‘Levelling up’ and infrastructure investment: lessons from Ancient Rome?
As I outline in my book Pugnare: Economic Success and Failure, towards the end of the 1st century BC, Ancient Rome was in a similar position. Reeling from years of civil war brought about by the assassination of Julius Caesar, in 23 BC Augustus became Roman emperor. He inherited a state with cities and infrastructure suffering from underinvestment, in varying states of disrepair, and in which divisions left over from the civil war persisted under the surface.
Augustus set about transforming Rome and its infrastructure, with the city becoming one large building site. Old flats were renovated; roads were laid; and aqueducts were restored, bringing vital supplies of clean water to the city. Not only did this investment change the fabric of the city itself, it transformed the feeling of the city. From a feeling of fear came a feeling of renewal. The atmosphere in the city changed, as opportunities for work drew people in and new skills were developed.
Of course, this renewal would not last. Construction on these projects continued for decades after Augustus’ death in 14 AD, but gradually slowed as money for such projects dwindled. The emperor Claudius oversaw an expansion of Rome’s ports, however this declined under his successor Nero, and upon Nero’s death in 68 AD, this also came to an end. Disruption to the leadership of the empire did not help, typified by the year of the four emperors in 69 AD. Uncertainty in leadership is not conducive to long-term planning.
Under Trajan from 98 AD, the recognition of the importance of spending on infrastructure returned. In the near two decades of his rule, Trajan doubled the import and export capacity around Rome. The lengths of wharves were increased, providing greater capacity for goods. Storage capacity was increased through new warehouses to shorten the time it took to unload ships. Infrastructure such as canals were built to improve the distribution of goods, much of which went straight to the heart of Rome. This policy facilitated greater trade across the empire, and encouraged private business investment in regional centres so that they might become part of this expanding trading network.
Ports along the north African coast such as Carthage mirrored the expansion of Rome’s ports including Portus and Ostia. This boosted the exports of goods like wine, olive oil and grain, while specialist industries like glassware flourished as their goods became easier to access and trade to wealthy Romans in the provinces.
Today, some of the problems Liz Truss faces are not wholly dissimilar to those that her forebears encountered two millennia ago. The regions of the United Kingdom feel a disconnect from their capital and those who live and work there. Grand plans for high-speed national rail may be ongoing, but many would prefer more reliable local services and reasons for business to grow locally first. Liz Truss must follow the example of Augustus and, in particular, Trajan in prioritising infrastructure development across the country.
The spending must be considered. A pot of £4.8 billion is not the largest when put up against the £100 billion of borrowing likely to be used to finance assistance for energy bills. Targeted local investment will bring about change, but it must be used in the right place and in the right way, prioritising projects with the most favourable cost-benefit-ratios. Wherever possible, much of this can be private sector-led. Nero’s lavish spending on art instead of infrastructure did nothing for Rome’s economy, and Truss must heed that same warning.
The increase in trade and accompanying economic growth under Trajan led to surpluses in pension funds and, crucially, the ability to reduce taxation. Truss was criticised by her opponents in the Conservative Party leadership race for fairy-tale policies of tax cuts, being accused of economic irresponsibility. Were she to reduce taxes as a result of infrastructure investment and achieving her predecessor’s dream of levelling up, she would be lauded, as Trajan was, as a modern day ‘optima princeps’.