Niall Ferguson - SIEPR Economics Summit

Something is rotten in the state of America, We think we have the rule of law, we actually have the rule of lawyers.

The rule of lawyers involves rent seeking behaviour by a self-perpetuating elite which controls the output of the legislator. The legislator produces articles like the Dodd Frank Bill which is written in deliberately obscure verbiage deliberately intended to be ambiguous. Why is it deliberately ambiguous? So that lawyers can interpret it’s obscure meaning to compliance departments who then explain it to the people who actually run the businesses in this country. We worry a lot about the cost of government, but what about the cost of law. Maybe that is as big a cost on business as all the bureaucrats in the federal government put together.

My experience of staring a business is that it is harder because of lawyers, who charge extortionate amounts of money who essentially blackmail me with threats of future litigation and consume almost the entire starting capital of the venture.

Niall Ferguson points out the west is failing because our institutions, like rule of law, are failing.

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Civilisation: Is The West History?, Niall Ferguson

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Niall Ferguson explores the rise of western civilisation and how it came to shape the modern world, and asks how much longer western dominance can last?

Part 1, A Tale Of Two Rivers - The opening programme in the series begins in 1420 when Ming China had a credible claim to be the most advanced civilization in the world: “All Under Heaven”.  England on the eve of the Wars of the Roses would have seemed quite primitive by contrast. Yet the lead that China had established in technology was not to be translated into sustained economic growth. In China a monolithic empire stifled colonial expansion and economic innovation. In Europe political division bred competition. The question for our own time is whether or not we have lost that competitive edge to a rapidly ascending Asia.

Part 2, Science - In 1683 the Ottoman army laid siege to Vienna, the capital of Europe’s most powerful empire. Domination of East over West was an alarmingly plausible scenario. But Islam was defeated: not so much by firepower as by science. Niall Ferguson asks why the Islamic world didn’t participate in the Scientific Revolution and the Enlightenment, and if the West is still capable of maintaining its scientific lead, at a time when educational attainment in science subjects is declining.

Part 3, New Worlds, Professor Ferguson asks why did North America succeed while South America for so many centuries lagged behind?  The two had much in common (not least the subjugation of indigenous peoples and the use of slavery by European immigrants), but they differed profoundly on individual property rights, the rule of law and representative government. There were two revolutions against royal rule between 1776 and 1820, yet Simón Bolívar was never able to be George Washington, and Latin America remained politically fragmented, socially divided and economically backward even as the United States rose to global primacy. Niall Ferguson asks if North and South are converging today, linguistically as well as economically?

Part 4, Medicine - Niall Ferguson looks at how 19th-century advances in medicine made it possible to export Western civilization to Africa, with mixed results, and how China is building a new African empire.

Part 5, Consumerism - Today the world is becoming more homogenous and, with increasingly few exceptions, big-name brands dominate main streets, high streets and shopping malls all over the globe. We dress the same; we want the same latest technological kit; we drive the same cars. But where did this uniformity come from? The answer is the combination of the industrial revolution and the consumer society. Originating in Britain but flourishing most spectacularly in America, the advent of mass consumption has changed the way the world worked. Led by the Japanese, one non-Western society after another has adopted the same model, embracing the Western way of manufacturing and consuming. Only the Muslim world has resisted. But how long can the burkha hold out against Levi’s? Niall Ferguson examines whether we are now seeing the first effective challenge to the global dominance of Western consumerism.

Part 6, Work - The sixth element that enabled the West to dominate the rest was the work ethic. Max Weber famously linked it to Protestantism, but the reality is that any culture, regardless of religion, is capable of embracing the spirit of capitalism by working hard, saving, and accumulating capital. The question is why that ethic seems now to be fading in the West. Europeans no longer work long hours, and Americans have almost given up saving completely. The real workers and savers in the world are now the heirs of Confucius, not Calvin. In the final programme of the series, Niall Ferguson argues that the real threat to our survival is our loss of faith not in religion but in ourselves.

The Importance Of A Strong America

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A strong USA has a very profound effect on the rest of the world, and I’m not talking about the military, or even economically per-se, I’m talking about the image and perception of America that we non-Americans all have.

The USA is supposed to be the poster child of the west, the ultimate symbol of western democracy and progress, and the world looks at this symbol for inspiration. It is this soft power that has untold influence on populations around the world, and has been the source of much of the US’s power over others. However, with the eyes of the world upon you, this image can be a double-edged sword, because when that image becomes corrupted, it can be the source of great damage and begin to undermine the progress the west has managed to achieve.

When that image becomes one of dogmatic free market economics and greedy rich people who don’t want to pay their fair share of taxes, when it becomes an image of people who would rather leave their fellow citizens to die if they can’t afford health care, when that image becomes one of Christian extremists who want to impose their religion’s version of Sharia Law on their own people against their will, and an image of a system of government and politics that is corrupted by money, then that image is no longer a source of inspiration, it is a source of derision.

This image becomes a destructive force that weakens western influence in the world and halts society’s positive evolution. It allows dictators, autocrats and single-party communists to point to the west and convince it’s population that a democracy is not desirable. The image begins to promote the idea that western democracy is as corrupt, broken and inherently flawed as anything else, and it allows ruthless governments to continue to oppress their citizens without meaningful resistance because people have lost their belief in the western way. People no longer want change because their perception is of a world where no matter what they do, their government will always be against them. People now believe that nothing ever really changes and don’t trust the west, and eroded trust then erodes participation. Why would you participate if nothing ever changes?

You may say this image is representative of only a small, and very loud minority, but, as Muslims know, it only takes a few to ruin it for everyone. However, is it really a minority if extremists can threaten the presidency through a democratic process. A dysfunctional public elects dysfunctional politicians, and it is your dysfunctional voters that are the main cause of corrosion to the image of a western ideal and a strong America. A strong image of the west is a great force for change that doesn’t need military might to ‘promote’ democracy.

Sort yourself out America

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