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Balance: The Economics of Great Powers from Ancient Rome to Modern America
In this groundbreaking book, two economists explain why economic imbalances cause civil collapse—and why America could be next.
From the Ming Dynasty to Ottoman Turkey to Imperial Spain, the Great Powers of the world emerged as the greatest economic, political, and military forces of their time—only to collapse into rubble and memory. What is at the root of their demise—and how can America stop this pattern from happening again?
A quarter century after Paul Kennedy's Rise and Fall of the Great Powers, Glenn Hubbard and Tim Kane present a bold, sweeping account of why powerful nations and civilizations break down under the heavy burden of economic imbalance. Introducing a profound new measure of economic power, Balance traces the triumphs and mistakes of imperial Britain, the paradox of superstate California, the long collapse of Rome, and the limits of the Japanese model of growth. Most importantly, Hubbard and Kane compare the twenty-first century United States to the empires of old and challenge Americans to address the real problems of our country’s dysfunctional fiscal imbalance. Without a new economics and politics of balance, they show the inevitable demise ahead.
From the Ming Dynasty to Ottoman Turkey to Imperial Spain, the Great Powers of the world emerged as the greatest economic, political, and military forces of their time—only to collapse into rubble and memory. What is at the root of their demise—and how can America stop this pattern from happening again?
A quarter century after Paul Kennedy's Rise and Fall of the Great Powers, Glenn Hubbard and Tim Kane present a bold, sweeping account of why powerful nations and civilizations break down under the heavy burden of economic imbalance. Introducing a profound new measure of economic power, Balance traces the triumphs and mistakes of imperial Britain, the paradox of superstate California, the long collapse of Rome, and the limits of the Japanese model of growth. Most importantly, Hubbard and Kane compare the twenty-first century United States to the empires of old and challenge Americans to address the real problems of our country’s dysfunctional fiscal imbalance. Without a new economics and politics of balance, they show the inevitable demise ahead.
450 pages, Kindle Edition
First published May 21, 2013
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Displaying 1 - 30 of 34 reviews
July 12, 2013
By Martin Hutchinson
Some books cannot be judged by their titles. “Balance – The Economics of Great Powers from Ancient Rome to Modern America” is one. Glenn Hubbard, former Council of Economic Advisers chairman and adviser to Mitt Romney, and Tim Kane of the Hudson Institute think-tank are anything but balanced in their effort to draw lessons for the United States from the fate of past great powers.
The first two-thirds of the book is dedicated to historical narratives of six great powers, focusing on their economic organizations. There are also discussions of the European Union and California, which are fair but seem out of place. The basic conclusion is unsurprising, coming from contemporary historians with a centre-right bias: the rise to power relies on high quality institutions, and sometimes on technological superiority.
The analyses of ancient Rome, Spain, the Ottomans and postwar Japan are mostly convincing. However the sections on China and Britain don’t ring true.
The book places the apogee of China’s great-power status in the few decades between 1405 and 1433, when Admiral Zheng He undertook his gigantic voyages around Asia and East Africa. But China was already overpopulated and the country’s wealth was declining. Zheng He’s voyages were extraordinary, but led to no colonies or trade ties. China’s regional authority and national wealth were much more impressive in the Song period, 300 years before Zheng He. However, Song China was pacifist and inward-looking - not the sort of greatness which appeals to Hubbard and Kane.
The claim that the seeds of British decline were sown in the 1770s, when it failed to give parliamentary representation to the American colonies, is also doubtful. A transatlantic parliament would probably not have worked long-term - a less ambitious parliamentary union with Ireland in 1801 was unsuccessful. Other dates for decay are more likely: perhaps 1846, when the endorsement of unilateral free trade allowed both agriculture and industries to be picked off by foreign protectionists. The authors are too much in favor of free trade themselves to consider that possibility.
In the last third of the book, Hubbard and Kane turn to today’s United States. Their reading of history is quite partial. For example, ancient Rome is blamed for fiscal overspending and deteriorating governance, and the obvious parallels are drawn. However, it is easy to imagine observers with different policy proclivities looking at other parts of the story.
A monetarist might consider Rome’s debasement of the currency, an opponent of immigration would cite the opening of the empire to barbarian hordes, and an environmentalist might bring up lead poisoning. There’s something for everyone in a complicated story like the decline and fall of the Roman Empire.
The authors also make much of increased political polarization, always a complaint of establishment moderates, but fail to find examples where polarization caused previous great powers to collapse.
Finally, the authors’ attempts to avoid declinism and come to an optimistic conclusion would be more convincing if, as well as the flaws in the U.S. position, the authors examined the weaknesses of its competitors. Ancient Rome wasn’t perfect, but it was 300 years before the even more flawed barbarians caused its collapse.
There is much to enjoy in the well-written “Balance,” but it is mostly in the narrative, not the policy prescriptions. Those can be found elsewhere, without the historical baggage.
Some books cannot be judged by their titles. “Balance – The Economics of Great Powers from Ancient Rome to Modern America” is one. Glenn Hubbard, former Council of Economic Advisers chairman and adviser to Mitt Romney, and Tim Kane of the Hudson Institute think-tank are anything but balanced in their effort to draw lessons for the United States from the fate of past great powers.
The first two-thirds of the book is dedicated to historical narratives of six great powers, focusing on their economic organizations. There are also discussions of the European Union and California, which are fair but seem out of place. The basic conclusion is unsurprising, coming from contemporary historians with a centre-right bias: the rise to power relies on high quality institutions, and sometimes on technological superiority.
The analyses of ancient Rome, Spain, the Ottomans and postwar Japan are mostly convincing. However the sections on China and Britain don’t ring true.
The book places the apogee of China’s great-power status in the few decades between 1405 and 1433, when Admiral Zheng He undertook his gigantic voyages around Asia and East Africa. But China was already overpopulated and the country’s wealth was declining. Zheng He’s voyages were extraordinary, but led to no colonies or trade ties. China’s regional authority and national wealth were much more impressive in the Song period, 300 years before Zheng He. However, Song China was pacifist and inward-looking - not the sort of greatness which appeals to Hubbard and Kane.
The claim that the seeds of British decline were sown in the 1770s, when it failed to give parliamentary representation to the American colonies, is also doubtful. A transatlantic parliament would probably not have worked long-term - a less ambitious parliamentary union with Ireland in 1801 was unsuccessful. Other dates for decay are more likely: perhaps 1846, when the endorsement of unilateral free trade allowed both agriculture and industries to be picked off by foreign protectionists. The authors are too much in favor of free trade themselves to consider that possibility.
In the last third of the book, Hubbard and Kane turn to today’s United States. Their reading of history is quite partial. For example, ancient Rome is blamed for fiscal overspending and deteriorating governance, and the obvious parallels are drawn. However, it is easy to imagine observers with different policy proclivities looking at other parts of the story.
A monetarist might consider Rome’s debasement of the currency, an opponent of immigration would cite the opening of the empire to barbarian hordes, and an environmentalist might bring up lead poisoning. There’s something for everyone in a complicated story like the decline and fall of the Roman Empire.
The authors also make much of increased political polarization, always a complaint of establishment moderates, but fail to find examples where polarization caused previous great powers to collapse.
Finally, the authors’ attempts to avoid declinism and come to an optimistic conclusion would be more convincing if, as well as the flaws in the U.S. position, the authors examined the weaknesses of its competitors. Ancient Rome wasn’t perfect, but it was 300 years before the even more flawed barbarians caused its collapse.
There is much to enjoy in the well-written “Balance,” but it is mostly in the narrative, not the policy prescriptions. Those can be found elsewhere, without the historical baggage.
April 18, 2016
I favor books that drive economic points with clear relationships with history, and the strengths of this book are tying policy paralysis and fiscal imprudence to the inevitable result of decline and/or collapse. The history is varied enough in periods and circumstances to both hold ones interest as well as offer an expansive (if highly abridged) survey of economic history to the reader.
The weaknesses are the policy prescriptions, as much as I understand their appeal... A balanced budget amendment makes sense on many levels but with congress populated by exactly zero economists i would worry such inflexibility would contribute to political hostage taking much as the deb ceiling has largely become. A third party is also not a panacea for congressional dysfunction if one reads deeper into Mancur Olson's works (as this book made reference to) as on occasion as a small party can essentially blackmail their way to outsized benefits and concessions for their votes, creating a much larger problem than current Tea Party pressure represents on hindering the GOP from governing effectively.
That said, the authors wrote an engaging history without bogging down in gratuitous detail, and that supports this book as a good read despite quibbles with their solutions. I have recommended it and given it as a gift.
The weaknesses are the policy prescriptions, as much as I understand their appeal... A balanced budget amendment makes sense on many levels but with congress populated by exactly zero economists i would worry such inflexibility would contribute to political hostage taking much as the deb ceiling has largely become. A third party is also not a panacea for congressional dysfunction if one reads deeper into Mancur Olson's works (as this book made reference to) as on occasion as a small party can essentially blackmail their way to outsized benefits and concessions for their votes, creating a much larger problem than current Tea Party pressure represents on hindering the GOP from governing effectively.
That said, the authors wrote an engaging history without bogging down in gratuitous detail, and that supports this book as a good read despite quibbles with their solutions. I have recommended it and given it as a gift.
January 6, 2016
Good book with interesting insights on the economic causes of Great Power decline through the ages and lessons that can be applied today.
November 11, 2016
Racking my brains to try to figure out what I've learnt from this book.
I'm genuinely tempted to say "nothing" but it's not entirely true.
I've learnt that Diocletian formalised guilds in Rome. In school we were all taught how horrible he'd been to Christians, but I now know we additionally have him to thank for the 28 "closed professions" Mario Monti lost his mandate trying to pry open. Cool info.
But I was surprised that the book could not make the connection between Rome and the Ottoman Empire. I mean what was great about both was common (respect for the achievements / tolerance for the culture and religion of their subjects) and what was bad about both was common (the fact that praetorians / janissaries etc. ended up running the empires for themselves a lot of the time). That's before you consider that one was built on the ashes of the other.
And, in general, the book took me through a whirlwind tour of Rome, China, Spain, Turkey, Japan, the EU, California and the US and then did not really do much in terms of putting the pieces together.
There was no oooomph. No passion. No over-riding theme. Too much, er, Balance. Then again, that's what it says on the cover.
Regardless, there are enough fun ideas in the book that one should not reject it. Like, for example, that the British empire did not die of overstretch. Rather, it failed to assimilate the US. Giving British citizenship to American subjects would indeed have been quite a coup. Even if it's the wrong idea, it's an intriguing concept.
Another idea I like was that the state-sponsored catchup with true capitalism can look for a long time like it's outperforming the real thing (like people say it's doing in China at the moment), but ultimately it does hit the stops. Not that any solid proof is provided in the book, but I like my prejudices to be reinforced.
Another idea I like that is that special interest groups are nothing new in America. And therefore, much as we don't like them, they can't be blamed for recent decline, if there is any. So the latest piece of legislation that lets Sheldon Adelson start his own PAC might be distasteful, but less so than not letting him.
Based on that fact, the authors have a stab at explaining ideological polarisation in US politics, blaming it (quite convincingly, from my angle) on changes in party finance laws back in the early seventies, that made it impossible for funds to go to anybody but the two parties (rather than say the candidates themselves or independents)
Then the conclusions appear. They are dreadfully Balanced.
I'm genuinely tempted to say "nothing" but it's not entirely true.
I've learnt that Diocletian formalised guilds in Rome. In school we were all taught how horrible he'd been to Christians, but I now know we additionally have him to thank for the 28 "closed professions" Mario Monti lost his mandate trying to pry open. Cool info.
But I was surprised that the book could not make the connection between Rome and the Ottoman Empire. I mean what was great about both was common (respect for the achievements / tolerance for the culture and religion of their subjects) and what was bad about both was common (the fact that praetorians / janissaries etc. ended up running the empires for themselves a lot of the time). That's before you consider that one was built on the ashes of the other.
And, in general, the book took me through a whirlwind tour of Rome, China, Spain, Turkey, Japan, the EU, California and the US and then did not really do much in terms of putting the pieces together.
There was no oooomph. No passion. No over-riding theme. Too much, er, Balance. Then again, that's what it says on the cover.
Regardless, there are enough fun ideas in the book that one should not reject it. Like, for example, that the British empire did not die of overstretch. Rather, it failed to assimilate the US. Giving British citizenship to American subjects would indeed have been quite a coup. Even if it's the wrong idea, it's an intriguing concept.
Another idea I like was that the state-sponsored catchup with true capitalism can look for a long time like it's outperforming the real thing (like people say it's doing in China at the moment), but ultimately it does hit the stops. Not that any solid proof is provided in the book, but I like my prejudices to be reinforced.
Another idea I like that is that special interest groups are nothing new in America. And therefore, much as we don't like them, they can't be blamed for recent decline, if there is any. So the latest piece of legislation that lets Sheldon Adelson start his own PAC might be distasteful, but less so than not letting him.
Based on that fact, the authors have a stab at explaining ideological polarisation in US politics, blaming it (quite convincingly, from my angle) on changes in party finance laws back in the early seventies, that made it impossible for funds to go to anybody but the two parties (rather than say the candidates themselves or independents)
Then the conclusions appear. They are dreadfully Balanced.
September 17, 2014
Noting that the dean of the Columbia University Graduate School of Business is one of the authors, I was expecting an insightful look and comparison between the economic histories of great powers with the United States. Instead, I read a thinly-veiled political treatise.
The book can loosely be divided into three sections: Intro, fallen powers, and America. The opening chapters are a bit disorganized. They try to set definitions for terms they use throughout the books, especially rent-seekers. I am still uncertain what the term means, but I think it has to do with people avoiding taxes, fees, social responsibility, and corporate citizenship.
A little less than one-third of the book discusses the economics of former great powers - Rome, China, Turkey, Spain - and oversimplifies their rise and fall. Rome, especially is frequently studied due to its similarities with the United States. However, I am a bit surprised that the authors argued that the economic decline of Rome was due to an end of expanding the empire and over-spending? Towards the end, they were starved for revenue. China fell due to group think and politicking. OK. These are a bit too simple.
The conclusion - and I include the chapters on California and the EU in here - is a hodge-podge of ideas that have little connection with the discussion on former great powers or each other. Here, the book reveals that it is more politics than economics. Here, the key ideas are cut entitlements, keep taxes low, less regulation (barriers to trade), balance the budget, and reduce the debt. It is ironic that they focus so much on entitlements, pointing out that they are the largest budget expenditure in the federal budget; but offer no means to fix them except to "make short term pains for long term gains." Social Security is broken; but we can keep it - just fix it. The implication is that medicare and medicaid are worthless. The last dozen pages focus entirely on balancing the budget. There is no attempt to link this to any former super power - not even Spain's hyper inflation in the 16th Century. There is little pretense of academic rigor here. It is just pure politics.
Overall, it is a slow read. It is directed towards the public, disguised as a serious economic study. It is a political discussion and only vaguely concealed. The history is over-simplified and the economics is a bit more complicated. Maybe I am being charitable when I say the economics is a bit more serious, accurate, and organized than the rest of the book. I do not recommend it for anyone.
The book can loosely be divided into three sections: Intro, fallen powers, and America. The opening chapters are a bit disorganized. They try to set definitions for terms they use throughout the books, especially rent-seekers. I am still uncertain what the term means, but I think it has to do with people avoiding taxes, fees, social responsibility, and corporate citizenship.
A little less than one-third of the book discusses the economics of former great powers - Rome, China, Turkey, Spain - and oversimplifies their rise and fall. Rome, especially is frequently studied due to its similarities with the United States. However, I am a bit surprised that the authors argued that the economic decline of Rome was due to an end of expanding the empire and over-spending? Towards the end, they were starved for revenue. China fell due to group think and politicking. OK. These are a bit too simple.
The conclusion - and I include the chapters on California and the EU in here - is a hodge-podge of ideas that have little connection with the discussion on former great powers or each other. Here, the book reveals that it is more politics than economics. Here, the key ideas are cut entitlements, keep taxes low, less regulation (barriers to trade), balance the budget, and reduce the debt. It is ironic that they focus so much on entitlements, pointing out that they are the largest budget expenditure in the federal budget; but offer no means to fix them except to "make short term pains for long term gains." Social Security is broken; but we can keep it - just fix it. The implication is that medicare and medicaid are worthless. The last dozen pages focus entirely on balancing the budget. There is no attempt to link this to any former super power - not even Spain's hyper inflation in the 16th Century. There is little pretense of academic rigor here. It is just pure politics.
Overall, it is a slow read. It is directed towards the public, disguised as a serious economic study. It is a political discussion and only vaguely concealed. The history is over-simplified and the economics is a bit more complicated. Maybe I am being charitable when I say the economics is a bit more serious, accurate, and organized than the rest of the book. I do not recommend it for anyone.
December 17, 2015
This may have been my favorite book I read in 2015. A very educational book on economics and political science. The book goes through different great powers and illustrates why they eventually collapsed or stalled. I will definitely be reading this book again!
The great powers:
1) Rome - declined because of the growth of the welfare state, centralized government and military dictatorship
2) Imperial China - centralized governance, autocratic policy making, and factionalized bureaucracy
3) Imperial Spain - centralized government that ran fiscal deficits and went bankrupt
4)Japan - weak democracy relative to special interests and centralized bureaucracy
5) United Kingdom - loss aversion by class and geographic elites in England
6) European Union - unconstrained budget deficits and easy debt; moral hazard by semi-sovereign states
7) California - partisan polarization from gerrymandering and term limits; extremely progressive tax rates and strong public-sector unions
The authors are concerned about the future of United States, but overall, are optimistic:
"Declinism as a topic smacks of both inevitability and failure. Neither adjective describes the United States or its economy."
"America is advancing past the productivity frontier, thanks to the best set of economic institutions the world has ever seen."
The great powers:
1) Rome - declined because of the growth of the welfare state, centralized government and military dictatorship
2) Imperial China - centralized governance, autocratic policy making, and factionalized bureaucracy
3) Imperial Spain - centralized government that ran fiscal deficits and went bankrupt
4)Japan - weak democracy relative to special interests and centralized bureaucracy
5) United Kingdom - loss aversion by class and geographic elites in England
6) European Union - unconstrained budget deficits and easy debt; moral hazard by semi-sovereign states
7) California - partisan polarization from gerrymandering and term limits; extremely progressive tax rates and strong public-sector unions
The authors are concerned about the future of United States, but overall, are optimistic:
"Declinism as a topic smacks of both inevitability and failure. Neither adjective describes the United States or its economy."
"America is advancing past the productivity frontier, thanks to the best set of economic institutions the world has ever seen."
November 21, 2013
This is an awesome book (on history and economy). Hubbard and Kane take readers on a rapid romp through imperial history, covering the Roman, Chinese, Spanish, Ottoman, Japanese, and British empires and finding the seeds of their failures in fiscal incontinence and the rise of loss-averse special interest groups. Historians often date the beginnings of imperial declines, identifying them with some external event, usually military in character. The authors argue persuasively that the decay typically starts long before such events and usually originates with some internal change. Against this background, they discuss the looming failures of Europe, the United States, and even California, the world’s tenth-largest economy. Their central thesis is that modern democracies have become dysfunctional and can be rectified only by changing the perverse incentives they create for politicians. (It is worth noting, of course, that their historical examples illustrate that dysfunction is hardly limited to democracies.) To accomplish this improvement in democratic governance, Hubbard and Kane propose eliminating safe electoral seats, abolishing term limits, and imposing tight fiscal rules on budgeting. (*by the Council on Foreign Relations)
September 4, 2014
I wish every American adult could/would read and understand this book! I wish I had a group to discuss this with; I feel like I'd learn even more from it and really get some brain-juices flowing.
There was a bit of "cross-talk" throughout the first few chapters, but everything became much more cohesive as my reading progressed. This could be a reflection of my understanding of the subject and its language or it could be the writing, I'm honestly not sure which it is. Ultimately I thought it comprehensive and relatively unbiased. What bias there was appeared to be on the more conservative side which was refreshing because my experience with similar books has been that they tend to be on the liberal side.
There was a bit of "cross-talk" throughout the first few chapters, but everything became much more cohesive as my reading progressed. This could be a reflection of my understanding of the subject and its language or it could be the writing, I'm honestly not sure which it is. Ultimately I thought it comprehensive and relatively unbiased. What bias there was appeared to be on the more conservative side which was refreshing because my experience with similar books has been that they tend to be on the liberal side.
September 2, 2013
This is a thought provoking analysis of the factors which could well lead to the demise of the US as a great power in the 21st century. The audience most likely to appreciate the arguments for the thesis presented would be sophisticated policy wonks, but even we newspaper readers can understand the drift of the case and sharpen our attention to the precarious situation that exists. The authors' proposal for a "nonpartisan balanced budget amendment to the Constitution" is an intriguing solution to the current Washington deadlock that is impeding any progress on resolving the "partisan and budgetary imbalances" that are aggravating the problem.
November 6, 2013
Everyone in Congress should have to read this book. The purpose of this book is to show that the real reasons the great powers of the past fell is because their economy collapsed from within, and not because of overstretch or any of the other reasons historians have claimed were responsible. The authors do a great job of explaining how and why the great powers fell, and what America needs to do to remain a world superpower. It also gives an example of a possible nonpartisan balanced-budget amendment that would help the United States get back on track. The book is simple enough for most people to understand, and yet complex enough to give the issue the proper depth. A great read.
September 30, 2013
Begins with an ultra-simplistic and frankly insulting summation of the Roman Empire's 400+ years to structure its neoconservative agenda, then uses Rogoff and Reinhart's disgraced debt thesis as supported analysis. This book was published in May 2013, after the excel / data source furor; as usual, ideology trumps intellectual rigor. Avoid, unless you want a view into the Laffer-lemon-squeezed kool-aid that passes for neocon thinktank theory.
November 17, 2014
If I run up my credit cards and stop paying bills, will it be any surprise if I'm soon bankrupt? If so, why doesn't this apply to nations?
Hubbard's book is about how nations and empires decline. He argues that economics are the primary factor. The highlights of the book are the short chapters on how some of the largest of history's empires ultimately found their end. Hubbard argues that America is on notice, and if we continue to run up the debt, we could go the way of Rome.
Hubbard's book is about how nations and empires decline. He argues that economics are the primary factor. The highlights of the book are the short chapters on how some of the largest of history's empires ultimately found their end. Hubbard argues that America is on notice, and if we continue to run up the debt, we could go the way of Rome.
May 20, 2016
If you're a right winger looking for someone to tell you that defense spending is fine, but spending on social security and medicare is going to ruin America then this book is for you. Despite my interest in the history of politics and economics I could not finish this book. Unfortunately the authors are too busy trying to push their agenda to do a good job of describing the rise and fall of the empires of the past.
July 16, 2014
Great summary of the rise and fall of various powers throughout history -- gives really nice summaries of the Romans, the Chinese, etc.
The most interesting chapter was on the rise and fall of California, a state whose economy dwarfs most nations but has been run into the ground by political mismanagement.
Definitely recommend.
The most interesting chapter was on the rise and fall of California, a state whose economy dwarfs most nations but has been run into the ground by political mismanagement.
Definitely recommend.
December 24, 2018
300 pages of mediocre history, just so we can get to a balanced budget amendment. Yikes.
What happens when there's a multi-year war and we need to spend more money? A massive recession?
Also, I'm immediately suspicious of anyone who describes CA as a post-apocalyptic hellscape with no economic opportunity. Which the authors do.
What happens when there's a multi-year war and we need to spend more money? A massive recession?
Also, I'm immediately suspicious of anyone who describes CA as a post-apocalyptic hellscape with no economic opportunity. Which the authors do.
April 18, 2014
I liked it. If we as a culture had any sense of history then perhaps we would have fewer of the same discussions ad nauseum, as one could not only say that this "new" idea isn't new and here's why it didn't work before.....
July 3, 2014
Comprehensive history of different world powers that have risen and fallen throughout time. The lessons learned are then used to illustrate what the United States can implement or avoid in order to maintain its status as a preeminent power.
November 23, 2014
Balance analyzes the sources of decline of great powers over time. It's pretty good, and aim well, but is ultimately a single issue based book, and it doesn't explain the positive repercussions well enough to make its point.
Read
June 19, 2013I am the author. Fantastic book! Best parts are the middle chapters, which are case studies of 8 Great Powers. My favorite is Japan chapter, but was most surprised by Ottomans.
June 20, 2013
I believe the authors bias shows. Puts forth an argument for a constitutional amendment to balance the federal budget.
September 1, 2013
I read this several times as a copy-editor. Fascinating take on empires and economics, with great insight into how that applies to our current situation as a nation.
January 22, 2014
I am the author. Loved writing this book.
June 23, 2014
All of human history is explained with a few math equations. Some interesting ideas, but the base concept strains credulity.
September 13, 2015
not really compelling but a good read.
January 20, 2016
The history is interesting, but the prescription for "saving" the US not so much. It boils down to a big payoff for big business - lower corporate taxes, fewer regulations, free-er trade.
January 21, 2020
The authors of "Balance," Dean Glenn Hubbard and Hudson Institute Economist Tim Kane make for me what is by far the most moving book that I have read on how to build an America that will be strong and vibrant far into the future, namely by adopting a "Balanced Budget" 28th Amendment to the US Constitution.
The whole book is just loads of cautionary and fascinating stories of previous Great Powers that were undone by political ineptitude followed by failed economic policies.
The authors are careful to point out that today, in this modern era we live in, that we have the knowledge, through pioneering work that includes the "Penn World Table" and historical comparisons of political power, that it is not to late for us in these United States to avert fiscal disaster.
The whole book, in case study after case study, point out the "Tipping Points" of these previous Great Powers and lead to a convincing conclusion of the necessity in this country for a Balanced Budget amendment. And because Dean Hubbard and Dr. Kane are such great authors, economists and thinkers, they spell out on the final page of the book the language a good 28th Balanced Budget Amendment.
Look, we can't spend ourselves into oblivion. We have to live within our means. For a long time I used to be taken in by lax progressive thinking about the ability to have my student debt forgiven after 10 years of government service.
After reading about Roman emperor after emperor that forgave debts previously accrued by the citizenry, only to be killed by the Praetorian Guard whenever these assassins thought the process needed to start over again, I am convinced that government student debt forgiveness is a bad idea for America and for the government's reinforcement of the character requirements of the American students.
There is no free lunch. Moral hazard is real. The Federal Government cannot backstop a bankrupt state of California. To do so would eliminate all trust our government has built since our Founders signed our Constitution.
The authors are careful to point out that theirs is not a "Declinist" book, and it is not. But the true value of "Balance" is for me its clarity: all those "Foreign Affairs" articles by economists like Larry Summers who argue that deficit spending does not matter muddy the water. Hubbard and Kane offer clear and concise language that make perfect sense: that "total outlays for the year cannot exceed the median annual revenue collected in the seven prior years." That's the first sentence in their Section 1. It makes sense!
The whole book is just loads of cautionary and fascinating stories of previous Great Powers that were undone by political ineptitude followed by failed economic policies.
The authors are careful to point out that today, in this modern era we live in, that we have the knowledge, through pioneering work that includes the "Penn World Table" and historical comparisons of political power, that it is not to late for us in these United States to avert fiscal disaster.
The whole book, in case study after case study, point out the "Tipping Points" of these previous Great Powers and lead to a convincing conclusion of the necessity in this country for a Balanced Budget amendment. And because Dean Hubbard and Dr. Kane are such great authors, economists and thinkers, they spell out on the final page of the book the language a good 28th Balanced Budget Amendment.
Look, we can't spend ourselves into oblivion. We have to live within our means. For a long time I used to be taken in by lax progressive thinking about the ability to have my student debt forgiven after 10 years of government service.
After reading about Roman emperor after emperor that forgave debts previously accrued by the citizenry, only to be killed by the Praetorian Guard whenever these assassins thought the process needed to start over again, I am convinced that government student debt forgiveness is a bad idea for America and for the government's reinforcement of the character requirements of the American students.
There is no free lunch. Moral hazard is real. The Federal Government cannot backstop a bankrupt state of California. To do so would eliminate all trust our government has built since our Founders signed our Constitution.
The authors are careful to point out that theirs is not a "Declinist" book, and it is not. But the true value of "Balance" is for me its clarity: all those "Foreign Affairs" articles by economists like Larry Summers who argue that deficit spending does not matter muddy the water. Hubbard and Kane offer clear and concise language that make perfect sense: that "total outlays for the year cannot exceed the median annual revenue collected in the seven prior years." That's the first sentence in their Section 1. It makes sense!
July 1, 2025
This book provides a valuable window into the minds of two fiscal conservatives, placing their views on the federal deficit in the wider context of world history. I had always wondered what the thought process was for so-called "deficit hawks," so I appreciated this take on America's concerning spending habits (though it does not seem to provide much policy advice beyond "cut entitlements," which of course no president or party is willing to do or else lose the next election).
This book's blitz through world history greatly overlaps with many of the frames of history employed by other writers (e.g. the emphasis on innovative institutions, free movement of capital, efficient allocation of resources and rents) but also looks at some places often overlooked by economic historians: imperial Spain, Ming China, and the late Ottoman Empire to name a few. However, some points remain unresolved or inconsistent (without the detail or pages needed to address them satisfactorily). For example, their point on California being a free-spending, bankrupt entitlement state doesn't seem to hold much weight without a proper contrast with what they would consider a successful state like Florida or Texas. Additionally, their policy prescriptions are agreeable, but sometimes quite puzzling in application: how do we get from our current state to their preferred state of fiscal balance and political stability? I often find that this poses more questions than answers.
This book's blitz through world history greatly overlaps with many of the frames of history employed by other writers (e.g. the emphasis on innovative institutions, free movement of capital, efficient allocation of resources and rents) but also looks at some places often overlooked by economic historians: imperial Spain, Ming China, and the late Ottoman Empire to name a few. However, some points remain unresolved or inconsistent (without the detail or pages needed to address them satisfactorily). For example, their point on California being a free-spending, bankrupt entitlement state doesn't seem to hold much weight without a proper contrast with what they would consider a successful state like Florida or Texas. Additionally, their policy prescriptions are agreeable, but sometimes quite puzzling in application: how do we get from our current state to their preferred state of fiscal balance and political stability? I often find that this poses more questions than answers.
August 6, 2016
Interesting book about why great powers failed and the implications for modern America. It all comes down to economic strength.
The basis of power is economic strength which enables military strength.
Economic Power = GDP * Productivity * Growth**0.5
Economic Power in 2010 relative to the U.S.
U.S. 100%
Europe 73%
China 40%
Japan 15%
South America 7%
India 6%
No other country seems to be able to sustain productivity (GDP per capita) above about 80% of that of the U.S. Some countries such as Brazil seem stuck around 20%. The key to economic power is the nature of economic and political institutions.
“The scale of the Roman Empire was the central feature of its rise to power, and perhaps its fall from power.” The height of power was during the rule of Augustus 27 B.C. To A.D. 14.
“The Rome of 100 A,D. had better paved streets, sewage disposal, water supply, and fire protection that the capitals of civilized Europe in 1800... The city of Rome reached a population of one million, a mark not rivaled anywhere else until London in the nineteenth century... A century after the reign of Augustus, Rome stopped growing. Four and half centuries after the death of Augustus – and Jesus – the city of Rome and the western half of the empire that bore its name had fallen.”
“A few key institutions were the army; labor specialization, thanks to scale of trade; and urbanization. The Roman roads enhanced all three. Roman markets, laws, taxes, and bureaucratic efficiency also helped. An absence of new technologies or further institutional development suggests that by the early third century, Malthusian pressures were likely eroding average incomes. The economy itself was predominately rural and agricultural... The expansion of Rome's economic scale, which lasted an astonishing seven hundred years from 500 B.C. To A.D. 200, was exceptional in size but typical of the transformation of tribal human villages into larger city-states and then nation-states... There were forty or so provinces at Rome's fullest extent.”
One can see the height of Rome in the archeological record. The peak of lead production and of ship wrecks is around A.D. 0.
The self-interest of the Praetorian Guard started Rome on its long decline. “The Roman army usurped control over imperial succession in the third century A.D. All power during Rome's political crisis was in the hands of a self-serving Praetorian Guard.”
Prior to his death in A.D. 117, Emperor Trajan “initiated the first welfare program directed to relieve childhood poverty around Rome... It established a principle of state obligation to compensate for unequal market outcomes... A 3-month spectacle of gladiatorial games was also a costly, if not original, indulgence... Hadrian continued Trajan's policy of investing heavily in public goods, and his decision to understretch the empire was largely to redirect the treasury inward.”
A.D. 122 Hadrian's Wall marked the end of the expansion of the Roman empire, the end of growth in scale. “There is no point denying the archeological evidence. This era was the economic turning point. The most obvious explanation is that the growth in economic scale and labor specialization came to a halt when the geographic expansion came to a halt.”
Hadrian also canceled “all outstanding debts taken out on any state loan taken out in the last 15 years” and “announced that financial burdens on municipalities would be funded directly by the central treasury, effectively bribing cities to sell their independence... Although the moves made Hadrian popular, even the dullest citizen of Rome figured out that thrift after that day was for fools.”
By A.D. 284 the silver denarius was debased to 2 – 5% purity. It was 95% or higher during the reign of Augustus. “Trade devolved to barter and taxation was in-kind. Without money, long-term trade is impossible. With the disappearance of its scale economy, prosperity contracted.”
A.D. 301 Diocletian issued a list of price controls to quell inflation. Then he “brought nearly all major industries and guilds under detailed control... The tax burden under this absolutism became so great that landowners and their tenant farmers simply abandoned the land.”
“The army's monopoly of power eroded the separation of civilian and military authority, such that the military was in complete control over imperial succession... The army's appetites drove an escalation of taxes that ultimately destroyed the tax base, the currency, and even the money economy.” This phenomenon is known in economics as the collective action problem: special interests seeking and gaining rents at the expense of the broader society.
When the economy could no longer sustain the population, people reverted to simple sustenance farming, the army fell apart and starving barbarians looted what they could find. Europe fell into a 1000 years of the Dark Ages.
“The decline of Rome was economic, from the rampant inflation and excessive taxation of the third century to the central planning tragedy of Diocletian.”
The book also discusses China, Spain, the Ottoman Empire, Japan, Great Britain, Europe, and California before drawing parallels to the decline of modern America.
"The existential threat is internal." America's entitlement society, deficit spending, and collective action by special interests poses an existential threat.
The basis of power is economic strength which enables military strength.
Economic Power = GDP * Productivity * Growth**0.5
Economic Power in 2010 relative to the U.S.
U.S. 100%
Europe 73%
China 40%
Japan 15%
South America 7%
India 6%
No other country seems to be able to sustain productivity (GDP per capita) above about 80% of that of the U.S. Some countries such as Brazil seem stuck around 20%. The key to economic power is the nature of economic and political institutions.
“The scale of the Roman Empire was the central feature of its rise to power, and perhaps its fall from power.” The height of power was during the rule of Augustus 27 B.C. To A.D. 14.
“The Rome of 100 A,D. had better paved streets, sewage disposal, water supply, and fire protection that the capitals of civilized Europe in 1800... The city of Rome reached a population of one million, a mark not rivaled anywhere else until London in the nineteenth century... A century after the reign of Augustus, Rome stopped growing. Four and half centuries after the death of Augustus – and Jesus – the city of Rome and the western half of the empire that bore its name had fallen.”
“A few key institutions were the army; labor specialization, thanks to scale of trade; and urbanization. The Roman roads enhanced all three. Roman markets, laws, taxes, and bureaucratic efficiency also helped. An absence of new technologies or further institutional development suggests that by the early third century, Malthusian pressures were likely eroding average incomes. The economy itself was predominately rural and agricultural... The expansion of Rome's economic scale, which lasted an astonishing seven hundred years from 500 B.C. To A.D. 200, was exceptional in size but typical of the transformation of tribal human villages into larger city-states and then nation-states... There were forty or so provinces at Rome's fullest extent.”
One can see the height of Rome in the archeological record. The peak of lead production and of ship wrecks is around A.D. 0.
The self-interest of the Praetorian Guard started Rome on its long decline. “The Roman army usurped control over imperial succession in the third century A.D. All power during Rome's political crisis was in the hands of a self-serving Praetorian Guard.”
Prior to his death in A.D. 117, Emperor Trajan “initiated the first welfare program directed to relieve childhood poverty around Rome... It established a principle of state obligation to compensate for unequal market outcomes... A 3-month spectacle of gladiatorial games was also a costly, if not original, indulgence... Hadrian continued Trajan's policy of investing heavily in public goods, and his decision to understretch the empire was largely to redirect the treasury inward.”
A.D. 122 Hadrian's Wall marked the end of the expansion of the Roman empire, the end of growth in scale. “There is no point denying the archeological evidence. This era was the economic turning point. The most obvious explanation is that the growth in economic scale and labor specialization came to a halt when the geographic expansion came to a halt.”
Hadrian also canceled “all outstanding debts taken out on any state loan taken out in the last 15 years” and “announced that financial burdens on municipalities would be funded directly by the central treasury, effectively bribing cities to sell their independence... Although the moves made Hadrian popular, even the dullest citizen of Rome figured out that thrift after that day was for fools.”
By A.D. 284 the silver denarius was debased to 2 – 5% purity. It was 95% or higher during the reign of Augustus. “Trade devolved to barter and taxation was in-kind. Without money, long-term trade is impossible. With the disappearance of its scale economy, prosperity contracted.”
A.D. 301 Diocletian issued a list of price controls to quell inflation. Then he “brought nearly all major industries and guilds under detailed control... The tax burden under this absolutism became so great that landowners and their tenant farmers simply abandoned the land.”
“The army's monopoly of power eroded the separation of civilian and military authority, such that the military was in complete control over imperial succession... The army's appetites drove an escalation of taxes that ultimately destroyed the tax base, the currency, and even the money economy.” This phenomenon is known in economics as the collective action problem: special interests seeking and gaining rents at the expense of the broader society.
When the economy could no longer sustain the population, people reverted to simple sustenance farming, the army fell apart and starving barbarians looted what they could find. Europe fell into a 1000 years of the Dark Ages.
“The decline of Rome was economic, from the rampant inflation and excessive taxation of the third century to the central planning tragedy of Diocletian.”
The book also discusses China, Spain, the Ottoman Empire, Japan, Great Britain, Europe, and California before drawing parallels to the decline of modern America.
"The existential threat is internal." America's entitlement society, deficit spending, and collective action by special interests poses an existential threat.
February 3, 2019
The authors are unabashedly pro-free trade and freedom of labour across professions. Their focus is then on the institutions (with the attendant economic and political policy) that enable a strong economy (relative to the others).
I thought this was an interesting and readable book on institutions; I liked their focus on talking about economies relative to other economies.
I thought this was an interesting and readable book on institutions; I liked their focus on talking about economies relative to other economies.
July 10, 2019
Beatiful concept, mediocre implementation. A real historian would be required for the writing of the historic chapters. The book is very much about US politics, not great empires all over the world.
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