A Classical Approach to Deficit Reduction

Last night I was reading Suetonius' history The Twelve Caesers and was intrigued by the story of the Emperor Vespasian. When Vespasian came to the throne he declared that at his accession he needed 400 million gold pieces to put the country on its feet again.  The emptiness of the Treasury and the Privy Purse, Suetonius tells us, forced him into heavy taxation and unethical business dealings.  (He cornered the market in certain commodities and then sold them on at inflated prices - an early example of trading in derivatives and insider dealing which, it is interesting to note, was regarded as unethical even in ancient Rome which was used to eye-watering levels of corruption).  He exacted fees from candidates for public office (sold honours!) and sold pardons to guilty and innocent alike. 

None of these solutions to the deficit problem would wash today apart from the heavy taxation which we are all braced to expect. However, when we look at the argument against cuts in public spending Vespasian provides us with some useful ammunition and, instead of voicing a visceral objection to cuts per se, perhaps allows those who advise against cuts and heavy taxation alone as the solution with some sound economic examples.

 

Vespasian initiated a building programme on a grand scale and invested heavily in the arts and sciences and education.  He paid teachers of Latin and Greek rhetoric (who supplied a good general education) an annual salary of 1,000 gold pieces from the Privy Purse.  He encouraged musical theatre (which is very labour intensive) by investing in the theatre and offering high rewards to its principal stars and attempted to revive the vitualling trade through giving lavish informal dinners.  Despite his encouragement of innovation he was practical enough to discourage it where it clashed with his programme of job creation.  When an engineer offered to employ a mechanical device to haul huge columns up to the Capitol as part of the rebuilding programme Vespasian declined his services insisting "I must always ensure that the working classes earn enough money to buy themselves food." To compensate him for his disappointment but reward his initiative he paid the engineer a handsome fee.

 

Over the past two decades we have concentrated on investing in technology that, as a downside, has made many jobs redundant.  Perhaps we should start taking a leaf out of Vespasian's book and initiate a new 'Arts and Crafts' movement, putting on hold technological developments which reduce the labour force, and concentrate on making fashionable labour intensive industries.  Film and theatre are a good example relying heavily on a wide range of subsidiary crafts which explains Vespasian's sudden interest in producing musicals.  There is not much sense in handing production over to robots if the end result is that people go hungry. We can at least say that Vespasian's policies worked.  There is a lot to be learned from old books.