Friday, March 11, 2011

Had Enough Therapy?

From Stuart Schneiderman's very interesting blog comes this beauty:

"Ferguson has written a new book, called Civilization, to be published next week, about what made the West great. I would humbly recommend that getting in touch with the sources of our greatness will serve us better than worrying about our decline.

Ferguson wrote: “For 500 years the West patented six killer applications that set it apart. The first to download them was Japan. Over the last century, one Asian country after another has downloaded these killer apps — competition, modern science, the rule of law and private property rights, modern medicine, the consumer society and the work ethic. Those six things are the secret sauce of Western civilization.”

I consider it metaphorically infelicitous to go from killer apps to secret sauce, but Ferguson is otherwise correct."
 
Full worth-reading essay is here.
 
I am interested in reading why Niall Ferguson thinks that modern medicine, a work ethic, and a consumer society belong only to the West as "killer apps."  I'm pretty sure that people all over the world work hard.  It has to be something other than hard work that sets us apart.  I do think he is dead on with the rule of law and private property rights. 

A number of years ago I stumbled upon two influential books written by Hernando de Soto, The Mystery of Capital and The Other Path.   Much of de Soto's work has been to unscramble the confusion about capitalism and why it worked so well in North America and not so well elsewhere.  A quote, "The goal of formal property is to put capital in the hands of the whole nation."  A second quote, "This capacity of property to represent aspects of assets in forms that allow us to recombine them so as to make them even more useful is the mainspring of economic growth, since growth is all about obtaining high-valued outputs from low-valued inputs."   In de Soto's view, it is the lack of "formal property" that holds much of the "third world" back economically.

I suspect that much of the relative economic strength of the United States has its roots in the combination of our legal/contract law system and our tradition of the primacy of individual property rights (which encompasses far more than just real estate).   Looking forward to reading Ferguson's new book.

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