The emperors of the Roman Empire should know. I found that out when I wrote a paper on it back in 2005. The economy was adjusted to placate the masses which resulted in an economic nightmare. Social justice was just an oxymoron. Here's an excerpt...
Growth, plenty, economic boom and the State had copious revenue, so much so that Augustus began huge public works programs when he “repaired all the roads of
Italyand , restored the temples and built many new ones, and built many aqueducts, baths and other public buildings. Tiberius, however, cut back on the building program and hoarded large sums of cash. This led to a financial crisis in 33 A.D. in which there was a severe shortage of money. This shortage may have been triggered by a usury law which had not been applied for some years but was again enforced by the courts at this time” (Frank, T. "The Financial Crisis of 33 A.D." American Journal of Philology, 1935 56(4): 336-41). “The shortage of money and the curtailment of state expenditures led to a sharp downturn in economic activity which was only relieved when the state made large loans at zero interest in order to provide liquidity” (Thornton, M.K., and Thornton, R.L. (1990) "The Financial Crisis of A.D. 33: A Keynesian Depression?" Journal of Economic History 50(3): 655-62). Rome
Here we have a perfect example of the “invisible hand of the marketplace” being held by big government. The time frame between the boom of Augustus and flop of Tiberius was just a year or two. Did Augustus actually practice hands off policy? Not really, not when there was an abundance of public works underway, and not when the taxes were lowered. In the traditional Keynes philosophy, public works and lower taxes are government tactics used to give the economy a burst of energy. In other words, government induced economic growth. Augustus employed Keynes theory before Keynes was a twinkle in his daddy’s eye.
Did the depression happen because Tiberius hoarded large sums of cash (the economy was based on a cash flow system and credit was not widely used). Was the zero percent interest a shot in the arm in Keynesian style? In contrast to the laissez faire classical macroeconomic theorist point of view, yes. Since the government was not keeping a hands off attitude but was digging deep into public revenues it was the beginning of the fall. The emperors of
began to degrade the amount of gold and silver in coins. This debasement of coinage caused inflation which led to the population hoarding the more valuable coins and paying taxes with the less valuable coins. This led to a greater need for revenue by the government so taxes were raised and this resulted in the privately wealthy to be slowly robbed of their wealth. The natural inclination of the patricians to hide their wealth came in the form of tax evasion. The sights of the government were then turned to the middle class. These employed the tactics of the rich by tax evasion in various forms mostly by appearing to be poor or by outright selling themselves as slaves to the larger land owners. (Slaves didn’t have to pay taxes.) The constant drain on the empire’s coffers by the military caused a greater and greater need for more revenue. The emperors put less and less gold and silver in the coinage. It was an economic nightmare. Emphasis because it jumps out at me. It happened 2000 years ago, but could be today's headlines! Rome
Does this sound familiar? Will we never learn???
Russia and other countries found out that there is no way to even or spread the wealth. Jesus said the same thing when He told his disciples when they became angry at the usage of some valuable perfume and an alabaster jar that the poor would always be with us.
Glenn Beck gave his definition of social justice: Here's my definition of social justice: Forced redistribution of wealth with a hostility toward individual property rights, under the guise of charity and/or justice.
That's how the Romans defined it, lived and breathed it. So how did that work for them? Not well at all. That kind of thinking brought a 10 centuries old empire to its knees and then flat on its face in the mud. Ours isn't half that old, but we will fall just as hard, and the impact to the world will be just as devastating.