By Rob Natelson on June 9, 2013
A nation’s health and prosperity depends on good institutions. These institutions are political and private. Good political institutions include balanced government with a significant amount of popular control, the rule of law, freedom from corruption, and respect for individual rights. Good private sector institutions include free and open markets and positive moral codes in religious and private life.
(I was introduced to the importance of institutions in the 1990s when attending a conference at which economist Douglas North, who had just won a Nobel Prize for his work on the subject, was a co-participant.)
Many conservatives quote John Adams for the view that public virtue is of great importance to a country’s fortunes. But as Adams himself said, the nature of man is such that virtue can’t do it alone; you need well-constructed government as well. Or James Madison observed, men are not angels—you need government to control anti-social behavior coupled with rules to control government. A country with bad institutions will always remain a third-world nation or worse.
A good Constitution entrenches good political institutions. For example, the U.S. Constitution (when this requirement was still honored) limited federal power and left most governance to be handled at the state, local, or private. This improved the quality of decision making, and enabled the voters to select officials at each level based on a limited set of issues.
When this division broke down, we got bad government and endless deficits. We also got impaired democracy, since lines of responsibility have become so confused that no official can be held accountable for much of anything any more. (Are local, state, or federal officials really most responsible for the quality of our schools, for example? Impossible to know.)
Just because a country has good institutions does not mean those institutions will remain good. Countries can backslide. The early Roman Empire had generally good institutions: In the early Second Century A.D., Rome was a prosperous, decentralized, de facto federation with a vigorous private sector and a good deal of freedom under law. By the Fourth Century, however, the empire had deteriorated into a totalitarian hellhole.
Harvard’s professor Niall Ferguson shows in this Wall Street Journal story [http://online.wsj.com/article/SB10001424127887324798904578527552326836118.html?KEYWORDS=Niall ]
that key institutions in America are now unraveling. The evidence is overwhelming. It is documented by many international studies and surveys, relying on all sorts of methodologies. This has been going on for some time—but particularly in the Age of Obama.
America today breaches the rule of law more often. Government has become less efficient and both government and the economy more rife with cronyism. As for the traditional American commitment to free enterprise—there is little left now of the truly private sector.
Even in a relatively well-run state like Colorado, government meddles in just about everything, including almost every business enterprise you can imagine. At best, this conduct is inefficient and unfair. But more often it offers alluring opportunities for influence-peddling and corruption.
Here’s a recent illustration from my personal life: I live in Lakewood, Colorado where the government-run (i.e., socialized) West Line of “light rail” recently opened. I see the trains pass all the time. And they are almost always nearly empty. For this, politicians and special interests drained $707 million (it turned out to be far more expensive than projected) and 15 years of effort from otherwise productive people and otherwise productive lives. Pure and simple waste.
And this sort of thing is going on all over the country in boondoggles of almost every description.
The President promised to “fundamentally transform” (i.e., completely change) America, and this already has happened. Today we look less and less like the kind of country that rose to world leadership, and more and more like a third-world kleptocracy. If you doubt this, read Professor Ferguson’s article and examine some of the studies he cites. It is a sobering experience.