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There are moments when history reaches across the centuries with startling clarity. Standing in the Palazzo Pubblico in Siena, Italy, and looking at Ambrogio Lorenzetti’s “Allegory of Good and Bad Government,” I had one of those moments.
Nearly 700 years old, the series of fresco paintings includes a depiction of a bustling city that illustrates the effects of good government, as well as representations of the decay that results from arbitrary and unjust rulers. The visual treatise on political economy holds important lessons for us today.
Lorenzetti’s city isn’t thriving because its government is energetic or ambitious. It’s thriving because a wise government knows its place.
The people creating its wealth aren’t politicians. They’re merchants opening shops, artisans practicing their crafts, builders raising new homes, farmers bringing goods to market, families walking safely through the streets and a couple getting married. Prosperity comes from their voluntary cooperation. The government appears as the guardian of the rules that make prosperity possible: justice, security, predictable laws and limits on arbitrary power.
That distinction is everything. America did not become the richest nation in history because Washington, D.C., was exceptionally good at directing the economy. It thrived because its institutions largely prevented Washington from interfering. The rule of law and constitutional limits have allowed millions of individuals to make sound decisions that no central authority could possibly coordinate.
Lorenzetti understood that institutions shape incentives, and incentives shape civilization. When political institutions protect a people’s liberty, property and contract rights, they will invest, innovate, trade, build and cooperate. When institutions become vehicles for arbitrary power, society reorganizes itself around politics instead of production, and everything decays.
That’s why the most troubling trend in American politics today isn’t just how remarkably bloated the government has become. It’s that both major political parties are now comfortable using their power to direct private economic life, and they seem unbothered by whether this undermines the rule of law.
Federal spending and debt continue their relentless rise because politicians prioritize today’s voters over future generations. They support industrial policy to prop up their favorite industries. The Trump administration is taking equity stakes in companies like Intel and USA Rare Earth, with some members enriching themselves in the process.
Meanwhile, many Democrats champion taxes on held wealth and unrealized capital gains, challenging the principle that property exists independently of political permission. Genuine Socialists who aspire to subordinate property rights and voluntary exchange to political power are now winning elections.
Today, Democrats and Republicans share an understanding that the government should actively allocate resources, direct investment and determine economic outcomes, often for its own benefits.
That’s a shift Lorenzetti’s frescos implicitly warned against. The danger is not poorly executed government; it’s that society’s rules eventually begin to break down. Businesses learn that political influence matters as much or more than serving customers. Investors devote increasing attention to Washington rather than to innovation. Entrepreneurs spend more time competing for subsidies than for customers. Citizens become clients of the state instead of participants in a free society. Political discretion displaces voluntary cooperation.
This transformation rarely arrives dramatically. It instead comes one exception at a time: one bailout, one industrial policy, one new entitlement, one emergency spending bill, another emergency bill that no one feels any need to repay, one “golden share,” one creative tax hike. Together, these changes reshape the relationship between citizen and state.
Lorenzetti’s companion depiction of a bad government is often interpreted as a portrait of tyranny. Justice lies bound at the feet of a horned, demonic ruler, her scales broken and cords cut. Around them, the city decays: buildings crumble, the streets empty of commerce, stores are looted and the only workshop still doing business belongs to the armorer. Soldiers seize a woman — a dark reflection of the happy bride processing through the city on the opposite wall — while a man lies slain at her feet.
Similarly, in one painting of the countryside, the figure of Security, guaranteed by law and not by whim, flies above cultivated fields. In another, Fear hovers over villages burning and barren ground. Same land, same people, different institutions.
But tyranny isn’t simply oppression. It’s the condition under which political power, no longer constrained by enduring principles, becomes society’s organizing force. That’s where bad becomes worse. High taxes become levies meant to punish and confiscate. Regulating industries becomes the locking down of an economy. Constraints on speech become censorship and book burning.
That’s why institutions matter. A constitutional government’s purpose is not to directly produce prosperity. It’s to prevent political power from suffocating the countless acts of creativity, exchange, investment and cooperation through which free people produce prosperity themselves.
America’s greatness has never rested on the brilliance of its politicians. It rests on institutions that leave enough room for people to flourish. The lesson from Siena is that we must restore and preserve what keeps political power in check. Without it, the government does not merely redistribute wealth; it coarsens and corrupts the character of the people, leading to its destruction.
Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. This article was produced in collaboration with Creators Syndicate.
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Ideas expressed in the piece
- The article argues that Ambrogio Lorenzetti’s frescoes show prosperity emerging from merchants, artisans, farmers and families cooperating freely under clear laws, secure property rights and predictable justice, rather than from ambitious or activist rulers.
- It contends that America’s historic wealth similarly arose because constitutional limits and the rule of law restrained Washington from directing the economy, allowing individuals and firms to make decentralized decisions that no central authority could effectively coordinate.
- The piece suggests that institutions are decisive: when governments protect liberty, property and contract rights, people invest, innovate and trade; when institutions become instruments of arbitrary power, society reorients around politics instead of production, leading to decay.
- The column contends that today’s central danger is not merely the size of the federal government but a bipartisan willingness to use political power to steer private economic life, from mounting spending and debt to industrial policies that favor certain firms and sectors. External work on industrial policy describes this shift toward targeted subsidies, tax credits and other tools that deliberately shape production and investment patterns in ways that depart from market allocation.[2][12]
- It criticizes industrial policy and government equity stakes in companies as mechanisms that blur the line between public authority and private enterprise, warning that such interventions foster cronyism and resource misallocation. Research associated with limited‑government advocates similarly argues that expansive spending and targeted interventions distort markets, crowd out private activity and encourage firms to seek political advantage.[1][6][8]
- The article is skeptical of proposals such as taxes on held wealth and unrealized capital gains, presenting them as challenges to the principle that property exists independently of political permission. Analyses of wealth taxes note that critics fear administrative complexity, avoidance, and potential damage to investment incentives even when such taxes are designed to apply only to very high net worth households.[3][5][7]
- It warns that as businesses learn political influence can matter more than serving customers, and as citizens come to view themselves as clients of the state, discretionary government power gradually displaces voluntary cooperation, eroding the character of a free society. This concern is consistent with the author’s broader work on cronyism, which emphasizes how close ties between government and favored industries can undermine market discipline and public trust.[8][11]
- The column ultimately argues that tyranny is not just overt oppression but the condition in which unconstrained political power becomes the organizing force of society, turning taxes into punishment, regulation into economic lockdown and speech rules into censorship. It concludes that the core lesson from Siena is the need to restore and preserve institutional checks on government so that political power does not suffocate the countless individual acts of creativity and exchange that generate prosperity.
Different views on the topic
- In contrast, supporters of modern U.S. industrial policy argue that an active federal role is essential in an era of geopolitical rivalry and rapid technological change, contending that tools such as the CHIPS and Science Act can bolster national security, strengthen strategic supply chains and maintain technological leadership.[2][12]
- Proponents further maintain that recent laws like the Inflation Reduction Act and CHIPS have already catalyzed investment in renewable energy, electric vehicles and domestic semiconductor manufacturing, demonstrating that targeted tax credits, subsidies and public support can accelerate the transition to new technologies and build resilient industrial capacity.[4][12]
- Some economists advocate a reimagined industrial policy focused on creating “good jobs,” arguing that collaborative programs between public agencies and firms, along with initiatives like a proposed ARPA‑Workers, could steer technology toward complementing middle‑skill workers and improve job quality across the service sector.[9]
- These perspectives contend that markets alone cannot reliably address climate change, regional decline or strategic vulnerabilities, and that carefully designed, transparent industrial policies can complement private decision‑making by correcting information failures, supporting innovation and ensuring that critical capabilities remain onshore.[2][4][9][12]
- Supporters of a wealth tax argue that levies on very large fortunes could help address widening wealth and income inequality while generating substantial revenue from a relatively small number of households, pointing to estimates that a modest tax on net wealth above high thresholds could raise trillions of dollars and reduce concentration of wealth and power.[3][5]
- Policy proposals such as wealth taxes on unrealized gains and tiered levies on net worth above $50 million are presented by advocates as instruments of redistributive justice, intended to close the wealth gap, fund infrastructure and social programs and ensure that those with the greatest resources contribute more to public finances.[7][10][13]
- Some analysts, while acknowledging implementation challenges, argue that the risks of avoidance and administrative complexity can be managed through strong enforcement and careful design, and that the benefits of enhanced revenue and reduced inequality justify experimenting with wealth taxation alongside reforms to existing income and inheritance taxes.[3][5][7]
- More broadly, critics of a strictly minimal state argue that complex contemporary problems—from demographic change to climate and automation—require an engaged government that shapes economic outcomes, rather than one that simply polices basic rules, asserting that without such involvement, market outcomes can leave communities behind and exacerbate social and political instability.[2][4][9][12]
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