Obama and the Aqueduct
The statisticians at the Commerce Department have determined that the US economy has turned around with the benefit of government incentives prodding consumers to spend money on cars and homes. On the surface, the New New Deal is working just as Washington planned, with GDP increasing 3.5 percent, and household purchases climbing 3.4 percent in the third quarter, the most in two years according to Bloomberg. Vice President Joseph Biden's chief economist, Jared Bernstein, preached to a CNBC audience that the federal government's Recovery Act has created or saved one million jobs in reaction to "the market's failure" so far; and 3.5 million jobs will be created or saved at a cost of only $92,000 per job by next year.
But as John Williams at shadowstats.com points out, 92 percent of growth last quarter came from nonrecurring items such as the sales bump from Cash for Clunkers, homes purchased by first-time homebuyers taking advantage of $8,000 tax credits, and inventory buildups. "As personal consumption and housing decline anew, lacking stimulus props, and as excess inventories get worked off, a renewed quarter-to-quarter decline in real fourth-quarter GDP is a fair bet," writes Williams.
So the Obama administration won't rest until the unemployment rate recedes from its stubbornly high 9.8 percent. And the news on that front isn't good, with the Conference Board's newspaper help-wanted index hitting a new 58-year low and 5.8 million Americans continuing to collect unemployment benefits. It's just a matter of time before renewed calls for a Works Progress Administration (WPA) or other Depression-era-like programs are trotted out again with the idea of Uncle Sam putting people back to work.
Governments' malinvestment monuments, the product of politicians meddling in the market, rather than letting the economy heal are present the world over. Just south of Las Vegas is Hoover Dam, a project authorized by the Boulder Canyon Project Act of 1928. Normally, dams weren't named for sitting presidents, but Herbert Hoover was campaigning for reelection and wanted credit for creating the jobs.
The massive structure cost $49 million (or $736 million in inflation-adjusted dollars) and measures over 726 feet in height and more than 1,200 feet in length. It took five years and 4,360,000 cubic yards of concrete to build and was finished two years ahead of schedule. About 16,000 people worked on constructing the dam, with over 100 losing their lives in the process. "It does give me extraordinary pleasure to see the great dream I have so long held taking form in actual reality of stone and cement," Hoover wrote in his memoirs. "It is now ten years since I became chairman of the Colorado River Commission…. This dam is the greatest engineering work of its character ever attempted by the hand of man."
But the Romans didn't need any concrete to complete the Aqueduct of Segovia, Spain, stacking the massive brick-like granite blocks into a structure that reaches a height of over 93 feet. Although no one knows for sure, it's estimated that the aqueduct was constructed sometime during the reign of either Emperor Vespasian or Nerva to transport water from the Fuente Fria River over ten miles from the city. The aqueduct has 167 arches and reaches its height at the Plaza Azoguejo.
Although this impressive Roman structure only serves to attract tourists to the city of 55,000 today, it wasn't long ago that it provided water. But as our guide, Jerry, told us, Segovia's population did not warrant such an expenditure when it was built. "The Romans primarily built the aqueduct as a show of power," Jerry explained — not a surprise to the group of Mises supporters who toured Segovia after attending a conference in Salamanca.
In his book The New Deal in Old Rome, H.J. Haskell writes that he was inspired to consider government intervention in the ancient world after driving through Europe with his wife. Haskell wrote that the "hand of Rome is all over the place." The town of Segovia was still being supplied water from the aqueduct when Mr. and Mrs. Haskell drove through the historic city in the late 1930s.
And just as WPA workers constructed the Cow Palace in San Francisco, New York's La Guardia Airport, and the River Walk in San Antonio during the Depression, the Romans constructed aqueducts in small towns, industrial sites, and large cities from France to Istanbul. But aqueducts were only a small part of the Roman-style New Deal programs.
Haskell's engaging story is a travelogue seen through the eyes of a curious observer who questioned how Rome's tentacles spread throughout Europe and what economic programs were required to keep those living in conquered lands mollified. The book makes an excellent primer on Roman history, and for those planning a trip to Europe, it provides a background you won't find in Fodor's.
For those who think FDR invented the idea of federal farm programs in the 1930s, Haskell points out that Domitian created an Agricultural Adjustment Administration and Farm Credit Administration in A.D. 91.
And the Federal Reserve's trashing of the dollar was preceded centuries ago by the devaluation of the denarius, which fell in value by over 95 percent from Augustus's rule in the early 1st century to the end of the 3rd century under Diocletian.
The New Deal in Old Rome has it all: from the booms and subsequent depressions to big business in politics. The political largesse of Rome comes alive in Haskell's prose. Writing in the 1930s, the author seeks "to call attention to certain warning signals from the past." But his warnings weren't heeded then and aren't now. "The spending for nonproductive public works, for the bureaucracy, and for the army, led to excessive taxation, inflation, and the ruin of the essential middle class and its leaders," Haskell writes, destroying the men French historian Léon Homo called "the general staff of civilization."
The word from Washington is that things are looking up. The citizens in Segovia used to hear the same thing from Rome.