The Macabees
29-04-2009, 00:25
http://i75.photobucket.com/albums/i291/Macabees/magazinebanner.png
Peace Through Liberty: Market Stabilization in Greater Díenstad and Progress Towards Regional Peace
Gíorj Kest, PhD
Following the infamous War of Golden Succession, Greater Díenstad became the host of a cold war ready to turn hot. Indeed, immediately after the war, the Second Empire of the Golden Throne (the Macabee nation) embarked on campaigns of imperialism, taking advantage of the Holy Empire’s caution as to not spark another regional war. The destabilization of the region into chaos seemed eminent, as although all the “big players” remained wary of warring each other, they seemingly risked it all on the prospects of regional hegemony. This was underscored by the Golden Throne’s underhanded occupation of the free-city of Tarn, south of Adaptes Astrates, and the continental island of Theohuanacu. Indeed, if Greater Díenstad was ever leaning towards total war anew it was then. Theohuanacu served a more positive purpose, however. The fiat currency of the Second Empire had allowed the Empire to fund the War of Golden Succession through the virtual printing of money to an extent impossible under any sound currency, expanding credit to stimulate the war economy. Fearful of the repercussions of this economically suicidal monetary policy, His Imperial Majesty Fedor I decided to invest in further wars. Ultimately, the bubble popped and the Second Empire faces one of the deepest depressions in its economic history. Normally, governments have responded to these periods of “bust” by increasing the burden of government on the private sector, under the impression that uncontrolled government spending could make up for a reduction in demand for consumer goods (although even the theory of underconsumption is a falsity). Fedor I, however, undertook much more “radical” reforms, declaring a return to a free gold standard, eliminating the government-formed central bank and promising to avoid any “progressive” government intervention in the economy. This sudden emergence of the free-market in what is arguably the most influential nation in Greater Díenstad has allowed for the beginning of the return to prosperity, and just as importantly, has established the foundations for a region-wide peace.
Mercantilism: Éminence Grise of a War-Time Government
The Empire has been devoid of sound economic theory for much of its history. The Empire’s foundation was preceded by a century of inflation, as governments of the Great Civil War attempted to fix the price of gold and silver. This was one of the causes of the Second Empire’s economic hardships as it molded itself into a regional power. Although it was not in the interests of then monarch Jonach to introduce a sound monetary policy, his near agreement with the principles of laissez faire brought upon an era of undisputed prosperity. Such prosperity had not been seen by the citizens of the new Empire in the sorry span of their lives. Unfortunately, the return to prosperity was met with a return to artificial inflation through the government and the newly founded central bank. The expansion of credit lowered loan interest rates, stimulating the production of higher order capital-goods. It should be understood that higher-order capital goods are produced only to satiate future, long-term demand. They are a product of low interest rates, but it’s important to remember that low interest rates are naturally brought about by an increase in savings. This is merely a change in the consumer’s time preference, whereas the consumer does no longer desire current goods and therefore saves for future consumption. Artificial expansion of credit and its consequential decrease in interest rates sends signals that this was a product of increased savings, when in fact the low interest rates are not really brought about through a chance in the consumer’s time preference. Instead, the consumer is still demanding lower order goods, while businesses are investing in higher order goods. Although artificial prosperity is a short-term result (referred to as the boom period), a recession (or the bust) period is inevitable. A simultaneous increase in both investment and consumption is unsustainable.
Jonach’s reign was also marked with the rise of corporate welfare. Mercantilism was introduced as the government’s premier economic system under the guise of “absolute capitalism”. That is, supposedly, a capitalism that was more inclined towards an Imperial system of government. Ultimately, these policies led to government intervention to protect industry in the most “Imperial” regions, such as Díenstad (not to be confused with the region of Greater Díenstad) and the Imperial Province (where Fedala, the Second Empire’s capital city, is located). Government subsidization of these businesses is what led to the widespread dissent amongst businessmen in the regions of Weigar and Sarcanza (although the latter is relatively unpopulated, the former is one of the premier industrial regions of the Empire), and ultimately of the people. Jonach’s death and the rise of Fedor marked a new chapter in the Empire’s tragic history. Although superficially the War of Golden Succession began as a result of Fedor’s coronation, and not that of his still-living father, Heinrich, the war’s roots are purely economic. Heinrich would have never found support for his cause to usurp his son’s throne had it not been for the dissent in Weigar, and ultimately in Sarcanza. Furthermore, Safehaven’s entry into the war a month after the rebellion had begun can find its roots in economic tyranny, as well. Safehaven’s economy had been suffering as a result of tariffs imposed on imports, especially towards foreign agriculture, in order to protect Ruskan farmers. And so, as a result of tyrannical mercantilism the Empire found itself immersed in one of the bloodiest wars in its history and subsequently in one of the worst economic depressions.
Despite the bust resultant of the unhampered inflationary boom which occurred between 2005 and 2018 (these are Macabee dates and do not correlate with the Gregorian calendar), at first Fedor did not pursue a “reactionary” (that is, one which supports the free-market) fiscal policy. Instead, he turned the gears of government and continued on the path of inflation and government spending. And so, recession passed into depression. Unemployment in the immediate aftermath of the War of Golden Succession neared 14%; although many unemployed found a job in the Fuermak (armed forces), this institution made up only .75% of the population (roughly 90 million effectives). Post-war labor policies, including the introduction of a minimum wage, the increase in the power of unions, introduction of maximum labor hours and other similar interventionist schemes caused unemployment to soar to an all-time high of 25%. This was, in no doubt, fueled, as well, by the loss in confidence in the nation’s monetary system and financial institution, and the popping of the unsustainable credit bubble. And so, 2018 became a dark blotch in the history of the Empire’s economy. In the midst of economic crisis, Fedor decided to launch the invasion of Theohuanacu in an effort to undermine the Holy Empire’s authority in the southern portions of Greater Díenstad. By January 2019, there was seemingly no end in sight to the violent and irrepressible government spending spree enacted by Emperor Fedor. For many free-market economists, the complete collapse of the Empire’s economy seemed near. And yet, their fears continued unheeded.
The Second Empire, which continued to radiate signals of political power and stability to the foreign world, was on the brink of chaos.
The Macabee campaign in Theohuanacu has brought about both negative and positive consequences. Before we embark on exploring the positive aspects of the invasion, we should first study the negative. Ultimately, the negative led to the positive. The violent insurgency in Theohuanacu was only the product of mercantilism and the subjugation of the people’s liberty. The Imperial campaign to forcefully end the insurgency against its hegemony was just an extension of the destruction of wealth caused by the Imperial administration. The diversion of private resources into a war had only caused greater economic hardships for those ruled by Fedor. On the other hand, the campaign in Theohuanacu seems to have been the last straw. Fedor seems to have seen the follies of his policies, calling for the complete reconstruction of his ideologies. The horrors of Theohuanacu, unfortunate to humanity in the short-run as they may be, were necessary (although, admittedly, it would have been better for Fedor to become enlightened a tad earlier) for him to realize that only the allowance of liberty could quell the growing anti-government sentiment in the Empire and the insurgency in Theohuanacu. As a result, Fedor I has introduced the most extreme policies of any emperor (in any of the two historic empires of the Golden Throne), decreasing the role of government and establishing the premise for liberty.
Road to Liberty: Political Mechanics of a Free-Market
There are those who believe that politics and economics are two separate forces. They are wrong. Politics is only an extension of economics. By its very nature, Capitalism (the free-market) is a political system, because at its deepest roots it requires the lack of government. In other words, pure Capitalism calls for political anarchy; that is, the abolition of government in its entirety. As a result, government is simply socialism. There are varying degrees of socialism, including relatively free socialist states and then extremely tyrannical socialist governments (such as Communists and Fascists, which are one in the same). It turns out, surprising to some as it may be, that politics is always shaped by economics. The need for government stems from a perceived need for regulation; or, perhaps, not so much a need, as an ambition of some to govern many. Everything that has to do with government has to do with economics. There has not been a single decision made by any government, throughout history, that has not been dictated by economic necessity. Economics is simply the science of human liberty, and by extension one of government, as well. To put it in another way, engineering is dictated by the science of physics. Government is dictated by the science of economics. And so, the degree of liberty decides the degree of government. Fedor’s free-market policies of the post-2018 Empire have inevitably caused a decrease in government size and an increase in personal liberties.
What policies has Fedor enacted insofar?
Abolishment of central banking: Economists which currently hold sway in the inner circles of the Empire’s politics suggest that central banking (although, more accurately, they consider any government meddling in monetary policy as a detraction of liberty) is what causes the business cycle. Empirical evidence seems to suggest that they are correct. The indubitable inflation of the supply of credit through the purchase of loans and acceptances increases member bank’s reserves, artificially decreasing interest rates (since the supply of credit has increased). The decrease in interest rates sends a signal to businesses that they should begin investing into higher-order capital goods (those which take more time to manufacture). And so, the artificial supply of credit gives false signals, prompting an increase in investment (while consumption has not decreased, and real savings have not increased). This catalyzes malinvestment, and ultimately the bubble pops when industry finally figures that their growth was unsustainable since it was not met by any real demand. Although central banking is not necessary for government-induced inflation, it is a main contributing factor to the indubitable increase in proportions of the boom. Central banking also cartelizes the banking industry, allowing banks to offer more dangerous loans under the impression that they will be bailed out by the government and central bank when the time comes. As a result, the concept of moral hazard is eliminated. This theory has ended with Fedor abolishing the central bank and pushing for a movement towards completely free banking. He is not enforcing any banking reforms, as opposed to the idea that he is allowing banks to make a free choice based on their prospects and speculations.
Abolishment of minimum wage: Minimum wage has been one of the primary contributors to unemployment. Imagine an industry which pays a market-set wage (which is just the price of labor) of 5 Ríokmarks an hour, and the government imposes a price floor (for labor) of 6 Ríokmarks an hour. Either the company will begin to produce at a loss (the labor is worth more than the product, or lese the wage rate set by the market would have been higher), or the company will fire people in order to make up for the losses. In the case that in neither way can the company make up for the loss (firing employees cuts productivity), the company will go under, which means that all of its employees are suddenly unemployed. As a result, although the purchasing parity of the worker theoretically increases (let’s assume that it does), the proportion of unemployed to employed increases at the same rate. It is just a redistribution of wages amongst the labor force, not an increase in total money supply. A healthy increase in wages can only come about through an increase in productivity and competition (for labor). In this fashion, applied to the entirety of the Macabee economy, the minimum wage has become a bane in the years of recession (during a boom, if the minimum wage is beneath the market price for labor then the minimum wage becomes irrelevant). It’s expected that the abolishment of minimum wage will bring the economy to full employment (natural unemployment) by the end of the year.
Reduction of military spending: In an effort to decrease the burden of government on the people of the Empire, Emperor Fedor described a detailed plan to reduce the size of the armed forces, from an estimated 90 million soldiers to a force of five million effectives (which is still two and a half times greater than the size of the military prior to the War of Golden Succession). The initial steps will be to decrease the size of the occupation forces in Theohuanacu from 500,000 to 100,000, and decrease the size of the contingent in Guffingford from around fifteen million to only one and a half million, most of which will remain inside the territory, and not on the border with the Stevidian occupied zone. However, there are many warning against the “inevitable” rise in unemployment that the demobilization of roughly 85 million soldiers will do. However, the increase in the available money to the private sector (through a decrease in government spending) will lead to greater consumption or investment, ultimately increasing productivity and increasing the demand for labor. In most free-markets evidence suggests that healthy, private industry has quickly assimilated demobilized soldiers into the labor force without a long period of unemployment or poverty.
Other government spending cut: The Empire has reduced welfare, including reduction of welfare towards public healthcare. In fact, the only area with a comparatively large budget remains public security (law enforcement, et cetera). Government spending will be reduced by as much as two hundred trillion, ending a massive drain on private capital (it must be remembered that government doesn’t create, it only destroys, when it comes to the use of capital). To show for a decrease in spending, the government has eliminated all income taxes and decreased consumption taxes across the board. In fact, low consumption taxes on most goods (and some high consumption taxes on a minor amount of goods) are the only form of taxation really left in the Empire, as profit taxes on corporations has also been eliminated. The aim is to gradually decrease the amount of tax needed to literally offer liberty to those that are forced to pay it. However, the government has recently backtracked and has increased the government budget from 66 trillion to 69 trillion recently, although this is still nowhere close to the original spending figure. This reduction of taxes has included people living in occupied territories, including Theohuanacu.
The legalization of all drugs has also caused a cut in government bureaucracy, further slashing government burden on the people. Speed limits on roadways have been eliminated, amongst other archangel and punitive laws. For example, it’s expected that over the next decade the prison population of the Empire will be cut by more than half through the elimination of such laws such as the ‘3-strikes’ law and other anti-crime legislation which has increased the prison term sentences of non-violent criminals. Since the government has vowed to cut all corporate welfare, it’s expected that the prison systems will soon become completely private.
Ending corporate welfare: One of the most widely publicized decisions made by the government is to end subsidization of all industries, including agriculture (heavily subsidized, especially after the destruction of much cropland in Ruska during the War of Golden Succession), petroleum and armaments manufacturing. In fact, the government has gone as far as to remove price floors, instead opting for a return to complete market liberty. It’s expected that the price of these goods will drop considerably in the coming months, effectively increasing the purchasing power of Macabee citizens, making it much easier for citizens to procure necessities and other goods. The Empire’s mercantilism has been seen as one of the most destructive economic policies accepted by both Jonach and Fedor, and many economists (although not all) sees the liberalization of the market as a step-ahead towards a freer civilization in the Second Empire.
How the free-market establishes peace
The Empire’s approach towards greater economic liberty has already had effects on establishing peace within the Empire and within the region of Greater Díenstad, as a whole. For example, the “cold war” between the Second Empire and the Holy Empire (Stevid and Adaptes Astrates), and her allies, has began to dissipate. The once heavily fortified border zone in southern Guffingford has become one of the most stable frontiers in the region. Tens of thousands of troops have already been pulled off, as both governments realize that it has been economically disastrous for their respective nations to maintain those military installations in such great numbers. Naturally, the limitation of government’s ability to wage war, by decreasing the size of the military and the budget, has the long-lasting effect of reducing the means by which government can risk destabilizing peace. Furthermore, the need for war has been severely reduced as restricted trade has slowly turned into free-trade. In regards to peace inside the Empire itself, the increase in liberty, especially in territories, has decreased the need to rebel against the government. Indeed, citizens in Theohuanacu will soon enjoy greater freedoms than they did when they were independent of the Empire. Already, the effects on the strength of the insurgency have been felt.
The greatest blow to the insurgency has been the loss in support of the agricultural sector in southern Theohuanacu. The majority of these farmers grow what used to be illegal substances, including poppies, marijuana and other drug-producing plants. Since the finalization of prohibition the pressure on these farmers to rebel against authority, in order to protect their trade, has decreased. These farmers no longer have economic reasons to revolt, and indeed, they have more reason to support the Imperial government in Theohuanacu. They were not allowed to trade freely under the authority of the warlords either; oftentimes, their crop would be “taxed” in order to support the costs of a warlord’s security force. Their unrestricted trade under new Imperial law has become a welcoming factor. But farmers are not the only variable in the rebellion in the southern portions of the island. The main allies of the warlords are the pirates who have suffered a recent crackdown by Macabee ground, air and naval forces. Although the naval war continues, as Macabee warships protect their trade, restrictions on pirate activities have been lifted in part due to the legalization of parts of their own trade. Furthermore, due to cutbacks in the military budget, large portions of the Kriermada have been retired from southern seas. As a result, a defacto agreement has come into existence, due largely to the Kriermada’s inability to protect foreign shipping. Naturally, pirates have begun to target other nation’s shipping, which remains largely unprotected, and the Kriermada has not interfered. This has lessened the pirate’s requirements to war against the Imperial government.
And so, the military on the ground has consequently ended major military operations against the pirates (who’s major bases on the island had already been found and destroyed, regardless), and instead began to focus on the warlords. Warlord’s economic priorities are hard to meet, largely because they aren’t interested in free-trade, as much as they are interested in the power to fund themselves at the expense of the people they dictate. In an attempt to curtail this, the Imperial government has opened the road to partial autonomy in Theohuanacu, allowing a democratically elected local parliament to make local decisions. In theory, the Imperial government would intervene as little as possible. Without a constitution this agreement could be broken by the Imperial government whenever, but in the short-run the policy may work to temporarily appease a large portion of the warlords. These warlords now have the option of legally returning to power, through the parliament. Although not all warlords, or even most, can be appeased in this manner, it makes the military’s job considerably easier. Due to the government’s inability to bribe warlords through subsidization, the only means of establishing further peace is to continue the war against the insurgency. This is where the free-market takes an interesting turn.
In effect, the establishment of Imperial law in Theohuanacu also established clauses for the creation of personal property for the common civilian on the island. Warlords, who did not protect most of their citizen’s private property, consistently attack private land in order to cajole these new landowners into subsidizing, and sometimes even joining, the insurgency. This has issued a rise in local militias to fight the warlords. Although this movement is relatively minor, as the effects of the free-market have only just begun to show themselves, it’s expected that local militias will soon become the major part of the fight against the warlord’s insurgency. In effect, the government has created itself a new ally. In the long-run this could be counterproductive to Imperial power, as any curtailment of rights (or the local’s decision to fight for greater liberty) can result in these now trained local militias to turn against their former allies. But, that is something that the government is willing to worry about later. We must also work under the assumption that following the return to prosperity the burden of government will slowly increase (under the ratchet effect), and so “public security” in Theohuanacu is bound to increase again (to undermine the newfound power in the hands of the locals, through their voluntary militias). This, of course, will always be the bane of government, in general.
Nevertheless, for the time being the free-market has begun a general movement towards greater regional stability and peace. The Second Empire of the Golden Throne is quickly returning to prosperity, as private industry has liquidated its collective bad assets (bad assets will always exist, but not in such a collective manner as catalyzed by an artificial expansion in the credit supply) and confidence has been restored. Unemployment has begun to curve back down, and the Empire expects to reach full employment relatively quickly. This prosperity has lessened the need for the Empire to expand militarily, and military expansion has really become less of a priority. For now, Fedor is content in balancing the conquests he has already secured for himself and protecting his throne. This has stabilized international relations with several would be enemy countries, although heated politics continue nonetheless. Now, complete regional stability depends only on the tyrannical governments which still exist. These countries must adopt similar policies of liberty to stabilize themselves, and as a result stabilize the region. Only in this method can Greater Díenstad become a world leader in prosperity and freedom.
Peace Through Liberty: Market Stabilization in Greater Díenstad and Progress Towards Regional Peace
Gíorj Kest, PhD
Following the infamous War of Golden Succession, Greater Díenstad became the host of a cold war ready to turn hot. Indeed, immediately after the war, the Second Empire of the Golden Throne (the Macabee nation) embarked on campaigns of imperialism, taking advantage of the Holy Empire’s caution as to not spark another regional war. The destabilization of the region into chaos seemed eminent, as although all the “big players” remained wary of warring each other, they seemingly risked it all on the prospects of regional hegemony. This was underscored by the Golden Throne’s underhanded occupation of the free-city of Tarn, south of Adaptes Astrates, and the continental island of Theohuanacu. Indeed, if Greater Díenstad was ever leaning towards total war anew it was then. Theohuanacu served a more positive purpose, however. The fiat currency of the Second Empire had allowed the Empire to fund the War of Golden Succession through the virtual printing of money to an extent impossible under any sound currency, expanding credit to stimulate the war economy. Fearful of the repercussions of this economically suicidal monetary policy, His Imperial Majesty Fedor I decided to invest in further wars. Ultimately, the bubble popped and the Second Empire faces one of the deepest depressions in its economic history. Normally, governments have responded to these periods of “bust” by increasing the burden of government on the private sector, under the impression that uncontrolled government spending could make up for a reduction in demand for consumer goods (although even the theory of underconsumption is a falsity). Fedor I, however, undertook much more “radical” reforms, declaring a return to a free gold standard, eliminating the government-formed central bank and promising to avoid any “progressive” government intervention in the economy. This sudden emergence of the free-market in what is arguably the most influential nation in Greater Díenstad has allowed for the beginning of the return to prosperity, and just as importantly, has established the foundations for a region-wide peace.
Mercantilism: Éminence Grise of a War-Time Government
The Empire has been devoid of sound economic theory for much of its history. The Empire’s foundation was preceded by a century of inflation, as governments of the Great Civil War attempted to fix the price of gold and silver. This was one of the causes of the Second Empire’s economic hardships as it molded itself into a regional power. Although it was not in the interests of then monarch Jonach to introduce a sound monetary policy, his near agreement with the principles of laissez faire brought upon an era of undisputed prosperity. Such prosperity had not been seen by the citizens of the new Empire in the sorry span of their lives. Unfortunately, the return to prosperity was met with a return to artificial inflation through the government and the newly founded central bank. The expansion of credit lowered loan interest rates, stimulating the production of higher order capital-goods. It should be understood that higher-order capital goods are produced only to satiate future, long-term demand. They are a product of low interest rates, but it’s important to remember that low interest rates are naturally brought about by an increase in savings. This is merely a change in the consumer’s time preference, whereas the consumer does no longer desire current goods and therefore saves for future consumption. Artificial expansion of credit and its consequential decrease in interest rates sends signals that this was a product of increased savings, when in fact the low interest rates are not really brought about through a chance in the consumer’s time preference. Instead, the consumer is still demanding lower order goods, while businesses are investing in higher order goods. Although artificial prosperity is a short-term result (referred to as the boom period), a recession (or the bust) period is inevitable. A simultaneous increase in both investment and consumption is unsustainable.
Jonach’s reign was also marked with the rise of corporate welfare. Mercantilism was introduced as the government’s premier economic system under the guise of “absolute capitalism”. That is, supposedly, a capitalism that was more inclined towards an Imperial system of government. Ultimately, these policies led to government intervention to protect industry in the most “Imperial” regions, such as Díenstad (not to be confused with the region of Greater Díenstad) and the Imperial Province (where Fedala, the Second Empire’s capital city, is located). Government subsidization of these businesses is what led to the widespread dissent amongst businessmen in the regions of Weigar and Sarcanza (although the latter is relatively unpopulated, the former is one of the premier industrial regions of the Empire), and ultimately of the people. Jonach’s death and the rise of Fedor marked a new chapter in the Empire’s tragic history. Although superficially the War of Golden Succession began as a result of Fedor’s coronation, and not that of his still-living father, Heinrich, the war’s roots are purely economic. Heinrich would have never found support for his cause to usurp his son’s throne had it not been for the dissent in Weigar, and ultimately in Sarcanza. Furthermore, Safehaven’s entry into the war a month after the rebellion had begun can find its roots in economic tyranny, as well. Safehaven’s economy had been suffering as a result of tariffs imposed on imports, especially towards foreign agriculture, in order to protect Ruskan farmers. And so, as a result of tyrannical mercantilism the Empire found itself immersed in one of the bloodiest wars in its history and subsequently in one of the worst economic depressions.
Despite the bust resultant of the unhampered inflationary boom which occurred between 2005 and 2018 (these are Macabee dates and do not correlate with the Gregorian calendar), at first Fedor did not pursue a “reactionary” (that is, one which supports the free-market) fiscal policy. Instead, he turned the gears of government and continued on the path of inflation and government spending. And so, recession passed into depression. Unemployment in the immediate aftermath of the War of Golden Succession neared 14%; although many unemployed found a job in the Fuermak (armed forces), this institution made up only .75% of the population (roughly 90 million effectives). Post-war labor policies, including the introduction of a minimum wage, the increase in the power of unions, introduction of maximum labor hours and other similar interventionist schemes caused unemployment to soar to an all-time high of 25%. This was, in no doubt, fueled, as well, by the loss in confidence in the nation’s monetary system and financial institution, and the popping of the unsustainable credit bubble. And so, 2018 became a dark blotch in the history of the Empire’s economy. In the midst of economic crisis, Fedor decided to launch the invasion of Theohuanacu in an effort to undermine the Holy Empire’s authority in the southern portions of Greater Díenstad. By January 2019, there was seemingly no end in sight to the violent and irrepressible government spending spree enacted by Emperor Fedor. For many free-market economists, the complete collapse of the Empire’s economy seemed near. And yet, their fears continued unheeded.
The Second Empire, which continued to radiate signals of political power and stability to the foreign world, was on the brink of chaos.
The Macabee campaign in Theohuanacu has brought about both negative and positive consequences. Before we embark on exploring the positive aspects of the invasion, we should first study the negative. Ultimately, the negative led to the positive. The violent insurgency in Theohuanacu was only the product of mercantilism and the subjugation of the people’s liberty. The Imperial campaign to forcefully end the insurgency against its hegemony was just an extension of the destruction of wealth caused by the Imperial administration. The diversion of private resources into a war had only caused greater economic hardships for those ruled by Fedor. On the other hand, the campaign in Theohuanacu seems to have been the last straw. Fedor seems to have seen the follies of his policies, calling for the complete reconstruction of his ideologies. The horrors of Theohuanacu, unfortunate to humanity in the short-run as they may be, were necessary (although, admittedly, it would have been better for Fedor to become enlightened a tad earlier) for him to realize that only the allowance of liberty could quell the growing anti-government sentiment in the Empire and the insurgency in Theohuanacu. As a result, Fedor I has introduced the most extreme policies of any emperor (in any of the two historic empires of the Golden Throne), decreasing the role of government and establishing the premise for liberty.
Road to Liberty: Political Mechanics of a Free-Market
There are those who believe that politics and economics are two separate forces. They are wrong. Politics is only an extension of economics. By its very nature, Capitalism (the free-market) is a political system, because at its deepest roots it requires the lack of government. In other words, pure Capitalism calls for political anarchy; that is, the abolition of government in its entirety. As a result, government is simply socialism. There are varying degrees of socialism, including relatively free socialist states and then extremely tyrannical socialist governments (such as Communists and Fascists, which are one in the same). It turns out, surprising to some as it may be, that politics is always shaped by economics. The need for government stems from a perceived need for regulation; or, perhaps, not so much a need, as an ambition of some to govern many. Everything that has to do with government has to do with economics. There has not been a single decision made by any government, throughout history, that has not been dictated by economic necessity. Economics is simply the science of human liberty, and by extension one of government, as well. To put it in another way, engineering is dictated by the science of physics. Government is dictated by the science of economics. And so, the degree of liberty decides the degree of government. Fedor’s free-market policies of the post-2018 Empire have inevitably caused a decrease in government size and an increase in personal liberties.
What policies has Fedor enacted insofar?
Abolishment of central banking: Economists which currently hold sway in the inner circles of the Empire’s politics suggest that central banking (although, more accurately, they consider any government meddling in monetary policy as a detraction of liberty) is what causes the business cycle. Empirical evidence seems to suggest that they are correct. The indubitable inflation of the supply of credit through the purchase of loans and acceptances increases member bank’s reserves, artificially decreasing interest rates (since the supply of credit has increased). The decrease in interest rates sends a signal to businesses that they should begin investing into higher-order capital goods (those which take more time to manufacture). And so, the artificial supply of credit gives false signals, prompting an increase in investment (while consumption has not decreased, and real savings have not increased). This catalyzes malinvestment, and ultimately the bubble pops when industry finally figures that their growth was unsustainable since it was not met by any real demand. Although central banking is not necessary for government-induced inflation, it is a main contributing factor to the indubitable increase in proportions of the boom. Central banking also cartelizes the banking industry, allowing banks to offer more dangerous loans under the impression that they will be bailed out by the government and central bank when the time comes. As a result, the concept of moral hazard is eliminated. This theory has ended with Fedor abolishing the central bank and pushing for a movement towards completely free banking. He is not enforcing any banking reforms, as opposed to the idea that he is allowing banks to make a free choice based on their prospects and speculations.
Abolishment of minimum wage: Minimum wage has been one of the primary contributors to unemployment. Imagine an industry which pays a market-set wage (which is just the price of labor) of 5 Ríokmarks an hour, and the government imposes a price floor (for labor) of 6 Ríokmarks an hour. Either the company will begin to produce at a loss (the labor is worth more than the product, or lese the wage rate set by the market would have been higher), or the company will fire people in order to make up for the losses. In the case that in neither way can the company make up for the loss (firing employees cuts productivity), the company will go under, which means that all of its employees are suddenly unemployed. As a result, although the purchasing parity of the worker theoretically increases (let’s assume that it does), the proportion of unemployed to employed increases at the same rate. It is just a redistribution of wages amongst the labor force, not an increase in total money supply. A healthy increase in wages can only come about through an increase in productivity and competition (for labor). In this fashion, applied to the entirety of the Macabee economy, the minimum wage has become a bane in the years of recession (during a boom, if the minimum wage is beneath the market price for labor then the minimum wage becomes irrelevant). It’s expected that the abolishment of minimum wage will bring the economy to full employment (natural unemployment) by the end of the year.
Reduction of military spending: In an effort to decrease the burden of government on the people of the Empire, Emperor Fedor described a detailed plan to reduce the size of the armed forces, from an estimated 90 million soldiers to a force of five million effectives (which is still two and a half times greater than the size of the military prior to the War of Golden Succession). The initial steps will be to decrease the size of the occupation forces in Theohuanacu from 500,000 to 100,000, and decrease the size of the contingent in Guffingford from around fifteen million to only one and a half million, most of which will remain inside the territory, and not on the border with the Stevidian occupied zone. However, there are many warning against the “inevitable” rise in unemployment that the demobilization of roughly 85 million soldiers will do. However, the increase in the available money to the private sector (through a decrease in government spending) will lead to greater consumption or investment, ultimately increasing productivity and increasing the demand for labor. In most free-markets evidence suggests that healthy, private industry has quickly assimilated demobilized soldiers into the labor force without a long period of unemployment or poverty.
Other government spending cut: The Empire has reduced welfare, including reduction of welfare towards public healthcare. In fact, the only area with a comparatively large budget remains public security (law enforcement, et cetera). Government spending will be reduced by as much as two hundred trillion, ending a massive drain on private capital (it must be remembered that government doesn’t create, it only destroys, when it comes to the use of capital). To show for a decrease in spending, the government has eliminated all income taxes and decreased consumption taxes across the board. In fact, low consumption taxes on most goods (and some high consumption taxes on a minor amount of goods) are the only form of taxation really left in the Empire, as profit taxes on corporations has also been eliminated. The aim is to gradually decrease the amount of tax needed to literally offer liberty to those that are forced to pay it. However, the government has recently backtracked and has increased the government budget from 66 trillion to 69 trillion recently, although this is still nowhere close to the original spending figure. This reduction of taxes has included people living in occupied territories, including Theohuanacu.
The legalization of all drugs has also caused a cut in government bureaucracy, further slashing government burden on the people. Speed limits on roadways have been eliminated, amongst other archangel and punitive laws. For example, it’s expected that over the next decade the prison population of the Empire will be cut by more than half through the elimination of such laws such as the ‘3-strikes’ law and other anti-crime legislation which has increased the prison term sentences of non-violent criminals. Since the government has vowed to cut all corporate welfare, it’s expected that the prison systems will soon become completely private.
Ending corporate welfare: One of the most widely publicized decisions made by the government is to end subsidization of all industries, including agriculture (heavily subsidized, especially after the destruction of much cropland in Ruska during the War of Golden Succession), petroleum and armaments manufacturing. In fact, the government has gone as far as to remove price floors, instead opting for a return to complete market liberty. It’s expected that the price of these goods will drop considerably in the coming months, effectively increasing the purchasing power of Macabee citizens, making it much easier for citizens to procure necessities and other goods. The Empire’s mercantilism has been seen as one of the most destructive economic policies accepted by both Jonach and Fedor, and many economists (although not all) sees the liberalization of the market as a step-ahead towards a freer civilization in the Second Empire.
How the free-market establishes peace
The Empire’s approach towards greater economic liberty has already had effects on establishing peace within the Empire and within the region of Greater Díenstad, as a whole. For example, the “cold war” between the Second Empire and the Holy Empire (Stevid and Adaptes Astrates), and her allies, has began to dissipate. The once heavily fortified border zone in southern Guffingford has become one of the most stable frontiers in the region. Tens of thousands of troops have already been pulled off, as both governments realize that it has been economically disastrous for their respective nations to maintain those military installations in such great numbers. Naturally, the limitation of government’s ability to wage war, by decreasing the size of the military and the budget, has the long-lasting effect of reducing the means by which government can risk destabilizing peace. Furthermore, the need for war has been severely reduced as restricted trade has slowly turned into free-trade. In regards to peace inside the Empire itself, the increase in liberty, especially in territories, has decreased the need to rebel against the government. Indeed, citizens in Theohuanacu will soon enjoy greater freedoms than they did when they were independent of the Empire. Already, the effects on the strength of the insurgency have been felt.
The greatest blow to the insurgency has been the loss in support of the agricultural sector in southern Theohuanacu. The majority of these farmers grow what used to be illegal substances, including poppies, marijuana and other drug-producing plants. Since the finalization of prohibition the pressure on these farmers to rebel against authority, in order to protect their trade, has decreased. These farmers no longer have economic reasons to revolt, and indeed, they have more reason to support the Imperial government in Theohuanacu. They were not allowed to trade freely under the authority of the warlords either; oftentimes, their crop would be “taxed” in order to support the costs of a warlord’s security force. Their unrestricted trade under new Imperial law has become a welcoming factor. But farmers are not the only variable in the rebellion in the southern portions of the island. The main allies of the warlords are the pirates who have suffered a recent crackdown by Macabee ground, air and naval forces. Although the naval war continues, as Macabee warships protect their trade, restrictions on pirate activities have been lifted in part due to the legalization of parts of their own trade. Furthermore, due to cutbacks in the military budget, large portions of the Kriermada have been retired from southern seas. As a result, a defacto agreement has come into existence, due largely to the Kriermada’s inability to protect foreign shipping. Naturally, pirates have begun to target other nation’s shipping, which remains largely unprotected, and the Kriermada has not interfered. This has lessened the pirate’s requirements to war against the Imperial government.
And so, the military on the ground has consequently ended major military operations against the pirates (who’s major bases on the island had already been found and destroyed, regardless), and instead began to focus on the warlords. Warlord’s economic priorities are hard to meet, largely because they aren’t interested in free-trade, as much as they are interested in the power to fund themselves at the expense of the people they dictate. In an attempt to curtail this, the Imperial government has opened the road to partial autonomy in Theohuanacu, allowing a democratically elected local parliament to make local decisions. In theory, the Imperial government would intervene as little as possible. Without a constitution this agreement could be broken by the Imperial government whenever, but in the short-run the policy may work to temporarily appease a large portion of the warlords. These warlords now have the option of legally returning to power, through the parliament. Although not all warlords, or even most, can be appeased in this manner, it makes the military’s job considerably easier. Due to the government’s inability to bribe warlords through subsidization, the only means of establishing further peace is to continue the war against the insurgency. This is where the free-market takes an interesting turn.
In effect, the establishment of Imperial law in Theohuanacu also established clauses for the creation of personal property for the common civilian on the island. Warlords, who did not protect most of their citizen’s private property, consistently attack private land in order to cajole these new landowners into subsidizing, and sometimes even joining, the insurgency. This has issued a rise in local militias to fight the warlords. Although this movement is relatively minor, as the effects of the free-market have only just begun to show themselves, it’s expected that local militias will soon become the major part of the fight against the warlord’s insurgency. In effect, the government has created itself a new ally. In the long-run this could be counterproductive to Imperial power, as any curtailment of rights (or the local’s decision to fight for greater liberty) can result in these now trained local militias to turn against their former allies. But, that is something that the government is willing to worry about later. We must also work under the assumption that following the return to prosperity the burden of government will slowly increase (under the ratchet effect), and so “public security” in Theohuanacu is bound to increase again (to undermine the newfound power in the hands of the locals, through their voluntary militias). This, of course, will always be the bane of government, in general.
Nevertheless, for the time being the free-market has begun a general movement towards greater regional stability and peace. The Second Empire of the Golden Throne is quickly returning to prosperity, as private industry has liquidated its collective bad assets (bad assets will always exist, but not in such a collective manner as catalyzed by an artificial expansion in the credit supply) and confidence has been restored. Unemployment has begun to curve back down, and the Empire expects to reach full employment relatively quickly. This prosperity has lessened the need for the Empire to expand militarily, and military expansion has really become less of a priority. For now, Fedor is content in balancing the conquests he has already secured for himself and protecting his throne. This has stabilized international relations with several would be enemy countries, although heated politics continue nonetheless. Now, complete regional stability depends only on the tyrannical governments which still exist. These countries must adopt similar policies of liberty to stabilize themselves, and as a result stabilize the region. Only in this method can Greater Díenstad become a world leader in prosperity and freedom.