Beyond the widespread contemporary belief that government spending is capable of solving economic ills through the creation of jobs, the construction of low-cost social housing, etc., the truth is that for whatever purpose, this will always be done through the same means: the State extracts rents from individuals (taxpayers who create value) through taxes in order to finance its spending. In some cases, as we will see throughout history, some of the spending has been more superfluous than others.
Here are a few of the most spendthrift rulers in history.
Shi Huangdi. First Qin Emperor of China (221 – 210 B.C.)
Even though he ruled for less than ten years, he laid the foundations for one of the largest and longest-lived empires in history. During his reign he launched enormous construction projects, such as the Great Wall of China, considered the greatest engineering work in the world. He is now known for also having the largest funerary enclosure in the world, which consists of a mausoleum, 400 tombs for his officials and his army, which are the famous Terracotta Warriors. He also carried out reforms for the centralization of the empire, like the unification of the writing system that is maintained to this day. To this end, he had government edicts carved into the walls of sacred mountains throughout China, as a way of spreading the writing of the new characters among the people. He erected a huge bureaucracy, creating thirty-six prefectures, each presided over by a civilian official, a military official and an imperial inspector (government delegate). These commanderies were also subdivided into counties, governed by magistrates who depended on the government delegate.
According to the historian Sima Qian, the reason for the emperor’s profligacy was his obsession with attaining immortality and divinity, which is why he surrounded himself with alchemists, astronomers, and physicians whom he believed would help him in this pursuit. He was tyrannical and harassed the Confucian intellectuals, executing 460 philosophers and sending them to be buried with only their heads above the surface, and then beheading them. He also had Confucian books burned for going against Legalism, a school on which he based his political power.
Caligula. Emperor of Rome (37-41)
Grand-nephew of Emperor Augustus (who instead was known for his frugality), the young Caligula in his four-year reign brought Rome to the brink of bankruptcy, with his excesses and his prodigality.
Having grown up in exile, throughout his childhood he had great admiration for the eastern world, especially the Egyptian pharaohs, and soon began to emulate the customs of the eastern monarchs, whose power was virtually omnipotent.
Caligula increased the salaries of Roman senators and officials, gave money to citizens and freedmen. He held extravagant banquets lasting several days for the senators and their families, where on several occasions he distributed costumes and purple togas to them. He presided over the spectacles of gladiatorial combats and all kinds of scenic games. During the games, he distributed gifts of all kinds among the spectators, even baskets full of bread and meat, and he sowed the arena with vermilion and gold dust. He took these games outside Italy, as far as Sicily and Gaul (present-day France). He finished building several temples and theaters and built his own. He had the most famous statues brought from Greece, among them, the Statue of Zeus at Olympia , whose head he removed and replaced with his own. He then had a golden statue made.
The historian Suetonius writes,
“…in less than a year he dissipated the immense treasures of Tiberius Caesar, which amounted to two thousand seven hundred million sesterces (…) When he had exhausted the treasures and was reduced to poverty, he resorted to plunder, showing himself fruitful and subtle in the means he employed: such as fraud, public sales and taxes.”
When Caligula emptied the State’s funds, he confiscated properties and inheritances, created several taxes that did not exist in Rome. The historian continues, referring to his insane desire for wealth that he had not produced: “His passion for wealth had degenerated into a veritable frenzy to the point of walking barefoot over immense piles of gold, placed in a vast hall, sometimes rolling over them.”
He murdered his cousin Gemellus, allegedly poisoned his grandmother Antonia, had incestuous relations with his sisters Drusilla and Agrippina the Younger. He murdered and tortured senators and citizens and even massacred entire villages. Among his best known extravagances is that he appointed his favorite horse, Incitatus, as consul, and built for it a stable of marble, ivory, jewels, and gardens, and put 18 servants at its disposal.
Louis XIV. King of France (1643-1715)
Also known as “The Sun King,” one of his most famous phrases is L’État, c’est moi (The State is me). According to Murray Rothbard, Louis XIV is the personification of absolutist despotism. Hand in hand with his economic “czar” Colbert, he implemented mercantilist ideas on a grand scale. Under Louis XIV, the French economy served exclusively the “public interest” and the “good of the State.”
An enormous amount of money went into the construction of palaces and chateaux for the king, Versailles being the most sumptuous of all, costing approximately 40 million livres ($2 billion today). During his rule, about 80 million livres were spent on palaces and royal buildings. The crown also sponsored the patronage of artists and intellectuals by creating several academies, with the exclusive mandate that their work was only in the service of the king. In addition to monopolies and regulations, it also granted subsidies and grants. Rothbard says that all manner of largesse and generosity was showered upon these savants “from the trough of the State.”
During the reign of Louis XIV, France was in debt many times. The king was very lavish in his spending. At the end of his reign and with the help of Colbert, he concluded that the only way to get the money he needed was to impose higher taxes on the nobles because they had rents and then on the entire population, who were left with less and less.
Louis XIV had no qualms about identifying his private interest as monarch with the public interest of the state. The absolutist monarch certainly believed that he was the master of all France and that he ruled by divine right. As Sun King, he acquired a semi-divine character and thus, for thinkers like Bossuet (one of his salaried intellectuals), the King was the embodiment of the State and the public interest was manifested in his own self-interest.
Any limit to his sovereign power was “anarchy,” and the only limit allowed was that imposed by his own self-interest.
Franklin D. Roosevelt. President of the United States (1933-1945)
Franklin Delano Roosevelt became President of the United States during the years of the Great Depression, when unemployment was close to 16 percent. With a speech that promoted austerity in public spending and taking advantage of the people’s demand to take action against the depression, Roosevelt quickly devised the New Deal, which basically consisted of a large increase in public spending to stimulate consumption and reactivate the economy.
In his January 1934 budget message, Roosevelt promised spending on the order of $10 billion, when the government’s income was only $3 billion.
In 1939, Henry Morgenthau, Roosevelt’s secretary of the Treasury, said: “We are spending more than we have ever spent and it is not working.”
The result? Rising unemployment and debt.
Obviously, to increase spending, Roosevelt resorted to the same methods as all the wasteful rulers in history before him: raising taxes and confiscations, which ended up scaring off investment, creating unemployment and bankruptcies. The social programs of the New Deal soon became politicized and federal aid went only to a few. In addition, the private possession of gold was prohibited.
In fact, economic historians claim that Roosevelt’s New Deal instead of alleviating the Great Depression, prolonged it. Roosevelt’s legacy will go down in history as the government that has spent the most money in the history of the United States. But to what end, if Roosevelt was not a particularly ostentatious man? The answer is: vote-buying. Through welfare payments and spending handouts, he secured loyalties, quotas, and support from coalitions, unions, and other special interest groups.
During the World War II years, through Executive Order 9066, FDR sent Japanese and Japanese-Americans to concentration camps for forced labor in the western part of the country.
FDR has gone down in history as the only president who broke the historic constitutional tradition established by George Washington of serving no more than two terms, governing uninterruptedly from 1933 to 1945.
Throughout history, rulers have spent more than they can extract from the population to provide themselves with all kinds of luxuries and excesses. And in the 20th century, the argument has been to procure the “greater good” for society. In the present, increased public spending is justified in favor of the provision of goods and services that lead to “social welfare” and are enshrined in the so-called “social rights.” Thus, since the beginning of the last century, we see a strong trend towards exorbitant increases in public spending in virtually every government in the world.
But whatever the motivation, we must keep in mind that the result has always been the same: greater concentration of power, greater arbitrariness of the State and, of course, greater corruption.