Economics and the Christmas Story

In 336 B.C. a 21 year-old was placed on the Greek throne following the assassination of his father, Philip. Alexander of Macedonia, who had been privileged to have Aristotle as his own personal teacher, had been made aware of a world that was fragmented economically into countless little city states, each being crushed by high taxes and isolation. He realized the high cost of fragmentation and fear. In the next dozen years ALEXANDER THE GREAT “conquered” the known world for Greece. He conquered it with such interesting subtlety that, more often than not, the countries in his path simply threw open their gates and welcomed him in. Alexander brought with him security, protection, fairness, and the opportunity for expansion of trade. He encouraged free trade within his new world based on a dependable metallic coinage of gold and silver. The genius of that economic unification rested in the fact that it did not cost his constituents more out of their purses for those additional benefits, but less . . . a whole lot less. 

Where the citizens had been paying as much as 70 to 80 percent in taxes to operate their fragmented city-states, Alexander reduced those tax rates to around 12 to 15 percent. Little wonder that they threw open their city gates and welcomed him with open arms! 

But, alas, with no more worlds to conquer, Alexander the Great died at the age of 33 after a wild drinking party. His five generals took command, and before long the greed and insecurity pushed the populace back toward the mass of fragmented city-states, no longer unified by an environment of low taxes and economic stability. His empire eventually crumbled, but his dream lived on. 

Two hundred seventy-one years later, Julius Caesar, an admirer of Alexander, laid claim to Alexander’s dream, overhauled it, and began to implement the “great experiment,” Pax Romana. The global economy was not nearly as fragmented as it had been prior to Alexander. The Greek philosophy, literature, and ideas of democracy had done much to break down the barriers between the “Greeks” and the “barbarians.” 

Julius Caesar, like Alexander, began building his empire, not through brutal conquest, but, rather, through economic and political liberation. Five years after he had taken over Gaul, Julius Caesar entered Italy, where Rome opened her gates and welcomed him as her new champion and leader. He made the stability of Roman currency so attractive, the mildness of Roman taxation so alluring, the openness of worldwide trade and commerce so desirable, that his empire expanded by the force of demand. He treated the “conquered” nations with such secure leniency that even if they could have revolted, they didn’t! 

The economy began to grow, trade began to flourish, and the Roman Empire was established. Julius Caesar perceived that individual initiative and creativity that was rewarded produced more individual initiative and more creativity . . . thus a more stable and wealthy empire. He also perceived that exorbitant taxation squelched individual initiative and creativity. He, therefore, set out on a plan to broaden the tax base so that he could lower the individual tax rate, i.e., include more people on the tax rolls but lower the amount that each had to pay on his production so that they would be encouraged to produce more, thereby making the empire wealthier and all the people better off. Caesar understood that it was production that was true wealth.

In order to broaden the tax base so that he could lower the tax rate, Julius Caesar needed to take a census of the empire. The census was completed of Italy only. In 44 B.C. Julius Caesar was brutally assassinated. But in those eight years (52-44 B.C.), Julius Caesar had established an economic system that endured the next 500 years and eventually influenced the establishing of even our American economic philosophy. After 16 years of civil war, Octavius, the adopted son of Julius Caesar, desirous of fulfilling his father’s plan, victoriously returned to Rome as Caesar Augustus, Emperor of Rome. 

Does that name sound familiar? It should. Does a census for taxation ring a bell? It should: 

“And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed. (And this taxing was first made when Cyrenius was governor of Syria.) And all went to be taxed every one into his own city. And Joseph also went up from Galilee, out of the city of Nazareth, into Judaea, into the city of David which is called Bethlehem: (because he was of the house and lineage of David) to be taxed with Mary his espoused wife, being great with child. And so it was, that, while they were there, the days were accomplished that she should be delivered. And she brought forth her first born son, and laid him in a manger: because there was no room for them in the inn.” (Luke 2: 1-7 KJV)

Regarding the Christmas story, we are also told: “In the fullness of time . . . God sent his son.” During this season, I am pondering. Just what all could that statement possibly mean? Is it possible that a repeat of some sort of equally significant event of cultural economics is even now developing before our eyes? I certainly am intrigued by economics and the Christmas story.