Lessons from the Ancients - by Ohmyrus

I have long been dissatisfied with the general performance of politicians whom I now call "votrepreneurs" to emphasise that they behave like entrepreneurs. Then I realised that its not their fault but the fault of the Democratic system itself. This realisation led me to investigate how the ancients viewed the problem of organizing government.

In the Discourses, Niccolo Machiavelli wrote that there are three forms of government – monarchy, aristocracy and democracy. Monarchy is of course rule by one man. An aristocracy is the rule by a few and democracy is rule by all citizens.

According to Machiavelli, all three are flawed and will not last long. The first monarch in a dynasty usually has the competence to rule well. But later his descendents will grow degenerate and the government will fall.

This will lead to rule by a few nobles which after a few generations will also grow corrupt and oppressive. The people will revolt and the government will fall paving the way for democracy. After a few generations, democracies will fall into disorder (I call it mobocracy) which again requires the rule by a strong man to restore order and you get a monarchy again.

In this, Machiavelli was following the writings of Polybius according to Peter Constantine who published the book, “The Essential Writings of Machiavelli.”

This cycle seems to see a rough parallel in the American experience. In 1776, the Americans succesfully revolted against an oppressive King George III and set up a Republic and not a Democracy. The Republic was essentially a libertarian quasi-aristocracy. It should be remembered that not everyone could vote in the new Republic. In 1776, only white males with property could vote because they believe that only those with a stake in the country should vote.

By 1830, fourteen out of 24 states still retricted voting to white males either with property or paid taxes. Even as late as 1860, seven states still had one of these restrictions. So describing this as a libertarian quasi-aristocracy is in my view accurate. Power lay in the hands of its elite who could inherit property and with it the right to vote. What they wanted was a Republic that can protect your freedom and not a democracy.

But with popular demand, the right to vote was gradually extended to all white males, then women and minorities. This peaceful revolution occurred without violence as what Machiavelli expected. But now that America is a full fledged democracy, will his prediction of the collapse of democracy come true? Will it degenerate into chaos which requires the rule by a dictator to restore order?

As expected, when one group of people grows too powerful, they will oppress the others. During the French Ancien Regime, it was the aristocrats and the monarch who had the power. They could party all day and live off the labor of the peasants. They were the parasitic class. So the people revolted.

Today, the parasitic class are those on welfare. They do no work (like the French Aristocrats during the Ancien Regime) but live off the labor of others who pay their taxes. As Marx said, Democracy is the Road to Socialism. Aristotle said something similar. He said, “Democracy is government for the poor because there are more of them and the will of the majority is supreme.”

That is why Democracies always lead to welfare states. Welfare states require high taxation to sustain. This means that wealth and income are being transferred from today's elite to the lower economic classes wheras the reverse was true during the Ancien Regime. Europe has gone further ahead than the USA on this. But America now has the most Liberal President in its history and both Houses of Congress are controlled by Democrats which is basically a Socialist Party.

Will the taxpayers' revolt? There has been signs of this happening with the growing Tea Party movement. Taxpayers do not like the idea that their money goes to fund entitlement programs that benefit others who often don't pay taxes so that votrepreneurs (politicians) can win elections.

If the original Tea Party was motivated that there should not be “taxation without representation”, today's Tea Parties are motivated by a distaste for “representation without taxation”. Once people get used to their Entitlements, its hard to wean them off it. Europe's high taxes, low birth rates are a killer combination making the long term viability of their states doubtful.

To fund these expenditures, the tax burden in France and Italy has risen to 45% of GDP. The American colonists rebelled against George III when the tax burden was far lower than this. According to Paul Leroy-Beaulieu, a tax burden of 12% at the begining of the 20th century would have been considered “excessive”. So taxes have been increasing.

Inspite of high taxes, they still could not pay for the exorbitant welfare benefits to satisfy the voters. So the votrepreneurs borrowed money and thus push the burden to future generations. In Socialist France, public debt has risen to 60% of GDP. In other countries, public debt rose to 100% of GDP.

Besides welfare spending, the votrepreneurs also implemented costly qualitative benefits to the workers like laws making it difficult to fire workers. This comes at a cost to owners of capital because of the higher cost of labor.

But thanks to globalization, capital can move quickly to low tax and low cost jurisdictions. So businessmen have been shifting their investments away from these high tax, high cost countries. This causes high unemployment in welfare states which in turn increases government expenditures because the unemployed are entitled to unemployment benefits.

Consequently, France has an Unemployment rate of 8.6 percent. For the EU as a whole, the Unemployment rate is 7.9%. As Michel Camdesssus said, they need to reform the Welfare State. He gave a list of reforms – like increasing the retirement age and reducing medical and retirement benefits. But once the Mob is used to high level of benefits, it is diffcult if not impossible to reform the system. Any votrepreneur trying to reduce the benefits will not be elected.

Making the problem worse for welfare addicted Europeans is its growing Muslim immigrants who are not assimilating and often form the underclass. But I won't go into that or my essay will be too long.

One day a crisis will occur which makes today's democracies ungovernable and a dictator will take over – making Machiavelli's cycle complete.

What can be done? Probably nothing. The game must be played out. But what should be done if we could? Machiavelli's advice was to combine the three elements into the government – monarchy, aristocracy and democracy. Perhaps he got his ideas from Aristotle, who said the same thing.

All three have their strengths and weaknesses. But if one of the three has too much power, the system is unbalanced and will fail. Machiavelli pointed out that Athenian democracy lasted far shorter than the Spartan Republic which had a more balanced system.

If the French Ancien Regime fell because its elite squeezed the people too much, today's democracies will fall because the people squeezed the elite (who pay most of the taxes) too much. In one case, the elite had too much power and in the other the people have too much power.

It is simply human nature to benefit ourselves at the expense of others if we have the power to do so. So you need to strike a proper balance. Has there ever been a country or polity that combined all three – monarchy, aristocracy and the people?

One that came close to this Machiavellian ideal is ancient Venice. It lasted more than a thousand hundred years till it was conquered by Napoleon Bonarparte in the 19th century – far longer than any Democracy, both ancient and modern.

What sort of constitution did it have that helped it last this long? Describing its government is like trying to hit a moving target because it evolved over time. After having read the book, Venice by Frederick C Lane, I will point out some of the features in their constantly evolving Consitution at different points in time that I think is beneficial to us.

First, Venice was led by the Doge who functioned a bit like a monarch. Once elected, he ruled for life. But there were restrictions on his power. Unlike a true monarch, power was not passed on to his son but requires an election. He was a member of the Council of ten and could not go against the wishes of the majority. However, while he ruled for life, his fellow Council members ruled for shorter periods like two years.

This gives him the experience and prestige to get his way most of the time but not so much power than he can abuse it. An advantage of having a King is that he is in a position to think more for the long term. Today's votrepreneurs can only think ahead not more than the next elections. So unlike the Doge they are unable to make necessary but unpopular decisions which causes short term pain but yields great benefits in the long run. This is because once elected, the Doge is secure.

But the other members in the Council of Ten face periodic elections. So there was input of the popular will in the decision making process. So the Doge was not quite a dictator like the average Medieval King nor was he tossed about like a blade of grass by the changing winds of electoral opinion as a modern votrepreneur (politician) is.

Below the Council of Ten was the Council of forty and the Senate. Both had different functions. Below that was the Great Council and at the bottom of the pyramid was the General Assembly which consisted of every citizen of Venice.

In theory at least, the Doge gets his power from the People. Each election of the Doge and important laws must be affirmed by them. But in practice, the important decisions were made by the nobility who served in the Councils and Senate. But they had to take into account the opinion of the common man for the laws and election of the Doge must be affirmed by them.

In Venice's early days, there was no great distinction between nobles and commoners.The only distinction was that the nobles were recognised as men of ability and were chosen to serve in the councils. They started off with minor duties and membership in the Grand Council. If they did a good job, they were promoted up the pyramid and assigned more important duties. So people from poorer families could and did rise to the top.

So you have all three elements present in the government of Venice – bit of monarchy, a bit of aristocracy and a bit of democracy. But of course, the situation was fluid as I said earlier and the Constitution evolved.

In the first few centuries, the Doge had enormous power. But later on, his power was gradually reduced. At the same time, the nobles became more entrenched in the positions of power and distinctions appeared between them and the common people.

The nobles started making it difficult for people not in their social class to gain political power though they periodically opened the ruling class to new members. But eventually, Venice evolved into an aristocracy and membership to the ruling class was closed. This was a bad mistake and Venice gradually declined.

So the lesson we learn here is we must build a system where the ruling class must comprise of its most able citizens by practicing strict meritocracy. There must be social mobility where able people can rise to the top. The head of state must be a strong executive. He must have the ability to make decisions for the long term without fear of unpopularity. To do that, he should be appointed for life.

The voice of the people must be heard but not to the extent that votrepreneurs compete for their votes by promising to transfer property from one group to another. In short, we need to strike a balance between the three elements of society – the King, the aristocracy and the common people.

In today's terms, the King would be the President or Prime Minister of the country. The aristocracy would be the more able elite who no doubt earn more money and hence pay more taxes. How do we go about doing this?

I propose a two chamber Legislative – an Upper and Lower house. In the Upper House (which we can call the Senate) the voting rules would be skewed in favor of the more able citizens. This can be done without disenfranchising anyone.

I suggest that the vote to be made transferable. Every citizen will start with one vote. But for a mutually agreed price, anyone can buy votes from anybody who wishes to sell. An electronic market can be set up to facilitate this. Since the people with higher incomes are likely to end up with more votes, it is not in their interest to vote for anyone proposing entitlement programs that must be funded by taxes which they end up paying.

This may sound undemocratic to some because some people will end up with more votes while others have none. But you should bear in mind that the system requires the voluntary relinguishing of the right to vote when a person sells it. What could be more democratic than respecting someone's wish not to vote? Its his choice. Even in a Presidential election, something like 40% of the electorate do not vote. Now they can get paid for their choice.

The price of a vote could be substantial. Don't forget that hundreds of millions of money were raised and spent during Presidential and Congressional elections. Probablyl most of these funds can be used to buy up the votes of those who do not wish to vote.

America's Founders linked Representation with Taxation. Its time to bring back that link. Paying taxes is, for most people, the main contribution they make to society. Yet in the present system, those who pay the most taxes have less say on how that money is to be spent than those who pay less or not all. Is it not fair that those who pay more should have more say in how that money is to be spent? According to the Wall Street Journal, the top 10% of Americans pay 72.8% of total income taxes. But of course, they only get 10% of the votes under the present system.

Finally, it would be an improvement of the present American system which is undemocratic in spirit. In the US Senate, each state gets two Senators irregardless of the population size. This means that a Californian voter is less important than a Rhode Island voter. I propose doing away with this and alloting the number of Senators according to population as in the House of Representatives.

The present system gives favor to people who happen to live in small states. My proposal gives favor to people who contribute more to the country. I think my proposal makes more sense than the present system.

The Lower House will continue as before where buying or selling of votes will not be allowed. This will strike a balance of power between the elites who are the more able and richer citizens and the common people so that neither group can oppress the other.

Finally, the President should be patterned after the Doge. This means that his power must be increased. He should therefore be elected for life or till he reaches the age of say, 75. While the Senators and Representatives can be elected by the people, the President should be elected by the Senators and Lower House Representatives.

The Cabinet should also be elected by the Senators and Representatives but for a period of four years. One of them can be appointed by the former President for a period of four years. Knowing human nature, it is likely that he appoints one of his sons. This is to encourage the President to rule well with an eye to the long term. A good record will increase the prospects of his son's career.

Undoubtedly there will be problems with this new system. Nothing is perfect, but I believe that it will be an improvement of the current systems in place. The British still have the remnants of such a system. There is the monarchy and a House of Lords both of which are today powerless. Of course, you have the House of Commons which is today all powerful. But it was not so in the past. In the 18th and 19th centuries the monarch and Lords still had considerable power and the voice of the Common man was not as strong as today.

The King (or Queen) gave the country greater cohesion and a longer term outlook. He of course wanted his son to inherit a rich powerful kingdom. So its in his interest to think more for the long term. In contrast, today's votreprenuers can only see as far as the next elections. The result of the political structure today is that it rewards politicians to adopt policies that gives short term gain but long term pain.

In 18th and 19th century Britain, the Lords consisted of the best educated and able men in their society and thus it makes sense to have them wield power disproportionate to their raw numbers. (Of course, in modern times we must reject the idea of inherited power.) It may not be democratic but it was effective and practical. Then you had the House of Commons which protected the interests of the common man though of course at that time not everybody could vote. Nevertheless, with this system, Britain rose to the top of the world. It pioneered the Industrial Revolution and created the largest empire (not that its a good thing) the world has seen.

Later the Common people rose in power and the power of the King and Lords declined. This was different from Venice where it was the Nobles that gained power at the expense of the other two. This weakened them and Venice declined. However, Venician Republic lasted more than a thousand years - far longer than any democracy both ancient and modern.

To sum up, my proposals will increase the power of the head of state and the elite of society at the expense of the common people. I expect to be accused of being undemocratic. But as I pointed out in my earlier article, having too much democracy is bad for the country. The most democratic society is a pure democracy where every decision is made by the entire electorate. The ancient Athenians had one.

Today, with the internet, it is possible to put every decision to the electorate. But nobody is proposing this. It would lead to chaos because we recognise that the average citizen does not have the competence or the time to deliberate complex issues. That is why we live in Representative Democracies.

Thus we accept that somewhere in between a dictatorship and a pure democracy lies a golden mean. I believe none of the democratic nation states has found this. All I am proposing is a little fine tuning to find the Golden Mean.

The Barring of Geert Wilders

Here is an interesting article by my friend Free Hal:

The Barring of Geert Wilders

The 2 reasons advanced for excluding Geert Wilders from the UK are: public order concerns, which was the UK governments stated reason although this doesn’t fit into the national security power they invoked; and Wilders wants to ban the Koran, so we have every right to ban him, which is the line advanced by most muslim commentators including the disreputable Lord Ahmed.

The first reason, public order is mere appeasement. The subtext is that muslims will feel offended and react violently. The Foreign Secretary confirms this by coming out with the tired “shouting-‘fire’-in-a-theatre” routine, which casts muslims as having no more self-control than prisoners in an inferno. He doesn’t say what someone should shout if there really is a fire.

It is just possible that, occasionally, some good may come of restricting a demo on the grounds of the reaction to it. E.g. turning back the British Union of Fascists at Cable Street in 1936. But that is with the benefit of hindsight about the horrors of fascism. And the BUF weren’t banned from marching – the order was for the BUF to postpone its march by a week and use a different route.

So there’s no getting away from the British government’s embarrassing reasoning. Appeasement pure and simple: Fred is dangerous because Joe will riot if Fred comes here, and we’re scared of Joe so let’s ban Fred.

The other reason, that Wilders wants to ban the Koran, tends to be used by muslim commentators (Lord Ahmed, the MCB) to justify the ban. Wilders wants to ban my religion so I can ban his speech. Basic logic, or the idea about two wrongs not making a right, don’t factor in such comments.

Non-muslim commentators tend to use this point as the basis for snide attacks. This is not new. In 1989, politicians who had never read The Satanic Verses suddenly acquired the literary expertise to damn the book as so badly written as to allow the writer no sympathy for having to live under the fatwa.

The parallel with Rushdie is appropriate, except that this time it goes to the root of political comment.

It is far from clear that Wilders seriously wants to ban the Koran. It is highly unlikely that the people who say he does have any idea.

This stems from a speech to the Dutch Parliament, recorded on Wilders own website:


Madam Speaker, the Koran is a book that incites to violence. I remind the
House that the distribution of such texts is unlawful according to Article 132
of our Penal Code. In addition, the Koran incites to hatred and calls for murder
and mayhem. The distribution of such texts is made punishable by Article 137(e).
The Koran is therefore a highly dangerous book; a book which is completely
against our legal order and our democratic institutions. In this light, it is an
absolute necessity that the Koran be banned for the defence and reinforcement of
our civilisation and our constitutional state. I shall propose a second-reading
motion to that effect.


Wilders appears to have been saying that if the Dutch constitution, particularly the ban on texts that incite violence, is to be uniformly upheld, then the Koran should be banned.

If one reads Wilders other statements, in particular calling for ‘nearly 100% freedom of speech’, or saying that his party has no problem with muslims who obey the law, then his call to ban the Koran looks more ironic, rhetorical, than sincere.

But let’s suppose he was sincere. What does a democracy do about fascist texts, or texts which incite violence?

Democracy is much weaker than most people assume, especially to internal division. They cannot long survive large groups who don’t accept the system, as is the case with people who follow calls to violence in a cause. Political groups who advocate unconstitutional means, i.e. violence, threaten the viability of the state if they attain a critical mass of followers. Long-settled democracies can afford to be more blasé, but that excludes pretty much every mainland European country.

Democratic states have to ban fascistic books. It is one of the drawbacks of democracy.

This leaves the question of whether the Koran is a fascist book. There are certainly muslims who, currently, obey democratic law. And a disturbingly large number prepared to commit the worst violence while quoting the Koran. I.e.the question is debatable.

Which means that Wilders should be heard. It is the nub of his case, it is what he wanted to discuss.

And that is the real reason for excluding him – that he would say that the Koran is a fascist book and Islam and fascistic ideology. And no-one should be allowed to say that in Britain.

In short, the media are right to sense that this is a milestone in the history of free speech, because a parliamentarian, invited by the British parliament, has been barred from the country purely because of the substance of the ideas he intended to discuss.

And this is the salient fact of this episode in the decline of democracy: the limpness of the British government’s commitment to freedom. It reveals a level of decadence which bodes very ill for the future.

We can expect a lot more of the same.

Hal

Ban Fred because what he says will cause Tom to riot. Instead of telling Tom not to riot, they are rewarding Tom's violent ways by giving him what he wants. When you reward bad behavior, you will get more of it.

Mark Steyn's take on the G20 meeting

Mark Steyn recently wrote an interesting article called, "Exporting their mistakes worldwide"

In it, he accused the G20 governments of not telling the people the truth in order to enhance their electorial prospects:

If government has a role in this crisis, it ought to be to reverse the combination of unaffordable social programs and deathbed demographics that make a restoration of real GDP growth all but impossible in many European nations. But that would involve telling the citizenry unpleasant truths, and Continental politicians who wish to remain electorally viable aren't willing to do that.

This is exactly what I have been trying to say in this blog. To win elections, you have to do stupid things to win votes. Right now, we are in dire need to create economic growth. But the governments are not coming up with pro-growth policies like lower taxes and curbing entitlement programs. Instead they are gunning for scapegoats - like taxing AIG's managers of their promised bonuses or firing GM's CEO. Or blaming everything on Wall Street's truly greedy executives. Obama has come up with a huge stimulus package which seems designed more to win votes than the stimulate the economy.

The cause of the crisis is very complex. But it started in the Clinton Administration with compelling banks to extend mortgage loans to people the banks are unwilling to lend to by toughening the Community Reinvestment Act. By repealing the Glas Steagal Act, commerical banks like Citigroup were allowed to get rid of these sub-prime mortgages by packaging them into Mortgaged Backed Securities (MBS) and selling them.

I am not saying that this is the only cause. There are other contributory causes including, the easy monetary policy of Alan Greenspan, the perverse financial incentives of Wall Street Bankers to take enormous risks, the failure of credit rating agencies and the complexity of new financial instruments which few seem to understand.

But it was the Community Reinvestment Act that started the housing bubble. Without forcing banks to lend money to uncreditworthy people, there won't be subprime loans. Without subprime loans, there won't be MBS. Without Congressional pressure on Fannie Mae and Freddie Mac to buy these MBS, the housing bubble would not have blown this big. The root cause is political. The votrepreneurs (in this case, the Democrats) wanted to win the votes of the lower income groups who could not get loans from banks to buy property.

Similarly, the welfare states set up in Europe resulted in high taxation, high unemployment and other ills. To create jobs, they have to free the market from these constraints as what Mark Steyn said. But the votrepreneurs are too worried about their own elections to take the necessary tough and painful measures. So the problem will fester till people lose confidence in the democratic system itself. Then the stage will be set for the re-emergence of the Strong Man in Europe - like what happened in the 1930s.