Economic historian Niall Ferguson invites an answer to that question by first addressing ‘How America Lost Its Way’. As the Laurence Tisch Professor of History at Harvard, Senior Research Fellow at Oxford, and Senior Fellow at Stanford’s Hoover Institution, Dr Ferguson is a man of some accomplishment and moment. His new book The Great Degeneration: How Institutions Decay and Economies Die publishes this Thursday. The punchline of his message is that “it is getting ever harder to do business in the United States, and more stimulus won’t help: Our institutions need fixing.”
I bring this latest expose of America’s decline to the attention of RR readers as a matter of strong corroboration of the same message being documented regularly in these pages. The Left’s echo chamber continues to divert the dialogue to discounting these warnings as the product of isolated sclerotic minds disconnected from the progressive push to recovery, now that the messiah is in the Oval Office, after having banished the deviltries of Bush2 and his crowd. Ferguson argues that nothing could be further from the truth.
Citing metric after international metric, he shows the steady, alarming, and accelerating decline of the US in the last years. We rank in the mud – the sixth worst in the world - with the likes of Zimbabwe, Burundi, and Yemen in the growth of regulatory friction that it takes to carry out a set of benchmark business practices. And it is all due to the bureaucracies that our governments have set up. Ferguson confirms that the recent and biggest buckets of sand into the country’s productive gears are Frank-Dodd and Obamacare, with the damage from these growing by the day.
And as we all know, the direct beneficiaries from all this bureaucracy and regulatory fog are not only the liberal politicians but also the “lawyers, not forgetting lobbyists and compliance departments. For complexity is not the friend of the little man. It is the friend of the deep pocket. It is the friend of cronyism.” In the World Economic Forum’s Global Competitiveness Index we have dropped from first place (yes, at the depth of the Great Recession) to seventh place on Obama’s watch.
In this light Ferguson asks, “What is the process at work here? Perhaps this is a victory from beyond the grave for classical Western political theory. Republics, after all, were regarded by most ancient political philosophers as condemned to decadence, or to imperial corruption. This was the lesson of Rome. Democracy was always likely to give way to oligarchy or tyranny. This was the lesson of the French Revolution. The late Mancur Olson had a modern version of such cyclical models, arguing that all political systems were bound to become the captives, over time, of special interests. The advantage enjoyed by West Germany and Japan after World War II, he suggested, was that all the rent-seeking elites of the pre-1945 period had been swept away by defeat. This was why Britain won the war but lost the peace.”
In the meantime we are busily building up our cadres of rent seekers, assured by progressive economists that our salvation lies in ever more borrowing, fiscal stimulus, higher taxes, and quantitative easing (money printing). No one in Washington, and most certainly not in Sacramento, is facing up to the real impediments to growth and the resurgence of America.
[20jun13 update] Niall Ferguson's The Great Degeneration is out, and it has been reviewed by no less than George Melloan in today's WSJ ('A Jeremiad To Heed'). The book report is a worthy read as is the book. ("U.S. future obligations exceed future revenues by $200 trillion, and state and local governments face $38 trillion in unfunded obligations.") I again feel a bittersweet vindication, for the volume is a 174 page condensation of what I have attempted to communicate in these pages over the last seven years. Yes, and Professor Ferguson also considers less than bright the masses of voters who have inexorably brought the country to its present state, and who still see no reason to change their behavior.