The Taj Mahal, in northern India, is widely ranked as the most beautiful building in the world. Yet, it was a prime cause of the collapse of the Mogul empire.
“Like most visitors to northern India, I visited the Taj Mahal. Unlike most visitors, I asked economic questions. Reports of his tax policies suggest that Shah Jahan may have appropriated as much as 40 per cent of what we now call gross domestic product to support a lifestyle of exceptional ostentation and self-indulgence. He was overthrown by his son, who was exasperated by his father’s penchant for monumental building, anxious to maximize his own share of the loot and concerned by the scale of the levies on the population. But it was all too late. The Mogul empire was in irretrievable decline.’ John Kay, ‘Learn from the Moguls: rent-seeking will destroy your empire’, Financial Times, November 21, 2012
As John Kay notes, the activities of Shah Jahan epitomize rent-seeking – the accumulation of a fortune not by creating wealth through serving customers better but by the appropriation of such wealth after it has already been created by other people. Unfortunately, such activities are not confined to India. Indeed, they run rampant across 21st century America.
As John Kay also notes, the primary locus of rent-seeking in the United States is the over-blown financial sector, where burgeoning trade in existing assets has overwhelmed the creation of new wealth, attracting scarce talent from elsewhere and creating instability. Parallels between the Wall Street of Lloyd Blankfein, Jewish CEO of Goldman Sachs, and the court of Shah Jahan are too close to be ignored.
“The success of market economies is not achieved by policies that encouragfe people to be greedy and imposing as few restrictions as possible on what the greediest of them do. That was the world of Shah Jahan and it produced very little in the way of economic advance…. The excesses of rent-seeking meant the Mogul empire was in effect ended within two generations. The ensuing sacking of Delhi left a political vacuum only filled by the British Raj.” John Kay, ibid.
Even Lloyd Blankfein might feel a little queasy at the prospect of a British re-colonization of America. So do try to keep your fat greasy fingers out of the money-pot, Mr. Blankfein, and all you greedy Wall Street financiers who fill your pockets with other people’s hard-earned wealth. The Empire State Building is no Taj Mahal. And even the Taj Mahal was not worth the immiseration of the Indian sub-continent and the collapse of the Mogul empire..