal comparison in a sociopolitical vacuum. Portugal, from what I hear, is one of the worst countries in Europe in terms of their economy. France and Germany seem to be doing quite alright, even with their problems, with all of their own military adventures. And why not make the simplest comparison - to England? How many times has England extended her reach around the world over the past 500 years... ever hear the phrase "The sun never sets on the British Empire"? A quick wiki search shows that this originally was termed to describe the Spanish Empire of the 16th century.

In other words the USA now is not Spain of the 16th century. It is not even the old Roman Empire, as Rome fell in many parts because their water supplies were depleted as the visigoths destroyed the aqueducts. I'm not sure if there is a good comparison to "USA now" to any historic empire or country, but I can say with some assurances that Spain in the 16th century isn't it. (Besides the USA did all their Indian raping, pillaging, and killing in the 19th century, along with our own gold rush. See Andrew Jackson.)

I'm not sure how shooting for other examples invalidates my original point: That the currency inflation Spain experienced due its conquest of the New World created a highly stratified, rigid society with a huge gap between rich and poor by systemically destroying the middle class - and that a corollary to present day America can be made if the word credit is substituted for currency.

France as a nation has never had its 'day in the sun' as a world empire - the French empire was at its best a poor second cousin to many others. France certainly was a powerful force in Europe, but was much more interested in internal issues. There was never a flood of extra-national resources pouring into France like Spain experienced.

Germany as a country did not exist until the late 1870's. I would also point out that the German empire was even a lower relation cousin than France's with many of the similar arguments.

The best possible counterexample might be Britain. I do wonder how the Industrial Revolution can be separated from the effects of the Empire - which of course the Industrial Revolution was a major factor in societal development on its own.

DemonD
04-21-07, 06:50 PM
I'm not sure how shooting for other examples invalidates my original point: That the currency inflation Spain experienced due its conquest of the New World created a highly stratified, rigid society with a huge gap between rich and poor by systemically destroying the middle class - and that a corollary to present day America can be made if the word credit is substituted for currency.

In the late 1800's/early 1900's, the US had much worse stratification between the haves and have nots. Many times in US history has there been a huge disparity. Also there have been times of famine and hunger which we no longer have thanks to agri-tech.

I would agree that a better comparison would be Britain because their socio-political structure is much more similar to the US than Spain's was (or is).

I find your point invalid because you are basically picking one or two elements and making a comparison. It's like saying oranges and apples have skins and seeds so we should be able to compare them just as well too. As I sit here writing this I'm watching a full stadium of people in chicago playing basketball, i'm sitting in a city with unemployment around 2%, typing on a computer connecting to people all around the globe, etc. etc. While I agree there are things we can learn from the past, I just don't see the correlation as strongly as you do.

c1ue
04-24-07, 02:37 PM
In the late 1800's/early 1900's, the US had much worse stratification between the haves and have nots. Many times in US history has there been a huge disparity. Also there have been times of famine and hunger which we no longer have thanks to agri-tech.

True, however, I would argue that the difference in wealth between a largely self sustaining subsistence economy - where most people have no money but don't need it - vs. our present economy where almost no one can survive without money, is a major structural difference.

It is like the difference between a slash and burn farmer in a 3rd world vs. a poverty level urban person in a developed country; the former is poor and uneducated but can survive, while the latter is poor and uneducated but is dependent on handouts for survival (and knows it).


I would agree that a better comparison would be Britain because their socio-political structure is much more similar to the US than Spain's was (or is).

I find your point invalid because you are basically picking one or two elements and making a comparison. It's like saying oranges and apples have skins and seeds so we should be able to compare them just as well too. As I sit here writing this I'm watching a full stadium of people in chicago playing basketball, i'm sitting in a city with unemployment around 2%, typing on a computer connecting to people all around the globe, etc. etc. While I agree there are things we can learn from the past, I just don't see the correlation as strongly as you do.

The point I was making was not that the USA is Spain in 1500, but rather that a possible mechanism for Spain's rise and fall was the New World derived currency expansion, unaccompanied by (in fact stunting) organic growth.

In the USA today, the credit being lent by the world is a different method, but identical result of currency expansion, furthermore also being (less and less) accompanied by organic growth.

Aside from what I note earlier on the poor, my thesis is the middle class. In the past the middle class provided tangible and necessary services such as simple manufacturing (blacksmithing etc), skilled services (medicine, etc), and retail. Today the areas are still similar, though middle class manufacturing is increasingly as labor rather than skill.

Today with outsourcing and corporatization, 2 of these 3 are under attack. While I do not believe this is moral or immoral, nor right/wrong, I do subscribe to what Galbraith noted in his analysis of the 1929 depression: That concentration of wealth leads to concentration of spending in the wealthy. This concentration is ultimately unhealthy as the wealthy are far more flexible in their spending needs than the lower classes in their subsistence needs.

A farmer who can grow his own food, but cannot afford a movie, is much less likely a revolutionary than a laborer who can't earn enough to survive or retain hope of advancement for his descendants. This was Marx's thesis.