The danger of living on bread and circuses
The danger of living on bread and circuses
Rome in the first two centuries A.D. faced a yawning gulf between rich and poor. The mighty empire built on tribute reached its geographic limits. Its economy created few exportable goods. Slaves acquired by conquest built most of its bridges, roads and aqueducts and took jobs in farming, mining and construction. As this cheaper labor replaced Roman citizens, idle, unemployed, hungry people filled the capital.

The Caesars created make-work and part-time jobs, subsidized housing and doled out grain. Even more, they found, was needed. "A people that yawns is ripe for revolt," wrote Jerome Carcopino in Daily Life in Ancient Rome.

The emperors added holidays until, eventually, the Romans spent half their days attending gladiator games, public executions and chariot races. Disgusted, the satirist Juvenal accused his fellow citizens of selling out for bribes of "bread and circuses." The Romans did nothing to prove him wrong, until two centuries later the empire was divided forever and Rome was sacked by Visigoths.

The complicated causes of Rome's decline have long fascinated historians, and provide a lens through which to examine the vulnerability of other dominant cultures. Americans' addiction to entertainment has been compared to the circuses of ancient Rome. We can, and do, spend much of our free time watching dreck on TV like "Half Pint Brawlers," about a company of self-styled "midget wrestlers" who attack each other with staple guns and broken bottles. In fact, in 2009, people over age 15 spent an average of 58 percent of their leisure time watching television, playing games and using the Internet -- an increase of 16 percent from 2003.

When entertainment dominates a society, it changes more than the culture; it also reshapes the economy. You can see that circuses are where the money is from the rise of digital entertainment, which has steered enormous amounts of discretionary income toward digital content and the devices that run it: laptops, televisions, gaming consoles, smart phones. In the decade leading up to the 2008 financial crisis, the only major industry other than health care that consistently showed strong real growth was consumer electronics.

Although hit hard by the recession, spending on digital media has now begun to rebound. The question is who benefits. We produce a lot of content, yet most of the devices it comes on are not made in the U.S.

This exemplifies another problem that vexed the Romans and faces us today: Dominant economies tend to import more than they export, creating trade imbalances. The manufactured stuff of life, basic items such as food, clothing, cars, phones and furniture -- the bread, as opposed to the circuses -- costs less to buy if produced elsewhere than if made by a highly developed country's own citizens. The result is a loss of jobs at home.

The conquest-driven Romans stand out in history as an extreme example. They brought home their imports, including slave labor, as plunder. This made the "bread" as cheap as it could be, and put the Romans themselves out of work.

We merely face a situation in which our labor costs, laws and regulations make U.S. business less competitive than that of other countries. In the 1990s, manufacturing workers went through a draconian loss of employment as work was sent offshore. The very thing that drove the jobs overseas made the bread cheap. During the high-growth bubble decade that culminated in 2008, the sales growth rates of basic consumer goods such as apparel, cars and sporting goods averaged less than 2 percent, so low as to be deflationary in real terms.

Offsetting the loss of manufacturing work, the leverage-happy bubble era created so many jobs for bankers, hairstylists, airline ticket agents and home health aides that we began to describe ourselves as a "service economy."

But service businesses are vulnerable to the very same forces that drove the fat out of manufacturing. Take retailing. Since the 1990s, businesses that helped make the bread cheaper, such as superstores and warehouse clubs, were the only major category of retailers to show strong growth. Now these businesses, too, are severely pressured by more efficient online sellers, which are growing twice as fast as their offline counterparts.

The proportion of our total population that is currently working has fallen to 58.4 percent, the level it was in 1983, when far fewer women were in the job market.

It's true that this percentage should improve as the economy moves past the lingering effects of the financial crisis, but recovery won't alter the fundamental trend. Structural forces are creating serious employment headwinds, faced especially by younger, less educated men.

Simply put, what has been good for American consumers hasn't been good for workers.

Look at the big picture, and you also see how, unlike Rome, whose armies looted the lands they conquered, the underemployed U.S. must borrow money to pay for our bread and circuses. Rome was so rich it took hundreds of years for the empire to crumble. We're broke, which accelerates the day of reckoning. Reform of U.S. entitlement spending would buy us time, but wouldn't fix the employment situation.

Alice Schroeder is author of "The Snowball: Warren Buffett and the Business of Life" and a former managing director at Morgan Stanley.