The Great Degeneration, by Niall Ferguson (book review) - George Melloan

That maxim applies to the writings of the economic historian Niall Ferguson. The 49-year-old Glaswegian scholar isn't someone to be dismissed as some sort of eccentric or deft provocateur. He teaches at Harvard University and is a fellow at the Hoover Institution; he has written many weighty books and articles and has created five television documentary series. One, "The Ascent of Money," won an international Emmy in 2009. As a Scot, he views America with a certain detachment not available to native sons and daughters.

• BOOKSHELF
• June 19, 2013, 3:30 p.m. ET

The Wall Street Journal, June 20, 2013

A Jeremiad to Heed

U.S. future obligations exceed future revenues by $200 trillion, and state and local governments face $38 trillion in unfunded obligations.

By GEORGE MELLOAN

The Great Degeneration

By Niall Ferguson

(Penguin Press, 174 pages, $26.95)

Doomsayers are never popular, but sometimes they're right. The original jeremiads uttered by the biblical prophet Jeremiah were on the money. His fellow Judeans were vanquished and enslaved by the Babylonians, just as he had warned. Moral: Don't take jeremiads lightly.

With a focus on the United States, "The Great Degeneration" warns that Western civilization has entered into a period of decline due mainly to the strangling of private initiative by the ever-encroaching state. "We are living through a profound crisis of the institutions that were the keys to our previous success—not only economic, but also political and cultural—as a civilization," he writes.

The threatened institutions are representative government, the free market, the rule of law and civil society. Mr. Ferguson is dismayed at the explosion of public debt, the destruction of markets by excessive regulation, the replacement of the rule of law by "a rule of lawyers," and the decay of civil society as represented in part by the decline of thousands of private, voluntary organizations (Rotarians, Elks, et al.) that have contributed so much to social order and progress in America.

"We humans live in a complex matrix of institutions . . . ," Mr. Ferguson writes. "Once—I'm tempted to date it from the time of the Scottish enlightenment—this matrix worked astonishingly well, with each set of institutions complementing and reinforcing the rest. That, I believe, was the key to Western success in the eighteenth, nineteenth and twentieth centuries. But the institutions in our times are out of joint."

The most worrisome evidence of decline, he believes, is the "crisis of public debt," with government budgets out of control in the U.S. and Europe. He sees outsize debt as a symptom of the "betrayal of future generations: a breach of Edmund Burke's social contract between the present and the future." Should this news leak out to college-bound American youths they might well be moved by resentment to challenge the progressive orthodoxies that infest so many campuses.

When it comes to health care and Social Security in its various forms, it is not at all clear that the government will be able to keep its promises. By Mr. Ferguson's reckoning, U.S. future obligations under present law exceed future revenues by $200 trillion (calculated at current value), "nearly thirteen times the debt as stated by the U.S. Treasury." That figure doesn't include the unfunded obligations of state and local governments, estimated at $38 trillion.

Of course, future obligations stretch over many years, and the burden consists mainly of debt service, not the debt itself. But the numbers are so huge that just the carrying charges will likely make them unmanageable without painful adjustments. One adjustment that already seems inevitable is a reduction of Medicare and Social Security benefits to future generations. The Federal Reserve also has a solution—inflation, yet another form of pain. And then there is the Obama all-purpose remedy, higher taxes. One way or another, tomorrow's citizens will pay for today's excesses.

Mr. Ferguson worries as well about the erosion of the rule of law. Not only do politicians increasingly flout the Constitution, but they are creating a proliferation of unwise and unenforceable laws and regulations. Lawyers on congressional staffs write massive pieces of legislation for other lawyers to implement and still others to interpret for clients. Thus, lawyers rule.

The Brobdingnagian Dodd-Frank Act meddles with global finance, something that Friedrich Hayek would have called a "complex system" beyond the power of mere mortals to control. Billions of transactions of infinite variety can't be managed by a law, even one that ran to 2,700 pages in its original draft. To attempt such a thing is stupid, costly and dangerous. Mr. Ferguson cites the Darwinian principle that, in the natural world, a small input in a complex system "can cause huge, unanticipated consequences." Financial systems, he argues, are much the same.

The author's argument that civil society is undergoing decay is no less depressing. As government has grown, civil society has withered, he asserts. Robert Putnam's "Bowling Alone" (2000) recorded a sharp decline in participation in civic organizations between the 1960s and late 1990s—for example, a 61% drop in PTA membership. The French author Alexis de Tocqueville marveled at the scope of American civil society in the 19th century, the many associations that owed their "birth and development" not to law but to individuals freely joining forces. Mr. Ferguson agrees with Tocqueville that "the state—with its seductive promise of 'security from the cradle to the grave'—was the real enemy of civil society."

Mr. Ferguson borders on glibness when he touches lightly on such treacherous matters as income disparities and population shifts. But on the whole his intellectual virtuosity is refreshing. "The Great Degeneration" won't be popular in the Obama White House or other centers of power. Jeremiah wasn't popular with the elders of Judea either. They tossed him in jail for his sedition. They had reason later to be sorry.

Mr. Melloan, a former columnist and deputy editor of the Journal editorial page, is the author of "The Great Money Binge: Spending Our Way to Socialism."

A version of this article appeared June 20, 2013, on page A19 in the U.S. edition of The Wall Street Journal, with the headline: A Jeremiad To Heed.