On a recent trip to Rome we spent an entire afternoon walking around the Roman Colosseum and the Roman Forum. As we trekked around the 2,000-year-old ruins that once were the epicenter of western civilization, my economic mind began to wonder. Among the rubble lining famous roads like the Via Nova laid the remains of grand government buildings, temples, and a sports arena.
The Forum also served as a parade ground where military units marched in victory celebrations. It then dawned on me that the sights we marveled at and snapped family pictures in front of represented government spending. I thought about the amount of labor, materials, and tools expended to build the wishes of government. And how did the average Roman citizen benefit from these massive public works projects? I imagined an ancient Keynesius etching a formula like C+I+G+X=Y in stone showing the increase in economic growth in Roman coinage terms resulting from the construction of the Atrium Vestae.
Flash forward to the present, when economists, financial pundits, and central bankers fret over sequestration and austerity. After all, according to the Inscriptions of Keynesius, decreases in government spending lead to less economic growth. Lost in all the formulas and theory are two questions: what is economic growth and why is it important? …To Read More….
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