Rich Nations That Went Broke By Spending Too Much

Government spending drives taxes, deficits, debt and inflation, so it’s at the core of our economic problems. What to do about runaway spending? The tendency is to imagine that it might be controlled by electing the right politicians, enacting a law like a balanced budget amendment, passing a spending limitation ballot initiative, establishing a super committee or coming up with some kind of “grand bargain.”

These and other well-intended strategies have failed, primarily because they were attempts to have politicians act against their self-interest. Politicians generally want more power which means more money, more laws, regulations and bureaucrats. Historical experience suggests that rulers – whether kings, dictators or elected politicians — have a visceral urge to spend money they don’t have. They can’t control themselves. They’ll weasel their way around any efforts to put a lid on the cookie jar. This is why rich nations like Japan, Saudi Arabia and the United States are spending money they don’t have and incurring chronic budget deficits.

All of this has been has been going on for a very long time, a reminder that we’re dealing with one of the most potent forces in politics. Runaway spending repeatedly has contributed to the downfall of the high and mighty.

For example, spending problems began to be evident in the early years of the Roman Empire, and they became huge in the third century C.E. Perhaps as early as the third century B.C.E., Rome began minting a gold coin that came to be known as the aureus. Originally the face value of the coin equaled the market value of gold in it. ……

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