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Alexander Tytler (1747-1813) was a Scottish-born English lawyer and historian.
Reportedly, Tytler was critical of democracies, pointing to the history of
democracies such as Athens and its flaws, cycles, and ultimate failures.
Although the authenticity of his following quote is often disputed, the words
have eerie relevance today:
A democracy is always temporary in nature; it simply cannot exist as a
permanent form of government.
A democracy will continue to exist up until the time voters discover they can
vote themselves generous gifts from the public treasury. From that moment on,
the majority always votes for the candidates who promise the most benefits from
the public treasury, with the result that every democracy will finally collapse
due to loose fiscal policy, which is always followed by dictatorship.
The average age of the world's greatest civilizations from the beginning of
history has been about 200 years. During those 200 years, these nations always
progressed through the following sequence:
From bondage to spiritual faith;
From spiritual faith to great courage;
From courage to liberty;
From liberty to abundance;
From abundance to complacency;
From complacency to apathy;
From apathy to dependence;
From dependence back to bondage.
Tytler's Cycle and the U.S.
In looking at American history, we can see Tytler's sequence in action. In
1620, the Pilgrims sailed to America to escape the religious bondage imposed by
the Church of England. Their spiritual faith carried them to the new world.
Because of their deep faith, the Pilgrims left England in spite of the high
percentage of deaths incurred by earlier American settlements. For example,
when Jamestown, Virginia, was founded in 1607, 70 of the 108 settlers died in
the first year. The following winter only 60 of 500 new settlers lived. Between
1619 and 1622, the Virginia Company sent 3,600 more settlers to the colony, and
over those three years 3,000 would die.
In 1776, the Declaration of Independence was signed. From spiritual faith the
new Americans were garnering great courage. By crafting the Declaration of
Independence, the colonists knew they were essentially declaring war on the
most powerful country in the world -- England.
With the onset of the Revolutionary War, the colonists were moving from courage
to liberty, following Tytler's sequence. By demanding their independence and
being willing to fight for it, a new democracy was born. This new democracy
grew rapidly for nearly 200 years.
Then, in 1933, the U.S. was thrown into the Great Depression and elected
Franklin Delano Roosevelt as president. Facing total economic collapse,
Roosevelt took the U.S. dollar off the gold standard. At the same time,
Germany, also in financial crisis, elected Adolf Hitler as its leader. World
War II soon followed.
In 1944, with WWII coming to an end, the Bretton Woods Agreement was signed by
the world powers and the U.S. dollar, once again backed by gold, became the
reserve currency of the world.
After the war, America passed England, France, and Germany to become the new
world power. Having entered the war late, the U.S. emerged as the creditor
nation to the world. Our factories weren't bombed and the world owed us money.
The U.S. grew rich financing the rebuilding of England, France, Germany, Italy,
and Japan. The American democracy was transitioning from liberty to abundance
-- maybe too much abundance.
In 1971 President Nixon violated the Bretton Woods Agreement by taking the U.S.
dollar off the gold standard because America was spending more than it was
producing and the U.S. gold reserves were being depleted.
In 1972 Nixon visited China to open the door for trade. What followed was the
biggest economic boom in history -- a boom fueled by the U.S. borrowing money
through the sale of bonds to China, one of the world's poorest countries at
that time. The sale of these bonds financed a growing U.S. trade deficit. China
produced low-cost goods, and we paid for them with money borrowed from the
Chinese workers.
American factory production, which had fueled the American boom after WWII, was
"shipped" overseas along with high-paying American jobs. America was shifting
from abundance to complacency. Rather than produce, we borrowed and printed
money to maintain our standard of living.
In 1976 America celebrated its 200th anniversary as a democracy. Rather than
produce, we kept borrowing to finance social-welfare programs. Over the next
three decades or so, America slid from complacency to apathy.
In 2007 the subprime crisis reared its ugly head. And by 2010, unemployment
increased to double-digits, even as the rich got richer. Once-affluent people
walked away from homes they could no longer afford. The U.S. moved from apathy
to dependence.
Today we're dependent upon China to finance our debt as well as fill our stores
with cheap products. At the same time, millions of Americans are becoming
dependent upon the government to take care of them. If Tytler is correct, the
American democracy is presently moving from dependence back to bondage.
Filling the Void
History reminds us that dictators and despots arise during times of severe
economic crisis. Some of the more infamous despots are Hitler, Stalin, Mao, and
Napoleon. I find it interesting that the U.S. is now dependent upon Chairman
Mao's creation, the People's Republic of China, for the things that we buy and
the money that we borrow.
To me, this is spooky, foreboding, and ominous. While the Chinese people, as a
rule, are good people, my business dealings with Communist Chinese officials
have left me disturbed and concerned about the rise of the Chinese Empire. As
you know, China doesn't plan on becoming a democracy. With money, factories, a
billion people to feed, and a massive military, could they put the free world
into bondage?
Although I don't like the way the Chinese do business, I continue to do
business in China. I have to. They're the next world power. I cautiously
believe that trade, business, and understanding offer better options for world
peace and prosperity than isolationism.
Now the Western world must seek to grow stronger financially as China continues
to gain power. To do this, our schools need to offer more sophisticated
financial education to children of all ages.
This is not the time to be complacent or apathetic. This is the time to think
globally. Putting up trade barriers would be disastrous. Instead, it's time our
schools train students to be entrepreneurs who export to the world rather than
employees looking for jobs that are being exported to low-wage countries.
Please be clear. I don't fear the Chinese. I fear our own growing weakness.
Only a weak people can be oppressed. Today, America has too many people looking
to the government for financial salvation.
In 1620 the Pilgrims fled the spiritual oppression of the Church of England.
Today Americans may need to flee the financial oppression of our own government
as our democracy dies. If we follow Tytler's cycle for democracy, our financial
dependence will lead us to financial bondage.