The Great Degeneration by Niall Ferguson

Rarely is a book’s title, subbed How Institutions Decay and Economies Die, so well-suited for its own description. Let me start by noting I agree with Niall Ferguson’s principal charge; that is institutions more than geography and culture explain global economic disparity, and their decay – especially in the West – should be of concern. At least more than it is right now. Also, despite the fact that he seems to know almost nothing about monetary policy, I found The Ascent of Money to be invaluable. Never, however, have I read a book – no less from an endowed chair at Harvard – that is so blatant in its fraudulent claim, only vindicated by a lawyerly interpretation of grammar: something, as any reader of the book knows, Ferguson does not like.

This book is clearly written for a lay audience, given its understandably pedantic explanation of what exactly an “institution” is (no, friends, not a mental asylum reminds us Ferguson). Therefore, it is fair to assume Ferguson does not expect his audience to have read the papers cited throughout. It is his responsibility as a member of elite academia to represent those papers with honesty and scholarship. As page 100 of the Allen Lane copy suggests, Ferguson does not agree:

It is startling to find how poorly the United States now fares when judged by these criteria [relating to the ease of doing business]. In a 2011 survey, [Michael] Porter [of Harvard] and his colleagues asked HBS alumni about 607 instances of decisions on whether or not to offshore operations. The United States retained the business in just ninety-six cases (16 per cent) and lost it in all the rest. Asked why they favoured foreign locations, the respondents listed the areas where they saw the US falling further behind the rest of the world. The top ten reasons included:

1. the effectiveness of the political system;

2. the complexity of the tax code;

3. regulation;

4. the efficiency of the legal framework;

5. the flexibility in hiring and firing.

As it happens, I have read this paper. And, like I said, the only way Ferguson’s cherry-picked nonsense can be justified is through the emphasized grammar. Indeed the “top ten” reasons did (in different words) include the above. Take a look for yourself:

The reader is led to believe that the five listed reasons are at or near the top of a such list created by Porter and his team. To the contrary, the biggest reason, almost twice as prevalent as anything else, was “Lower wage rates (in the destination country)”. That would seem to suggest that “globalization” and “technology” play a role, which Ferguson shrugs off as irrelevant. The tax system, is sixth down the list and cannot in any way be considered primary. There is a chance that Ferguson was using another, more defensible, graph in defense of his claim:

However, this division is not directly emergent from the study of HBS alumni themselves, as Ferguson suggests, but from later analysis. These are not “responses” at all. Furthermore, even though higher skill and education of foreign labor were core components of offshoring, Ferguson does not cite from the above graph America’s lagging “K-12 education system”. Or take the “flexibility in hiring and firing” which, from this graph, isn’t definitively a weakness or deteriorating at all. (Edit: if it is this graph, “flexibility in hiring and firing” is still a very clear strength – and looks stable. So it would be purely dishonest to list it as a reason for decay. It’s like cherry-picking cherries from a apple orchid.) He even fails to cite “logistics infrastructure” and “skilled labor”, whose deterioration leads the authors to note “investments in public goods crucial to competitiveness came under increasing pressure” at all. They do not gel with his hypothesis that “state is the enemy of society”.

What of Reinhart and Rogoff’s famous report, “Growth In a Time of Debt”? This study has much documented methodological and computational errors, but even before these were furiously publicized in the past three months – in academic circles to which Ferguson supposedly belongs – the results were highly disputed. Even the authors, explicitly at least, warned of confusing correlation with causation. But Niall Ferguson notes “Carmen and Vincent Reinhart and Ken Rogoff show that debt overhangs were associated with lower growth”. “Associated” with? Okay, cool. But then he, gleefully, argues against deficits “because the debt burden lowers growth”. And here I thought they teach historians about correlation and causation at Oxford. Also, with gay abandon, he ignores R and R’s consistent claim that inflation is a necessary tool today, arguing instead that higher inflation will lead to no good, signing his name on letters warning of hyperinflation.

Already, there is a pattern of citing microscopic elements of large, nuanced (in the former case), or debunked (in the latter case) studies without providing the appropriate context, or indeed the truth at all. Again, grammar – and that alone – can vindicate Ferguson’s convoluted logic.

The confusion doesn’t end with misrepresentation of facts and opinions, however. He even misrepresents the legends. Most educated but lay readers know very little of Adam Smith, only something about the free market and the famously invisible hand of the price mechanism. So they can be easily lied to about his beliefs. He inaugurates his book with a tribute to Smith via his writings on “the Stationary State” – (the “West” today) noting:

I defy the Western reader not to feel an uneasy sense of recognition in contemplating these two passages.

He pastes Smith’s lucid argument that standard of living of labor are high only in the “progressive” state, “hard” in the “stationary state” and “miserable” in the “declining state”.

This Smithian motif continues throughout the book. What readers are not told is that Adam Smith believed all growth was eventually stationary. Famous phrases like “the division of labor is limited by the extent of the market” aren’t catchy for nothing. He believed as wages increased, so too would the population, pushing them down, continuing in perpetual negative feedback into a steady-state population.

Adam Smith did believe that deregulation and free trade – contrary to mercantalist principles of the day – would increase that maximum steady state. But he, like so many classical economists around him, did not believe in the power of human ingenuity to lift human living conditions. Permanently. Indeed, he certainly did not nuance his argument through modern prescriptions of “institutional change” as forwarded by Acemoglu and Robins as caveats thereof, as Ferguson tries to have you believe.

And if the misrepresentation of philosophers (sorry, Professor Ferguson, but John Stuart Mill bordered on socialist), economists, facts, and opinions is not enough; perhaps the sheer internal inconsistency of the whole thing is. He casually notes:

Nor can we explain the great divergence [between the West and the Rest] in terms of imperialism; the other civilizations did plenty of that before Europeans began crossing oceans and conquering.

On the next paragraph, I kid you not, he cites “the ghost acres” of enslaved Caribbean farmers,

which were soon providing the peoples of the Atlantic metropoles with abundant sugar, a compact source of calories unavailable to most Asians.

SUCKERS! He also argues that the massive buildup of British debt “was a benign development”. But there was one big difference between them, and us. They were imperialists:

Though the national debt grew enormously in the course of England’s many wars with France, reaching a peak of more than 260 per cent of GDP in the decade after 1815, this leverage earned a handsome return, because on the other side of the balance sheet, acquired largely with a debt-financed navy, was a global empire […] There was no default. There was no inflation. And Britannia bestrode the globe.

Alright, folks, so this is what tenured professors at the world’s by and far most prestigious university want you to know: debt is okay so long as it finances a navy and enslaves other people on whom you may force a market. Or if it fuels a war (throughout the book Ferguson talks about “peacetime” debt, as if using your credit card to kill and maim is chill). This explains why Niall Ferguson was hush about George Bush’s credit fueled war on Iraq, and presumably the lovely occupation thereafter. But when debt finances education or infrastructure; food stamps or healthcare; unemployment relief or development aid we must “be cautious of inflation and slower growth”. Thereupon we develop Fergusonian Inequivalence: Ricardian equivalence, by economic law, holds only for peacetime debt. What?

In fact, contrary to his initial claim, the whole damn chapter is about the benefits of imperialism. But here’s a little secret: just like everyone can’t run a trade surplus, everyone can’t imperialize the shit out of other countries. In fact, Niall Ferguson’s sex relationship with imperialism is deeper than at first glance. Through the book, he pays tribute to the responsible “capital accumulation” that so helped 19th century European economies. However, as we know from John A. Hobson, one of England’s best economists, imperialism is the direct and necessary outgrowth of such accumulation. Capitalists could no longer finance sufficient profit on domestic consumption alone, requiring large and bountiful export markets. Furthermore, domestic industry would no longer require capital at a rate commensurate with high profits, which would need to be invested somewhere. Contrast, hence, the domestic versus national products of British colonies to see just what Niall Ferguson believes was a good thing.

I would devote paragraphs to every other flaw within, but then I’d have to write something longer than the book itself, so here’s a good summary:

  • Ferguson repeatedly invokes Edmund Burke’s “partnership of the generations” in the context of fiscal irresponsibility. He’s also delighted about the failures of the “green fantasy” and more than once criticizes those worrying about degrading the “environment”. I will leave it as an exercise to the reader to find the irony.
  • He keeps talking as if central banks should control something called “asset price inflation”. First of all, huh? Second of all, we tried that once upon a time. It’s called the “gold standard”. Remember how that went? (If you need a history lesson, take a look at Europe today)
  • He talks a lot about America’s broken regulation system and how it’s “consistently” beat by Hong Kong. Yes.
  • He cites World Bank Ease of Doing Business indicators, and yet fails to tell the reader – shock! – that the only three countries ahead of America (Singapore, Hong Kong, and New Zealand) have a population the size of less than New York. He has no problem, however, citing Heritage’s far more subjective “Economic Freedom” index which places America far behind. By the way, Heritage is a far more scholarly organization than the World Bank, folks.
  • He tells us in a footnote that Iran’s appearance on IFC’s “Doing Business” report “is a reminder that such databases must be used with caution”. So apparently his only inclusion criteria for “further consideration” is the Boolean variable “is this country part of an Axis of Evil”.
  • As Daniel Altman has suggested, British legal institutions may not be all that great.
  • He consistently wants to confuse the reader with stocks and flows. Sometimes China is this amazing story of incredible growth of which America should be afraid. He devotes pages and pages to the West’s relative decline against the “Rest”. But suddenly against a purported counterpoint to his argument regarding state capitalism, he also notes that America is way more productive than China.
  • On this note, he waxes eloquent about the “Rest’s” amazing sovereign wealth funds valued in the trillions. On the same page, he talks about the ills of state capitalism. Huh? Where exactly does he think China and Saudi Arabia get their money from? Selling software?
  • For that matter, he talks about the “artificial” purchase of American debt from China keeping American interest rates unfairly low. What exactly does he think China should do with its trade surplus? Burn it?
  • (A retrospective edit from my notes). He so dismissively passes off Steven Pinker’s claim that violence has decreased over time, saying he hasn’t seen “statistics”; does he know his colleague has written a 700-page book about the subject? Also brings doubt to his whole “this is peacetime” thing.
  • He devotes a whole chapter to the erosion of civil society. Beneath the veneer of an actually valuable point is an argument that we should replace progressive taxes with volunteerism. Yeah, okay, that’s new. But anyway, an overwhelming portion of civil charities, believe government provision of goods and services to the poor is complimentary to their job.
  • He bemoans the fact that even if the average donation amount has increased, the number of people who donate has fallen. This bothers me too. Except I don’t call it the battle between “Civil and Uncivil Societies”. I call it “inequality”. As the divergence between mean and median wages continues, this is to be expected. That is by definition the result of an increase in relative poverty.

But nothing so far comes close to measuring the deepest flaw in this book, and indeed his worldview. The whole argument behind his “fall of the West” thesis comes from relative decline. Indeed, the first graph in the whole book shows the historical ratio between British and Indian per capita income levels. Maybe the recent fall in that ratio bothers neocolonialists like Niall Ferguson, but to me it is empowering. To me it is the amazing comeuppance (as pointed out by commenter Julian, I’ve used this word incorrectly) rise of my country – which, mind you, was suppressed for so long by his. I would not make it personal if he shared the accepted, and indeed correct, view that colonialism was largely extractive, with a few piecemeal benefits on the side.

Let me tell you, Niall Ferguson, that I will not be happy until the damned ratio in your primary graph falls to, and below, one. What you see as the fall of some stupid and glorious ideology is what over three billion people of this Earth see as the final coming of dignity and prosperity.

As an American I share with you the concern about decaying institutions. But I’m looking at pictures of Detroit and New York City after Hurricane Sandy. As a true believer in market institutions I am looking with concern, but full understanding, at the Occupy movement. I am looking at a world which now mistakes America as a warmonger and projects onto us a mantle you wear so elegantly: “imperialist”.

There are different levels of argument. There is that of fact. Then of analysis. And then of meta-analysis and beyond. Debunking this book requires little more than the first. For it is nothing more than the whimper of a dying idea.

  1. There was once a theory that many a wayward young man had been redirected toward a more positive life by the timely application of a beat cop’s billyclub. In that spirit; You’ve never heard of the Ottoman Empire, or any of its predecessor caliphates dating back into the 7th century?

    On one of the tapes provided the world by Osama bin Laden, he laments the ‘tragedy’ of Al Andalus, by which he means the Spanish driving out their Islamic overlords–in the same year Columbus ‘discovered’ America. These Islamic empires stretched not only into Europe, but also Asia and Africa.

    How about all those Chinese ‘dynasties’? They were empires too. Again, long before any Europeans established sugar plantations in the Americas. Speaking of which, why do you suppose that the former colonies of England are such happier, wealthier places than the former colonies of imperial Spain? (When you get to college you might learn that this comparison is about as close to a laboratory example as exists in human affairs.) Helpful hint; it has something to do with Shakespeare, Elizabeth I, Adam Smith, David Hume, David Ricardo.

    I’d suggest you put the Marx and Engels Reader away and try reading some actual economists. Or, even go to YouTube and watch some episodes of Free To Choose; you’d at least learn that there’s nothing new about Ferguson’s argument that state ‘welfare’ agencies have displaced private eleemosynary institutions and arrangements.

    There are far more things under heaven and earth than are dreamt of in your philosophy, Ashok. Complacent, arrogant and ignorant is no way to go through life.

    • Patrick, I know of the older and many other arguments “that state ‘welfare’ agencies ave displaced private eleemosynary institutions and arrangements”. I’m also aware of many arguments to the contrary (for example what effect, if any, do charitable deductions have on donations) regardless, this review is more about the whole argument he makes, and contradictions within, than this one point.

      I also know that the Spaniards were harsh colonists, much worse than the British. The Islamic rule across the world, in India for example, is very different. The Mughals effectively migrated onto a people rather than rule from abroad. They were not benign (except Akbar, for example) but it is not a fair comparison.

      By the way, there’s a good section in the book where Ferguson says some very nice things about the Santa Fe Institute, W. Brian Arthur, and Geoffrey West. It was the most interesting section overall, but I’m guessing that makes you want to reject the whole book, now?

      • Well, if you knew about the older arguments, why did you write; ‘…we should replace progressive taxes with volunteerism. Yeah, okay, that’s new.’

        Nor is your response that the Spanish ‘were harsh colonists’ adequate as an explanation for your ridiculing Ferguson for;

        ‘Nor can we explain the great divergence [between the West and the Rest] in terms of imperialism; the other civilizations did plenty of that before Europeans began crossing oceans and conquering.’

        Obviously you now concede he’s correct about that. Which means all your arguments about imperialism have to be abandoned. You see that, right?

      • You do understand I was being sarcastic, first time, right?

        No, I cede he’s correct about the British not being the first imperialists, I’m not ceding that it had nothing to do with the great divergence.

      • acerimusdux said:

        Patrick, you do realize the Spanish are Europeans as well, don’t you? That they were more brutal than the Brits hardly exonerates European imperialism, or casts any doubt on it’s role in the great divergence. Note also that there is no divergence between Spain and Britain; Spain is currently only very slightly behind Britain in per capita GDP, and is actually ahead in overall development according to the United Nations Human Development Index.

    • Jon Torrance said:

      Patrick R. Sullivan: Well, if you knew about the older arguments, why did you write; ‘…we should replace progressive taxes with volunteerism. Yeah, okay, that’s new.’

      Someone’s sarcasm detector appears to need calibration – it’s clearly nowhere near sensitive enough.

      • Nice try, guy, but here’s more of what Ashok wrote;

        ‘He devotes a whole chapter to the erosion of civil society. Beneath the veneer of an actually valuable point is an argument that we should replace progressive taxes with volunteerism. Yeah, okay, that’s new. But anyway, an overwhelming portion of civil charities, believe government provision of goods and services to the poor is complimentary to their job.’

        Take note that Ashok does not try to explain that, in his reply of 12:13PM, as ‘sarcasm’. That’s only occurs to him after you–apparently not having bothered to familiarize yourself with the context–offer it to him.

      • Greg Haroutunian said:

        Patrick, are you kidding? That was such an obvious bit of sarcasm that it wouldn’t initially occur to any reasonable person that that sarcasm was missed. Rao’s point was clear, Ferguson was presenting tired, old and discredited ideas as if they were something new. Rather than needing to explicitly and in detail debunk said old discredited tired ideas, Rao simply dismissed them out of hand with a sarcastic comment. If you are incapable of seeing that, you need some serious help in your reading comprehension. I could recommend a course of study in english comprehension if you’d like.

    • Anonymous Jones said:

      “Complacent, arrogant and ignorant is no way to go through life.” And it’s even worse if those three things are compounded by misplaced certainty! [Think about it for a second, Patrick. Or maybe a few days is probably more your speed? Who am I kidding? You’re going to the grave not realizing what you’re doing. No billyclubs are going to change that.]

      Ha ha on the Marx-Engels reader stuff, too. See, it’s funny when you exaggerate and make your opponent into a buffoon based on no substance. I read a book on that once.

      As for your second comment, you do understand that even if you poke a hole in Ashok’s argument, that doesn’t mean he (or we) have to concede Niall is correct. The imperialism argument is obviously too complex (occurring at different geographies with different technologies at the direction of different cultures) for you to settle this with a few internet comments, no?

      I just never cease to be amazed at how insistent (nay, even angry about it) people like you are in the quest to embarrass yourselves.

      There is nothing so absurd that some learned man has not already said it.

      • Yes I think the important caveat for most of my post is there’s a good chance someone, not exactly sure who, has said it already.

      • ‘…even if you poke a hole in Ashok’s argument, that doesn’t mean he (or we) have to concede Niall is correct.’

        ‘Poke a hole’? Ashok quoted Ferguson: “Nor can we explain the great divergence [between the West and the Rest] in terms of imperialism; the other civilizations did plenty of that before Europeans began crossing oceans and conquering.”

        Immediately heaping ridicule on him with:

        ‘On the next paragraph, I kid you not, he cites “the ghost acres” of enslaved Caribbean farmers….’

        So, please explain how Ferguson’s acknowledgement of slavery in the Caribbean undermines his point that ‘imperialism’ had existed in many other places and times across the planet, and thus has no explanatory power?

      • Greg Haroutunian said:

        Patrick: Because the slavery practiced in the Caribbean was unprecedented as compared to all other previous civilizations institutions of slavery. So Ferguson right there himself, identified a key difference in western european imperialism vis-a-vis all other civilizations.

        Again, this was blatantly obvious based on what Rao wrote. I really have to wonder if you are even bothering to read what he wrote at all, given your, quite frankly, appalling inability to comprehend what was written.

      • Saying that slavery in the Caribbean was different doesn’t get you to a conclusion that it is the source of European prosperity. Double entry bookkeeping from Italy, invented before Columbus even got to the Caribbean, explains more.

    • eqbal00 said:

      “Why do you suppose the former colonies of England are such happier, wealthier places than the former colonies of Spain?”

      Been to Chile? Or any country in Latin America? Been to Uganda? Or Kenya or Tanzania or Gambia? Or India for that matter? Or Yemen? And while visiting, what did you see?

      Per World Bank, GDP per capita in Chile in 2011 was US $14,000+, in Uganda it was $487. (Just to be clear, in Bolivia, a poorly performing LAC economy, it was $2,374.) You _might_ have an argument to make here, but you don’t make it very convincingly in the pedantic, under-elaborated or under-informed response that you’ve offered.

      “Complacent, arrogant and ignorant is no way to go through life.” I am, as you might imagine, in agreement with at least this part of your post.

      • Yep also see Daniel Altman’s work (to which I linked) that suggests British institutions may not be all that important. I’ll be honest, I place more faith in institutions overall as a source of political and social, if not only economic, stability but British dominance seems fragile to the other exogenous factors for which regression controls. Therefore I think we can impute, with some confidence, that British institutions may not be causally linked with prosperity.

        Now it depends who gets the null. You can attack me by talking about the uncertainties and fuzziness of such work, but my null is that “British institutions do not significantly increase prosperity”. That’s a theoretically justified null. I like common law much, much better than civil law like NF says it seems more fragile to a changing economy but is continental Europe so far behind? And can that backwardness be explained by legal codification?

        Regardless, that one’s institution is superior in my opinion is not grounds for colonialism. Nor is that the point of my review to begin with!

    • cinnamon colbert said:

      1) I sure hope you are not a native English speaker
      2) Did you do know that there are free tools that will scan you webpage and tell you if there is enough contrast between text and background ? and that if you ran such a scan, the light grey text would be flagged as very hard to read, as there is not enough contrast between light grey text and white background ?

  2. Niall: “Nor can we explain the great divergence [between the West and the Rest] in terms of imperialism; the other civilizations did plenty of that before Europeans began crossing oceans and conquering.”

    Patrick: “Obviously you now concede he’s correct about that. Which means all your arguments about imperialism have to be abandoned. You see that, right?”

    Because other civilizations were imperialist before Spain, Netherlands, Britain, France, U.S. that means we can’t use imperialism as an explanation for the Great Divergence between the “rest” and the “west”?

    This assertion is absurd on its face. The question at the heart of the “great divergence” debate is why did Europe (England specifically) break free of Malthusian constraints and emerge from proto-industrialization into full blown industrialization proper, while China did not?

    The answer has much to do with the New World. The interactions, conjunctures and technological/institutional developments that came about as a result of the “Europe’s” interaction with the New World all played an important role.

    Chief among these are the slave trade and plantation labor system. Commodities like silver, gold, cotton and sugar are the best materiel explanations of the “great divergence.” While the institutional frameworks built around these systems of extraction fill out the explanation nicely.

    Professor Ferguson loves counter-factual history. So I have one for the professor and maybe Patrick would like to chime in here to: Would the “great divergence” ever have come about without the British World Empire of extractive slave colonies and the unfathomable ghost acres of calorie rich commodities and materiel wealth provided by India, the Caribbean and the Americas?

    In the end wasting to much breath (or bites in this case) on Ferguson’s poorly written screed feels entirely retrograde as his arguments are much more simplistic and felicitous than those made by Eric Jones, Samuel Huntington and David Landes decades ago.

    For the actual present and future of this debate look to scholars like Ken Pomeranz, R Bin Wong and Jason Moore.

    • Indeed. By the way, I think there is a legitimate possibility (however much I dislike counterfactual history) that the great divergence may have emerged without colonialism. But that’s too harsh a divergence for reality to even fathom, and even Ferguson doesn’t attempt at its resolution.

      I will add, for Ferguson imperialism isn’t something to diminish or deny, he is quite proud of the glorious days when the sun never set on Britain.

    • To Imperial Rome, Britain was a ‘new world’, the people there were enslaved by them by the full power of Roman legions. Why no ‘great divergence’ then?

      In Elizabeth I’s time we are already seeing prosperity starting to be enjoyed by the common folk. For one thing, they have the plays of Ben Jonson, Shakespeare, Marlowe to enjoy. How does plantation slavery explain that?

      • ED said:

        Your remarks suggest an impoverished model of causality, and with this, difficulties in providing effective critiques of multi-causal explanations. Here, you ask an interesting question, but the answer involves the roles of multiple causes, and the role of one doesn’t refute the rest.

        There’s also a “necessary cause” vs. “sufficient cause” vs. “satisfying a requirement” confusion somewhere in there.

      • acerimusdux said:

        You don’t think there was a great divergence between the Roman empire and prehistoric Britain? Elizabeth I doesn’t come along until some thousand years after the fall of the Roman Empire.

      • Greg Haroutunian said:

        Patrick: Did you miss the part where the Romans conquered Britain in the first century BCE and Elizabeth I didn’t come into being until the 16th century CE? I think we’ll see India surpass britain by a substantial margin in wealth within only a hundred years from now, only maybe 4 centuries after imperialism began in earnest.

  3. Mark Duckenfield said:

    I’m sorry, Patrick, but how do you get that the former Spanish colonies are worse off than the former British colonies? “Happier” seems rather subjective, but “wealthier”? I’d say it is a mixed bag driven largely by direct racial connection to the former metropole since you are presumably looking at Australia, Canada and New Zealand as “former colonies” as opposed to Ghana, Kenya, Uganda and Belize. The former Spanish colonies of Argentina, Mexico and Chile are much wealthier than the former British colonies of Nigeria, Ghana, Kenya, Uganda and Belize. Even laggard Paraguay has three to four times the per capita GDP of Kenya or Nigeria. Mexico has four times the per capita GDP of India. Former Spanish colony and communist (talk about a disadvantage!) Cuba has a higher per capita income than former UK colony Jamaica. I’d be very careful with such a monocausal interpretation. It’s not simply “British imperialism/institutions good, others/Spanish bad” or “public sector good, state bad”

    • Now this is funny! You want to compare African countries to American: Would you like to point out a few of the success stories in Africa that were former Spanish colonies? By African standards, the best places are in fact those that were former British colonies or had some association with Britain.

      Thanks to Magellan there are a few former Spanish colonies in the Pacific, like the Phillipines. Would you like to compare them to New Zealand?

      Cuba seems a particularly poor choice for you, though it was once the richest Caribbean country, today it’s one of the poorest. You aren’t so foolish to believe Cuban statistics, I hope. If so, how many Jamaicans risk their lives to sharks floating on innertubes, ala Elian Gonzales’ mother, to get away from Jamaica. A large part of the latter country’s problems stem from its former alliance, during the Michael Manley era, with…Cuba, btw.

      • The most developed countries in Sub-Saharan Africa are South Africa, Botswana, and Gabon. But South Africa was a dominion rather than a colony; the Cape Colony had self-government in the late 19th century already. Same reason why New Zealand vs. Philippines is such a stupid comparison; within the world of former Spanish colonies, too, Latin America is far better off than the Philippines. So we’re left with two African ex-colonies, one British and one French, both underpopulated. It’s interesting to do a case study of how Botswana managed to leverage its diamond wealth to produce economic development whereas other resource-rich African countries got civil war out of them, but it’s not a general feature of British colonies: Nigeria’s oil gave it pollution rather than wealth.

        Spain did not have enough African colonies for us to be able to do a comparison about Spain specifically; Equatorial Guinea for what it’s worth has high GDP and low GNP and HDI. The main example of exceptional failure of non-British colonialism in Africa is the Belgian Congo, which was somewhat of a special case, for “the Congo Free State was a holocaust” values of “special.” So in that sense saying “Britain was better than the rest” is like excusing Polish pogroms on the grounds that “Poland was less anti-Semitic than the rest” where you’re comparing it to a basket of European countries that includes Nazi Germany.

      • Cuba Libre said:

        Dear Patrick, Cuba ain’t no paradise but let’s allow any Jamaican who lands on US soil to get citizenship, move it a lot closer (say, Mexico distance) and then compare outflows, no?

        I’m also getting confused about whether you are trying to argue that all imperialism is equal (Rome vs. Britain) or not (Spain vs. Britain). Don’t your own arguments here suggest the answer is really complex?

      • My argument is that ‘imperialism’ has no explanatory power at all. Both Spain and Britain had empires on which the sun never set…for centuries. They had very different development paths during this time.

      • Mark Duckenfield said:

        I think I was pointing out that there are multiple factors at play — being an African colony rather than one in the Americas, for instance, seems to matter as your “you want to compare African countries to American” comment implicitly reveals (although you clearly miss it). So, yes, I do want to make that comparison — given that you seem to want to compare Australia/Canada and Latin America I think I’m on safe ground. And I did make intra-regional comparisons: Cuba/Jamaica, Mexico/Belize and you could even add how less wealthy former British colony Guyana compares to ex-Spanish colonies Costa Rico/Chile (I’ll leave off oil-rich Venezuela).

        Clearly historical legacies matter even in the face of bad policies and a bad external environment (witness Cuba), but not in so clear-cut a way as you claim. I included the Cuba/Jamaica comparison precisely because it is so problematic for your position, not because I endorse their policies or government. I’m pretty sure that Jamaicans can get exit visas to the United States, so they don’t have to hop on rafts.

        In response to your snarky comment, my data on Cuba, Jamaica and the others is the United States Central Intelligence Agency:

      • Mark Duckenfield said:

        I should add, my point is not that it sucked to be a British colony — in fact it integrated your into a very sophisticated network of trade and finance, but let’s not overlook that it was a lot more exploitative of some than others. It is quite revealing that the former colonies/Dominions that are doing better now suffered the lowest level of political and economic exploitation (Canada, Australia, etc) and much of the remainder that haven’t done as well were always in a pretty clear extractive relationship. Now, an interesting argument would be that the others did poorly, in part,
        due the *absence* of the political institutions that Ferguson gushes about.

      • My argument is that ‘imperialism’ has no explanatory power at all.

        And yet Japan, the one country that was never colonized de jure or de facto (counting China as de facto colonized), was the first to achieve comparable living standards to those of Western Europe and the US.

      • ‘And yet Japan, the one country that was never colonized de jure or de facto (counting China as de facto colonized), was the first to achieve comparable living standards to those of Western Europe and the US.’

        That’s completely baffling. Japan opened itself to Europe and America in the mid to late 19th century. Japan sent emissaries out specifically to learn western ways, which is about when their industrial revolution began. So, if your point is that ‘imperialism’ doesn’t explain Japanese prosperity, you’re correct.

        In fact, when Japan decided to become an imperialist power it was their downfall.

      • Japan sent emissaries to learn Western technology, and adapt it locally on its own terms. It was protectionist in the same way Germany was protectionist in the second half of the 19th century. China instead had Western powers come in and establish treaty ports in which Western law prevailed. Nowhere in Japan was there anything like Shanghai’s foreigner-only gardens. Of course China today is like Japan of the 1920s and 30s – American companies do business in China on China’s terms, subject to Chinese law – and not like China of the 1920s and 30s.

        My thesis about imperialism is that it’s neutral to the prosperity of the colonizer: Switzerland and the Scandinavian countries did fine without it – they didn’t get the captive markets Britain had, but didn’t need to piss away money on a huge navy. Japan’s imperialism worked fine when it participated in the Scramble for China and when it invaded Korea and Manchuria. It only stopped working when it picked a fight with a stronger power. Imperialism is only really bad if you’re the colonized party.

      • Interesting suggestion, that imperialism is neutral on the prosperity of the dominant party. Like all other such convictions, hard to justify with data (which is fine). However, I don’t think Switzerland and Scandinavia are good control groups because they benefit from a richer Britain as far as their export markets are concerned, right?

        A better control would be the United States, though we don’t control for a whole host of factors, which became richer than Britain without any colonies, and mostly domestic consumption (labels of “imperialist” came later).

        But I think America would have been richer anyway. The question is are you richer than you should be. Harder to answer!

  4. Odin said:

    Finally someone else looks askance at the use of the word “peacetime” to describe the last decade. I was beginning to think it was just me.

    Dept of nitpick: “Even the authors, explicitly at least, warned of confusing correlation with causation.” – I assume you meant implicitly. And ya know the word you wanted was “complementary,” right? (The errors of great men . . . )

    • Julian said:

      You missed the misuse of comeuppance. It does not mean ‘rise’ as Ashok appears to want it to mean. It means downfall or just deserts / desserts.

  5. Peterh32 said:

    Sounds like a Tom Buchanan book. Remember, in The Great Gatsby? “Civilization’s going to pieces…. Have you read ‘Rise of the Colored Empires’ by this man Goddard? … If we don’t look out the white race will be — utterly submerged. It’s all scientific stuff; it’s been proved.”
    He would have loved Ferguson, I should think.

    • To be fair, I don’t think NF is anything much of a racist, though he clearly views the British Empire through rose-tinted glasses. His debate with Kissinger and Zakaria (on Munk debates) was very pro-China, and without the White Man’s Burden-esque attitude either.

      I’d say his argument for neoimperialism that is America should remain in the Middle East just comes from a profoundly confused idea of what the world wants from America.

      • guthrie said:

        And surely a profoundly confused idea of what America can offer the world?

  6. Alex1 said:

    “Let me tell you, Niall Ferguson, that I will not be happy until the damned ratio in your primary graph falls to, and below, one”

    Well, thats a bit harsh. The point of convergence is me thinks that 1 becomes a stable equilibrium. Wishing for the future British to be poorer than the future Indians because their ancestors were Imperalists seems like original sin, and not at all pareto optimal…

    • Ha, ha. Besides the British imperialists provided India with all kinds of things they hadn’t known before, such as the English language, industrial technology and much else that undoubtedly helped India to develop. Of course, they also introduced British socialist ideology that resulted in the ‘License Raj’, which clearly retarded India’s economic growth for decades.

      But, yeah, Ashok’s reminding me of an old Soviet era joke, the punch line of which was, ‘I wish my neighbor’s cow would die.’

      • Amitabh said:

        Ha ha Patrick I guess that’s why India’s GDP growth rate practically doubled the day after it became independent to the “Hindu rate of growth”. Because the British did such a great job. And Japan wouldn’t have grown without the English language and India would never have, gasp, imported industrial technology. Like everyone in Europe and North America.

        But not your fault really: these are the standard arguments you hear from Westerners who spend about a day studying colonialism, max, and are told how great the railways were for India etc.

      • The ‘day after India became independent’ was met with terrible violence in which probably a million people lost their lives. Millions also migrated to Pakistan to be with their co-religionists. Not a very good argument for British exploitation, is it?

      • This must be one of the top ten most ridiculous comments I’ve read. You get India (or Pakistan and Bangladesh) wouldn’t have existed if the Brits didn’t come in the first place, right?  Sent from iCloud

      • What exactly is the point you think you’ve made Ashok? That the warring principalities that were ‘India’ before the British arrived, were happier places?

      • Yes I wrote “warring principalities that were ‘India’ before the British arrived were happier places.” Oh wait, I didn’t.

        There’s very strong evidence that the British empire halted economic growth in India. A very concise overview is here: The India question

        The funny thing about your remarks are you think of your self as some “free market” type of person, and can’t seem to tell the difference between free and forced trade. Hint, one is good the other is not.

      • Well, gee, if tiny little Britain could impose its will on the huge population of India so easily, doesn’t that speak poorly of the natives’ abilities?

      • Well, actually, before the Brits came India was far richer on a per capita basis But hey that wouldn’t work with your supremacist priors now would it?

      • So what’s your explanation of how the richer, far more numerous natives couldn’t cope with the handful of Brits who showed up one day?

      • They got duped. Which is fair, it’s their fault.

        Anyway, none of this answers my question about how a purportedly “free trade” guy (which you clearly are not) supports forced trade. No one wanted the crappy British garments, but over-accumulation in domestic industries needs, well, a market.

      • You don’t think that they were so busy killing each other that that allowed the Brits to take over?

        So, who forced the Indian people to buy things they didn’t want?

      • Back in 1905-06, William Jennings Bryan visited India and wrote about it. He termed British rule in India a system of legalized pillage.

        His essay is not much known in India because it was proscribed by the British censor.
        You can read it here:

        What he said about the railroads is: “The railroads, with all their advantages, have been charged with adding to the weight of famine by carrying away the surplus grain in good years, leaving no residue for the years of drought. While grain can be carried back more easily in times of scarcity, the people are too poor to buy it with two freights added.”

        Now we have Niall Ferguson and acolytes like Patrick Sullivan trying to whitewash all of that.

    • You’re right. I did not mean it in that way, however. Only that holding British wages constant I want that graph to be as low as possible.

    • In his book “White Sahibs in India” (published around 1937) Reginald Reynolds quoted “A Popular History of British India”, W. Cooke Taylor, 1842, that the Indian ship-building industry “was also doomed, for we read how “the arrival in the Port of London of Indian produce in Indian-built ships created a sensation among the monopolists which could not have been exceeded if a hostile fleet had appeared in the Thames. The ship-builders of the Port of London took the lead in raising the cry of alarm…..An obliging Government saw to it that the Indian industry perished.”

  7. dilbert dogbert said:

    You all are having fun with Patrick but there is an old tradition on the innertubes: “Don’t feed the trolls”
    But if you enjoy it, then have at it.

  8. AJ said:

    Good job pointing out Ferguson’s tendentious research citations. I too read and enjoyed ‘the Ascent of Money’, but personally I find Ferguson kind of a reprehensible person and economist, so I hadn’t bothered checking out his latest. I’ve also seen him on CSPAN a number of times, where he gives the same kind of loaded arguments to support his favored agenda – frequently he argues against regulation and bashes the US for stickies and it’s tax code, so I’m not surprised those favorite canards rear their heads again in this book. You really did a good job picking apart some of the arguments he made in Great Degeneration and I can’t believe how low he stooped for some of them. Any economically/historically literate person would be able to spot the flaws, but this is one of the reasons why he writes mainly pop-treatises for the lay demographic.

    This is tangential, but Ferguson’s use of the example of China makes me think: that China’s economy will continue to grow apace while the advanced economies in the west slow down is inevitable and obvious, and I wish the ‘experts’ would stop sounding the alarm about it, because it needlessly encourages people to think of China as an enemy a la the old USSR. The fact is China’s rise will not necessarily be a bad thing for economy in the long run, nor does it make our system look bad next to state capitalism.

    And the bigger point is that we shouldn’t even be attempting to compete or compare ourselves with the Chinese in the first place! I’m so tired of hearing it, but you can never get away from it. Our natural competitor is the EU and in order to keep up with them, we need to make some major investments in infrastructure, retraining workers, and improving education, as the graphic you posted suggests – not stripping away regulations and benefits until our labor market is marginally more appealing next to China’s, who sometimes pay their workers with a bowel of rice and have untold suicides from shitty working conditions/wages.

    Incidentally, I lol’d at Ferguson’s quoting of Burke the anti-imperialist.

    I’m not sure if I can agree with you guys that institutions have played a larger role in the disparity between the
    ‘west and the rest’ than geography, culture, and history have – the great divergence occurred long before the west had any significant advantage in that area, I would argue, and it certainly has more to do with imperialism than Ferguson is willing to admit. Anyways nice article, def. will check out this blog from time to time.

  9. Hey! I know this is kind of off topic but I was wondering if
    you knew where I could find a captcha plugin for my comment form?

    I’m using the same blog platform as yours and I’m having problems finding one?

    Thanks a lot!

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