Decline and Fall

Following on from last night’s look at institutional decay, via ZeroHedge I came across a couple of essays on the Rise and Fall of Great Powers.

… it’s not the absolute wealth and power of any one nation or empire that matters, it’s the economic growth rate of competitors and its wealth and power relative to theirs that matter. A nation whose economic base is growing at a lower rate than a competitor slowly become relatively weaker than its rival, even though its absolute wealth is still increasing.

He also notes a tendency for powers in relative decline (i.e. those growing less robustly than their neighbors/rivals) to spend more on military security as their position in the pecking order weakens. This diversion of national surplus to military spending further saps their economic vitality as funds are shifted from investment to unproductive military spending. This creates a feedback loop as lower investment weakens their economic base which then causes the leadership to respond to this weakening power with more military spending.

This feedback creates lags, where an economically weakening power may actually increase its military power, until the overtaxed economy implodes under the weight of the high military spending.

This dynamic certainly seems visible in the history of the Soviet Union, which at the time of this book’s publication in 1987 was unanimously considered an enduring superpower with a military that many believed could conquer Western Europe with its conventional forces.

US defence spending, it seems, is usually around 5% of GDP.

Though statistics from the Soviet era are not entirely reliable, various scholars have estimated that fully 40% of the Soviet GDP was being expended on its military and military-industrial complex.

During the height of the Reagan buildup, the U.S. was spending about 6% of its GDP on direct military expenditures.

In another essay along the same lines, the same author considers the Fall of Rome:

In Goldsworthy’s view, a key driver of decline was the constant political struggle for power drained resources away from protecting the Imperial borders from barbarian incursions and addressing the long-term problems facing the Empire.

Such conflicts for the Imperial throne often led to outright civil war, with factions of the Roman army meeting on the field of battle.

In other words, Rome didn’t fall so much as erode away, its many strengths squandered on in-fighting, mismanagement and personal aggrandizement/corruption.

More telling for the present is Goldsworthy’s identification of expansive, sclerotic bureaucracies that lost sight of their purpose. The top leadership abandoned the pursuit of the common good for personal gain, wealth and power. This rot at the top soon spread down the chain of command to infect and corrupt the entire institutional culture.

As the empire shrank and lost tax revenues, the Imperial bureaucracies continued growing, much as parasites attach themselves to a weakened host.

Individual contributions and institutional success are both difficult to measure in large bureaucracies, and it is tempting to define success by easily achieved metrics that reflect positively on individual contributions and the institutional management.

As the organization loses focus on its original purpose, the core purpose of the institution is given lip service but is replaced with facsimiles of managerial effectiveness, bureaucratic infighting over resources and the targeting of easily gamed metrics as substitutes for actual success.

People who have no skin in the game behave quite differently from those who face consequences. This disconnection of risk from consequence is called moral hazard…

By breaking the institutional purpose into small pieces whose success is measured by easily gamed targets, the institution can be failing its primary function even as every department reports continued success in meeting its goals. Repeated failure and loss of focus erode the institution even as those in charge advance up the administrative ladder.

In the final years of the Empire, in the 5th century A.D., this institutional failure led to the absurdity of detailed descriptions of army units being distributed within the Imperial bureaucracy, while the actual units themselves–the troops, the officers and the equipment–had ceased to exist. In some cases, it appears bureaucrats and officers collected pay for supplying and commanding completely phantom legions.

Okay, let’s compare now with then. Expansive, sclerotic bureaucracies? Check. The top leadership abandoned the pursuit of the common good for personal gain, wealth and power? Check. Bureaucracies continue growing? Check.  They define success by easily achieved metrics? Check.

All Tobacco Control’s metrics are ‘easily gamed’. They can rustle up a study in no time at all, showing how health has improved since the introduction of smoking bans (e.g. heart attack miracles). And Tony in the comments today reminded us that John Brignell thought that UK universities started deteriorating once academic success began to be measured by numbers of papers published. Public health metrics of reducing smoking prevalence and population BMI are also easily gamed.

No skin in the game? Our bankers award themselves huge ‘bonuses’, and at every level our politicians award themselves pay rises and gold-plated pensions. They’ve got nothing at stake.

The late Roman Empire was also characterised by numerous religious cults. We’ve got them too. There’s the religion of the antismoking zealots, which is based on smoke and mirrors. And there’s the religion of Global Warming. And, now as then, many of our political class have signed up to these new religions, and become True Believers.

And we also have bread and circuses, with people entirely dependent on the state (bread), sitting at home watching TV (circuses).

And at some point our overtaxed and over-regulated economy is also set to implode.