The Curious Ironies of Protectionism, and The Late Roman Empire
In light of a recent column by Virginia Postrel called “The Fantasy of Survivalism,” I thought I would take a moment to draw some parallels between the “survivalist instinct” and protectionism, compare them with historical precedent, and evaluate them in light of modern developments.
Postrel gets it right on survivalism, which has seen some resurgence in the wake of Japan’s earthquake, tsunami, and nuclear disasters.
[T]he survivalist instinct mostly plays to a perverse fantasy. It’s both comforting and thrillingly seductive to imagine that you’re completely independent, that you don’t need anyone or anything beyond your home, that you can master any challenge. In the survivalist imagination, a future disaster becomes a high-stakes opportunity to demonstrate competence and superiority.
…But these escapist pleasures can encourage misleading conclusions about reality.
“Globalization has made the economy more fragile,” declares trade hawk Clyde Prestowitz in a blog post pointing to the disruption in the supply of Japanese-made semiconductors. He takes a legitimate lesson of the earthquake—the old supply-chain wisdom of using dual sourcing for essential goods—and twists it into a general denunciation of global trade.
His conclusion has the ironic result of suggesting that geographically concentrated businesses would somehow be less vulnerable to shock. But natural disasters happen in America, too. Instead of urging more diversification, the antitrade prescription winds up suggesting less—hardly a recipe for resilience. Besides, dependence on local sources is still dependence.
…A subsistence economy like Haiti, one might conclude, is more resilient than Japan. Or, by the same logic, the rich America of today is more vulnerable to economic depression than the rural America of 1930. Neither is true, of course. Another obvious benefit of trade is that help can come from outside.
Survivalist and escapist fantasies, then, seem to lead to economic fantasies. These economic fantasies can have appalling consequences too, as demonstrated by late Roman history. The Roman empire in its pre-Constantine, post-Aurelius phase underwent many years of both civil and military unrest, especially on its far frontiers, and a series of weak leaders addressed the issues with more militarism. (Most believe the origin of the “Crisis of the Third Century” was the reign emperor Alexander Severus, followed by several decades of competing factions, insecure succession, military losses, frontier invasions, and ultimately a split in the empire.)
The problems began to compound themselves as a poorly-run empire began a cycle of overreach. First, militarism interrupted trade, which until that time had been booming. Roman merchants, through their eastern and southern allies, had been trading with places as far flung as the Indian subcontinent and central Africa. Constant war on the frontiers disrupted the trade routes, and urban markets, once full of spices, metals, salt, and other commodities, were laid bare.
Additionally, paying for militarism proved more than Rome could handle. The army’s ranks were increased by the Severan emperors, and base pay was doubled. While seeming like a good deal on paper, the emperors did not have the funds to make their promised payments and began a cycle of seignorage, or currency devaluation by “clipping” coins. Quite simply, they reduced the amount of silver in each individual coin.
Finally, a lack of focus on true security and peaceful foreign relations led many Roman cities to fortify, which had been unnecessary for many years under the “Pax Romana.” This further diverted productive resources to military uses. Construction and investment was put on hold while cities and towns enclosed themselves in fortified walls and spent on war materiel.
The ultimate upshot of this progression was what we now call the “Dark Ages,” and the rise of this era was precipitated by the very survivalism and protectionism that even now appeals to many.
Roman citizens, first on the frontiers, but soon within the interior of the empire (recall that Rome was sacked in 410) began to focus less on peaceful trade and more on security and self-sufficiency. Large landowners hired others to provide local goods, in turn offering security through standing armies. Localities began to be dominated by a hegemony of landowners, each of whom was suspicious of the next. The feudal system was born.
Which leads to the curious ironies of modern protectionism. For all the hand-wringing over Chinese imports, we are missing the forest for the trees. If we redirect national resources to manufacturing the plastic dog poop currently made in China, where will the next semiconductor come from? The next integrated circuit? Cell phone? Internet?
Are we truly willing to sacrifice our standard of living for an illusion of self-sufficiency that, in the end, would be subject to overrun by whichever society ends up taking the mantle of invention from us? I suppose it’s nice to know how to grow your own corn, but that doesn’t matter so much as which country ends up with the next superweapon.
Which, incidentally, sheds more doubt on our current policy of cowboy interventionism abroad. If we keep throwing trillions at far-flung sandpits with no strategic value and paying for it by clipping our coins (read: “Federal Reserve open market operations”), we can reasonably expect to see lower standards of living, compounded by a general unpreparedness for whichever external entity might next pose a real military threat to us.
Whether the genesis of survivalism and protectionism is xenophobia, aftermath of disaster, or just poor economics, it does not suit our society. We need to be free to enjoy the gains from cooperation and trade, and we need to be unencumbered by fantastical world-police missions in order to protect the gains we have already made. Now, in the aftermath of a horrible Japanese disaster, and in the midst of heated rhetoric on free trade, especially with China, we need sober voices to stand up for freedom more than ever.