Real GDP - Part I: Ave Caesar

Recently I have been thinking about a better way to measure real GDP growth, one that takes debt into account.

Lo and behold, rigorous academic research ( a weekend dozing at the beach) has uncovered a trove of heretofore unexamined historical information on the subject. It is now turned into a III-part series for your enjoyment (film rights available).

Have fun...

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Rome, 69 A.D.

The Empire is ruled fitfully by one Debitus Subitus Messopotamicus - a name frequently shortened to Dubious by his numerous enemies - an Emperor whose later reign becomes curiously shrouded in obscurity. An episode is playing out unknown to modern-day historians, because the otherwise meticulous annals of Rome were wiped clean of every mention. The eradication was not performed to protect the innocent - there were none left in Latium by then - but to perpetuate the devious conspiracy that was hatched at the time, and which is still with us to this day.

Our story begins in early summer. A pall of tenuous unease is settled over the Eternal City. It seems as if all drive and ambition have been sucked out of once mighty Rome.

It is late morning and at his villa on Palatine Hill Emperor Debitus has just finished his breakfast of fresh figs, bread and honey. As he absently gazes over the rooftops below, his guard announces the unexpected visit of Flavius, the grains merchant and financier whose immense wealth and girth are only exceeded by his greed.

"Ave Caesar, may Vesta's graces be with us today", greets Flavius at the entrance of the emperor's day-chamber, before strolling inside with an ease that belies his size. His senatorial toga bordered in crimson is spotless, though the methods by which he acquired it are far from its equal.

"I bring glad news, Sire. My fellow bankers and I have come up with a plan to resolve the plebe crisis."

"As you know, the people are no longer willing to enlist in the legions to fight for Rome's greater glory of conquest and loot. Our previous successes have made them unambitious and lazy. Trade with the eastern provinces provides cheap goods and strips them of the drive for gainful employment. Plus, we can't put them to work building more infrastructure projects. We have finished every aqueduct we need and all roads lead to Rome, anyway. Our state revenue is worsening by the day, Excellency, and we must find other ways to re-invigorate the growth of our economy."

What goes unsaid, but is perfectly understood even by Debitus, is that Flavius worries much more about his own purse - and that of his associates - than the reduced flow of gold into the Imperial Treasury.

"Yes, yes, Flavius. I know all this already" sighs Debitus impatiently.

"Yesterday, at the banquet for those barbarians visiting from Scythia, we had to serve a dreadful local Apulian instead of the fine import vintages we are used to. This economizing business has gone far enough. Come on then, out with it. What are we to do?"

"Caesar, our recommendation is that we establish a bread and spectacles economy. But first allow me to demonstrate with a model" says Flavius and claps his hands twice. At the sharp retort the doors are immediately thrown open and four slaves dressed in his family livery enter shouldering a large wooden platform. Upon it sits a detailed model of a fabulous amphitheater, complete with sunshade awnings made of coloured silk and clay figurines of gladiators, wild animals and spectators.

The Emperor's Box is rendered in rose marble and real gold, with a vague likeness of Subitus carved in ivory seated in a throne of jade. A small hydraulic mechanism allows the floor of the arena to rise and fall at the press of a toggle, revealing a maze of tunnels and corridors below populated by even more figurines. Clearly, no expense has been spared in the effort to impress the emperor, who is known to be immensely fond of clever toys.

As Debitus curiously examines the model without bothering to conceal his child-like delight, the financier explains his plan in hushed, yet excited, tones.

"We shall build an arena to host gladiatorial games, beast shows and all manner of circus-like spectacles. It will hold 50,000 spectators in comfort, plus hundreds of slaves, guards and animals at the lower levels. Building it will employ thousands of workers and artisans for years - but this is only the beginning."

"Imagine the turnover and profit once it starts operating: gladiators must be bought, trained, fed and armed, beasts imported from all over, stage managers employed to run the spectacles, food and drink provided to the spectators during the all-day shows. The economy will start growing briskly once more, with none of the risks involved in foreign wars. Riches will flow strongly to the Treasury and your fame shall glow bright to the ends of the world. "


"Wonderful, wonderful, Flavius! This amphitheater will be a great addition to the Circus Maximus where our chariot races are held. I can hear the crowds roar in delight already" exclaims Debitus.

But then a frown of worry quickly crosses his face.

"Wait a minute, Flavius. How are we going to pay for all this? My Imperial Treasury is nearly empty - though I have reason to believe that your own strongbox is in far better shape. We can't afford this idea of yours, can we?"

"Sire, I am but a humble servant of your Majesty and whatever small recompense I receive for my services pales by comparison to the benefits accruing to your august person", retorts Flavius in a slightly hurt tone.

"But I can easily comprehend your worries, Caesar. The Treasury is, indeed, in a temporary bind. But a simple lack of ready cash need not be of concern. We have arranged to borrow all the capital we need to get this great enterprise going. Once the amphitheater is ready the revenue it generates will greatly exceed the sums required to repay the loans. It has all been worked out - in great detail, I might add.

The look on Debitus' face reveals that he is still not convinced.

"Flavius, I know you are very clever with sums. For myself, I prefer the alea* to the abacus, yet even I can see that this enterprise of slaughter and gaming is not adding any real value to our economy. Where is the lasting production? And how are we going to keep proper accounts of income and wealth, if we simply destroy one day that which we created the day before? We might as well put the people to work continuously making and smashing clay chamberpots."

He pauses momentarily in thought and then snaps his fingers.

"Ha! By Jove, that's what this is! A potty idea, Flavius. What have you to say, to that, eh?" He brightens at once, bemused by his own feeble joke and proud that he has, at long last, found a fault in one of Flavius' endless schemes.

Flavius watches smiling and nodding obsequiously, though he is secretly amazed that this imbecile could so easily poke a hole at his plan. Well, he has to admit, it is not a perfect plan. And what plan is, these days, pray tell? No matter - he has to quickly draw the emperor's attention away, before everything that was so carefully put together is laid waste by this fool. For all his ineptness, Debitus is notoriously stubborn once his mind is set.

"Oh, no, no Sire! As you said, accounting of sums and balances is not a subject fit for Emperors. It is best left to lowly public servants and slaves - it need not bother you one bit. I shall immediately confer with the proper officials at the Imperial Treasury and explain everything to them. It's all a matter of properly balancing debits with credits, you see. Is that Greek still the chief servant in the fiscal department? What's his name, Calculus?"

"Yes, that godforsaken Calculus is keeper of the accounts down at the Treasury. He seems to have been there since the days of Romulus, if not before", grumbles Debitus clearly upset at the mention of his chief fiscal advisor. Lately, Calculus has been making a nuisance of himself with his repeated sour warnings about the parlous state of Imperial finances.

"All right then, Flavius. Go see Calculus, by all means. Better you than me. And let me keep this lovely model until you conclude your deliberations, eh? I have another banquet tonight, this time with a delegation of Athenians - and you know how uppity they are. Always bringing up Parthenon this, Acropolis that - I would love to shove their insufferable faces into this ... this ... Wonder. A Roman Wonder is it not? Roman by Jove, not Greek! Yes, yes, that'll teach them."

"Now, run along and let me inspect this magnificent model in peace. Go!" Debitus dismisses the merchant with a flick of the wrist.

Flavius smiles and bows graciously as he takes his leave, carefully stepping backward in silence. He knows not to bother the emperor any further.

Outside, he lumbers heavily into his litter, yelling menacingly to his slaves: "To the Treasury you lazy scum, before I whip the hide off your backs. Double quick." He settles his corpulent body comfortably on the silk pillows and the six long-suffering slaves raise the litter onto their shoulders.

They quickly fall into a familiar, weary trot. The basilica housing the Treasury is not far, but the day is still young.

End of Part I
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*alea: dice