Mauldin Conference – Niall Ferguson

Niall Ferguson, Harvard history professor, lead off the conference with what amounted to a recap of his latest book, Civilization; the West and the Rest. He addressed the issue of whether the West would retain its global leadership, and if that were a question Niall’s answer would have been “no.”

The U.S. has created six–as he called them–”killer apps,” a phrase he used to keep his teenage children engaged in the discussion. The trouble is that, since the late ’70s, the emerging world has downloaded them; China has downloaded five of six. The killer apps are:

1. Competitiveness
2. Innovation
3. Rule of law
4. Medicine
5. Consumption society
6. Work ethic

Regarding competitiveness, he pointed out that since 2004, a measure of global competitveness has seen the U.S.’s competitiveness decline while China’s has increased. In innovation, China and South Korea have developed more patents than Germany. Niall argued that the U.S. has not the rule of law, but the rule of lawyers. He called the Dodd-Frank bill a legal-community job creation law. Honk Kong, for example, exceeds the U.S. in 15 of 15 categories. As an aside, the worst of the countries are Italy and Greece. As evidence of the West’s decline in medical leadership, Niall pointed out the change in life expectancies; Russia’s is greater than Scotland (the country of Niall’s birth); Hong Kong and Japan are ahead of the U.S. In work ethic, the average South Korean works 1000 hours per year more than the average German. “if you go on vacation, the Germans are already there, and when you leave, it’s auf wiedersehn.”

He concluded with six questions he thinks are critical for the future.

1. Can the Rule of Law come to China? If not, it’s not out of the woods.
2. Can India go from an economic tortoise to the hare?
3. Will the Muslim world have a Reformation? Can it separate church and state?
4. Can the West overcome the clash of generations? He argued that the Occupy movement and youth, in general, would be better served in the future by becoming more conservative.
5. Can Africa overcome Malthus? Its population growth threatens to swamp its resources. 43% of population growth in the future will come from Africa.
6. Can the resource curse become a blessing? The history of resource-rich nations is not a good one.

In conclusion, “you need to work on your bow.” 500 years of western dominance is over.

In the Q & A session, session, Niall made a few salient points.

Deflation is the dominant force, at present.
The Euro is not doomed. We won’t see the Lira and Drachma come back. The Europe situation is like the worst soap opera ever.
Regarding the possibility of technology rescuing the U.S., Facebook does not equal the Manhattan Project.


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