The quote from Cicero in a previous blog was a warning to the Roman Empire that went unheeded with dire consequences. Rome’s first entitlement program was the distribution of free grain. The result was an influx of rural poor to Rome to take advantage of free food. It increased the poor population of the city.
Over the decades emperors added more to the Roman welfare system by giving out free bread, olive oil, pork and wine. The free handouts were started in other major urban centers with the same influx of the poor into the cities; however, the government had to pay for all of those freebees through taxes.
The wealthy were given repressive taxes to pay for Rome’s entitlements. The heavy taxing of the wealthy slowed economic growth because they could no longer invest their money in trade. The burden then shifted to the lower class with devastating results. The Roman money economy collapsed.
What had happened was that the people who were on welfare exceeded the people producing the goods and services which sustained the empire. The recipients of the entitlements demanded more and more. This led to an intolerable and unsustainable tax burden on the productive classes.
To avoid the loathsome taxes, people started to hide their wealth. Others could not pay the taxes so they went bankrupt. Rome’s efforts to sustain its entitlements hastened its decline because it resulted in shrinking revenues. Without a steady source of income, the empire had problems paying its armies and protecting its frontiers from barbarian invasions.
What the Romans failed to realize was that entitlements were a burden for those producing the wealth. By taxing the producers of wealth and redistributing it to the urban masses, they created a cycle of declining wealth which did not lift the masses up but pushed the productive wealthy class down. With a decline in wealth came a decline in revenue for the empire. The empire became poorer and weaker.
When you look at the future predictions for the US entitlements, there is a similar pattern of unsustainable entitlements like Rome. When the Democrats call for higher taxes on the wealthy and a redistribution of wealth, only the ignorant support it. History has demonstrated over and over again that you cannot pull the masses up by heavily taxing the rich.
George Bernard Shaw had it right when he wrote, “If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience.”