Niall Ferguson is a tremendous writer. In this essay, he succinctly laid out his concerns that the western society could be stuck in what Adam Smith described as the “stationary state” - a formerly wealthy country that had ceased to grow. He argued that the west - the United States more specifically - is in a profound institutional crisis:

1) Suffocating amount of public debt will eventually require painful deleveraging where growth is slower - according to historical precedents.

2) Overly complex and “bad” regulations make the financial system more fragile. They are the cause of financial crises, not the remedies.

3) The rule of law has degenerated into the rule of lawyers.

4) State overreach has eroded the traditionally active civil society.

The first two points - where Ferguson has the most expertise - were very well argued. Especially the chapter on the modern banking system - the copious amounts of post financial crises regulations such as Dodd Frank will not solve the too big to fail problem. The unintended consequences of “inclusive policies”, such as encouraging homeownership among low income families, were at least partially responsible for the crisis. Ferguson also favored the notion of “unintelligent design”, where corporations compete for survival and the very possibility of failure make the population as a whole stronger. He shrewdly pointed out that despite policy makers’ rhetorics, very few people were sent to jail because of their involvement in the crisis. The absence of consequences creates pervert incentives which will continue to provide grounds for the next crisis.

The chapter on the rule of law was the least well written, in my view. It was more of a rambling of commentaries that spanned across several topics: 1) the superiority of the common law system; 2) the importance of enforcement of law - and the very absence of it makes China still not a country governed by law; 3) rising legal costs in the United States and the exploitive torts system. The ultimate conclusion - that the rule of lawyers endangered institutions - did not come across entirely clear.

The chapter on civil society was a very interesting one. The example of his self-organized efforts to clean up seashores was a vivid example of the civil, spontaneous society that the west used to be. Then he ventured into arguing independent/privately funded schools, and cited education as one of the consequences of government overreach and resultant impairment of the civil society.

As a historian, he views history as non-linear and non-deterministic.The last chapter was a very memorable one. He pessimistically pointed out that many of the conditions that created the post-war growth are non-recurring - such as the lowered cost of labor because of China, the increase in productivity from application of wartime technologies - and thus it will be naive to assume future growth will return to historical norms. He also proposed the concept of “known unknowns” in the context of history - those obvious knowledge in history that is ignored by contemporaries. Revolutions and wars were the norm in history. Many forces in today’s world, such as rising inequality, may provide fertile ground for recurrence of these “known unknowns”. Oblivion could be very costly.

I found this essay to be an enlightening read and I would recommend it to everybody.

Ferguson hold strong opinions on how economies should work and why they don't. At times evidence is used in a contradictory manner (untapped ownership by the poor vs bad Fannie Mac) to support his pre-Keynesian economic views. Some of the statements wouldn't be out of place on conservative talk radio but the use of evidence and historical knowledge elevates this book above the usual patter. Even if you don't agree with Ferguson, the ideas are engaging. The third chapter/lecture on the decline of the legal system is particularly well thought out and argued.

Фергюсон давно и прочно зарекомендовал себя в списке моих любимых писателей на политико-экономические темы, как твёрдый автор, обладающий хорошей иронией (в том числе и самоиронией) и консервативный, но "со свежей альтернативщиной" (кто помнит?) аналитик. Именно таких трудов не хватает для обсуждений и анализа - остальные писатели этого направления или скатываются в сугубо философские построения, либо вращают столик в надежде в очередной раз услышать ответ Маркса, либо прячут свою несостоятельность за рядом терминов, которые можно было бы и опустить в контексте их высказываний.

Особого внимания, как наиболее спорная, заслуживает глава о качестве образования. Ну и вообще стоит внимательно читать всё - автор не приукрашивает сложившуюся ситуацию для "стран первого мира" и не рисует радужных картин для "десятки наиболее интенсивно развивающихся экономик".

Ferguson, who was a McCain advisor, tackles the decline of the West in this short but packed book on why we are failing. Lots of good info here. You might not agree with him on everything but he is focused and crisp in his delivery. Some great lines here like the rule of law being replaced by the rule of lawyers. He comes down on regulation by the government but I don't quite buy his argument. I completely agree with him that regulation should be simple and not complex and that throwing bankers in jail would solve the problem. Like many in the GOP he criticises Obama for being the CEO of the stationary state and it's not the government's job to make sure a family gets a decent wage or retirement. When Obama points out that government put a man on the moon, created the GI Bill, etc he reacts to this by saying that government didn't start every small business,etc. All Obama is saying that goverment is there to support the people not control them. Ferguson makes a lot out of our debt and he is no economist as he slams the Nobel Prize winter, Krugman. But Ferguson knows his economic history and he talks about the decline in the middle class and the buying power since the 1970's, which basically explains our situation. He gets into sociology too with the decline of associations and volunteering. This book is a great beachhead into all the subject matter experts Ferguson cites in a variety of fields from economics to sociology. You'll want to read them at length. I guess most would agree with a lot of what he says but when it comes time to implementing policies and strategies to address the problem that's when the polarization starts. It doesn't look good for the future.

Honestly, I agreed with some of the points he made, but Ferguson uses examples and quotes without context. This is quite strange to me as he is a historian and should know that it is important to explain context. However, I was quite disappointed with his fourth chapter about the "uncivil society" in which he sounded like "Old Man Yells At Clouds" as he states that engagement is "way down" in terms of what he deems to be typical types of civil activity without expanded upon why the new generation has taken to different forms of political and civic engagement. He uses statistics to further his point but does not acknowledge that statistics are the worst type of lies. As well, he sounds extremely elitist in discussing club memberships as many of these exclusive memberships cost hundreds of dollars and are seen as a luxury, not a necessity, to a new generation. I would not recommend reading this alone without having additional information and resources about the financial crisis and how state capitalism operates.

This is too short. I need more. Ferguson has a good insights and he has what it takes to explain and illustrate his ideas of combating the financial crisis, be it today and the future. I think I'm going to dive back into my finance textbook which I left on the bookshelves right after I graduated. Some of the terminology really got to me and I need to refresh my mind about it. I've read better book than this but I still want to give 4 stars cause I found his idea peculiar.

Based on his own BBC's Reith Lectures 2012 Niall Ferguson diagnoses the malaise of our times: the West has entered Adam Smith’s "Stationary State" as a once proud warship enters a stasis field.

For Ferguson it is our laws and institutions that are the problem.
"The great recession is merely a symptom of a more profound great degeneration"

Institutions, in the broadest sense of the word, determine modern historical outcomes, more than natural forces like the weather, geography or even the incidence of disease.

"Most commentators who address this question tend to concern themselves with phenomena like excessive debt, mismanaged banks and widening inequality. To my mind however these are nothing more than symptoms of an underlying institutional malaise: an Inglorious Revolution, if you like, which is undoing the achievements of half a millennium of Western institutional evolution".

Ferguson rightly sees that “our once vibrant civil society is in a state of decay, not so much because of technology but because of the excessive pretensions of the state” And the first port of call is to revolutionise the education

Public education has the same problem as any other monopoly: quality dwindles because of lack of competition and the creeping power of vested "producer" interests. A mix of public and private institutions with meaningful competition favours excellence.

He ends the book with a coda about the political and social developments that could be expected from our current “degeneration”, a not too rosy prospective summarized in Obama’s infamous “You didn’t build that” speech: the voice of the stationay state: the chief mandarin addressing distant subjects in the provinces.

A gem of a book.

“Довольно неприятно видеть, как Коммунистическая партия Китая рекламирует государственный капитализм. Но еще тяжелее слышать, как о нем говорит президент Соединенных Штатов.”

Доволі непогана книжка. Автор окремо розбирає кілька «стовпів» успішної держави - економіку, верховенство права, сильне громадянське суспільство. «Правова» частина, нажаль, мені здалась найслабшою, а от про регулювання економіки і вплив громадянського суспільства було досить цікаво.
В цілому - цікавий погляд на проблеми сучасних «держав першого світу», хоча щодо «занепаду» автор певною мірою згущує фарби.

Conceptualized as part of the BBC Radio 4 Reith Lectures, "The Great Degeneration" provides a non linear perspective on the primary reasons that have led to an inexorable decline of the West. Niall Ferguson identifies four basic edifices that are indispensable for the survival and prosperity of any civilization - that are undergoing an unfortunate degeneration in the West. The four necessary foundations for political, cultural, social and economic advancement being:

Representative Government;
The Free Market;
The Rule of Law; and
Civil Society

Having identified the fundamentals, Ferguson dwells into the erosion and decay (along with the underlying causes) of the four institutions in the West that is threatening to bring economies down. The proselytizes of the West's decline have crossed the threshold from being mere filaments and fragments of a pessimistic rambling mind to a real possibility. If the West has to prevent this catastrophe from its unfortunate logical conclusion, it has to act and the time to act is - now.

"The Great Degeneration" - An avoidable decay!