Harvard Historian Warns the State Is Causing the West’s ‘Great Degeneration’

Harvard Historian Warns the State Is Causing the West’s ‘Great Degeneration’
July 15, 2013

Jay Lehr, Ph.D.

Jay Lehr, Ph.D. (jlehr@heartland.org) is science director at The Heartland Institute, an... (read full bio)

The Great Degeneration: How Institutions Decay and Economies Die, by Niall Ferguson, Penguin Press, 176 pages, ISBN: 978-1-59420-545-3

What causes rich nations to lose their way? Symptoms of decline are all around us: slow growth, crushing debts, increasing inequality, and aging populations. What exactly has gone wrong? In his new book, The Great Degeneration, bestselling historian Niall Ferguson argues the intricate framework of our institutions is degenerating.

The condition of representative government, the free market, the rule of law, and a free society are each addressed in separate chapters of this brief book. These institutions set the West on the path to prosperity, and they have dramatically declined in recent decades, Ferguson observes.

Governments have broken the implied contracts among generations by heaping IOUs on our children and grandchildren. Our markets are hindered by overly complex regulations. Why, he asks, is it 100 times more expensive to bring a new medicine to market than it was 60 years ago? He wryly suggests the Food and Drug Administration would prohibit the sale of table salt if it were put forward as a new product today, because of its toxicity in large doses.

Having been more than 20 times wealthier than the average Chinese as recently as 1978, the average American is now just five times wealthier, Ferguson notes. In a wide range of dimensions the gap between the West and the rest has narrowed dramatically. In terms of life expectancy and educational attainment, some Asian countries are now ahead of most in the West.

Ferguson argues these declines in institutional leadership have been partly a result of a lack of transparency, which could not be allowed in private business. The only hope for improvement will come when all institutions are dragged out into the daylight.

Complexity vs. Simplicity

Today it seems the balance of opinion favors complexity over simplicity, rules over discretion, codes of compliance over individual and corporate responsibility. Ferguson believes this results from a flawed understanding of how financial markets work.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 is a nearly perfect example of excessive complexity of regulation, Ferguson notes. The Act requires that regulators create 243 new financial rules, conduct 67 studies, and issue 22 periodic reports. No one, however, is regulating the regulators, and the most regulated institutions in the financial system have become the most disaster-prone, he notes.

Reminiscent of Tocqueville

Ferguson’s analysis calls to mind that of Alexis de Tocqueville nearly 180 years ago. Many persons can recall Tocqueville’s compliments in his book Democracy in America, in which the French political philosopher and historian favorably describes the national character and institutions of America observed during his travels around the country in the 1830s. Readers seem to have forgotten his warnings, however. He anticipated a future society in which associational life has died:

“I see an innumerable crowd of like and equal men who revolve on themselves without repose procuring the small and vulgar pleasures with which they fill their souls,” Tocqueville wrote. “Each of them, withdrawn and apart, is like a stranger to the destiny of all the others; his children and particular friends form the whole human species for him; as for dwelling with his fellow citizens, he is beside them but he does not see them, he touches them but does not feel them; he exists only in himself and for his self alone. 

“Thus, after taking each individual by turns in its powerful hands and kneading him as it likes, the sovereign extends its arms over society as a whole. It covers its surface as a network of small complicated, painstaking, uniform rules to which the most original minds and the most vigorous souls can not clear away to surpass the crowd; it does not break wills, but it softens them, bends them, and directs them; it rarely forces one to act, but it constantly opposes itself to one’s acting; it does not destroy, it prevents things from being born; it does not tyrannize, it hinders, compromises, enervates, extinguishes, dazes, and finally reduces each nation to being nothing more than a herd of timid and industrious animals of which the government is the shepherd.”

Tocqueville saw the state—with its seductive promise of security from the cradle to the grave—as the real enemy of civil society. Ferguson agrees with this view.

Need for Private Schools

Toward the end of this both depressing and hopeful book, Ferguson makes a great case for dramatically increasing K-12 school choice. He notes American universities, largely private, are considered among the best in the world, whereas our government-run K-12 schools have sharply fallen in quality, lagging behind those of many other nations. He says we should expect continued educational mediocrity until substantially more private and charter schools are allowed to compete for students.

In his closing paragraphs he quotes from the “You Didn’t Build That” speech that President Barack Obama delivered while campaigning for reelection in 2012.

“If you were successful, somebody along the line gave you some help,” Obama said. “There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business—you didn't build that. Somebody else made that happen.”

Ferguson calls it the voice of a state destined to further degeneration.

Jay Lehr, Ph.D.

Jay Lehr, Ph.D. (jlehr@heartland.org) is science director at The Heartland Institute, an... (read full bio)