Friday, July 08, 2011
When the rich stop paying their share -- empires collapse
Writing in the Washington Monthly, Paul Glastris imagines that America's plutocrats may well be repeating a familiar historical pattern: "the willingness of the rich to defend their wealth from taxation to the point of national ruin".
"The Han dynasty in China fell in the third century AD after aristocratic families with government connections became increasingly able to shield their ever-larger land holdings from taxation, which helped precipitate the bloody Yellow Turban peasant revolt. Nearly a millennium and a half later, the great Ming dynasty went into protracted decline in part for similar reasons: unable or unwilling to raise taxes on the landed gentry, the government couldn’t pay its soldiers and was overrun by Manchu invaders. In the fifteenth century, the Hungarian King Matthias Corvinus persuaded his reluctant nobles to accept higher taxes, with which he built a professional military that beat back the invading Ottomans. But after his death the resentful barons placed a weak foreign prince on the throne and got their taxes cut 70 to 80 percent. When their undisciplined army lost to Suleiman the Magnificent, Hungary lost its independence.
Similarly, the cash-strapped sixteenth-century Spanish monarchy sold municipal and state offices off to wealthy elites rather than raise their taxes—giving them the right to collect public revenues. The elites, in turn, raised taxes on commerce, immiserating peasants and artisans and putting Spain on a path of long-term economic decline. This same practice of exempting the wealthy from taxation and selling them government offices while transferring the tax burden onto the poor reached its apogee in ancien regime France and ended with the guillotine."
Glastris' source for these examples is Francis Fukuyama's book The Origins of Political Order.
So, folks, keep your popcorn ready and TV set on for the next several weeks; you may be able to watch our national march of folly carry us right over the cliff, the rich leading the parade!