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1-Page Summary of The Great Degeneration
Overview
What creates a successful society? Intellectuals have been wondering that for decades. Is it because of superior genetics, or simply luck? The true answer is more subtle: It’s the institutions within a society that make them great.
Humans are self-centered, so they need rules and boundaries to force them to think about the common good. For example, a police officer enforces laws that keep people in line.
The importance of institutions means that nations with better institutions are more likely to prosper. The things that make a nation’s institutions good or bad is the incentives it creates for its citizens, which can be seen in the actions they take. Good institutions will encourage people to work hard and strive for economic growth or a fair legal system, while bad ones will do the opposite by encouraging crime. A great example of this is comparing East and West Germany; both countries were essentially populated by the same population, but their different political and economic systems created vastly different results.
The results? West Germany thrived economically, while East Germany stagnated.
Big Idea #1: Over the last 500 years, Western nations have dominated because they had the best institutions.
About 500 years ago, a major shift in global politics occurred. Prior to this time, Western countries were not particularly powerful or influential on the world stage. However, they began to outstrip other nations in terms of economic growth and military power and technological development.
Why did the West prosper? It’s because they developed good institutions. For example, England developed effective political institutions by creating a parliament that protected private property rights, which meant citizens were incentivized to work hard and grow wealthy. This spurred economic development culminating in the British Empire dominating the entire world through trade.
Meanwhile, other countries had poor institutions because their rulers were autocratic and didn’t want to share power. This meant that they resisted the development of important institutions, like China’s government officials who allowed themselves to steal from citizens. As a result, people in those countries had little incentive to work hard and eventually even fell prey to Western imperialism.
Big Idea #2: The relative decline of the Western nations is due to decline in the quality of their institutions.
The West has been the dominant economic and geopolitical force for a long time. However, that seems to be coming to an end. We can see this trend in how other countries are catching up with the West in terms of economic power. To see this trend, we just need to look at recent figures: The US economy grew by only 2% last year, while European economies actually contracted. Meanwhile, China’s economy grew by 8%. There are many theories about why this is happening; some experts think it’s because they’re copying Western institutions and models but that view is too simplistic. The real reason lies with the decline of Western institutions, which were responsible for making them so powerful in the first place.
For example, banks used to be the backbone of Western economies but are now in complete turmoil. They crashed the economy and yet go unpunished, while governments stifle businesses with red tape and overly complex bureaucracy.
As a result, great institutions are declining and dragging Western society down with them.
Big Idea #3: The current generation in the West is prospering at the expense of future generations.
In the 18th century, Edmund Burke suggested that civilized society is a contract between generations. The values of dead generations cannot be trampled on and future generations must be considered in any action taken by the current generation. This philosophy was thought to bring about a stable, prosperous society.
