The Daily Reckoning PRESENTS: The roots of Italian
fascism... as a case study for modern governments facing
(er, taking advantage of) tough economic times.
AS WE GO MARCHING
by Bill Bonner
"The mind thus turned loose, thus emancipated from facts,
took unexpected directions... "
- John T. Flynn
"One of the funny things about the situation... " Alexander
Chancellor began a sentence, speaking of the war in Iraq,
"is the way the Germans have come through this...
"They took the same position as the French - they didn't
want to get involved. But the American press focused on the
French as traitors and cowards... and hardly mentioned the
Germans."
The Germans occupy a special place in recent world history.
"Give a German a gun and he heads for France," was a common
expression in the last century.
"The Hun is either at your throat or at your feet," was
another.
People wondered what it was about the Germans that had made
them so ready to go to war... and so willing to go along
with ghastly deeds on a national scale. Was it something in
their blood, in their culture... or in their water?
Now, of course, the Hun has been tamed; the Kraut has
become a pacifist. America urges him to join the war
against Iraq, but he demurs; he has had his fill of war.
And so the question is more puzzling than ever. Has his
blood changed? His Kultur? Or his economy?
We raise the question after beginning a marvelous little
book by John T. Flynn, "As We Go Marching," written during
WWII.
Flynn argues that fascism had no particular connection to
the Germans themselves... nor was there anything in the
Teuton spirit that made them especially susceptible.
Instead, he points out that the creed was largely developed
by an Italian opportunist, Benito Mussolini. It was the fat
Italian who figured out the main parts - including the
glorious theatrical elements. The Germans merely added
their own corruptions and attached a peculiarly vicious
policy of persecuting, and later exterminating, Jews.
But it is Flynn's description of the economic circumstances
in Italy in the late 19th and early 20th centuries - the
fertile soil in which fascism took root and flourished -
that caught our attention.
Italy went to war, in the month of September, 1911, against
Turkey. The war was over 12 months later and soon forgotten
by everyone.
But the impulse that drove the Italians to war in the first
place... and led to their next move... was the focus of
Flynn's attention:
"The vengeance of the Italian spirit upon Fate was not
appeased. Instead, the appetite for glory was whetted. And
once more glory did its work upon the budget. But once more
peace - dreadful and realistic peace - peace the bill
collector, heavy with her old problems - was back in Rome.
The deficits were larger. The debt was greater... the
various economic planners were more relentless than ever in
their determination to subject the capitalist system to
control."
Perhaps they should have lowered interest rates. Or
pressured China to raise its currency. Any policy
initiative, no matter how absurd, could be considered. As
Flynn puts it: "Out of Italy [as out of America currently]
had gone definitely any important party committed to the
theory that the economic system should be free."
Italy had dug herself into a deep hole of debt. Between
1859 - when the centralized Italian state came into being -
and 1925, the government ran deficits more than twice as
often as it ran surpluses. Politicians, who depended upon
giving away other people's money, found themselves with
little left to give away.
"All the old evils were growing in malignance," writes
Flynn. "The national debt was rising ominously. The army,
navy, and social services were absorbing half the revenues
of the nation. Italy was the most heavily taxed nation in
proportion to her wealth in Europe."
Of course, there followed many episodes of financial
risorgimento and many pledges to put the books in order.
None of it stuck for long. Italian politicians were soon
making promises again.
When grand promises must be fulfilled, debt creeps
higher... and so does the resistance of taxpayers and
lenders, especially from conservative groups.
"Hence it becomes increasingly difficult to go on spending
in the presence of persisting deficits and rising debt,"
writes Flynn. "Some form of spending must be found that
will command the support of conservative groups. Political
leaders, embarrassed by their subsidies to the poor, soon
learned that one of the easiest ways to spend money is on
military establishments and armaments, because it commands
the support of the groups most opposed to spending."
Military spending gives an economy the false impression of
growth and prosperity. People are put to work building
expensive military hardware. Assembly lines roll and smoke
stacks smoke. Plus, the spending goes into the domestic
economy. Americans, for example, may buy their gee-gaws
from China, but their tanks are homemade.
Military adventures not only seem to stimulate the domestic
economy; they also goose up popular support for government.
Soon, "it was a time for greatness... " as Flynn describes
the approach of war. War, Giovanni Papini raved, was "the
great anvil of fire and blood on which strong peoples are
hammered."
The romantic appeal of war... and the political pull of
military spending... the economic delusion... the polished
brass and boots... it was all too much to resist. Despite a
disastrous experience in WWI, under Mussolini's leadership,
even the fun-loving Italians were soon marching around like
popinjays and getting out maps of Abysinnia.
Even Americans were impressed. "He is something new and
vital in the sluggish old veins of European politics," said
Sol Bloom, then chairman of the House Foreign Relations
Committee in 1926. "It will be a great thing not only for
Italy but for all of us if he succeeds."
In investments, as in war, an early defeat is often more
rewarding than a later one. Fortunately for the Italians,
the African campaign was a fiasco. In a few years,
Mussolini was hanging from a meat hook and Italians went
back to making shoes, handbags and pasta.
Bill Bonner
P.S. Mussolini was the perfect fascist. Like America's
leading neo-cons, he was really a leftist... who saw an
opportunity. And also like America's neo-cons, he was an
admirer of Machiavelli, who believed that the ruler "must
suppose all men bad and exploit the evil qualities in their
nature whenever suitable occasion offers."
Editor's Note: Bill Bonner is the founder and editor of The
Daily Reckoning. He is also the author, with Addison
Wiggin, of "Financial Reckoning Day: Surviving The Soft
Depression of The 21st Century" (John Wiley & Sons)
available... as of this morning!