Decline Is a Choice. Let’s Reject It

Wednesday, January 12, 2011

Juxtapose pictures of Frankfurt and Liverpool in 1945, and then again in 2010 (or, for that matter, Hiroshima and Detroit). Something seems awry. Perhaps one can see, even in these superficial images, that something other than military defeat erodes societies.

Of course, losing a war can end a civilization (ask the Carthaginians in the Third Punic War or the Aztecs in 1521). But the chicken-and-egg question reappears: why are some civilizations more vulnerable to foreign occupation or more incapable of reacting to sudden catastrophe—such as the pyramidal Mycenaeans rather than the decentralized Greek city-states?

In three wars, Republican Rome managed to end seafaring Carthage—in part through the building ex nihilo of a bigger and better navy—and in a dynamic fashion not repeated six hundred years later when a 1 million-square-mile, 70 million-person imperial Rome—now top-heavy, pyramidal, highly taxed—could not keep out barbarians from across the Danube and Rhine.

At the end of the Second World War, the industrial centers of Western and Eastern Europe were flattened. Russia was wrecked. China and India were pre-capitalist. Germany and Japan themselves were in cinders.

The factories of the United Kingdom (despite the 1940 blitz and the later V-1 and V-2 attacks) were largely untouched, and the United States pristine. Both countries had incurred massive debt. Yet Britain in the late 1940s and 1950s socialized, vastly increased the public sector, and become the impoverished nation of the 1960s and 1970s. In contrast, America began to return to its entrepreneurial freedoms and geared up to supply a wrecked world with industrial and commercial goods, paying down its massive debt through an expanding economy. We thrived, yet socialist Britain did not become a West Germany, Japan, or Singapore.

One can see that natural resources, while important, are not all-determining. Oil-rich Venezuela and Mexico are a mess; resource-poor Japan and Switzerland are not. There are few economic refugees now fleeing Shanghai to Hong Kong, as in the past; nor is east Germany still unlike west Germany, as North Korea is unlike South Korea.

Cultural tradition plays a role, of course. But more important still is the nature of politics and the economy. As a general rule, the more free the individual and flexible the markets—with lower taxes, less bureaucracy, constitutional government, more transparency, and the rule of law—the more likely a society is to create wealth and rebound from either war or natural disasters.

A RENEWAL YET TO COME

These truths transcend space and time, and they trump race and nationality, weather and climate, resources and geography. The notion that we are doomed and the Chinese fated to prosper is not written in stone. It is simply a matter of free will—theirs and ours. They must deal with a new era of coming suburban blues, worker discontent, unions, environmental discretion and regulation, an aging and shrinking population and greater personal appetites, social protest, and nonconformity—in the manner that industrializing Western nations did in the early twentieth century.

We in turn can easily outdistance any country should we remain the freest, most law-abiding, and most economically open society, as in our past. A meritocracy blind to race, gender, and ethnicity; equal application of the law; low taxes; small government; and a transparent political and legal system are at the heart of that renewal. America could within a decade become a creditor nation again, with a trade balance and budget surplus, drawing in the world’s talent and capital in a way not possible in the more inflexible or less meritocratic China, Japan, or Germany. Again, that is our choice, not a superimposed destiny from someone else.

The more free the individual and flexible the markets, the more likely a society is to create wealth and rebound from either war or natural disasters.

Unfortunately, we are mired—as in the case of many complex societies that become ever more top-heavy and bureaucratic, when their salvation depends on becoming less so—in a new peasant notion of the limited good. Anything produced is seen to come at the expense of others. We would rather be equal and unexceptional than collectively better off, with a few better off still.

SHRUNKEN BY ENVY

I, like most Americans (I hope), don’t care whether Bill Gates lives in a mansion or Warren Buffett flies in a huge private plane or George Soros has billions to give away to progressive causes or even that John Kerry has millions to spend on power boats and sailing ships. The system that created these excesses, if we even call them that, also ensured that my hot water—and the hot water in nearby, rather poor, Selma—is no cooler than theirs. My Honda and hundreds in town run as well as their limousines. Last time I went to the local Wal-Mart I counted a hundred cell phones, and I doubt Al Gore’s gets any better reception. The better off may or may not “at a certain point . . . (have) made enough money,” to quote the president, but I have no idea where that certain point is (or whether it includes vacations to Costa del Sol). I do know that once our technocracy starts determining that point, there is a greater chance that my town will not have as much hot water as the rich or Hondas that run as well as their luxury cars.

Study the collapse of complex societies, and rarely is the culprit the environment or the enemy across the border. Walls may be torn down, rivers silt up, and volcanoes erupt, but social collapse hinges on the existing nature of a society—whether it is flexible and wealth-creating or inward, acrimonious, and wealth-redistributing. Chile will recover from a far stronger earthquake than the one that hit Haiti. (I fear Haiti will not recover easily, if at all.)

Unfortunately, we are mired in a new peasant notion of the limited good. Anything produced is seen to come at the expense of others.

In 1521, a brutal Hernán Cortés could never have taken Britain with his 1,500 conquistadors, but he quickly figured out how to destroy an empire of 4 million with that same force. The test for the command economy of the Soviet Union—which it failed—was not just to repel a Nazi-led invasion 3 million strong but to do so without losing 20 million of its own, while creating a prosperous, sustainable postwar order inside the USSR and at its periphery.

“Spread the wealth” and “redistributive change” occur only when the enterprising, gifted, lucky, or audacious among us feel that they have a good chance to gain something for themselves (and keep most of it) or to extend to others something they earned—more often relying on both motives, self-interested and collective. Deny all that, shoot their bigger cow, so to speak, or burn down their towering grain, and we will end up as peasants and serfs fighting over a shrinking harvest.