I had an old friend send me a copy of Niall Ferguson’s “The Great Degeneration – How Institutions Decay and Economies Die”. The book takes a look at the institutional ballast that is slowing economic growth and creativity in the Western world.
Much time and energy is expended in our office dealing with the legislation that arises in Austin that threatens liberty. As we are in a legislative year we are battling bad thinking in Austin and spending money to stop it, while attempting to promote good reasoning.
As always, I encourage you to read it through your own window, but I will offer a summary herein. While reading I could not help but add to the thought regarding political institutions, to religious institutions as well.
Ferguson is critical of our current institutional ballast and our move from a Rule of Law, to a Rule of Lawyers. He asserts the following through out his work: Complex regulation to avert future financial crisis is based on a profound misunderstanding of how economies work. Second, that the rule of law is degrading into the rule of lawyers. Third, those volunteer associations, so much a part of the ascension of Great Britain and U.S. are less a part of culture today, but those associations made things happen.
He states simple realities that are swept under the news story carpet.
Unemployment is reported incorrectly low, in that, in the last few years the number of people on permanent disability has more than doubled (3% in 1990 – now 6%). These are not people that have returned to the work force, they have disappeared into a new vacuum.
It remains an issue that ten institutions control ¾ of all financial assets in the U.S.
The entrepreneur is threatened at every turn. One example exhibited by a journalist in New York who demonstrated the issue by applying to open a lemonade stand. It took 65 days to process the paperwork and then a five-week waiting period.
Ferguson suggests we are in what Adam Smith called a “stationary state”. The wages of most are low, and an elite monopolistic few manipulate the rule of law. Normally this would come from a liberal, but he asserts it is liberal thinking that is the creator of the problem. He writes, “The welfare state is not part of democracy as the ancient Athenians conceived it. In bee terms, the welfare state seems to create an ever-increasing number of dependent drones whom the worker bees have to support. It also employees a great many bees simply to transfer resources from workers to the drones. And it seeks to finance itself on the back of future bees in the form of public debt.” Dependents and debt like never before.
Our institutions, political and economic, incentivize bad behavior. Dysfunctional institutions force the poor, and the greedy, to live outside the law. I would argue that poor and rich can behave equally greedy. The ire should be raised as much against the 99%, if not more, for the deep coveting attitude that demands more of the 1%.
Now the U.S. is pushing our comfort onto future generations. This I personally find the most upsetting reality about our current executive administration. Ferguson writes, “The heart of the matter is the matter is the way public debt allows the current generation of voters to live at the expense of those as yet to young to vote or as yet unborn. Edmund Burke wrote that the real social contract is not Jean-Jacques Rousseau’s contract between the sovereign and the people or ‘general will’, but the ‘partnership’ between the generations.”
As Burke wrote society is indeed a contract, “…a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.” Greed at the cost of others forsakes our founders and our future.
Without a dramatic change in our institutions and attitudes in the U.S. the future is not as bright as we tell our children. “Western democracies are going to carry on in their feckless fashion, until, one after another they follow Greece and other Mediterranean economies into the fiscal death spiral that begins with loss of credibility, continues with the rise in borrowing costs, and ends as governments are forced to impose spending cuts and higher taxes at the worst possible moment.”
I encourage a read of Ferguson’s book and consideration of how we as individuals can influence change in our institutions and a return to the rule of law, not lawyers.