The ‘Khaldun Curve’ | Nima Sanandaji

Ideas change the world. A good example of this is how the global view of taxation quietly began shifting one afternoon in 1974. That afternoon, the American economist Arthur Laffer met with Dick Cheney and Donald Rumsfeld, who both were working for the Nixon-Ford Administration at the time. The topic at hand was taxes, a pressing matter at a time when the highest marginal tax rate in the US was fully 70 per cent.

 

During the meeting, Laffer explained that the relationship between the tax revenues and the tax rate was not as simple as one would expect. Doubling the tax rate, for example, does not double the tax revenues, because higher taxes disincentives people from working. To illustrate his point, Laffer famously sketched a curve on a napkin. It showed that both a tax rate at zero per cent and one at hundred per cent would yield no tax revenues.

 

 

A tax rate of zero per cent would logically mean zero revenues, and one at 100 per cent would disincentives people completely from working, which also means zero revenues. The implication, Laffer noted, is that somewhere between zero and hundred per cent, there is a tipping point. Above this point, raising the tax rates would actually lead to such a damaging effect on economic incentives, that the collected taxes would actually be lower after the tax rate was raised.

 

Ibn Khaldun (1377) - Taxation and the reason for low and high tax revenues.

 

[...] The funny thing is that Arthur Laffer’s theory was far from new. He was rediscovering a concept that had been acknowledged during the Islamic Golden Age period of free market policy. Laffer has himself explained that he didn’t invent the curve, but took it from Ibn Khaldun, a 14th-century Muslim, North African philosopher. Indeed, many of the ideas we today associate with Western free-market thinkers originated in the Islamic world.

Quoted from:
Nima Sanandaji (2018) - Why the Laffer Curve should really be called the ‘Khaldun Curve’.

See also:
Ibn Khaldun (1377) - The Muqaddimah. An Introduction to History.
Amilcare Puviani (1903) - Theory of Financial Illusion. 

Stephen Moore & Arthur B. Laffer (2018) - Trumponomics. Inside the America First Plan to Revive Our Economy.

Robert Irwin (2018) - Ibn Khaldun: An Intellectual Biography.

The Fate of Empires | John Bagot Glubb

Lieutenant-General Sir John Bagot Glubb (1897 – 1986), known as Glubb Pasha, was a British army officer, scholar, and author, who led the Transjordan's Arab Legion between 1939 and 1956 as its commanding general. Glubb was a man of his time and class, he wrote some 20 books about the Arab world and Islam, and in 1978 a short treatise titled “The Fate of Empires and Search for Survival”. In this he describes a rising civilization as a society where people have a sense of duty and service, practical attitudes, a strong merchant class, and a desire for conquest.  

 

The characteristics of a falling civilizations include frivolity, love of money instead of duty, excessive reverence for celebrities, and the rise of intellect over action. Despite an empire’s geographic, religious, cultural, and technological differences, they all follow the same pattern of expansion, development, decline, and collapse. Using this knowledge, Glubb hoped that through understanding how empires decline, the British Empire could stand a chance at avoiding the same fate. Although the rise and fall of civilization are as unstoppable as the change of seasons, countries can mitigate losses by preparing for the future. 

 

Glubb formulates a set of patterns that empires experience until their eventual collapse. His framework consists of six stages that are characteristic of superpowers and follows the idea of cyclical paradigms in the historical record. Glubb estimates that on average empires last 250 years or 10 generations:

 

1. The Age of Pioneers (The Outburst)
2. The Age of Conquest
3. The Age of Commerce
4. The Age of Affluence (The High Noon)
5. The Age of Intellect
6. The Age of Decadence (Midnight)

Glubb’s formulation of collapse is inherently controversial, but he understands this keenly. Those living in or around a “collapsing” empire could never truly observe it, at least not directly - after all no citizen easily perceives or admits that the empire is failing or has failed. The human spirit is adaptive, and embraces many harsh and diverse conditions with exceptional ease. It is not a “gradually, then suddenly” - but a perpetuity of gradual decline. A collapse is realized centuries later by future hopefuls far removed, or in Glubb’s grim case, barbarians. Glubb’s sense of collapse implies a steady and progressive softening and weakening of an empire, nation, or power. “Empires do not usually begin or end on a certain date. There is normally a gradual period of expansion and then a period of decline. Human affairs are subject to many chances, and it is not to be expected that they could be calculated with mathematical accuracy.” 

 

“The only thing we learn from history, is that men never learn from history”. His central proposition on collapse stems from the questionable way empires pass down history. Glubb considered an accurate generational transfer of history a crucial guard against collapse. Powers that retained fairly objective histories would win out in the long run as a matter of historical record in Glubb’s view. “Our people are represented as patriotic heroes, their enemies as grasping imperialists, or subversive rebels. In other words, our national histories are propaganda, not well-balanced investigations.” Further, in the wider historical sense, Glubb argues that for world history to be useful - it must be an accurate and collective history of the human race. “Any useful lessons to be derived must be learned by the study of the whole flow of human development, not by the selection of short periods here and there in one country or another.”

 

Age of Pioneers

The age of pioneers is marked by a sense of freedom and boldness characteristic of new encounters with the unknown. Pioneers are not limited to conventions or traditions. The leaders of the pioneers are creative, set the stage, and are free to improvise unique solutions and compromises. The old virtues - diligence, courage, honor, and loyalty rule the day. “Uninhibited by textbooks or book learning, action is their solution to every problem.”

 

Age of Conquest

The age of conquest is a period of military action and land acquisition. Glubb marks this period by the simmering desire for commerce and wealth by the public. The military may be proud and honorable, but conquest is driven mainly by a merchant class who usher in the age of commerce. “During the military period, glory and honor were the principal objects of ambition. To the merchant, such ideas are but empty words, which add nothing to the bank balance.”

 

Age of Commerce

Glubb marks the age of commerce by the ease at which goods are transported. In this period, trade is simplified and the ease of doing business maximized. The empire controls all trade routes, resulting in little to no interdependence in the domains of commerce and travel. “The means of transport were slower, but, when a great empire was in control, commerce was freed from the innumerable shackles imposed upon it today by passports, import permits, customs, boycotts and political interference.”

Age of Affluence

The age of affluence is identified by a subtle distinction in the value and utility of education. In an empire’s high noon, knowledge is viewed only as a path to riches, with its practical and virtuous foundations taking an indefinite back seat. Glubb intuits that as with the Arab decline, there is a gradual loss of knowledge that would have bolstered the empire’s institutions. “The Arab moralist, Ghazali (1058-1111), complains in these very same words of the lowering of objectives in the declining Arab world of his time. Students, he says, no longer attend college to acquire learning and virtue, but to obtain those qualifications which will enable them to grow rich.”

Age of Intellect

The age of intellect is marked by the common idea that education will solve all the problems in the world. It is this idea that underscores what Glubb terms “the inadequacy of intellect”. Glubb’s banal observation is that problem solving and cohesion among people depend simply on the principles that encourage self–sacrifice, loyalty, courage, and trust. Intellect is a product of these old virtues, and not the primary ingredient. “In a wider national sphere, the survival of the nation depends basically on the loyalty and self–sacrifice of the citizens. The impression that the situation can be saved by mental cleverness, without unselfishness or human self–dedication, can only lead to collapse.”

Age of Decadence

The age of decadence is signaled by increased pessimism and cynicism among citizens as the empire marches towards midnight. Civil dissensions predominantly in matters of politics become more tribal and pronounced. The pervasive pessimism and cynicism is assuaged through various means and frivolity becomes the order of the day. Glubb writes: “Frivolity is the frequent companion of pessimism. Let us eat, drink and be merry, for tomorrow we die. The resemblance between various declining nations in this respect is truly surprising. The Roman mob, we have seen, demanded free meals and public games. Gladiatorial shows, chariot races and athletic events were their passion. In the Byzantine Empire the rivalries of the Greens and the Blues in the hippodrome attained the importance of a major crisis. Judging by the time and space allotted to them in the Press and television, football and baseball are the activities which today chiefly interest the public in Britain and the United States respectively. The heroes of declining nations are always the same - the athlete, the singer or the actor. The word ‘celebrity’ today is used to designate a comedian or a football player, not a statesman, a general, or a literary genius.” 

 

“In 10th century Baghdad, contemporary historians lamented the decadence of the period, which was signified by who the citizens considered their heroes. [They] deeply deplored the degeneracy of the times in which they lived, emphasizing particularly the indifference to religion, the increasing materialism and the laxity of sexual morals. They lamented also the corruption of the officials of the government and the fact that politicians always seemed to amass large fortunes while they were in office. The historians commented bitterly on the extraordinary influence acquired by popular singers over young people, resulting in a decline in sexual morality. The ‘pop’ singers of Baghdad accompanied their erotic songs on the lute, an instrument resembling the modern guitar. In the second half of the tenth century, as a result, much obscene sexual language came increasingly into use, such as would not have been tolerated in an earlier age. Several khalifs issued orders banning ‘pop’ singers from the capital, but within a few years they always returned.”

When the welfare state was first introduced in Britain, it was hailed as a new high-water mark in the history of human development. History, however, seems to suggest that the age of decline of a great nation is often a period which shows a tendency to philanthropy and to sympathy for other races. This phase may not be contradictory to the feeling described in the previous paragraph, that the dominant race has the right to rule the world. For the citizens of the great nation enjoy the role of Lady Bountiful. As long as it retains its status of leadership, the imperial people are glad to be generous, even if slightly condescending. The rights of citizenship are generously bestowed on every race, even those formerly subject, and the equality of mankind is proclaimed. The Roman Empire passed through this phase, when equal citizenship was thrown open to all peoples, such provincials even becoming senators and emperors. The Arab Empire of Baghdad was equally, perhaps even more, generous. During the Age of Conquests, pure-bred Arabs had constituted a ruling class, but in the ninth century the empire was completely cosmopolitan. State assistance to the young and the poor was equally generous. University students received government grants to cover their expenses while they were receiving higher education. The State likewise offered free medical treatment to the poor. The first free public hospital was opened in Baghdad in the reign of Harun al-Rashid (786-809), and under his son, Mamun, free public hospitals sprang up all over the Arab world from Spain to what is now Pakistan. The impression that it will always be automatically rich causes the declining empire to spend lavishly on its own benevolence, until such time as the economy collapses, the universities are closed and the hospitals fall into ruin. It may perhaps be incorrect to picture the welfare state as the high-water mark of human attainment. It may merely prove to be one more regular milestone in the life-story of an ageing and decrepit empire. 

 

It is of interest to note that decadence is the disintegration of a system, not of its individual members. The habits of the members of the community have been corrupted by the enjoyment of too much money and too much power for too long a period. The result has been, in the framework of their national life, to make them selfish and idle. A community of selfish and idle people declines, internal quarrels develop in the division of its dwindling wealth, and pessimism follows, which some of them endeavor to drown in sensuality or frivolity. In their own surroundings, they are unable to redirect their thoughts and their energies into new channels.

 

 

But when individual members of such a society emigrate into entirely new surroundings, they do not remain conspicuously decadent, pessimistic or immoral among the inhabitants of their new homeland. Once enabled to break away from their old channels of thought, and after a short period of readjustment, they become normal citizens of their adopted countries. Some of them, in the second and third generations, may attain pre-eminence and leadership in their new communities. This seems to prove that the decline of any nation does not undermine the energies or the basic character of its members. Nor does the decadence of a number of such nations permanently impoverish the human race.

Decadence is both mental and moral deterioration, produced by the slow decline of the community from which its members cannot escape, as long as they remain in their old surroundings. But, transported elsewhere, they soon discard their decadent ways of thought, and prove themselves equal to the other citizens of their adopted country. Neither is decadence physical. The citizens of nations in decline are sometimes described as too physically emasculated to be able to bear hardship or make great efforts. This does not seem to be a true picture. Citizens of great nations in decadence are normally physically larger and stronger than those of their barbarian invaders [...] Decadence is a moral and spiritual disease, resulting from too long a period of wealth and power, producing cynicism, decline of religion, pessimism and frivolity. The citizens of such a nation will no longer make an effort to save themselves, because they are not convinced that anything in life is worth saving."

If superpowers inevitably break down around the 10th generation, then in Glubb’s framework the global empire of the United States would be superseded by another great power by the year 2026 at the very least.

Reference: 

John Bagot Glubb (1978) - The Fate of Empires and Search for Survival.

 

See also:

Ibn Khaldun (1377) - Muqaddimah (مقدّمة ابن خلدون.).

Serge Bernard (Jul 25, 2016) - From Conquest To Affluence To Collapse: The 250 Year Empire Life Cycle.

John Mearsheimer (2001) - The Tragedy of Great Power Politics.

William Strauss & Neil Howe (1997) - The Fourth Turning.

Oswald Spengler (1918) - The Decline of the West.

 

When the ordinary thought of a highly cultivated people begins
to regard 'having children' as a question of pro's and con's,
the great turning point has come. - Oswald Spengler, 1918

Where did Steve Bannon get his Worldview? From my Book. │ Neil Howe

Steve Bannon - Trump’s chief strategist.

Neil Howe (Feb 24, 2017) - The headlines this month have been alarming. “Steve Bannon’s obsession with a dark theory of history should be worrisome” (Business Insider). “Steve Bannon Believes The Apocalypse Is Coming And War Is Inevitable” (Huffington Post). “Steve Bannon Wants To Start World War III” (The Nation). A common thread in these media reports is that President Trump’s chief strategist is an avid reader and that the book that most inspires his worldview is “The Fourth Turning: An American Prophecy.”

I wrote that book with William Strauss back in 1997. It is true that Bannon is enthralled by it. In 2010, he released a documentary, “Generation Zero”, that is structured around our theory that history in America (and by extension, most other modern societies) unfolds in a recurring cycle of four-generation long eras. While this cycle does include a time of civic and political crisis — a Fourth Turning, in our parlance — the reporting on the book has been absurdly apocalyptic.

I don’t know Bannon well. I have worked with him on several film projects, including “Generation Zero,” over the years. I’ve been impressed by his cultural savvy. His politics, while unusual, never struck me as offensive. I was surprised when he took over the leadership of Breitbart and promoted the views espoused on that site. Like many people, I first learned about the alt-right (a far-right movement with links to Breitbart and a loosely defined white-nationalist agenda) from the mainstream media. Strauss, who died in 2007, and I never told Bannon what to say or think. But we did perhaps provide him with an insight — that populism, nationalism and state-run authoritarianism would soon be on the rise, not just in America but around the world.

Because we never attempted to write a political manifesto, we were surprised by the book’s popularity among certain crusaders on both the left and the right. When “The Fourth Turning” came out, our biggest partisan fans were Democrats, who saw in our description of an emerging “Millennial Generation” (a term we coined) the sort of community-minded optimists who would pull America toward progressive ideals. Yet we’ve also had conservative fans, who were drawn to another lesson: that the new era would probably see the successful joining of left-wing economics with right-wing social values. Beyond ideology, I think there’s another reason for the rising interest in our book. We reject the deep premise of modern Western historians that social time is either linear (continuous progress or decline) or chaotic (too complex to reveal any direction). Instead we adopt the insight of nearly all traditional societies: that social time is a recurring cycle in which events become meaningful only to the extent that they are what philosopher Mircea Eliade calls “reenactments.” In cyclical space, once you strip away the extraneous accidents and technology, you are left with only a limited number of social moods, which tend to recur in a fixed order.

Along this cycle, we can identify four “turnings” that each last about 20 years — the length of a generation. Think of these as recurring seasons, starting with spring and ending with winter. In every turning, a new generation is born and each older generation ages into its next phase of life.

The cycle begins with the First Turning, a “High” which comes after a crisis era. In a High, institutions are strong and individualism is weak. Society is confident about where it wants to go collectively, even if many feel stifled by the prevailing conformity. Many Americans alive today can recall the post-World War II American High (historian William O’Neill’s term), coinciding with the Truman, Eisenhower and Kennedy presidencies. Earlier examples are the post-Civil War Victorian High of industrial growth and stable families, and the post-Constitution High of Democratic Republicanism and Era of Good Feelings.

The Second Turning is an “Awakening”, when institutions are attacked in the name of higher principles and deeper values. Just when society is hitting its high tide of public progress, people suddenly tire of all the social discipline and want to recapture a sense of personal authenticity. Salvation by faith, not works, is the youth rallying cry. One such era was the Consciousness Revolution of the late 1960s and 1970s. Some historians call this America’s Fourth or Fifth Great Awakening, depending on whether they start the count in the 17th century with John Winthrop or the 18th century with Jonathan Edwards.

The Third Turning is an “Unraveling”, in many ways the opposite of the High. Institutions are weak and distrusted, while individualism is strong and flourishing. Third Turning decades such as the 1990s, the 1920s and the 1850s are notorious for their cynicism, bad manners and weak civic authority. Government typically shrinks, and speculative manias, when they occur, are delirious.

Finally, the Fourth Turning is a “Crisis” period. This is when our institutional life is reconstructed from the ground up, always in response to a perceived threat to the nation’s very survival. If history does not produce such an urgent threat, Fourth Turning leaders will invariably find one — and may even fabricate one — to mobilize collective action. Civic authority revives, and people and groups begin to pitch in as participants in a larger community. As these Promethean bursts of civic effort reach their resolution, Fourth Turnings refresh and redefine our national identity. The years 1945, 1865 and 1794 all capped eras constituting new “founding moments” in American history.

Just as a Second Turning reshapes our inner world (of values, culture and religion), a Fourth Turning reshapes our outer world (of politics, economy and empire).

September 11, 2001: The sinister Neocon Project for a New American Century, engineering "some
catastrophic and catalyzing event – like a new Pearl Harbor" — one generation ahead of time (HERE).

In our paradigm, one can look ahead and suggest that a coming time period — say, a certain decade — will resemble, in its essential human dynamic, a time period in the past. In “The Fourth Turning,” we predicted that, starting around 2005, America would probably experience a “Great Devaluation” in financial markets, a catalyst that would mark America’s entry into an era whose first decade would likely parallel the 1930s. Reflecting on the decade we’ve just lived through, we can probably agree that the 1930s parallel works well. In the economy, both decades played out in the shadow of a global financial crash, and were characterized by slow and disappointing economic growth and chronic underemployment of labor and capital. Both saw tepid investment, deflation fears, growing inequality and the inability of central bankers to rekindle consumption.

In geopolitics, we’ve witnessed the rise of isolationism, nationalism and right-wing populism across the globe. Geostrategist Ian Bremmer says we now live in a “G-Zero” world, where it’s every nation for itself. This story echoes the 1930s, which witnessed the waning authority of great-power alliances and a new willingness by authoritarian regimes to act with terrifying impunity. In social trends, the two decades also show parallels: falling rates of fertility and home-ownership, the rise of multi-generational households, the spread of localism and community identification, a dramatic decline in youth violence (a fact that apparently has eluded the president), and a blanding of pop youth culture. Above all, we sense a growing desire among voters around the world for leaders to assert greater authority and deliver deeds rather than process, results rather than abstractions.

September 1, 2005: FEMA-camp, New Orleans, in the aftermath of Hurricane Katrina (HERE).

We live in an increasingly volatile and primal era, in which history is speeding up and liberal democracy is weakening. As Vladimir Lenin wrote, “In some decades, nothing happens; in some weeks, decades happen.” Get ready for the creative destruction of public institutions, something every society periodically requires to clear out what is obsolete, ossified and dysfunctional — and to tilt the playing field of wealth and power away from the old and back to the young. Forests need periodic fires; rivers need periodic floods. Societies, too. That’s the price we must pay for a new golden age. If we look at the broader rhythms of history, we have reason to be heartened, not discouraged, by these trends. Anglo-American history over the past several centuries has experienced civic crises in a fairly regular cycle, about every 80 or 90 years, or roughly the length of a long human life. This pattern reveals itself in the intervals separating the colonial Glorious Revolution, the American Revolution, the Civil War, and the Great Depression and World War II. Fast-forward the length of a long human life from the 1930s, and we end up where we are today. 

America entered a new Fourth Turning in 2008. It is likely to last until around 2030. Our paradigm suggests that current trends will deepen as we move toward the halfway point. Further adverse events, possibly another financial crisis or a major armed conflict, will galvanize public opinion and mobilize leaders to take more decisive action. Rising regionalism and nationalism around the world could lead to the fragmentation of major political entities (perhaps the European Union) and the outbreak of hostilities (perhaps in the South China Sea, the Korean Peninsula, the Baltic states or the Persian Gulf).  

September 18, 2008: Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke met with key
legislators to propose a $700 billion emergency bailout. Bernanke reportedly told them: "If we
don't do this, we may not have an economy on Monday." (HERE)

Despite a new tilt toward isolationism, the United States could find itself at war. I certainly do not hope for war. I simply make a sobering observation: Every total war in U.S. history has occurred during a Fourth Turning, and no Fourth Turning has yet unfolded without one. America’s objectives in such a war are likely to be defined very broadly. At the end of the 2020s, the Fourth Turning crisis era will climax and draw to a close. Settlements will be negotiated, treaties will be signed, new borders will be drawn, and perhaps (as in the late 1940s) a new durable world order will be created. Perhaps as well, by the early 2030s, we will enter a new First Turning: Young families will rejoice, fertility will rebound, economic equality will rise, a new middle class will emerge, public investment will grow into a new 21st-century infrastructure, and ordered prosperity will recommence.

"Prestige lasts at best four generations in one lineage."
Muqaddimah (1377), Ibn Khaldun.

During the next First Turning, potentially the next “American High,” millennials will move into national leadership and showcase their optimism, smarts, credentials and confidence. Sometime in the late 2030s, the first millennial will be voted into the White House, prompting talk of a new Camelot moment. Let a few more years pass, and those organization-minded millennials may face a passionate and utterly unexpected onslaught from a new crop of youth. Welcome to the next Awakening. The cycle of history keeps turning, inexorably (see also HERE).

The Global Financial Crisis catalyzed by the 2008 financial meltdown in the US was the most severe
economic downturn since the Great Depression in the 1930s. With public trust continuing to ebb, the
regeneracy phase of this crisis still seems years away. Most likely, this Fourth Turning will come
to an end in the late 2020s, just as the Generation Zero/Millennials will embark on careers (HERE).