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Niall Ferguson’s Keys To Economic Growth Recommended

Posted by Larry Doyle on April 29, 2012 12:41 PM |

I truly love gaining global insights and perspectives from highly intelligent people. I had just such a treat this morning in reading a Barron’s interview with the economic and financial historian Niall Ferguson.

What did this Harvard professor have to say on a topic which should be a MAJOR point of debate for our 2012 Presidential election? A lot. Let’s navigate.

Barron’s: There are once again concerns about U.S. growth. What factors are keeping the economy from reaching what you call “escape velocity”? 

Ferguson:I’m skeptical that the U.S. can get to a self-sustaining recovery if we only increase monetary or fiscal stimulus. Part of the reason why the U.S. economy is not growing faster is policy uncertainty, and part is structural weakness. In terms of institutional policy, the U.S. is a relatively less attractive destination for investment than it used to be. A large body of literature shows a strong relationship between the quality of institutions and the growth rate.

When countries improve rule of law, property rights, and investor protections, and when regulation becomes more transparent and corruption reduced, there are major payoffs. The World Justice Project says the U.S. has been deteriorating for close to 10 years by all these measures, which contrasts with improvements in some emerging markets, like Hong Kong.

That statement alone is a massive indictment of the Wall Street-Washington incestuous relationship. I would not expect that Mr. Ferguson will be a regular on the political cocktail circuit. Let’s review the data compiled and delivered by The World Justice Project. Here is a link to the profile of the United States.

How is the US doing? Rank mediocre and as Ferguson attested, our trend lines are not good.

Does anybody care to venture a guess as to which countries and regions are the standard bearers when it comes to Accountable Government, Security and Fundamental Rights, Open Government and Regulatory Enforcement, and Access to Justice?

Perhaps we should take a hard look as to how New Zealand manages its affairs. While we are at it, we may also want to check out Norway and Sweden.

Meanwhile, Ferguson does not disappoint in the balance of this interview which literally scans the globe. I STRONGLY recommend, Is America Becoming an Anti-Risk Welfare State? When Ferguson was asked:

Can you liken this to anything in history? 

 A parallel is the way that things went wrong in Great Britain in the mid-20th century, when a combination of overseas commitments, excessive public debt, vested interests in the form of organized labor, and incompetent management and a pretty decadent ruling elite made Britain the sick man of Europe. There are some lessons there.

Over time, good institutions tend to deteriorate because of the human condition. There needs to be a renewal of American faith in the founding principles. A lot of ordinary Americans, especially businessmen, yearn for this and resent the crony capitalism they see between Washington and Wall Street.

Hey now!! Ferguson again takes direct aim at the corrosive and destructive Wall Street-Washington Incest.

Navigate accordingly . . . and keep an eye out for Mr. Ferguson. He talks a whole lot of ‘sense on cents’.

Larry Doyle 

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Perma Bear

    Niall Ferguson’s analysis in Barron’s was great until he got the the point of praising Paul Ryan for being a courageous leader.

    Paul Ryan’s budget policies will only accentuate the wealth disparities and other economic problems that his predecessors created.

  • fred


    Consumers are tapped, state fed local gov’ts are tapped, where is all the cash? Corporations.

    How about we establish a flat tax rate and do away with all corp tax loopholes and incentives except three;

    1. For international businesses, a labor rate equalizer that would provide corp tax relief for U.S. hires vs. overseas hires when U.S. hires are financially noncompetative.

    2. Health care costs and retirement benefits paid for/to current workers and retirees. Benefits received would offset, rather than supplement, benefits due from Medicare and SSI.

    3. Dividends paid to shareholders. Puts an end to double taxation and creates a taxable event (shareholder income).

    We could also implement a tax disincentive by taxing cash holdings (as well as income), in excess of a multiple of normalized capex and working capital needs.

    If we were to implement these changes our economy might not need all the QE provided by the Fed and our debt/gdp ratio would decline significantly.

    Let’s get it on the national ballot for a public vote!

    • LD


      We got to get you to Washington.

      I am thinking about launching a “write in” drive for you in the upcoming election. Lord knows, we could collate and distribute all the wisdom you have put forth here at this blog and you’d be a “shoo in”.

      I will admit that I have never undertaken the exercise of collating comments by individual but I just tried it and came up with 30 pages of comments embedded in the plumbing here at SoC!!

      For some reason, there were comments by other readers embedded in there as well. Perhaps they might be comments on specific articles in which you commented as well. I am not that smart BUT all I know is a LOT of your thoughts are saved.

      We need to find you a campaign manager and you just might be the first candidate to run on the Sense on Cents platform.

      I like it!!

      • fred


        I’m blushing. And all this time I didn’t think you noticed. On the downside, now you have my wife jealous, she said you’d have to fight her for me. Regards.

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