Real GDP - Part III: Let The Games Begin

After receiving his marching orders from Emperor Debitus, Calculus walked slowly down Palatine Hill, heading towards the Forum and his official chambers at the Treasury basilica. He was in deep, troubled thought.

On the one hand he felt professional rage at being ordered to manipulate the Imperial books to accommodate Flavius' boondogle. Up to now he was always scrupulous in his accounting, down to the last copper as that crossed his books. Given its size and nature, the overhaul required by Debitus would entail smoke and mirrors on a grand scale, with a similar-sized reduction in his own integrity as a public servant. Old, stammering Emperor Claudius would be horrified. But then again, he was long dead and safely ensconced in Elysium, along with the rest of his god-like kin. What care had gods of earthly matters?

And thus, on the other hand Calculus pondered how to best accomplish the task set before him. The emperor was menacingly clear: cook the books or get ready for an immediate trip to Hades - a very unpleasant choice. Though just over 70, Calculus was still in fine health and his mind was sharper than ever. He was by no means ready to throw his life away, and despite some rumors from Judea, he had never seen anyone come back from the underworld, no matter how righteous. He would have to comply with Debitus' wishes.

As he saw it, the task involved two issues: the assumption of an enormous amount of long-term debt, and the proper accounting of the eventual activities - the games themselves - in the national accounts [Ed.: today's GDP].

The Imperial Treasury had certainly borrowed money before, but always relatively modest sums and for short periods of time. For example, if a year's harvest failed and grain had to be imported from abroad to feed the people, the Treasury contracted with wealthy grain merchants who also financed the purchase until next year's harvest. Building the Flavian amphitheater, however, would require borrowing ever increasing sums of money for at least 10 years - that's how long it would take to complete it. Perhaps a creative modification of the aqueduct construction model would suffice, thought Calculus. "Hmmm... maybe we should think of it as financial engineering" he mumbled to himself.

Dealing with the second issue, the accounting of income and expense from the games, was far more difficult. Naturally, slaughter was one of Rome's mainstays, but it was always done for a solid business purpose. Namely, the conquest of more lands to increase the productive assets of the Empire in foodstuffs, timber, metals and slaves. In other words, there was profit in waging war successfully and sensibly. But slaughter inside an arena in Rome? Now, that was senseless - indeed, it would forever show a net loss. Add depreciation of human and physical capital plus interest charges, and the whole thing was a bottomless pit of ruin. Ruin for the Imperial Purse and, by extension, ruin for the entire economy.

Obviously, those who ran the show would reap huge profits. Not only would they charge an arm and a leg to construct and finance the arena, they would also provide the gladiators and beasts at a markup, hold the food and slave concessions and control the bookies taking all the bets. It would quickly result in a vast transfer of wealth from the public at large to a select few bloodsuckers - fat Flavius and his unscrupulous gang. Calculus could easily predict that in just a few decades the lower patrician classes [Ed. today's middle class] would have to go into debt in order to survive and, once stripped of all assets, ultimately be forced into indentured slavery in lieu of their debts.

And yet, Calculus had to somehow find a way to portray this constant ruination as a net economic benefit, year after year! [Ed. in today's terms, show real annual GDP growth].

Well, it serves Romans right, he thought. These days everyone simply minded his own business. However, as a well educated Greek he knew his Thucydides by heart: "We regard him who does not get involved in public affairs not as minding his own business, but as a wholly useless man."* While a Republic demanded participation, all that a dictatorship asked for was sloth. And if the citizens of Rome wished to be useless, who was he to stop them? So be it: Let the games begin.

With these thoughts still fresh in his mind, Calculus entered the Treasury and immediately called for Ursatalus**, a newly hired official with a talent for complicated mathematical calculations. Unlike most Romans who preferred to be clean-shaved, he sported a scraggly beard. Calculus quickly laid out his plan and set him to work demolishing the Empire's financial foundation.

Bust of a bearded Roman, ca. 75-150 AD

End of Part III
(Note: This is getting longer than I thought. There will be at least one more installment).

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*Thucydides: Funerary Oration by Pericles
**ursa: bear, talus: ankle