How A Country Dies



A country dies slowly.


Those living during the decline of Rome were likely unaware that anything was happening. The decline took over a couple of hundred years. Anyone living during the decline only saw a small part of what was happening and likely never noticed it as anything other than ordinary.

Countries don’t have genetically determined life spans. Nor do they die quickly, unless the cataclysm of some great war does them in. Even in such extreme cases, there are usually warning signs, which are more obvious in hindsight than at the time.

Few citizens of a dying nation recognize the signs. Most are too busy trying to live their lives, sometimes not an easy task.  If death occupies their mind, it is with respect to themselves, a relative or a friend. Most cannot conceive of the death of a nation.

A Country Dies Slowly First


For those interested, signs or symptoms precede death for a country. There are patterns:


1. The Economy


Economically, people become poorer. It becomes harder to feed a family. Growth stalls and stagnation occurs.  Job opportunities decline. Disincentives to work rise as government tries to ease the burden on the unemployed and lower-skilled. These efforts require more revenues, necessitating higher taxes or debt financing. Disincentives to create jobs are exaggerated as a result of attempting to ease the hardships. Higher taxes and other burdens on the productive make work less attractive.

Capital flees first. It goes to areas where adequate returns are still possible. Jobs are created, just not in the host country. Finally a “brain drain” occurs – talented people leave the country for places that offer greater opportunity. In the case of the US, it is necessary to renounce one’s citizenship in order to escape US taxes. Citizenship renouncements are currently at the highest levels in history. The flight of capital, both real and human, further  reduces standards of living. Signs of stagnation become apparent. Countries often respond with capital and emigration controls.

Signs of deterioration begin to appear. They do so slowly and in many ways. Funds to maintain infra-structure are diverted for other purposes. So too are funds necessary to provide longer-term benefits like pensions. Eventually these diversions begin to show up in slow and subtle ways — roads  have more potholes, government funding for research and development slows, government services decline, pension benefits come under attack.
Effects show in the private sector. “For rent” signs are seen more frequently. Classified advertisements for employment  decrease. “Going out of Business” sales appear often and are no longer marketing gimmicks.

As a country declines,  people dig into their savings or borrow more in an effort to maintain their standards of living. Many believe the condition temporary, rather than a long-term, deteriorating condition. Bankruptcies increase. Strip malls and other retailers close. Manufacturers decrease their labor force. Municipal areas like Detroit can become close to uninhabitable as industry leaves and government services are cut back.
These conditions characterize the beginning of the decline. As the decline progresses, things become much worse.


2. The State


The State is threatened by the decline. Its first reaction is to blame others for causing it. Eventually, it moves into pretend mode, trying to convince people that things are on the mend. All States seem to want to deny, divert and become more powerful.
Three behavioral traits characterize the States reaction to a declining situation:


  1. things are not as bad as they seem.
  2. the State is not responsible for the situation.
  3. the State must do more (grow bigger) in order to solve the problems.


State-controlled data are fudged to convey a false image of well-being. Government spending soars as a means to  juice reported economic activity. Much of the increased spending is both unproductive and counterproductive. Disincentives and distortions are introduced as a result, further weakening the economy’s ability to recover. Proper price discovery is disrupted and capital allocation decisions are based on improper signals.

The State encourages unwise behavior in an effort to mask or correct the problem. People are encouraged  to live beyond their means by making debt readily available and nearly free.  Bubbles inevitably occur as the result of these false signals and then burst. New bubbles are necessary to replace the economic activity lost from the bursting of the old bubbles.

The State has one objective  – to remain in power. When that is threatened, rules, laws and regulations  are rewritten as necessary. New ones multiply.  The attempt to fool the masses eventually becomes an attempt to protect the State. Rules and legislation become more tyrannical, often under the pretense of protecting people against some false threat. In reality, the laws are passed to protect the State against a public growing increasingly restive as a result of the decline in its quality of life.

“Bread and circuses” increase as diversionary tactics. Dependency increases, reflecting an attempt to placate, even “buy-off”  the dissatisfied masses. A “wag the dog” war or crisis may be used as a means to rally the public against some common, but phony, enemy.


3. Society


Society coarsens as this process progresses. People increasingly are less able to provide for their families. Some  turn to unethical behavior, even criminal acts, out of desperation.  Common decency declines.

Regulations reduce the sphere of voluntary interactions between people. Government dictates more and more of what must be done as well as when and how it must be done. Political correctness is increasingly used as a club to direct behavior and language. How you must live increasingly becomes determined by others rather than yourself.

Free markets are slowly replaced by command and control. Spontaneous order based on cooperation and trade slowly changes into rules dictating what must be done.  Coercion and fear displace  freedom as the motivating  force. People increasingly do what they must rather than what they want.
Interest groups, i.e. politically preferred constituents, created in good times don’t demand less when less is available. Their conditioning and sense of entitlement makes their demands seem reasonable, at least to themselves. The inability to meet these demands represents a threat to society itself.

Political strife and eventually civil unrest eventually occur.  Not honoring these demands may produce rioting and bloodshed.

Society becomes increasingly divided in terms of  “makers” and “takers.”  As the takers grow in numbers, the makers shrink.  Soon the parasites overwhelm the productive. Society collapses at that point.


Are The People Aware?


The United States, the beacon of freedom and wealth, is deteriorating. and doing so at an increasing pace. To paraphrase Ernest Hemingway’s response to a bankruptcy question:


How did your country die? Two ways. Gradually, then suddenly.


Do people understand what is happening to them and their country? I suspect some have partial awareness.  Few appreciate  the full consequences of what is happening. People are not trained to think in these terms, nor should they have to be. For most,  it is a chore to get through each day. That is true of the dullards and the brilliant, for most of us end up at levels that tax our abilities.

An innate trust in government is what makes this process so insidious. Few understand the predatory nature of the State. State schools have brainwashed most into believing the State is like a big brother who will take care of them if things become difficult. That belief is fundamental to the State’s continuing ability to plunder.

People sense there is something wrong, even though they may be unable to identify what that something might be. Many believe that what is happening is temporary, sort of like an economic slowdown that reverts back to normal. For them, it is just a rough patch that is painful but will soon be over.

The results from a recent Gallup poll are interesting and illustrate an  increasing level of dissatisfaction among the public:




Numerous points could be made regarding this poll. All institutions have decreased in favorability. Such a result undoubtedly reflects the increasing dissatisfaction people have with the current situation. Apparently, most institutions are at record lows.
Gallup was definitive regarding one in particular:

The current 7% of Americans who place confidence in Congress is the lowest of the 17 institutions Gallup measured this year, and is the lowest Gallup has ever found for any of these institutions. The dearth of public confidence in their elected leaders on Capitol Hill is yet another sign of the challenges that could face incumbents in 2014′s midterm elections — as well as more broadly a challenge to the broad underpinnings of the nation’s representative democratic system.

The  poll is not a direct measure of the health of the nation. However, it provides a composite of public satisfaction.  People know things are not right, even if they don’t know why.

This dissatisfaction and distrust characterizes decline.


[This article first appeared at Economic Noise and was authored by Monty Pelerin. Permission granted to reprint]

[Image credit: Real Agenda]


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