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Sunday, 6 January 2013

Austerity in Ancient Times

In the past few years we have seen Europe slump into a recession. As the situation worsened, governments in Europe instituted what is known as "Austerity" measures.

"Austerity" has been as follows.
In economics, austerity refers to a policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to try to reduce their deficit spending and are sometimes coupled with increases in taxes to demonstrate long-term fiscal solvency to creditors. .... Development projects, welfare, and other social spending are common programs that are targeted for cuts: Taxes, port and airport fees, train and bus fares are common sources of increased user fees. Retirement ages may be raised and government pensions reduced. (Source: Wikipedia, entry on Austerity)
In ancient Rome, during the year 215 BC, something similar happened. Cato the Elder, an ancestor of Nero, the Roman emperor, was then the consul. A law known as the "Oppian law" (lex Oppius) was enacted at the request of Gaius Oppius to limit the luxuries and extravagances enjoyed by women. Women were forbidden from:
  • owning more than half an ounce of gold;
  • wearing a garment of several colours; and
  • driving a carriage with horses for less than a mile from the city.
The only exception was if these acts were for public celebration of religious rites.

After the Second Punic War, however, Rome had conquered Carthage, and wealth flowed into the Roman ruling class. These upper crust citizens who enjoyed the wealth now wanted to change the laws so that they could enjoy more comfortable lifestyles. When the matter was brought to debate at the Tribune, there was much opposition from the members of the Tribune. 

The women were roused and could not be muted. The women crowded the streets and blocked access to the forums. The women intercepted their husbands in the streets to beseech them to restore their ornaments. The women even approached Consuls and Praetors and other magistrates to take up their cause. 

Finally, tired of the women's persistent demands, the tribunes withdrew their opposition to the women's demands. All the tribes voted to pass the abolition of the Oppian law. The women celebrated and paraded in the streets in their finery.

(Source: Wikipedia, entries on Cato The Elder and Lex Oppia)

Cato the Elder was stringent against luxury and extravagances. He imposed a heavy tax on dresses and adornment worn or used by women. In 181 BC he supported the lex Orchia which limited the number of guests that could be present at a meal. In 169 BC he supported the lex Voconia which forbade anyone who owned property worth 100,000 asses or more from naming a woman as an heir. 

In fact, there were also other seriously austere laws during Cato the Elder's time. Lex Fannia limited dinner expenditure, the kind of food that could be offered, and the number of guests, while lex Didia was an application of the lex Fannia to the entire Italian peninsula that targeted providers of and guests at illegal dinners.

Following this is a link to the book "Cato The Censor" by A. E. Astin. Note the passage on lex Voconia.



The upshot of this is that times haven't changed by much. Today, Bloomberg reported on a paper that has just been presented at the IMF (International Monetary Fund). To summarize, the report -- IMF Officials: We Were Wrong About Austerity -- said that fiscal multiplier effects from government spending are much higher during bad times, compared to good times. This means that government should spend during bad times, to boost the economy.

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