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Blink 3 of 8 - The 5 AM Club
by Robin Sharma
Listen to the Intro
The Great Degeneration summary
Niall Ferguson
How Institutions Decay and Economies Die
15 mins
What is The Great Degeneration about?
The Western world seems to be in crisis. It is faced with huge levels of public and private debt, and the economies of the rest of the world are fast catching up. After 500 years of total global dominance, the era of Western powers could be coming to an end.
The Great Degeneration (2014) aims to tackle why this is the case. It suggests that a decline in Western institutions is partly to blame. Only by arresting this decline through radical reform can the West recover.
Table of Contents
The Great Degeneration
summarized in 9 key ideas
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Key idea 1 of 9
The key to a society’s power and prosperity lies in the strength of its institutions.
What makes a society successful? For a long time, intellectuals have debated this point, wondering why some nations prosper and succeed while others dwindle and suffer. Is it down to some kind of superior racial biology of the more prosperous society? Or perhaps sheer luck? In fact, the true answer is more subtle: A society is made great by its institutions.
Why? Because humans tend to be selfish, so without some kind of rules to force them to think about the common good – the good of their society as a whole – they tend to simply look after their own interests. Institutions provide such rules and boundaries.
For example, consider the institutions of the law, like the judiciary and the police. They provide certain rules and boundaries that the rest of society abides by.
The importance of institutions means that the nations with better institutions are more likely to prosper. And what makes institutions good or bad?
Quite simply, the things they incentivize people to do with the rules and boundaries they set. Good institutions will encourage the population of the nation to strive harder for worthwhile goals, like economic growth or a fair legal system. Bad institutions do the opposite; for example, they may encourage crime.
A good example of the importance of institutions can be seen when comparing the economies of former East and West Germany. Both countries were essentially populated with the same people, but the difference in their institutions was immense: In West Germany, the political and economic institutions encouraged people to work hard, innovate and take risks (for example, by starting their own businesses). In East Germany, this kind of entrepreneurship was discouraged.
The result? West Germany became a vibrant economic state while East Germany stagnated.
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Best quote from The Great Degeneration
...institutions are to humans what hives are to bees. They are the structures within which we organize ourselves as groups.
—Niall Ferguson
Who should read The Great Degeneration?
- Students of political and economic history
- Anyone who wants to know why Western nations are in so much debt
- Anyone who is interested in the future of democracy
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