Niall Ferguson of the Financial Times, and surprisingly enough the reactionary right wing Hoover Institution at Stanford, has some interesting parallels between the present day US and the Decline of the Ottoman empire after about 1870.
The Ottoman empire is in bullet points, the US is indented further.
- After the Crimean war, the Ottoman Empire accumulated huge. Between 1855 and 1875, debt increased by a factor of 28.
- At the end of 1980 the federal debt was $994 billion, at the end of 2007, it was $9,350 Billion a factor of almost 10 (link).
- While some of the spending was for infrastructure, such as theSuez canal, but much was, “squandered on conspicuous consumption, symbolised by Sultan Abdul Mejid’s luxurious Dolmabahçe palace and the spectacular world premiere of Aïda at the Cairo Opera House in 1871.”
- Iraq, tax cuts for the wealthy, pork barrel projects, Star Wars, F-22, JSF, Future Combat System.
- There was a panic (financial crisis) in 1873 making further financing unavailable to the Ottomans
- Sub Prime Mess, 2007.
- In October 1875 the Ottoman government declared bankruptcy.
- Not yet, but it is quite literally the goal of much of the Republican party, like Grover Norquist, who, when not taking terrorist money to lobby, wants to “drown the federal government in a bathtub”.
- This led to the sale of the Suez Canal to the British, and foreign investors getting the right to other Ottoman revenues.
- Sale of significant shares of major financial institutions to foreign investors and foreign government sovereign wealth funds.
- For Egypt, this led to increasing British involvement in governance until eventually Egypt became a de facto colony.
- Not yet here, but you see this with the IMF and World Bank elsewhere in the world.
As Ferguson so succinctly puts it, “Debtor empires sooner or later have to do more than just sell shares to satisfy their creditors.”