Circa1865

About 400 years before Christ, Athens, was perhaps the first republic overtaken by economic depression with widespread unemployment and many flocking to the Agora seeking aid. First the farmers were granted handouts, then came the laborers and others wanting their share. The ancient racket continues unabated today.

The New Deal: An Old Racket

“It is clear from Plutarch’s account that Pericles, the political ruler of Athens, understood the cause of the trouble. Plutarch describes the character of the workers who thronged into Athens clamoring for relief. They were, he tells us, brass workers, wood workers, smiths, moulders, founders, stonecutters, goldsmiths, ivory workers, and painters. It was perfectly obvious that Athens was in a depression because of the collapse of the building industry and particularly the extensive shipbuilding industry at Piraeus, the port of Athens. In other words, the capital goods industry was in a slump.

Its effects spread to others – to farmers, who were the first to get grants in aid through the munificence of the great man, Pericles. This encouraged the idle workmen to demand attention and they were given a dole amounting to six cents a day.

Pericles tried to lessen the effects of the depression by settling the unemployed in distant colonies. He sent 500 to the Isle of Naxos, 250 to Andros, a thousand to Thrace, and others to various colonies of Attica. And Plutarch observes that he did this “to discharge the city of the idle,” who were, by reason of their idleness, “a busy and meddlesome crowd of people.”

All this brought down the scorn of the wealthy conservative, Thuycidides (not the historian), who estimated that some 20,000 citizens one way or another were on the government payroll – which was something of an exaggeration.

In the end, Pericles tried to deal with the depression by a huge program of public works . . . a diminutive empire caught in the grip of those merciless economic laws which torment the far mightier empires of today. Thus trapped in an economic crisis, he turned to the second remedy of a sick society – borrowing.  Pericles decide to “borrow” [public defense funds guarded in the sacred treasury] to set in motion a big building program.

Pericles, the arch politician, insisted that [the defense funds] were in the hands of Athens to be used as it saw fit. He prevailed, and these funds were used to erect that magnificent collection of buildings on the Acropolis . . . But, in the end, Pericles turned to the third and most destructive and evil of the elements of his Athens New Deal – war.

The war with Sparta and her allies lasted for many years and ended with the downfall and humiliation of Athens and provided the tragic climax of this earliest of New Deals. Depression, caused by collapse of the heavy industries; then government doles paid for with taxes; great building and military enterprises to create work paid for with borrowed funds – in this case misused money – and finally war. Thus ended the New Deal in Athens.”

(The New Deal: An Old Racket; Forgotten Lessons: Selected Essays of John T. Flynn, Gregory P. Pavlik, editor, Foundation for Economic Education, Inc., 1996, excerpt pp. 55-56)