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Common cents

Compelling argument to fix economy by returning to simpler times

The theme of British economic historian Niall Ferguson's newest work is deceptively simple: the institutions at the core of Western civilization have become over-complex, misdirected and stagnant, and our only hope to avoid economic and social decline is for citizens to step up and breathe life back into them.

This short book, based on a series of BBC lectures, is not calling on people to storm the Bastille. Quite the opposite.

Protesters opposed to Ireland's government austerity policies march toward the parliament building in central Dublin.


Protesters opposed to Ireland's government austerity policies march toward the parliament building in central Dublin.

The Tory populism of this occasional adviser to George W. Bush and John McCain harkens back to simpler times when government was smaller and communities took care of their own, when laws were applied sensibly, fairly and quickly, and capitalism pretty much regulated itself.

Over more than two decades and numerous books, Oxford-educated Ferguson has established his credentials as a scholar who, while intimately familiar with the finer points of international finance, could make the "dismal science" engaging. He has also gained a reputation as an academic provocateur though unconventional opinions on the First World War, the British Empire and the rise of modern Europe.

In 2011, he revealed the "full monty" of his political incorrectness by retelling the story of "civilization," focusing on the six "killer apps" the West had and the "Rest" didn't: competition, science, democracy, medicine, consumerism and the work ethic.

These, more than accidents of geography, resources or demographics, explain the historical success of Western Europe, Ferguson said. Today, the West no longer has a monopoly on these factors and, mired in financial and institutional complacency, is losing its pre-eminence to rising economic powers, most notably China.

Against this backdrop, despite embellishing his arguments with choice thoughts from political thinkers Edmund Burke, Alexis de Tocqueville and Walter Bagehot, The Great Degeneration seems rather thin and almost conventional. Except that Ferguson is not finished being a contrarian.

Ferguson first targets bloated public debt, which he casts as a key villain of our age, as it "has become a way for the older generation to live at the expense of the young and unborn."

Next is financial regulation, seen by many as the way to avoid future crises like that of 2008-09. He writes: "Not only was misconceived regulation a large part of the cause ... (but) there was a feeling of impunity that came not from deregulation but from non-punishment."

Ferguson's solution, astonishingly, is to return to the England of the 1870s -- and of his mentor, Bagehot, the 19th-century economic journalist -- when the Bank of England had fewer written rules and more discretion to lock up bankers who forgot that "individual prudence" was a better guide than mere compliance with the law.

From this opinion, he moves naturally to share his exasperation over our current legal system. In its simple form the rule of law began as a necessity for commerce. Today, he says, it has become "the rule of lawyers," who in connivance with the modern state throw countless irritants in the path of business growth and innovation -- and in fact of any attempt to set the West back on course.

Ferguson leaves us with a final and decisive thrust at Western governments. Not only have they spent their way to colossal debt, clumsily intervened in the economy and created thickets of regulations that stifle change, but they have robbed us of the notion of "civil society."

The role of churches, citizen groups and voluntary associations in addressing public issues, he says, is all but gone, usurped by the universal public sector.

All told, it's a grim and provocative assessment, even if one doesn't accept all of Ferguson's assumptions about how we got to this sorry state.

Ted Wakefield is a Winnipeg writer and editor.

Republished from the Winnipeg Free Press print edition July 20, 2013 A1

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