Blog Archives

What If All the Cheap Stuff Goes Away?

One of the books I just finished reading is The Fate of Rome: Climate, Disease, and the End of an Empire. The thesis of the book is fascinating to those of us interested in the rise and fall of empires: Rome expanded for many reasons, but one that is overlooked was the good fortune of an era of moderate weather from around 200 BC to 150 AD: rain was relatively plentiful/ regular and temperatures were relatively warm.

Then one of Earth’s numerous periods of cooling–a mini ice age–replaced the moderate weather, pressuring agricultural production.

Roman technology and security greatly expanded trade, opening routes to China, India and Africa that supplied much of Roman Europe with luxury goods. The Mediterranean acted as a cost-effective inland sea for transporting enormous quantities of grain, wine, etc. around the empire.

These trade routes acted as vectors for diseases from afar that swept through the Roman world, decimating the empire’s hundreds of densely populated cities whose residents had little resistance to the unfamiliar microbes.

Rome collapsed not just from civil strife and mismanagement, but from environmental and infectious disease pressures that did not exist in its heyday.

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Want Widespread Prosperity? Radically Lower Costs

It’s easy to go down the wormhole of complexity when it comes to figuring out why our economy is stagnating for the bottom 80% of households. But it’s actually not that complicated: the primary driver of stagnation, decline of small business start-ups, etc. is costs are skyrocketing to the point of unaffordability.

As I have pointed out many times, history is unambiguous regarding the economic foundations of widespread prosperity: the core ingredients are:

1. Low inflation, a.k.a. stable, sound money

2. Social mobility (a meritocracy that enables achievers and entrepreneurs to climb out of impoverished beginnings)

3. Relatively free trade in products, currencies, ideas and innovations

4. A state (government) that competently manages tax collection, maintains roadways and harbors, secures borders and trade routes, etc.

Simply put, When costs are cheap and trade is abundant, prosperity is widely distributed. Once costs rise, trade declines and living standards stagnate. Poverty and unrest rise.

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