No matter how many photos you have seen, when you walk up to the Roman aqueduct in Segovia, Spain, it is breathtaking.
It also inspires questions.
How could a civilization with such limited technology and using only human and animal power have constructed such a giant piece of infrastructure? Without optics, how did they maintain such exact surveying control? How did they quarry, transport and lift so much granite?
An economist has other questions: What fraction of total Roman gross domestic product went into producing such public works? What was the structure of Roman public finance? Were taxes on the rich valleys of northern Italy used to fund aqueduct building on the frontiers of the empire? Or did the local populace have a crushing tax burden? Or did they pay in kind through forced labor on public works? Was the treasure taken by conquest, or done by captured slaves?
Going further, if libertarian economies with minimal government involvement really are more economically efficient, as their advocates argue, why were no such great works ever erected by civilizations that focused on individual autonomy rather than government action? And did Roman politicians have such debates?
These questions go to the heart of age-old disputes about the role of government in an economy. In what ways and to what extent is government action required to make economies productive? At what point does it become counterproductive?
Would we have modern electronic devices or the Internet¸ much less interstate highways or large hydroelectric dams, without government? Do the negative incentives of taxation outweigh the positive productive effects of national security, public order and public goods such as roads, public health and tornado warnings?
Does government establishment of “welfare” programs such as food stamps or Medicare drug benefits eventually consume so much of a society’s capacity to pay taxes that public goods such as roads and dams depreciate away? Are Supplemental Security Income payments or subsidized student loans the modern-day equivalent of the bread and circuses that Roman “makers’ had to provide to their society’s “takers,” leading to inevitable social and economic breakdown?
Looking at it another way, what price, if any, in personal freedom, did people under Roman rule pay for public order and clean water? Were their lives any less nasty, brutish or short had they been barbarians outside the frontier of Roman conquest?
It is clear that to construct lasting infrastructure, early governments needed to wield great power, including the ability to impose a heavy tax burden, in case or in kind, on subject peoples. Ancient infrastructure such as the irrigation works in the Indus Valley, Roman bridges and Incan Andean terraces all required forced labor.
But they also resulted in greater day-to-day safety and usually greater food availability than was enjoyed in smaller societies that had less coercion and perhaps greater individual autonomy, although tribal membership often involved forced obedience, too.
There is a chicken-and-egg question about early governments. Was it that groups who were able to organize could irrigate or store food and thus have greater resources to put into successful defense against enemies?
Or was it that groups that were able to effectively organize for defense had time, space and resources to build irrigation or terraces or drain swamps so they could have more food?
Or did such initial accumulation of capital come from organization for aggression? Did aqueducts stem from treasure taken from less organized societies by brute force?
Whatever the initial case, some ancient societies were able to enter into virtuous cycles in which internal and external safety allowed resources to be put into productive infrastructure, which, in turn, allowed greater output and thus more investment.
Rome accomplished a lot.
But it, like the civilizations that built Asian temples, Nile valley monuments, the Acropolis and the Incan road from Cuzco to Quito all fell eventually, and often to less advanced and apparently less organized foes.
What causes inner rot? Is it ruinous military spending brought by imperial overreach? Is it the creation of disincentives to work by corrupt governments eager to appease greedy populaces? Is it degeneration of government into a sclerotic force that stifles individual creativity?
Comparisons would be easier if there ever had been a society that might have met the libertarian standards of Friedrich Hayek or Ludwig von Mises, but there haven’t been. Industrial Revolution Britain might have come close, and 19th century America infringed less on individual autonomy, at least of white people, than it does today. That also might be easier with a population of 40 million rather than 315 million.
Some early infrastructure construction, including the Erie and other canals and pre-Civil War railroads, were largely initiated by private enterprise. Many of these, however, did involve state legislatures granting monopolistic charters, use of eminent domain or grants of land. However, in contrast to Europe, the U.S. telegraph net involved little government action.
The transcontinental railroads got great government subsidies. Harbor and river navigation improvements were nearly all government projects. Private companies built small dams for irrigation and hydroelectric production, but the large ones did not commence until state and federal government took a central role.
Defense needs always have been an impetus to production of “public goods,” in the sense economists use the term, items that are “non-rival” and “non-excludable” in consumption, like fire protection. Segovia itself and its aqueduct existed to support a Roman military base on the frontier of the empire. Nearly all of modern electronics technology including transistors and integrated circuits and materials science from plastics to ceramics stem from World War II and Cold War military-oriented or funded research.
We wouldn’t have the Internet without military communication infrastructure. Private enterprise might eventually have produced the 3-D seismic imaging that is key to developing North Dakota’s oil, but it would have taken many decades if not for federal support of research to facilitate finding Russian submarines or for the National Security Agency to listen in on and decode the utterances of far-away presidents and infantry squad leaders.
Second-century Segovians wouldn’t have had clean water and their 21st century descendants wouldn’t be able to walk around with smartphones if not for government action, that is clear. But that doesn’t help us identify the point at which government action in the economy becomes counterproductive.