What Built the West -- and What's Wrong Now

From: Newsweek, October 30, 2011

Niall Ferguson on how America can avoid imminent collapse
Ferguson has written a new book in which he describes what caused the rise of the west and what is happening to those advantages now. "The West first surged ahead of the Rest after about 1500 thanks to a series of institutional innovations" which Ferguson calls the "killer applications":

1. Competition. Europe was politically fragmented into multiple monarchies and republics, which were in turn internally divided into competing corporate entities, among them the ancestors of modern business corporations.
2. The Scientific Revolution. All the major 17th-century breakthroughs in mathematics, astronomy, physics, chemistry, and biology happened in Western Europe.
3. The Rule of Law and Representative Government. An optimal system of social and political order emerged in the English-speaking world, based on private-property rights and the representation of property owners in elected legislatures.
4. Modern Medicine. Nearly all the major 19th- and 20th-century breakthroughs in health care were made by Western Europeans and North Americans.
5. The Consumer Society. The Industrial Revolution took place where there was both a supply of productivity-enhancing technologies and a demand for more, better, and cheaper goods, beginning with cotton garments.
6. The Work Ethic. Westerners were the first people in the world to combine more extensive and intensive labor with higher savings rates, permitting sustained capital accumulation.
           [the blog author agrees and has two more, #7 and #8, listed at the end of this post]

Ferguson has questions about the on-going work ethic. "Ask yourself: who’s got the work ethic now? The average South Korean works about 39 percent more hours per week than the average American. The school year in South Korea is 220 days long, compared with 180 days here. And you don’t have to spend too long at any major U.S. university to know which students really drive themselves: the Asians and Asian-Americans."

He also sees some suspicious trends in the legal climate of America. "The rule of law? For a real eye-opener, take a look at the latest World Economic Forum (WEF) Executive Opinion Survey. On no fewer than 15 of 16 different issues relating to property rights and governance, the United States fares worse than Hong Kong. Indeed, the U.S. makes the global top 20 in only one area: investor protection. On every other count, its reputation is shockingly bad. The U.S. ranks 86th in the world for the costs imposed on business by organized crime, 50th for public trust in the ethics of politicians, 42nd for various forms of bribery, and 40th for standards of auditing and financial reporting."

Ferguson is worried about the future of the long-standing U.S. lead in science. "What about science? Every three years the Organization of Economic Cooperation and Development’s Program for International Student Assessment tests the educational attainment of 15-year-olds around the world. The latest data on "mathematical literacy" reveal that the gap between the world leaders—the students of Shanghai and Singapore—and their American counterparts is now as big as the gap between U.S. kids and teenagers in Albania and Tunisia."

Ferguson refers to social scientist Charles Murray, who calls for a "civic great awakening." This would involve deleting the viruses that have crept into our system:

• the anticompetitive quasi monopolies that blight everything from banking to public education
• the politically correct pseudosciences and soft subjects that deflect good students away from hard science
• the lobbyists who subvert the rule of law for the sake of the special interests they represent
• our crazily dysfunctional system of health care
• our overleveraged personal finances
• and our newfound unemployment ethic.

This essay is adapted from Niall Ferguson’s new book, Civilization: The West and the Rest, published by Penguin Press. The accompanying television series will air on PBS in 2012.Niall Ferguson is a professor of history at Harvard University and a professor of business administration at Harvard Business School. He is also a senior research fellow at Jesus College, Oxford University, and a senior fellow at the Hoover Institution, Stanford University. His Latest book, Civilization: The West and the Rest, will be published in November.

http://www.thedailybeast.com/newsweek/2011/10/30/niall-ferguson-how-american-civilization-can-avoid-collapse.html

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Two more essential western innovations

7. A free press, particularly a press that can publish harmful information without worrying about lawsuits when the information itself is true. You can’t have remote ownership of large corporations as well as ownership of government bond without a free press. A free press is essential to get around marketing so that citizens can vote on candidates’ track records and history rather than on mere spinning commercials.
8. Double entry bookkeeping, a clever math puzzle invented by Italian monks (probably by Benedetto Cotrugli) in the late 1400s and published, in a book of math puzzles, by Luca Pacioli in 1494. The intuitive knack for "making money" that a good merchant possesses became universally available to all in the marketplace through the publication of the ingenious approach of double entry bookkeeping, in spite of the fact that the central principal of double entry remains elusive to this day.