October 2013 Brief: Volume 20, Number 29
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The Four Things We Need – and the One Thing We Must DO
by Deborah D. Thornton
In order to be successful and continue to grow as a country, as a people, and as individuals there are four things we need. Dysfunction in even one makes success difficult and results in what Adam Smith in the 1700s called the “stationary state” – where an economy or country ceases to grow. This lack of growth results in significant problems for everyone.
As defined by Niall Ferguson in The Great Degeneration, the four factors are democracy, capitalism, the rule of law, and civil society. I found his dense but clear discussion of these issues to be of great help in focusing on the problems facing us today. The media is filled with stories about high unemployment, increasing crime, health-care failures, poor education, increasing debt, and general ennui. Nothing is helping. Why? What can we do about it?
Ferguson identifies the increasing public debt as the first major problem, one resulting in democratic degeneration and eroding of the generational contract. This is especially true as politicians play the newly retiring “baby boomer” generation and their expectations for promised social security and pension benefits against the much younger “millennials” who have their own entitlement expectations. This generational contract is an important part of the Tea Party effort highlighting debt issues and holding government officials accountable.
One potentially helpful suggestion is a Balanced Budget Amendment. However, in order for a balanced budget requirement to be effective, government debt must first be accurately reported through the use of true balance sheets – created using generally accepted accounting principles, and including “generational accounts.” These generational accounts would include not only Social Security and Medicaid/Medicare liabilities at the federal level, but accurate reporting of state, county, and city pension liabilities. Government-worker pension liabilities of hundreds of millions of dollars have resulted in the bankruptcies of several cities, most notably Detroit, Michigan, and are concerning for several state governments.
In discussing the issues surrounding capitalism, Ferguson emphasizes that over-regulation – as shown in legislation thousands of pages long, which virtually no one reads or understands before voting on or signing – will not fix the problems with retirement systems, bank lending, gun violence, health care, or illegal immigration. Instead, this complexity creates “fragile” institutional systems, where one minor change results in great risk and potential systemic collapse. This complexity also creates the potential for corruption and fraud, especially if it goes unpunished. There are many examples of these problems, including the famous report that in 2012 it took 65 days to get a lemonade stand permit in New York City.
The fragility solution according to Ferguson is “simplicity of regulation and strength of enforcement,” where the rules are clearly understood, easy to follow, and everyone knows the punishment and understands they are not exempt. In many ways it reminds me of four-year-olds and “time-out” rules.
Neither does over-regulation encourage better “rule of law.” At the core, individual civil liberties, personal property, and access to the courts must be protected by the rules of law. These were hard-fought issues from before the Revolutionary War – and continue today, made more difficult by current social mores. Many recent reports, from the World Economic Forum’s “Global Competitive Index” to the World Bank’s “World Governance” indicators, reflect that the rule of law is failing in the U.S. In four specific areas of government accountability, effectiveness, regulation, and corruption the U.S. is seen as falling in standards and quality. Unfortunately, lawyers, who at one time were positive contributors to rule of law are today significant contributors to its deterioration, according to Ferguson.
One striking example of both over-regulation and rule of law is the current murder rate in Chicago, Illinois – which has some of the most stringent gun-control laws in the nation, but also the highest murder rate. Complex regulations are not being enforced, leading to negative impacts on economic development, civil liberties, personal property, corruption, and the courts.
The final component of the degenerating stationary state is reduced participation in “civil society.” As far back as Alexis de Tocqueville, voluntary participation in collective organizations and groups was seen as a national strength of the U.S.A. Tocqueville said, “Americans of all ages, all conditions, all minds constantly unite. … If it is a question of bringing to light a truth or developing a sentiment with the support of a great example, they associate.”
Many researchers have documented the significant decline in civil participation in the last 50 years, from reduced participation in bowling leagues and school PTAs, to the Elks, Rotary, and Moose, plus many other local and national organizations. This includes not accepting leadership positions. Some blame this decline on television and the Internet. Others, such as Ferguson, go farther – back to Tocqueville again – and blame government for becoming an “immense…power…which alone takes charge of assuring their enjoyments and watching over their fate. It is absolute, detailed, regular, far-seeing, and mild…it seeks only to keep them fixed irrevocably in childhood.” Further, Tocqueville predicted that “The morality and intelligence of a democratic people would risk no fewer dangers than its business and its industry if the government came to take the place of associations everywhere.”
In responding to the bleak picture Ferguson paints, most of us – as citizens living in mostly small towns and villages, in one of 99 counties, in the great state of Iowa – cannot do much about the broad degeneration issues.
What we can do is manage our own budgets, debts, and lives prudently, personally honoring the generational contracts between our parents, ourselves, our children, and our grandchildren. We can question those elected to represent us, holding them accountable for foolish and convoluted regulations, and insist on simplicity and honesty by all our governments.
Most importantly, we can reverse the downward trend in civic participation by becoming joiners. Join the PTA, join the Rotary or the Masons, and go to church. Show up at the next meeting of the Republican, Democrat, Libertarian, or Green party! And have your children and family do the same. Get up from in front of the TV and the computer. Leave the house. Don’t wait for someone else to “change” things. Whatever your question or idea is, offer it – it can’t be worse than anyone else’s and just might be better. And you will have an impact. We must stop the “great degeneration.”
Deborah D. Thornton is a Research Analyst with Public Interest Institute, Mount Pleasant, Iowa. Contact her at Public.Interest.Institute@LimitedGovernment.org.
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