As if to mock the current intellectual conversation on “derp”, Niall Ferguson has a new column in the Wall Street Journal arguing that regulation is the cause of all American decline. I am happy to report to you that, in this special Niall Ferguson edition the “ease of defeating derp” remains quite high.
Not everyone is an entrepreneur. Still, everyone should try—if only once—to start a business. After all, it is small and medium enterprises that are the key to job creation. There is also something uniquely educational about sitting at the desk where the buck stops, in a dreary office you’ve just rented, working day and night with a handful of employees just to break even.
“Everybody go become an entrepreneur” profoundly fails Kant’s categorical imperative. Also, mind you, this is the “Laurence A. Tisch” professor at Harvard telling us the virtues of “sitting at the desk where the buck stops, in a dreary office you’ve just rented, working day and night with a handful of employees just to break even”. Anyway, here’s Ferguson’s wisdom from his “experience” as a serial entrepreneur:
As an academic, I’m just an amateur capitalist. Still, over the past 15 years I’ve started small ventures in both the U.S. and the U.K. In the process I’ve learned something surprising: It’s much easier to do in the U.K. There seemed to be much more regulation in the U.S., not least the headache of sorting out health insurance for my few employees. And there were certainly more billable hours from lawyers.
Before I talk about this, let’s set context with this random quote from Ferguson’s article:
Consider the evidence from the annual “Doing Business” reports from the World Bank and International Finance Corporation.
Okay, Ashok, let’s “consider the evidence” from World Bank’s “Doing Business” reports:
To use technical jargon, “ruh-oh”. So you’re telling me the three non-entitites that are “easier” than America have a sum total population less than… the New York metro area? Oh and what “regulation” does Niall Ferguson hate?
Why is it getting harder to do business in America? Part of the answer is excessively complex legislation. A prime example is the 848-page Wall Street Reform and Consumer Protection Act of July 2010 (otherwise known as the Dodd-Frank Act), which, among other things, required that regulators create 243 rules, conduct 67 studies and issue 22 periodic reports. Comparable in its complexity is the Patient Protection and Affordable Care Act (906 pages), which is also in the process of spawning thousands of pages of regulation. You don’t have to be opposed to tighter financial regulation or universal health care to recognize that something is wrong with laws so elaborate that almost no one affected has the time or the will to read them.
Because Obamacare and Dodd-Frank were both (!!!!!) passed in 2010, I imagine America’s ranking must have crashed from 4 to…. 5. (And it’s back down to 4, by the way). For all its flaws, the Doing Business report is a lot more comprehensive than Niall Ferguson’s word. I bet Silicon Valley entrepreneurs are running away to “New Zealand, Australia, Singapore, Canada, Hong Kong and the United Kingdom” to create their billion-dollar startups. Oh and I hear the credit is oozing through Britain. Oh wait…
So not only does Niall Ferguson have the balls to cite a report that directly contradicts his opening speech, he goes on with irrelevant comparisons:
The decline of American institutions is no secret. Yet it is one of those strange “unknown knowns” that is well documented but largely ignored. Each year, the World Economic Forum publishes its Global Competitiveness Index. Since it introduced its current methodology in 2004, the U.S. score has declined by 6%. (In the same period China’s score has improved by 12%.) An important component of the index is provided by 22 different measures of institutional quality, based on the WEF’s Executive Opinion Survey. Typical questions are “How would you characterize corporate governance by investors and boards of directors in your country?” and “In your country, how common is diversion of public funds to companies, individuals, or groups due to corruption?” The startling thing about this exercise is how poorly the U.S. fares.
I think it’s “known unknowns” but, hey, as a neo-imperialist I’m sure you know Donald Rumsfeld way better than I (and, in that case, can someone please explain to me what the hell an “unknown known” is). But, because of people like Niall Ferguson, the decline of American institutions, incidentally, is secret. Regulation is bad in America, but it’s the fundamental distrust George Bush instituted to wage Niall Ferguson’s war that made it okay to start invasions with a lies, and from that we may never recover.
I don’t want to place the mantle of failed imperialism only onto Ferguson, but no one better embodies the neoconservative who knows so little of what it means to be an American, and to be a republic. It is the lying, militaristic, interventionist terror which Niall specifically endorses that has eroded our institutions.
Not the one legislation that is meant to bring peace of mind to the millions of uninsured Americans who, by the way, won’t have the courage to give up wage-work to “start a business”, as Niall would have them do, without universal guarantee. But his only refrain to randomly-selected reports with meaningless indices is, literally, “In every single category, Hong Kong does better”. Well, no freaking shit a port city of 7 million with finance as its sole industry does better than the whole of America.
This man just doesn’t get it:
Yes, we Americans have the right to be stupid if we want to be. We can carry on pretending that our economic problems can be solved with the help of yet more fiscal stimulus or quantitative easing. Or we can face up to the institutional impediments to growth I have described here.
In fact, if there was such an adjective as “American”, Niall Ferguson is the last person that would come to mind. I’d like to see him produce one prominent intellectual who suggests “fiscal stimulus or quantitative easing” are all America needs. Niall fights against a straw-man to create an argument of smoke and mirrors.
Folks, this man believes America should imperialize the world and bear the white man’s burden. If one thing has poisoned our institutions, it is such neoconservatism. Indeed eroding trust in America’s institutions and a burgeoning regulatory state is bad for economic growth, but this should be argued in a measured manner. America is still leads the world in an innovation ecosystem that is unlikely to be surpassed any time soon. Cass Sunstein offers a way to a smart and effective regulatory state. But two, long, bills do not a declining country make.