The Forever War of Deposit Insurance

Serious question. What is the least moronic rationale you know of for why the system of deposit insurance in the US has a cap of $250,000? 

It is the nature of a lot of government policies that they start out as a proposed solution to a narrow problem. Then, they either fail to solve that problem, or they solve it so well that it threatens the viability of the jobs the program creates. But in either case, new rationales spring up, usually which the policy achieves increasingly poorly. In the end, you get a solution in search of new problems, but the solution itself never goes away. 

At first, we had to go to Afghanistan to kill those bastards who blew up our buildings. Then when we had only limited success in that, because said bastards were quite hard to find, we had to go there to blow up the Taliban, who supported the guys who blew up our buildings, and implicitly the Afghans who supported them. Then we had to stay there to fight terrorism in Afghanistan so we didn't have to fight it in New York. Then we had to stay there to liberate the poor Afghans from the Taliban, and impose women's rights and gay rights on goat herders in the mountains. At some point, nobody knew why the hell we were there, and Joe Biden's few cogent thoughts managed to steel enough resolve to finally get America out, albeit chaotically and humiliatingly.

Similarly, in the 1960s, we needed affirmative action because blacks were already as competent as whites, and only hostile, taste-based discrimination was keeping them out. Then when that didn't seem to be true on the test scores, we needed to get the first generation of black leaders in as role models for the younger generation to study hard earlier on, so they could see that they would also be able to be doctors and engineers, at which point it wouldn't be necessary. (Hilariously, Sandra Day O'Connor in Grutter v Bollinger actually committed to this principle and put a time line on it  - by 2028, it won't be necessary!) Then once that had gone on for a generation, and the test scores still weren't budging, we decided that actually having more blacks in these places was actually an end in itself. Unlike the Afghanistan War, this one shows no signs of going away. 

Deposit insurance has a similar flavor. It is still around, and bigger than ever. But the reasons why keep changing over time.

Which is to say, there is not much mystery as to why originally there was a limit on account size. The original idea was that bank runs were just a fact of life, and when they happened, we wanted to make sure that small depositors were protected and didn't lose their life savings. But since nobody was much interested in protecting fat cats with enormous amounts of cash, they weren't covered. 

Over time, instead the idea (cemented in Diamond Dybvig 1983) was that deposit insurance was actually important for preventing bank runs. At this point, you might already be starting to wonder whether the cap makes sense. Are there enough large depositors who aren't insured to cause a run? If there are, then suddenly the cap just looks counterproductive. This is especially so since the stated claim (not unreasonably) is that deposit insurance is actually much cheaper in practice than the size of the guarantee, because in equilibrium you don't actually need to pay out the guarantee if you prevent the run. Of course, the massive regulatory apparatus needed to manage the moral hazard created by the guarantee is far from free, but you're already paying that anyway, regardless of what the cap is. But we're still on the idea that the purpose here is protecting the depositors. Maybe the big guys don't get it, and we end up with some costs we didn't need to have, but too bad. We're not here to bail out fat cats. 

By 2008 in particular, the rationale had shifted again - we need to prevent bank runs not because they're bad for depositors (thought they are), but because they're bad for everyone else. Financial crises lead to reductions in the money supply (like in the depression, in the Milton Friedman description), and lead to large asset price declines, and both lead to reductions in real economic activity. We need to make sure that these don't occur - ex ante, we implement deposit insurance and regulation to prevent runs from happening, and ex post we grumblingly bail out systemically important financial institutions if they go under anyway. 

Of course, this new rationale is enormously larger and different in scope than what came before. The list of institutions where investors may have a run is basically anyone dependent on overnight financing, even if they're not a standard commercial bank. Bear Stearns. The Reserve Primary Fund. Lehman Brothers. AIG. And each one that goes down increases the likelihood of chaos elsewhere, even among places like AIG that didn't seem primarily dependent on overnight financing (but had sold credit default swaps to institutions who were). The Fed didn't seem happy about the implications of this. Are they suddenly guaranteeing everybody, everywhere? No, they said. No more bailouts. This policy was announced with Lehman's bankruptcy on the Monday. The policy lasted two days. AIG, which had written credit default swaps on Lehman, was now toast. If they'd gone down, Goldman and Citibank would have been next. So bailouts it was. 

But now you see the problem (especially for values of "you" that includes crypto institutions). Deposit insurance was brought in originally as something that was a reluctant admission to the demands of grateful depositors clamoring for protection. It eventually morphed into something you can't avoid even if you want to. If there's any chance you might have contagion to anything, anywhere, well now you're going to be regulated, notionally for your own good, perhaps for everyone else's good, but assuredly, because every bureaucracy wants to grow its power and influence. 

Parenthetically, I have a friend involved in a bank startup outside the US. I once asked him: "Do you ever think about how much easier it would be to run your entire bank using Tether or USDC, and base it in Yemen or Singapore, as long as you could just get a letter from the United States Government promising to leave you alone?"

His answer: "Every single day."

But, of course, like the schizophrenia of Afghanistan policy where we were simultaneously trying to punish and save the Afghan people, the strange carveout exception for depositors over $250K is still there, just hanging in the breeze. It's now one of the proximate causes of Silicon Valley Bank going bankrupt. Like nearly every bank run, the line between solvency and liquidity is blurry. The post mortems emphasize their unusual exposure to interest rate risk. If your risk management strategy is "assume the Fed will never meaningfully raise interest rates" ... well, actually, that was a disturbingly good bet for a very long time, until one day it wasn't. Still, don't let this distract you from the additional cause. Whatever problems this would have had, if you didn't have ~80% of depositors being above the FDIC limit, and thus uninsured, you wouldn't have had the run play out in the same way, and may not have had it at all. 

Janet Yellen couldn't make up her mind. Like the "no bailouts" policy, on the Sunday morning shows she was saying that large depositors wouldn't be protected. Whoops. That policy lasted about 8 hours. By the evening, they were. 

And even before this, you'd had these sob stories about how all these hard working startups were totally boned because they'd held their money in SVB. While it's easy to enjoy the schadenfreude of the supposedly brightest investors like Y Combinator reduced to writing petitions begging the Feds for a bailout, there is an actual point here. You can't plan to make payroll each month in any serious-sized firm while holding less than $250K in cash. You can try to minimize the size of your exposure by holding larger amounts in treasuries or money market funds or something, but still, there's going to be a fair bit of straight cash that you need to leave on hand one way or the other, for some large fraction of days. Is it desired policy that these guys just have to eat the bank run risk of wherever they end up? Apparently it is, kinda sorta, unless we change our minds ex post.

Why is all this so bizarre? 

Because bank runs are a solved problem even without deposit insurance!

Well, at least for the version of the bank run problem of "where can you safely store your money without the risk of it being lost or stolen, and not have that institution at risk of collapsing on you?"

In the modern world, your bank has an account with the Fed. You give your money to Citibank. Citibank deposits that money at the Fed. The Fed pays Citibank interest on those reserves. Citibank pays you approximately nothing. To which you might ask - can I just put my money in the Fed directly and earn that interest? No, of course you can't. And a bunch of creative finance types tried for the next best thing - they tried to create something called a narrow bank, whose only purpose is to take your money, give it to the Fed, and pass on nearly all the interest to you. What happened? The Fed repeatedly denied those licenses. 

You may think I'm exaggerating, or being conspiratorial here. But here's John Cochrane, neither a fool nor a conspiracy theorist, saying much the same thing. 

So why do they do it? Well, there's a few answers. 

One is that the Fed is effectively captured by the big banks. They like the subsidies from interest on reserves. They like too big to fail. They like the fact that you don't have anywhere else you can stick your deposits, and instead you have to give it to them if you just want the lowest chance of losing your money. You may not like it, but that's why you're nobody, and they're Goldman Sachs.

The charitable explanation, which actually overlaps with the first but gives it a more positive veneer, is that this is actually a tool of monetary policy - we want the fact that your deposits get lent out to small businesses and home buyers, because this expands the money supply, keeps interest rates low, and keeps the economy growing. We don't want you depositing your money with the Fed to just sit there going nowhere. We presumably also don't want the Fed to then have to get into the business of lending the money out directly. Although you may start to wonder why not - we regulate so much else of the lending process, but perhaps it would be a little embarrassing to go mask-off and just have the Fed lend to everyone directly. It would also hurt the shareholders of the big banks - see the previous explanation. 

Now, the first thing to question is whether we really have exhausted the range of possibilities - either a) subsidize Citibank and deny narrow banking licenses or b) money supply collapse and economic catastrophe. Are we sure that there is absolutely no other alternative? Bueller?

But hell, let's be charitable and assume that this really is the whole action space. We're crowbarring people into having their deposits be needlessly risky to keep lending flowing and the economy growing, but in return we protect them from bank runs ... unless they hold more than $250K. If they do, stiff shit! Why is that, under the current reasoning? Herp a derp, great question. 

Of course, in practice, they'll still probably bail them out ex-post, for the same reason they bailed out AIG. They'll just do it it randomly in an ex-post manner that creates lots of uncertainty, sometimes doesn't materialize (like Lehman), and sometimes creates needless bank runs (like this week). 

If you were Doug Diamond, pondering your legacy, it would be disturbing to wonder whether the deposit insurance idea, which actually isn't a terrible one, could turn into something so cumbersome and kafka-esque. But here we are.

So let's clarify the question at the start to make it more damning. What is the least moronic explanation you can come up with for why deposit insurance has a limit of $250K, and the Fed repeatedly denies licenses to narrow banks?

I'm not holding my breath for an answer.

There is a kind of reverse Gell-Mann Amnesia effect of government policy. Everyone looks at the chaos and inefficiency of government in general, and just assumes that policy is likely to be a shitshow run by clowns. But in the area where you personally have expertise, and especially if you have any conceit of being able to influence policy, you see all sorts of sophisticated rationales for why it might actually make great sense and be a clever balancing of tradeoffs. 

Now, maybe this is actually the right take, and government everywhere is more sensible than you think. But the alternative is worth pondering. If you have some expertise, and still it doesn't seem to make sense, maybe the general perspective is right. Maybe it is just a dumb, historically accidental clownshow. Even if it's the thing you study. Maybe this is true more broadly, and your expertise mostly leads to rationalization. 

The Fed, it is worth noting, is one of the less incompetent bits of the government. They still hire mostly high IQ economists with PhDs from top institutions. This doesn't mean that their assumptions about the world are right, or beneficial, but in general they aren't fools. There are some affirmative action midwits like Lisa Cook, but they are the exception, not the rule. In any case, the Fed is almost shockingly non-partisan. It would be very easy for them to massively jack up interest rates two weeks before the 2020 election to throw things into chaos to get Trump booted out. But they didn't, and they never have. However bad you think current policy is, it could be much, much worse. It probably will get much worse. 

And yet. The external position has a fair amount to recommend. We can see some part of policy that seems crazy, arbitrary, and historically anachronistic. What we are left to haggle over is how much this is tip, and how much this is iceberg. 

The French Revolution and the Inertia of Government

If I had to summarize in a sentence the biggest common thread between both the English Civil War and the French Revolution, it’s how much all governments are governments of inertia. For good or bad, any government whose institutions and norms have been around for a long time is a pretty stable equilibrium. The biggest problem that its enemies have is simply convincing a critical mass of people that it might actually be possible to achieve major reforms, if not complete replacement. People tend to be unimaginative on alternative institutional arrangements. This applies doubly so towards changes that don’t map to obvious and mentally accessible historical templates. Something like Curtis Yarvin’s sovereign corporations, or Robin Hanson’s futarchy, are notable because of how rare they are. Even when they get proposed, they have a very futuristic feel – which is to say, one can imagine them somehow, somewhere, far in the future. Imagining a clear path from here to there is much more difficult.

The obvious consequence of this, which is everywhere on display around you, is that dysfunctional or substandard government can persist a very long time. This holds true even if lots of people would prefer a change, or sometimes even if lots of elites would prefer some kind of change. But for forecasting the future in the conditional sense (where the stakes are probably highest), the flip side is actually almost as important. Once the revolution has gotten going, the new institutional arrangements have none of the old inertia benefit. Which is to say, revolutions look a lot like the golden rule of affairs – there’s never just one.

And this isn’t just the case in France, either. Russia had the February Revolution (we’ll have constitutional government under Prince Georgy Lvov) and the October Revolution (get ready for misery - horrible communist misery). America, after its war of independence, had the Congress of the Confederation, a period so dysfunctional that it tends to get left out of American history altogether, before it had the Constitution and the Federalists. In the English Civil War, it only took 9 years of Cromwell’s dictatorship after the execution of Charles I in 1649 for everyone to decide that they weren’t much interested in extending this after Cromwell’s death, and so King Charles II was installed in 1660.

And so it is in France. Actually, France takes this to a new level, because the chaos eventually gets so continual and extreme that you stop counting in terms of discrete events. You may think you’re just establishing a constitutional monarchy under the constitution of 1791. But since that’s just some document that a bunch of guys came up with a year ago, why should anyone pay it any particular heed? So next thing you know, King Louis is being executed and you need a new constitution of 1793, since it’s awkward to have the last constitutional document refer to a guy who’s dead. Except that never really actually gets implemented, so then you need the constitution of 1795, which lasts about three months until another coup, and eventually you get the constitution of 1799…

Constitutions are useful markers here not because they’re sacred, inviolable documents. Quite the contrary – often they’re barely even implemented. But they represent the fervent desire to establish some kind of precedent that will bind everyone else. The alternative, which the French revolution has a lot of, is the endless shifting of power, horse trading and back stabbing that happens when there’s no formal structure and lines of authority to decide who is really in charge. New constitutions are thus somewhat useful markers of when the reality of power has gotten so disconnected from the previous piece of paper that the current mob feel the need to justify the difference.

Parenthetically, this reveals the brilliance of the current constitutional order in the US. If the option is available, you are much better off referring to the same piece of paper and saying that you’re totally still the legitimate heirs of 1789. A shockingly large number of rubes will fail to notice that the modern government bears almost no resemblance in any of its practical arrangements to the government of 1789, so maybe, just maybe, you’re not actually governed by the piece of paper after all, and the government can very easily change with the paper staying the same.

All of which to say, if politics had the equivalent of a VIX index of implied future volatility, it is going to be high for quite some time after a revolution. Most of the participants at the Festival of the Federation in 1790, must have assumed that all the unpleasantness was over. A year after the storming of the Bastille, here was the King, and Lafayette, and Talleyrand, and Marie Antoinette, and everyone else saying what a great outcome it all was and how chuffed they were with France’s glorious new future. Instead, it was actually a great time to be selling your French property and getting out of dodge while nobody was yet trying to restrict you from doing so. Out of the celebrants, Lafayette had fled the country and wound up in an Austrian prison in 1792, Louis and Marie Antoinette were both executed in 1793, and through good luck and good management, Talleyrand skipped town for a few years, slightly ahead of a warrant for his arrest.

And this brief list highlights the overwhelming general trend here in both personnel and causes – there is an alarmingly high turnover of both. It is striking how many figures grace the stages early in the story, only to just disappear later on. Take Jacques Necker, Louis’ on and off again Finance Minister over whom so much of the pre-revolutionary controversy centered, but who eventually just gets politely shuffled off stage in 1791 to exile. Or consider the Parlement, whose conflicts with Louis XVI formed such a large part of the initial series of conflicts, but which had already sunk into irrelevance such that by the time it was abolished in 1790, you barely even noticed. The sacred rights of nobles to have a say in legislation was not a concern of long duration. Maybe that’s something worth thinking about before you kick off your list of complaints to the king. Are you on net a beneficiary of the current institutional arrangements, relative to the space of possible things that might come about if everyone starts to believe that institutional arrangements are much more malleable than they seem?

My favorite example of this is that Jacques-Louis David, who was basically Albert Speer with a small side of Goebbels, started doing his masterpiece painting, “The Tennis Court Oath”. Unfortunately, too many of the figures present got purged or executed before it could be finished, and he decided that it would be more prudent to just scrap the whole thing.

The grim upside in this monstrous affair is that once the initial round of executions is done, and most of the sympathetic reactionary figures are dead or exiled, it turns into a black comedy where each round of people gets killed for being insufficiently revolutionary. The Girondins, the “moderate” revolutionaries who supported the King’s removal, but argued only that he shouldn’t be put to death, were led to the guillotine still singing La Marseillaise. You’d need to have a heart of stone to not laugh at this, these nitwits determined to not be hit with the clue stick on the way out. Maybe, just maybe, something in our original worldview wasn’t quite right. It’s like the original version of so many modern memes:




“Jacobins are the real reactionaries!”

“So much for the tolerant left!’


The longer it goes on, the more you have to work to find the “comedy” amongst the “grim”. The most memorable summary of just how far all this changed within a few years, and how much of a shock it would have seemed, comes from Moldbug, quoting Hippolyte Taine, translating La Harpe. La Harpe was actually one of those pro-revolutionary artists who did get hit with the clue stick, becoming both reactionary and Christian by the end. In his fictionalized dialogue from the salons of 1788, he places himself as one of the incredulous guests laughing as Cazotte (who ended up guillotined himself for monarchist sympathies) prophesies the path of the French revolution. Even without knowing the full biographies of all the characters, the sentiment is quite jarring.

It seems to me, La Harpe says, as if it were but yesterday, and yet it is at the beginning of the year 1788. We were dining with one of our fellow members of the Academy, a grand seignior and a man of intelligence. The company was numerous and of every profession, courtiers, advocates, men of letters and academicians, all had feasted luxuriously according to custom. At the dessert the wines of Malvoisie and of Constance contributed to the social gaiety a sort of freedom not always kept within decorous limits. At that time society had reached the point at which everything may be expressed that excites laughter. Champfort had read to us his impious and libertine stories, and great ladies had listened to these without recourse to their fans.

Hence a deluge of witticisms against religion, one quoting a tirade from ‘La Pucelle,’ another bringing forward certain philosophical stanzas by Diderot… and with unbounded applause… The conversation becomes more serious; admiration is expressed at the revolution accomplished by Voltaire, and all agree in its being the first title to his fame. ‘He gave the tone to his century, finding readers in the antechambers as well as in the drawing-room.’ One of the guests narrates, bursting with laughter, what a hairdresser said to him while powdering his hair: ‘You see, sir, although I am a miserable scrub, I have no more religion than any one else.’

They conclude that the Revolution will soon be consummated, that superstition and fanaticism must wholly give way to philosophy, and they thus calculate the probabilities of the epoch and those of the future society which will see the reign of reason. The most aged lament not being able to flatter themselves that they will see it; the young rejoice in a reasonable prospect of seeing it, and especially do they congratulate the Academy on having paved the way for the great work, and on having been the headquarters, the center, the inspirer of freedom of thought.

One of the guests had taken no part in this gay conversation; a person named Cazotte, an amiable and original man, but, unfortunately, infatuated with the delusions of the visionary. In the most serious tone he begins: ‘Gentlemen,’ says he, ‘be content; you will witness this great revolution that you so much desire. You know that I am something of a prophet, and I repeat it, you will witness it… Do you know the result of this revolution, for all of you, so long as you remain here?’

‘Ah!’ exclaims Condorcet with his shrewd, simple air and smile, ‘let us see, a philosopher is not sorry to encounter a prophet.’

‘You, Monsieur de Condorcet, will expire stretched on the floor of a dungeon; you will die of the poison you take to escape the executioner, of the poison which the felicity of that era will compel you always to carry about your person!’

At first, great astonishment, and then came an outburst of laughter. ‘What has all this in common with philosophy and the reign of reason?’

‘Precisely what I have just remarked to you; in the name of philosophy, of humanity, of freedom, under the reign of reason, you will thus reach your end; and, evidently, the reign of reason will arrive, for there will be temples of reason, and, in those days, in all France, the temples will be those alone of reason… You, Monsieur de Champfort, you will sever your veins with twenty-two strokes of a razor and yet you will not die for months afterwards. You, Monsieur Vicq-d’Azir, you will not open your own veins but you will have them opened six times in one day, in the agonies of gout, so as to be more certain of success, and you will die that night. You, Monsieur de Nicolai, on the scaffold; you, Monsieur Bailly, on the scaffold; you, Monsieur de Malesherbes, on the scaffold; … you, Monsieur Roucher, also on the scaffold.’

‘But then we shall have been overcome by Turks or Tartars?’

‘By no means; you will be governed, as I have already told you, solely by philosophy and reason. Those who are to treat you in this manner will all be philosophers, will all, at every moment, have on their lips the phrases you have uttered within the hour, will repeat your maxims, will quote, like yourselves, the stanzas of Diderot and of “La Pucelle.” ’

‘And when will all this happen?’

‘Six years will not pass before what I tell you will be accomplished.’

‘Well, these are miracles,’ exclaims La Harpe, ‘and you leave me out?’

‘You will be no less a miracle, for you will then be a Christian.’

‘Ah,’ interposes Champfort, ‘I breathe again; if we are to die only when La Harpe becomes a Christian we are immortals.’

‘As to that, we women,’ says the Duchesse de Gramont, ‘are extremely fortunate in being of no consequence in revolutions. It is understood that we are not to blame, and our sex.’

‘Your sex, ladies, will not protect you this time… You will be treated precisely as men, with no difference whatever… You, Madame la Duchesse, will be led to the scaffold, you and many ladies besides yourself in a cart with your hands tied behind your back.’

‘Ah, in that event, I hope to have at least a carriage covered with black.’

‘No, Madame, greater ladies than yourself will go, like yourself in a cart and with their hands tied like yours.’

‘Greater ladies! What! Princesses of the blood!’

‘Still greater ladies than those…’

They began to think the jest carried too far. Madame de Gramont, to dispel the gloom, did not insist on a reply to her last exclamation, contenting herself by saying in the lightest tone, ‘And they will not even leave one a confessor!’

‘No, Madame, neither you nor any other person will be allowed a confessor; the last of the condemned that will have one, as an act of grace, will be…’ He stopped a moment.

‘Tell me, now, who is the fortunate mortal enjoying this prerogative?’

‘It is the last that will remain to him, and it will be the King of France.’ ”

Indeed, when one reads the path of all this, the contemporary French attitude towards the whole thing seems ghastly, glib, and frivolous. To view this as a noble story of the people shrugging off the shackles of a despotic king and implementing freedom and democracy requires zooming out to such a large distance and squinting at what details are still evident that you’re left with a narrative to be told to a small child, and not a very inquisitive child at that.

Zoom in any more on the narrative, and it quickly seems monstrous – François Joseph Westermann apparently writing to the Committee of Public Safety after ordering no quarter given on fleeing Vendée rebels

There is no more Vendée, Republican citizens. It died beneath our free sword, with its women and its children. I have just buried it in the swamps and the woods of Savenay. Following the orders that you gave to me, I crushed the children beneath the horses' hooves, massacred the women who, those at least, will bear no more brigands. I do not have a single prisoner to reproach myself with. I have exterminated them all.

This was somewhat hyperbole, but it was much less hyperbole when, months after any of these rebels still posed any military threat, Louis Marie Turreau lead his troops through the Vendée and exterminated everyone they came across, around 20% of the population, 20-40,000 all told.

Or Jean-Baptiste Carrier gleefully drowning 4000 people at Nantes, women, children, nuns, priests, in his “Republican Baptisms” (on top of the 2000 odd executed in a quarry, such as by blasting them all with a cannon).

The Committee of Public Safety during the Terror executed tens of thousands of people being suspected of being insufficiently revolutionary, old men, women and children included. When put this way, it all tends to just turn into a blur, where you might imagine that somehow this is just them being the equivalent of a Duterte or a Bukele, executing the equivalent of drug dealers and gangs. But no, focus in a little on the mechanism by which this came about, and it really is horrifying. The Law of 22 Prairial was the reform by which the messy process of accusation, trial, and deliberation was massively sped up. Defendants were no longer allowed to call witnesses, nor were they allowed to have lawyers – that is to say, they weren’t really allowed to defend themselves anymore. The line between “accusation” and “conviction” become very thin indeed. The list of crimes was expanded to include new offenses like “seeking to inspire disagreement”, “slandering patriotism”, and “spreading false news”. Only two verdicts were allowed – acquittal, or death. And, finally, citizens were required to denounce these crimes – failure to denounce is also a crime, which, like all crimes, is now punishable by death.

It's basically all the crazy untrustworthiness of the Soviet Union, where everyone denounces everyone else, but with the grim discipline of the NKVD replaced with Haitian anarchy.

And lest you think that this was all some accident, Robespierre had laid out his vision in a speech on the Republic of Virtue, that this was in fact the aim – terror is an emanation of virtue, and without it, virtue will be weak.

If the spring of popular government in time of peace is virtue, the springs of popular government in revolution are at once virtue and terror: virtue, without which terror is fatal; terror, without which virtue is powerless. Terror is nothing other than justice, prompt, severe, inflexible; it is therefore an emanation of virtue; it is not so much a special principle as it is a consequence of the general principle of democracy applied to our country's most urgent needs.

Mike Duncan (from whose Revolutions podcast a lot of this history is taken) does a great job of summarizing the atmosphere shortly before Robespierre met his end:

“The authorities had already had to move the guillotine of the Place de la revolution, to a spot east of the city, where the Place Bastille is now, and then move it further east again after residents complained of the blood and the stench. Executions were no longer a glorious public celebration, they had become a grim and mechanical daily routine that just wasn’t much fun anymore. No one was enthusiastic when Cecil Renault and her entire family – mother, father, sisters, brothers, were led off en masse to be killed for their role in this alleged plot to kill Robespierre. And it was really to no one’s great rejoicing when on July 17th, a herd of old pious Carmelite nuns were led off for the crime of living together communally. When a child pick pocket was led up to the scaffold, the sympathetic onlookers started shouting ‘No more children!’.”

As they say – you executed the King, for this?

The one minor note of optimism here is the – well, not even schadenfreude, more like thankful justice, that many of the worst characters here got eaten by the same forces they eagerly unleashed. Westermann was guillotined for being aligned with Danton. Carrier was recalled after even Robespierre found his activities too much, and then executed after the Thermidorian reaction. Robespierre himself was undone by the Thermidorian reaction, after threatening too many people with being involved in a conspiracy that they decided to get him before he could get them. He tried to organize an insurrection, but that failed. He tried to shoot himself with a pistol, but only succeeded in blowing off half his jaw. He lived in agony for another day before being guillotined himself. It’s grisly, but couldn’t happen to a nicer bloke.

The other terrible indictment of the project is that the French also want to idolize the man who shortly afterwards did more to undo all the principles of the revolution, Napoleon Bonaparte. And even then, 19th century French history is a complete mess until at least after the Paris Commune in 1871. Seriously, there’s a reason that most people don’t know much about France between the fall of Napoleon and it entering World War 1. It’s a total shitshow.

But aside from viewing it as a kind of grotesque cautionary tale that runs counter to the prevailing narrative, I think there is quite a lot to learn by putting oneself in the shoes of a potential reactionary at different points in the story. What exactly should you have been hoping for, anyway? At least before the ending of the story is known, it’s harder than you’d think. One sees a strange tension between supporting monarchical principles, and supporting monarchical tradition. When the king is still in power, there is not much of a contradiction here. But once the King is executed, are you specifically interested in restoring the legitimate heir of the Bourbon dynasty? What if he's 7 years old? What if, once he’s dead at age ten, it’s not straightforward whose claim you should support? Or are you just interested in solving the Carlyle problem of finding the most able man, and giving him absolute power? Because it’s pretty clear that by a certain point in the story, that man was Napoleon. The question of when exactly you would recognize him as such is not nearly as obvious as you might imagine. It is a funny exercise imagining the leaders of the French Directory, feeling like they’re on top of their game and in charge of France. But when a historian tells the story of that time period, for much of their reign, the actual tale being told is “what was Napoleon doing at this time?”

When you look into it, a curious regularity is that many of the great authoritarian leaders came to power supporting the governments they later overthrew. Julius Caesar lead the populares against the traditional aristocratic privilege of the Roman Senate. But did this matter once he’d assumed power? Did it stop his rule from being further right than what came before – monarchy, instead of oligarchy? Not one bit. Same thing with Napoleon. It’s well known that he was willing to use “a whiff of grapeshot” to defeat the mob, which sounds pretty based. But it was a Royalist mob, attacking the revolutionary government! Those who just wanted competent authority invested in the ablest man would have been much better off supporting the man shooting at them, though it was very hard for them to know that at the time. Even in modern times, Augusto Pinochet led the crackdown on anti-Allende protests in 1972!

All of which is to say, that it’s not nearly as obvious as you might think where exactly the next competent authoritarian might come from. It is a mistake to place too much weight in the man’s politics before he seizes power. Those destined to rule seem to instinctively know that the first thing to do is actually acquire the power to rule, by whatever means necessary, otherwise all your grand visions amount to very little. Of course, this adds a pretty big risk component once political opposition is swept away. As Moldbug is fond of pointing out, the Democratic Party platform of 1932 is almost the exact opposite of what FDR actually implemented once he took control of the US government. It can cut both ways.

And this tension between supporting the man and supporting the institution can even be extended back to the period when monarchs were in power. King Louis XVI was, in many ways, contemptibly weak, and not up to the task of dealing with the moderate problems he faced. But J.F. Bosher makes a great case, over and over, of all the alternatives Louis XVI had in front of him, whether shaking down the debt holders and effectively defaulting, or sending in troops to arrest the members of the National Convention at the Tennis Court Oath, or a bunch of other options. How much did he deserve your support?

Well, he was a hell of a lot better than what came immediately afterwards. Because even with his weakness, the inertia of governing structures kept things sane.

This isn’t the only view, though. Thomas Carlyle took the opposite position in Latter-Day Pamphlets, when assessing the various revolutions of 1848. You would think that, being a supporter of monarchy, he would be straightforwardly appalled at all these events that overthrew the monarchies of Europe, and offer a strong support of the deposed monarchs. But hating democracy misses the broader point, that nature abhors a weak and fake king:

[W]e had the year 1848, one of the most singular, disastrous, amazing, and, on the whole, humiliating years the European world ever saw. Not since the irruption of the Northern Barbarians has there been the like. Everywhere immeasurable Democracy rose monstrous, loud, blatant, inarticulate as the voice of Chaos. Everywhere the Official holy-of-holies was scandalously laid bare to dogs and the profane:—Enter, all the world, see what kind of Official holy it is. Kings everywhere, and reigning persons, stared in sudden horror, the voice of the whole world bellowing in their ear, "Begone, ye imbecile hypocrites, histrios not heroes! Off with you, off!" and, what was peculiar and notable in this year for the first time, the Kings all made haste to go, as if exclaiming, "We are poor histrios, we sure enough;—did you want heroes? Don't kill us; we couldn't help it!" Not one of them turned round, and stood upon his Kingship, as upon a right he could afford to die for, or to risk his skin upon; by no manner of means. That, I say, is the alarming peculiarity at present. Democracy, on this new occasion, finds all Kings conscious that they are but Play-actors.
…

These rulers were not ruling at all; they had merely got on the attributes and clothes of rulers, and were surreptitiously drawing the wages, while the work remained undone? The Kings were Sham-Kings, play-acting as at Drury Lane;—and what were the people withal that took them for real?

It is probably the hugest disclosure of falsity in human things that was ever at one time made. These reverend Dignitaries that sat amid their far-shining symbols and long-sounding long-admitted professions, were mere Impostors, then? Not a true thing they were doing, but a false thing. The story they told men was a cunningly devised fable; the gospels they preached to them were not an account of man's real position in this world, but an incoherent fabrication, of dead ghosts and unborn shadows, of traditions, cants, indolences, cowardices,—a falsity of falsities, which at last ceases to stick together. Wilfully and against their will, these high units of mankind were cheats, then; and the low millions who believed in them were dupes,—a kind of inverse cheats, too, or they would not have believed in them so long. A universal Bankruptcy of Imposture; that may be the brief definition of it. Imposture everywhere declared once more to be contrary to Nature; nobody will change its word into an act any farther…

Such a spectacle, can we call it joyful? There is a joy in it, to the wise man too; yes, but a joy full of awe, and as it were sadder than any sorrow,—like the vision of immortality, unattainable except through death and the grave! And yet who would not, in his heart of hearts, feel piously thankful that Imposture has fallen bankrupt? By all means let it fall bankrupt; in the name of God let it do so, with whatever misery to itself and to all of us. Imposture, be it known then,—known it must and shall be,—is hateful, unendurable to God and man. Let it understand this everywhere; and swiftly make ready for departure, wherever it yet lingers; and let it learn never to return, if possible! The eternal voices, very audibly again, are speaking to proclaim this message, from side to side of the world. Not a very cheering message, but a very indispensable one.

Alas, it is sad enough that Anarchy is here; that we are not permitted to regret its being here,—for who that had, for this divine Universe, an eye which was human at all, could wish that Shams of any kind, especially that Sham-Kings should continue? No: at all costs, it is to be prayed by all men that Shams may cease.

One shudders to think what Carlyle would make of the Republican Party in 2023.

But what Carlyle has in thundering and principled rhetoric, he doesn’t obviously have in terms of practical strategy. Because outside of the specific sham-monarch question, one of the other practical lessons of the ups and downs of the French revolution seems to be the opposite – holding institutions is useful, even (or especially) institutions that have been illegally purged of one’s enemies. Institutions do two things. First, they are opportunities for co-ordination and concentration of power. Second, they are public-facing sources of legitimacy, a kind of vaguely agreed upon sense that these guys are in charge. Often, it doesn’t even matter what the institution’s exact mandate even was. The National Convention was voted in in 1792 to draft a new constitution. But just being the convention meant that it operated as a de facto parliament with general powers, which it then delegated most of to the Committee of Public Safety, which then basically became a dictatorship by committee. None of these aspects, you will note, have anything to do with drawing up a constitution. But it didn’t matter.

Even expelling members doesn’t seem to be much of a problem. Once the Girondins got purged (admittedly, at the hands of a massive stirred up mob), the rest of the National Convention proceeded just fine. Same thing when the members of the Paris Commune were also expelled later on (this time, for being too leftist). The even more striking version, to briefly switch revolutions, was the Rump Parliament in the English Civil War. You might think that shamelessly expelling 180 of the 470 members of a legislative body for disagreeing with you might seriously weaken its legitimacy, but this is probably because you’ve lived under democratic lies too long. A better question is “whatcha gonna do about it?”. Because if you don’t have an answer to that question, then you’ve gotten weaker, not stronger.

It is possible to organize from out of power, of course. Mostly this seems to involve building parallel institutions to subvert the existing regime. Georges Danton was a great example. If you don’t know his story, read through the section on “Revolution” and try to work out at what point he actually held a major position in an important public office – it’s surprisingly late. He did most of his early work in the Jacobin club, which operated as a kind of shadow government for the left. He was involved in the local government of the Paris Commune, but most importantly helped organize the mobs that stormed the palace in the insurrection of August the 10th, which precipitated the King’s removal and eventual execution. In other words, you don’t have to be in the current legislative body (in this case, the Legislative Assembly) if you can just gin up a massive mob to overthrow the monarch presiding over said assembly. His first real post then came when he was appointed minister of justice, but this was mostly just a reflection of the informal organizing role he already had. Once you can stir up the mobs to carry out the September Massacres, executing all sorts of royalists and suspected Royalists, and effectively get away with it, it won’t be long until you’re finally voted into the National Convention (the new legislative body created after you totally crushed the old one), and ultimately in the big leagues of the Committee of Public Safety. Of course, his whole career looks a lot more like Vladimir Lenin than it does like Carlyle. Say what you will about the tenets of Bolshevik Communism, but they understood how power works. They may not have understood anything else, but they understood that. Danton was acting like a government in waiting long before he held real office, including directing a mob substantially at his command. One man’s mob is another man’s national guard.

What you definitely don’t want to do is what the outgoing Constituent Assembly did in 1791, when setting up the Legislative Assembly, and decree that none of the members in the current body should be eligible to sit in the new body. Great job! Now everyone who set up the new system won’t be serving in it, and the ones that do will have pretty damn ambivalent feelings about the constitutional structures you love so much. Giving up power, walking out of institutions without a plan of what to do next, boycotting elections – these are all symbolism without a concrete plan, and counterproductive symbolism at that.

Indeed, what’s most useful about all this is not so much studying what happened, but thinking about possible counterfactuals to what might have happened, and what they reveal about the general laws of politics and human behavior. The resemblance of the later French revolutionaries to straight-up communism is quite palpable. Especially Babouef, who explicitly wanted to abolish private property (“Society must be made to operate in such a way that it eradicates once and for all the desire of a man to become richer, or wiser, or more powerful than others."). And his idea of this was defending Robespierre and the other executed leaders of the Terror. Babouef, humorously, wrote under the pen name Gracchus, which is funny given the role of the rabble-rousing Graccchi brothers in kicking off a process in the Roman Republic that eventually led to … the Caesars. Babouef, who never actually made it to power, is just one more end point of each group deciding they could rile up a coalition of lower ranks who were out of power to overthrow the people at the top. The Parlement organized against the King, then the National Assembly organized against both the Parlement and the King by harnessing the power of the bourgeois citizens, then Danton organized the Sans Culottes into a mob that overthrew the power of the others, until the trend to that point stopped when Thermidor prevented things going further leftward. Religious reforms started out as being making the wealth and role of priests more equal, then it moved to abolishing tithes, then it moved to seizing Church property, then in moved to requiring priests to swear an oath of fealty to the Republic over the Church, then it moved to just abolishing the Church altogether and replacing it with a Cult of Reason.

The point is that there is a logic to these progressions. They in fact represent taking the established principles (which blog.jim described as “knocking over the apple cart in order to get the apples”) further each time. Thankfully, it’s not like this process always gets taken to its horrible logical conclusion. Existing elites can sometimes realize that enough is enough, and reverse the current trend to try to cement more right wing changes (Thermidor, the Federalists, the Restoration of Charles II). But there’s also no reason this process has to stop on its own. And to see it taken to its fully logical end point, you get Zhang Xianzhong, who Wikipedia politely refers to as “leading a peasant revolt” that led to “massacres in Sichuan that depopulated the region”. Translation: everyone got killed. Everyone. Like Robespierre’s homage to terror, this doesn’t seem to be an accident. His most famous contribution to literature is his Seven Kill Stele:

Heaven brings forth innumerable things to nurture man.
Man has nothing good with which to recompense Heaven.
Kill. Kill. Kill. Kill. Kill. Kill. Kill.

Like they used to say about Zimbabwe – it can always get worse.

I think the clearest application to the present, if you are a nobody and not an aspiring Georges Danton, is “Be extremely wary of the first revolution.”

By way of an example, in June 2020, during the height of the George Floyd mayhem, there had been a bunch of protests during the week, leading up to a big organized event on the Saturday night. There were thousands of protestors banging on barricades outside the White House. As it turns out, the security services managed to keep them under control, just. But what if it hadn’t gone that way? What if the mob had broken through the barricade, and the security services had started shooting them? Or what if they’d failed to shoot, and the white house got overrun and burned to the ground? What if Trump got chased out of office as part of a color revolution, or tracked down by a mob?

None of these things happened, of course. Which either means we got lucky, or that the protests were in fact controlled (since the left already holds the levers of power). But what would the French Revolution perspective be on these events? Are you really sure that Chuck Schumer and Nancy Pelosi will really stay in charge of a fully unleashed mob that got out of hand? You’d be a bold man to bet that way. Events have an alarming way of taking on a life of their own. You can call up a mob to the front of the White House, but your ability to control it in the heat of the moment may be less than you think. 

For my part, I had a modest position in VIX call options over that weekend. Nothing came of it, of course. Like every bad trade, when it fails, you can always call it a hedge.

I can tell you this, though. If the White House had actually gotten burned to the ground, or Trump got color revolutioned out of power that week, I would have begun planning my life around it being time to leave America.

The good news is that, historically, you actually have a decent amount of time to do this. Things don’t tend to go completely bananas in the next day, week, month, or often even year.

But after the first revolution, you are much better off being an Émigré, waiting to see whether the next big change is a reaction from the right, or further leftward. High political volatility is great if you’re a young, clever, ambitious man looking to quickly advance up the ranks. It is a disaster for everyone else though.

The Martian Perspective

One of the useful big picture ideas I remember picking up from Moldbug is that one should strive to understand the present in the way that a historian of the future would understand our time. That is, suppose you were living on Mars in 200 years time, so not only would the events not affect you, but all the players are dead and gone, as are the countries and institutions they represent.  Maybe even 500 years. The ideal is to imagine a space sufficiently distant that you don't even feel you have an intellectual dog in the fight, rather like an atheist trying to understand the 30 Years War between Catholics and Protestants. You just want to understand the truth, having gotten to the point where none care whether it prevail or not. 

This is always an aspirational ideal, of course. You never really know what the future historian will think (in part because they have seen the end of the story, and you haven't), but also because intellectually it's very hard to fully escape the present tense. For one thing, you can never have our hypothetical atheist's indifference when you're actually on the receiving end of things (put an atheist back in time to the middle of the 30 years war, and suddenly they will have to care about religion, or at least act like they do). But there's also a sheer difficulty in perspective. It may be that nothing in the past five years even makes their list of stuff to bother about. It may be that nothing in your whole lifetime does! (You should be so lucky). 

So while this perspective is hard, if you at least aim at this, you are likely to get a better sense of the actual importance of events than if the idea never even occurs to you. And the sense of what might seem important on a 200 year time line may be vastly different to what the newspapers are covering today. It might be something the average person isn't paying any attention to at all (like developments in AI, for instance). But it also might be events from the present that take on a bigger significance than people at the time realize.

For instance, by now, most of you have probably watched the famous video of Hu Jintao being gently but firmly escorted out of the Chinese Communist Party Congress

When Americans watch this video, they have a clarity of vision as to what is going on. A former president is frogmarched out of the room, publicly, by the current president, to God knows what fate. While it may be overblown, the cynical presumption is that he'll end up like Tank Man, never seen again.

It's worth noting that there's an alternative reading of all this, that Hu Jintao is kind of senile and either was, or was threatening to, wander awkwardly off script. And, hence, that escorting him out was actually an embarrassing loss of face to everyone involved, rather than a deliberate political flex. 

But one thing is for certain. Supposing he in fact gets charged and convicted of corruption, for taking bribes back in 2005. The average American will view this as almost entirely incidental to the important facts in the video above. Did he take some kind of bribe during his presidency? Almost certainly. Is that what this is actually about? Not on your life. If he gets charged instead with tax evasion, or murder, or covid violations, would that change anyone's perspective on the matter? Not at all. What he gets charged with is irrelevant. Whether he even broke the law is basically irrelevant. They certainly will not spend much time digging into the details of the allegations. This is a naked power consolidation. This was also considered in America to be big news for what it revealed about China, and how power works there.

So far so good. 

So what does the average American make of this:

FBI searches Trump's Florida home as part of presidential records probe

PALM BEACH, Fla., Aug 8 (Reuters) - Former President Donald Trump said FBI agents raided his Mar-a-Lago estate on Monday and broke into his safe in what his son acknowledged was part of an investigation into Trump's removal of official presidential records from the White House to his Florida resort.

The unprecedented search of a former president's home would mark a significant escalation into the records investigation, which is one of several probes Trump is facing from his time in office and in private business.

Is this the same thing as what happened to Hu Jintao? Is it a related thing? Is it a totally unrelated thing?

You'll have to decide for yourself. 

And the answer that lots of Americans come to is that, well, you see, this is actually about the crucial issue of violations of the Presidential Records Act, something that they had literally not heard about until August, but now think is an essential lynch-pin of our whole form of government. It's actually part of a large legal campaign against the former president on all sorts of fronts. 

Which is to say, they look at this and see only the things he's been charged with, from which we need to have a serious debate about whether he did or did not breach said Act. They don't at all see any bigger picture here. The Hu Jintao perspective, for want of a better term, is completely and utterly absent. 

(It is worth pondering whether the average person in China, to the extent that they know about the Hu Jintao story, view it as the mirror image of the Trump story - he obviously broke some important law that the papers will no doubt tell us about soon.)

But for the Trump story, if the average American does chance to see a bigger point, such as if they're a Fox News Republican, they'll probably just see one more example of the outrages of the Democratic Party, and are apt to list the above event alongside every other regular complaint about how the country is run, from illegal immigration, to woke trans activism in schools, to black lives matter leading to defunding of the police. Or, if they're on the left, one more aspect of the corrupt contempt for the democratic process by the Republicans, like Voter ID laws and the January 6th protests. 

What might the historian of 200 years' time make of this story? Well, here's one perspective. 

The single biggest fact in favor of American democracy, and democracy in general, is not that it selects wise leaders, or leaders who are legitimate in the eyes of the public, or anything like that. The primary thing in its favor is that it allows, nominally, for smooth transitions of power. Within the current sclerotic regime, of course, which outlaws all kinds of views and actions. And if you push it too far, like the South found out in 1865, you'll be crushed militarily. But within the operating envelope that the system is meant to work in, nobody has to be playing for keeps. Because while your guy may be in today, their guy may be in tomorrow, and you're stuck in a repeated game. So you have strong incentives to play nice.

Which is to say, for 230 years, America has had an unwritten gentlemen's agreement that former presidents are allowed to live out their lives in peace. It didn't matter if they were magnanimous and disappeared from public life, like George H. W. Bush. It didn't matter if they decided to run leftist alternative foreign policy missions, like Jimmy Carter. It didn't even matter if they were impeached for potential crimes, like both Richard Nixon and Andrew Johnson. Nixon is the classic here. Sure, Gerald Ford pardoned him for Watergate. But what's the chances that this was the only law he broke during his presidency? That an aggressive Carter White House couldn't have found something else to charge him with, after enough digging? No, that just wasn't how things were done. Former presidents get to live their lives in peace. Even Jefferson Davis was held only for two years, never ultimately charged, and allowed to live out the remainder of his days as a free citizen.  

That agreement is now gone. 

To which the dumb but common answer is that Trump's actions are so flagrant that they breached the agreement first. 

The nature of gentlemen's agreements is that the finer details aren't always written down, so this is hard to say for sure. But to judge this, you need an estimate of what the baseline level of past violations of the same kind might be. And there's decently strong evidence that this kind of thing is pretty common. What Trump did looks, to me, not nearly as bad as what Hillary Clinton did with her janky private email server while Secretary of State. Or, to take another example, we know that Sandy Berger, a Clinton advisor, was convicted of stealing documents from the National Archives after Clinton's term was over. What do you think the probability is that he was the only member of the Clinton White House to have breached some kind of records law, if the FBI were sent around to raid everyone else's house too?

In other words, to me, this looks more akin to Putin's charges against Boris Berezovsky  In that case at least, was he guilty of the illegal things they said he did? Absolutely. Did this distinguish him from any other oligarch? Not at all. The real crime, which everyone knows, was challenging Putin's power.

In the case of Trump, I really don't know what the sacred text of the Presidential Records Act requires, and whether Trump's actions may be in violation of it. For the purposes of the argument, I am entirely willing to believe he is in breach of it. He does not strike me as a stickler for detailed record-keeping, nor a scrupulous adherent to all kinds of process laws (he's a former New York real estate developer, for crying out loud. If you think there's a single one of them who's never broken any fiddly laws that they thought were getting in their way, buddy, I don't know what to tell you).

But my strong sense is that this is about as relevant as the question of what exactly Hu Jintao is charged with. Former presidents are simply not raided and arrested like they're some run of the mill citizen who fell afoul of a slightly too aggressive Assistant DA. Charging them is everywhere and always an explicitly political act. Especially in this case - can you imagine the Martian historian in 2222 opining about the crucial question of records storage? I can't. I think they'll say that this was part of an obvious longstanding campaign against Trump by whatever term they'll give to what we unsatisfactorily refer to as "the Deep State".

Why do I say this?

Because the FBI already was illegally wiretapping the Trump campaign during the 2016 election, before Trump was even elected! They procured the ridiculous Christopher Steele dossier, presented it to a FISA court, lied about where it came from, and used it to wiretap Trump advisor Carter Page. Nobody went to jail over that, of course. 

Is this the same thing? Is it a related thing? Is it a totally unrelated thing?

I think the argument for "totally unrelated" is absurd. So we're only left with the question of how related they are. And even if one forms the view that this time, Trump's actions really were terrible and illegal, we see the same ferocious politically targeted persecution even when there was no crime. Even when he was still just a private citizen.

This is not a "Can you believe the injustice?" post. Politics is usually ugly, nasty and stupid, and people at high levels play it seriously indeed. This is certainly not a "those disgraceful Democrats!" post. As MiddleEarthMixr savagely put it: "And how’s that working out for ya, imagining if the roles were reversed?"

Fifteen years ago, maybe even ten, I probably would have written something along these lines. But I am long past such perspectives, and no longer find them remotely useful. They are the furthest extreme from the Martian historian's creed.

Rather, this is merely to note that whether you are a fan of democracy, or whether you view it as absurd and past its use-by date, there is a serious reading that the whole campaign against Trump is a dangerous escalation and breach of prior norms, from which further counter-escalations seem likely. 

One of the advantages of living in 200 years time is that events that might be half a lifetime apart are easy to draw threads between, in a way that isn't quite as apparent at the time. It is altogether too easy to imagine future wikipedia articles that read something like this:

The Great Unravelling: 1970 - 2035

The term "the Great Unravelling" was first used by historian Michael Wallesteimer in the early 22nd century to describe the series of sequential breaches of previous unwritten political norms, in a cycle of escalation and counter-escalation that lead to an increasing distrust between the Democrats and the Republicans, and eventually the Great Breach of 2032 (Main Article). Wallesteimer defined the key events as not just those which were political advances by one party, but specifically changes that would subsequently be re-used by opponents afterwards.  Subsequent historians have disputed the original Wallesteimer list, both in terms of charting an original first course, and which events justify inclusion. But the general pattern is now broadly agreed to represent the increasingly fractious civic breakdown. The original Wallesteimer list is:

-The Supreme Court decision in Roe v Wade. This not only set off a large component of the culture war, but set a new standard in deliberate misreading of constitutional texts for political aims. Robert Axelford disputed the inclusion of this, noting that the court cannot be said to be explicitly part of the political apparatus at this time. But it paved the way for the increasingly Republican Court to overturn both all racial preferences in Wichita State University v Connors, and substantive portions of the administrative state in Rothstein v Gibbons, which even if more textually defensible, were viewed by the left as extreme judicial activism. 

-The Senate refusing Robert Bork's Supreme Court nomination. Up until this point, presidents had mostly gotten their Supreme Court nominations uncontested. This marked a discontinuous shift after which the vast majority of appointments became politically contentious, leading to the eventual packing of the court in 2026.

-The Kenneth Starr investigation. This set the precedent of open-ended Special Prosecutors targetting sitting presidents - "starting out investigating dodgy land deals in Arkansas, and ending up investigating blow jobs in the White House", in Anthony Reichenford's phrase. Special Prosecutors would be later used both against Scooter Libby, and by President DeSantis against speaker of the House Alexandria Occasio-Cortez.

 -The Clinton Impeachment. This set the precedent of impeaching presidents over pure process crimes, where there was no other underlying crime (in this case, perjury over testimony regarding sexual relations, when such sexual relations were not otherwise a crime). This was reciprocated when Donald Trump was charged and later convicted of violations of the Presidential Records act, something Trump described at trial as "chicken shit".

-The Trump Russiagate FBI wiretap. This set a precedent of explicit use of the permanent civil service and law enforcement to target a presidential campaign. This violation is considered more notable because of the lack of crimes uncovered by the campaign, which were significantly less than the wiretaps themselves. While the Republicans never succeeded in reciprocating via law enforcement, the subsequent politicization of the military by President Carren in 2031 is viewed as a counterescalation. 

-2020 Election Fraud. Wallesteimer described this as a "shadow breach", because its gravity was only fully appreciated after the fact during the audit of 2025. It is more viewed as part of a continuum of increasingly flagrant election fraud, eventually on both sides, that marked a further step in breakdown in belief in democracy. Relative to the other steps, this was considered more of a notional marker apparent in hindsight than a structural break, but was important additionally for its role in triggering the obvious breach of the January 6th protests. 

-The January 6th protests. While these are now viewed as chaotic and unstructured "acting out" without any serious risk against regime security, they established a precedent that the losing party in presidential elections would respond with mass protests, then with small scale violence, then ultimately with complete insurrection. 2016 is noted as the last of the "peaceful election transitions era". 

-The Arrest of Donald Trump. This ended the famous "gentlemen's agreement", as Wallesteimer described, that former opponents now out of power would be left alone. He viewed this as the most serious escalation, and an important step towards the arrest of President Carren and the Insurrection of 2034. 

You will need a little imagination to visualize what other future events might make the list. But the history of late Republican Rome offers some possible guidance. 

Or put it this way. Suppose that you were Ron DeSantis. How much would you have updated your belief that, if you got elected president, that you or your family would end up in jail if you lost power?

DeSantis is a smart guy. I'm not sure he would think the answer is yet "high". But it's certainly a fair bit higher than it was a year ago, and a lot higher than it was seven years ago.

Indeed, one might easily imagine the conclusion of the chapter above:

As Wallesteimer described the atmosphere in the mid to late 2020s, "From here on out, both parties' leaders began to suspect that if they lost power, they were liable to lose their freedom, if not their lives. After reaching this conclusion, they began to justify their own escalations as being a necessary precaution against the presumed intentions of their opponents. This in turn justified those opponents in their own beliefs, and their own escalations. Once such beliefs became widespread, democracy was not long for this world." 

On Rome and America

I recently finished listening to Mike Duncan’s excellent “History of Rome” podcast series. It left me with a confusing swirl of thoughts that I wanted to put down on paper before they gradually evaporated.

One of the themes I found myself reflecting on was the Moldbug point that a government is just a corporation. Moldbug used this argument to note that the difference between how the average westerner thinks governments should optimally be structured (with democracy and separation of powers and an independent judiciary), is radically different than how they think private corporations should be structured (with dispersed shareholders who vote for a board, who appoints and supervises an all-powerful CEO). Which either means that you need to explain what exactly it is about their different tasks that justifies the different form, or  if there's no fundamental difference in tasks, at least one of the two is suboptimal. 

When you see the various governing forms that the Roman Empire took over time, it brings to mind the more basic question – if a government is just a special case of a firm, well, what exactly is a firm, anyway? And Ronald Coase (and Jensen and Meckling) has an answer for us here. A government, like a firm, is a nexus of contracts. That is, a government is a way for various people to coordinate their behavior for some overall purpose. Some of those people are coordinated against their will, which is an odd form of contract, but not a fundamental obstacle to the idea. And secondly, most contracts are incomplete. We either can’t perfectly commit to future actions, or can’t observe other people’s information sets enough to know if they’re screwing us (is their lousy performance because got a bad draw, or because they stopped putting in effort?) or a variety of other problems in contract theory.

And in this lens, to say that contracts are always partially incomplete is another way of saying that power is always somewhat informal. The org chart can specify who answers to whom over what questions, but unless you can actually enforce action the whole way down the chain of command, there’s always a “run it up the flagpole and see” aspect to any given order. 

So in this sense, the simplest version that solves this incomplete contracts problem is the early Roman Republic – when “the Romans were like brothers, in the brave days of old”, in Macauley’s phrase. With enough mutual love and regard, the incomplete contracts problem gets largely solved, through sacrifice, shared understanding, and desire to not maximally exploit everyone else. Government as the expression of self-determination for a well-defined ethnic group with mutual fellow-feeling thus makes sense as a reliable way of solving the contracting problem. 

This is like the highly successful family business. But a firm where you only hire family members is limited in its capital and ability to expand, unless you’re having bazillions of children each generation. This creates incentives supporting the tendency to hire outsiders, but keep control and cash flow rights to the family. So now you go from the family-only operation, to a family-owned firm employing outsiders. This can be quite stable and allow for a lot of growth. But a lot of firms find out that if you really want to expand to take advantage of profitable opportunities, you may need to dilute control by selling shares in capital markets, and hiring competent external managers instead of just your eldest son, or even your most competent son. 

At each step, the challenge is figuring out how to coordinate the increasingly complex nexus of incomplete contracts that holds the whole thing together. And for the case of governments, this is an order of magnitude harder than for private firms, as there’s no larger governing apparatus or courts to appeal to in order to resolve disputes. You can get some progress due to personal loyalty, or traditions being a Schelling Point for behavior, or displays of force making things collapse to a single Nash equilibrium. But if people disagree enough on what the contract requires in a given high stakes situation, maybe the nexus itself breaks, reverting to smaller groups with less ambitious aims who can still agree on things. Assuming, that is, that those groups can actually operate independently of the broken off group. Complexity, like entropy, is easier to add than it is to get rid of again.

And this sounds a lot like the early history of the Rome. In the beginning, the Romans were literally the citizens of Rome, who were also the soldiers. And their enemies were other nearby cities – the Samnites, the Latins, and the rest. But once defeated, these become subject cities, then friendly allies, and then finally, Italians, the inner core of the expanded polity. The concept of who is “us”, at the core of the high trust solution to the incomplete contracts problem, gets expanded. And you see the genuine aspect of ethnogenesis – what exactly makes a people, anyway? This concept has been so abused by blank slate progressives advocating for open borders (where "there is some flexibility here" gets substituted for "there is thus infinite flexibility here"), that it’s easy to miss that there are genuinely multiple ways to construct identity. And the surest way you can tell this is that the old group names just stop appearing in the stories at a certain point. We stop hearing about the Samnites, then we stop hearing about Hispania, then finally we stop hearing about “the Gauls” (as a people) and just hear about “Gaul” (as a province). 

The flip side of this expansion, however, is that it becomes harder and harder to articulate an operating principle of what and whom the whole thing is for, especially in terms of the question of who gets to be in charge and who gets to enjoy the benefits. The Roman consuls first have to be Patricians, but then that gets discarded, and they can then be wealthy Plebs too, but they still have to be Roman. Then once it moves to emperors, they eventually can be Roman families from the provinces, like Trajan, but still generally of Roman stock. These expansions prove successful, then you get the series of great Ilyrian emperors, like Diocletian. But then you get peasant emperors like Maximinus Thrax, and then you get Gothic generals who wield lots of power over puppet emperors, but still do good service to the empire (like Stilicho). But then this gives way to barbarian generals like Ricimer, who notionally still serve the decaying empire successfully, but historians start to argue whether he’s actually just a King. And finally Odoacer decides to make our lives easy by actually sending the purple cloak back to the Eastern Roman Emperor and saying he’s done with the whole thing, and now is just the King. Which is lucky for us, only because it makes the whole narrative simpler for “when did they meaningfully stop being Roman Emperors”. The Senate kept meeting until the 7th century, even as it was totally useless and a joke. 

And it’s not just the leaders – by the end, when the western Roman empire is fighting off increasing barbarian invasions, the legions doing the fighting are mostly barbarian too, and there’s not always a lot in the legitimacy stakes to make you prefer the notional emperor(s) from the usurper. It’s certainly not obviously the extent to which they represent “the Roman people” in a Wilsonian sense. 

If all this sounds like it becomes a confusing mess of an org chart by the end, it is. Part of this is because when we refer to this as a nexus of contracts, there really aren’t any actual formal contracts anywhere once the simple ties of ethnic kin aren’t the main driver. The closest we get is clear rules of succession, whose importance becomes very obvious. And when these get ignored, we’re left to the coordination game version of the Melian dialogue – the strong (and their nexus of contracts) do what they will, and the weak either join the winning team, or get killed. This often happens surprisingly fast, and a lot things that seem like they’re going to turn into massive civil wars end up as a total collapse by one side without a fight, or after a small initial battle, where all the supporters of one side abandon their leader to join the opposing faction, and the losing general either gets killed by his former supporters or commits suicide. Say what you will about the late Romans, but they played politics for keeps. 

If democracy has any virtues, it’s certainly not the wisdom of the people, or even the legitimacy that elections confer, but probably just the well understood rules of succession, whereby power is transferred on schedule, and the losers generally get to live out their lives in peace without being thrown in jail or killed. Then again, this was true in Republican Rome too, until one day it wasn’t. In the early parts of the story, you hear mostly about cities and structures, with the individual Romans playing less of a central role (with occasional exceptions like Scipio Africanus). By the time you’re routinely hearing about individual personalities at high frequency, you’re well on the way to the collapse of the Republic. And at first this takes the form of utilizing factions of Romans violently against other Romans, then it becomes using foreign auxiliaries to overcome Roman legions (who are themselves mixed), then it ends with the foreigners just running the show. 

In this regard, what you’re trying to coordinate with the early Roman Republic is a form of group selection, whereby members of a group all end up benefitting in evolutionary fitness terms because of cooperative action. Like ethnogenesis, progressives love this idea, and abuse the concept mightily to argue for all sorts of nonsense. But it can exist – not only in the case of a termite mound, but also in terms of the cells in your body. They engage in all sorts of group coordination so that their DNA gets transferred on. For a while, so did the Romans, and then later on, so did the Italians (at least in our metaphorical sense, though perhaps in a literal one too). But even inside your body, defection is often locally profitable without strong enforcement mechanisms. When one section of cells starts growing uncontrollably at the expense of the rest, this is called cancer, and has a lot of parallels to a rebellion in civil society. But the metaphor is imperfect, because the cancer of rebellion doesn’t always kill the host. Rather, at some point it starts to look less like the body with cancer and more like a cancer in charge of what used to be the body. The polity, unlike your body, can theoretically absorb outsiders. 

Aside from these curious aspects about the nature of government and its change and decay, the other part I found myself wondering about were the parts of the story being left out. Not as a conspiracy or anything, but just which are the noticeably important aspects that don’t seem to get much emphasis in the Duncan retelling? 

There are two big ones. The first of these is birthrates. Obviously he’s not recounting a continuous census of fertility. But in the days of the Republic, the recurring theme is always that whenever a Roman legion gets wiped out, they just raise another one and keep fighting, refusing to give in. You can see this an indomitable spirit and resolution, but it’s worth pondering the sheer logistics too – there must have been a large excess of tough military age males sitting around at any time, ready to be brought into military service. Where those males all went by the end of the empire is not well explained. The standard view is that they were unwilling to fight, and were kept from service by rich land owners who didn't want to sacrifice their workers. But it also seems quite likely that they might just not have been around in the same numbers. Either way, it’s puzzling. 

The other piece that supports the latter interpretation is that by the time you get to the Empire (where there is much more focus on individuals, so we know their life stories better), you can’t help but notice just how few children the Roman emperors seemed to have. If you’re not constrained by resources, why not have 12 children, or 20? How on earth do you reach the stage that you don’t have enough sons to continue your dynasty, when this is the single most important aspect of succession? Or only one son who's a total muppet? Weirdly, having no children at all is more understandable than only having two, as the former might just be general unlucky infertility, but the latter suggests it's possible, just not done much. I had always viewed the overwhelming knock on Marcus Aurelius as being that he broke the tradition of the “Five Good Emperors” of appointing as successor the most competent man, rather than their blood offspring. This is true, but the part that Duncan notes (which I hadn’t known) is that none of the others actually had any blood sons! Which is bizarre, when you think about it. It’s not even like they’re Henry VIII, producing unlucky daughter after daughter. Aurelius appointed Commodus, who was a disaster, but as Duncan notes, he was rather in a bind. Either he probably had to kill him, or make him successor, since letting him just hang around was likely to lead to civil war, which is much worse. Even Augustus, the most powerful man in the empire, ran out of sons. Like, just get some mistresses! Or bang your wife more! I have a feeling something very odd was going on with Roman birthrates, which I want to understand more.

The other even less remarked on piece is Roman engineering and technology. Occasionally you get snippets of the story like Trajan building the longest bridge for the next thousand years, or Caesar shocking the Germanic tribes by building a bridge to transport his whole army across the Rhine before the barbarians knew it had happened. Or the general impressiveness of aqueducts, which managed to slope ever so gradually over miles and miles to deliver water from one place to the other. 

Nobody else was doing that. So how did Roman technology advance? How late in the story did that stop happening (surely an important question to those who judge present civilisational health by the existence of iPhones). And why couldn’t anyone else match it in the same way? You realize that you have such a tiny number of primary sources, and if it wasn’t a subject that people bothered to record the history of, you’re going to have a lot of guesswork.  

Finally, comes the applications to the present. One aspect that stands out is that the ability to forecast the lifespan of the empire is complicated by the fact that battles at that time were still largely tactical and not strategic. That is, there often might be only one or a couple of large encounters that decide who comes off the best in a war between nations. And because these often turn on small decisions on the battlefield, smaller armies can frequently rout and destroy much larger ones, or a small number of surprise defeats can threaten the entire nation (like in the Punic Wars with Carthage). This means that at a lot of places, something going differently could have ended the whole Roman experiment much sooner – the Punic Wars, for instance, or the Crisis of the Third Century. In the age of strategic warfare, you might actually have a better chance at forecasting which structural forces will prove decisive if the two sides just grind it out long enough. Then again, maybe not – there’s been no shortage of American defeats to notionally weaker foes that might not have seemed structurally obvious ahead of time. 

The last one is the surprisingly low correlation between the level of domestic misery at any given time and the actual instability of the whole project. The late Roman Republic was an utterly miserable time for its citizens compared with the previous centuries, with the advent of massive Roman civil wars, proscriptions and deaths of political opponents and their supporters, and general chaos and uncertainty. But all the protagonists at this point are still Roman. You never really get a sense that there’s an Alexander of Macedon equivalent waiting in the wings to crush all the war-weary parties. Instead, Rome still seemed pretty secure from external enemies. By contrast, there are lots of periods during the Empire where the barbarians seemed to be both stronger and more coordinated, and could tip the whole thing over. Even here, it’s not an inexorable decline. By the early 5th century, things actually seem to be looking slightly brighter for a while. Yet the striking thing at this stage is that even a competent Emperor like Aetius isn’t able to actually fully reverse the losses, only slow them. It’s not long then before things go off the rails for good, at least in the west. 

If we look at the level of America’s foreign predation, we see useless and counterproductive wars, and endless third world migration, but there is nothing like barbarian armies forcibly peeling off territory, or menacing the homeland. This calculus is made a little more difficult by the fact that we are highly dishonest about what the American empire actually is, and thus what it would mean to be losing territory if you only rule indirectly. If you defined the American empire crudely as “everywhere that had a George Floyd protest in 2020” (including places like Berlin, London and Melbourne) then maybe the calculus gets a little harder. But still – in physical fights, America loses, but it loses in other people’s backyards, when the stakes for the domestic citizens are mostly pretty low. 

And in a pinch, I find myself thinking that our recent developments seem to map more closely to the late Roman Republic than the late Roman Empire. If I had to guess who Trump most closely matches too, it’s probably the Gracchi brothers. They started using populism, and in their case threats of mob violence, to get their legislation passed. This isn’t exactly Trump, but the sense of tapping into populist anger to circumvent the normal political process seemed like a good description of his nomination and victory in 2016. And the establishment backlash to unseat him, both from dubious Russiagate investigations from the civil service and Democratic party, periodic deaths and violence in political confrontations and protests becoming more normal, unusual levels of election fraud in 2020, and Trump’s final temper tantrum protest on January 6th, all fit the same pattern. A gradual erosion of previous norms, a gradual escalation by each side. The Gracchi brothers both got killed, which I don’t think will be Trump’s fate (though blog.jim still is betting on this). But the important parallel I see is that they showed a path to a certain kind of escalation that later men like Marius, then Sulla, then finally Caesar and Augustus, would both increase and take to its logical conclusion. At some point, people just realize that the Republic is dead and not coming back. It takes a long time, and a lot of denial, before that point is reached.

Sometimes, that’s just your lot, and there’s not much you can do. To modify Brad Pitt’s character in Inglourious Basterds – you don’t gotta be Niccolo Machiavelli to know that you don’t want to live through “the Year of the Four Emperors”.

But America as the late Roman Republic is actually the optimistic scenario. Not because it won’t get worse – if the metaphor holds, it definitely will. But because it might eventually get better.