Niall Ferguson Stuns World Leaders at ARC Australia - "Are We The Soviets Now?"

[Applause] well thank you very much indeed I'm now about to do something rather counterintuitive having just listened uh to that video about the foundations of economic growth you're probably thinking if only we could all be like the United States and achieve the extraordinarily strong growth that we now see there how counterintuitive of me to argue that we are actually staring at late Soviet America when I published this uh particular piece we're all Soviets now for Barry Weiss's Free Press I think you could say I got a reaction and most people's reaction was oh Jesus Ferguson

has finally jumped the shark because it's profoundly counterintuitive that there could be any resemblance between the United States in the 2020s and the Soviet Union in the 1980s it's a bit like that sketch that you made hey remember are we the baddies dude are we the Soviets let me try and explain what motivated me to write that piece and to persuade you that there is a problem and it's a problem that is masked by rapid economic growth a problem that's masked by an economy that is essentially running on fiscal and monetary steroids of course before

the couet that overthrew President Biden as the nominee for the Democratic party the case was easy to make that like the Soviet Union in its Final Phase American politics is gerontocratic the president of the United States is still Joe Biden I know you've kind of forgotten that I'm not sure he's entirely aware of it but that is the situation uh we're in and and he will be 82 when his term ends and the likely next president of the United States Donald Trump will be 82 when his term ends the Advent of Vice President Harris as

the Democratic nominee doesn't radically alter the fact that American politics is geriatric if you look at the slide on the uh the chart on the other side of this Slide the United States is a real outlier uh because its legislators are also substantially older than those of peer countries so the point about gerontocracy doesn't apply only to presidential candidates and the Advent of uh camela Harris's candidate doesn't alter the fact that American politics is by the standards of the rest of the developed World somewhat geriatric the Soviet Union's economy was characterized by the soft budget

constraint which meant that state-owned Enterprises were under almost no pressure to uh be economically efficient that's in fact true of the US federal government too I spend a lot of my time thinking about us fiscal policy it's really shocking to observe that this year for the first time the United States federal government will spend more on interest payments on the federal debt than on defense and in this chart I uh try to sum up what I call Ferguson's Law which states that when a great power is spending in more on debt service than on defense

it won't be great for much longer it's a law because it's been true of all the great Powers through history it was true of the Dutch Republic it was true of hapsburg Spain it was true of bourbon France it was true of the Ottomans in the 19th century it was true of the British in the 20th century that's the other resemblance the soft budget constraint applies in the United States too and much of the economic growth that we've seen since 2021 and I would be crying too if I were uh a little younger that economic

growth is the result of fiscal stimulus up the Wazoo to use a technical term if you're running if you're running a deficit of more than 6% of GDP in two concurrent years when you at full employment you have a soft budget constraint a characteristic feature of the late Soviet Union anybody remember it anybody apart from me actually go to the Soviet Union in the 1980s one sorry you will remember one of the Striking features of life in 1980s Soviet Russia was that nobody believed in the system anymore the level of cynicism was staggering but that

is increasingly true of the United States look at these charts here the Wall Street Journal ran a poll recently that showed a dramatic decline in the percentage of Americans who think that patriotism was very important to them or religion was very important to them or having children was very important to them and if you look at National confidence in key institutions it is at historic lows in all almost every case public confidence in the US Congress which according to the Constitution is the most important branch of the federal government is in single digits there too

I think there's a resemblance but it's the Public Health Data that clinches and this is where we need to look past gross domestic product to look at well-being in a more meaningful sense fact as many Americans have died of suicide or drug overdoses in the last 10 years has died of covid-19 1.2 million if you include the deaths from alcohol abuse deaths of Despair killed more people in the past 10 years in the United States than Co did some of you will be aware of the mental health epidemic or ill health epidemic uh that Young

Americans suffer from but in a way it's less concerning to me than the excess mortality that we see amongst older Americans I've put a couple of charts on the right hand side here from the work of Angus Deon and others showing what an extraordinary increase there has been in deaths of Despair from suicide alcohol poisoning or drug overdoses and if you compare the United States with comparable countries including Australia which is in the lower uh chart uh dotted Blue Line you see that the United States has a completely unique Trend with an extraordinary upward surge

in deaths of Despair unlike anywhere else the financial times recently delved deeper into the data and it makes makes the case I think very compelling that something's badly wrong uh something that nobody really wants to talk about but you see it when you go to the swing states spend time in Rust Belt Pennsylvania and you'll see what these charts mean in practice life expectancy in the United States took a decided turn for the worse in the last few years and it wasn't just Co that did it because of opio as well as gun violence and

suicide you've got this marked deterioration in life expectancy much worse than in countries that are economically doing less well I told you I had a paradox for you it's a very important Paradox and just because it's happening in the United States and not happening so much here doesn't mean it isn't happening here at all I come from Scotland we invented the Rust Belt we did hillbilly elery before JD Vance was even born I remember the East End of glasgo they sh they shut down the steel Works they shut down the shipyards glasgo in the 1970s

was already a Rust Belt by the 1980s deaths of Despair was our major export anybody seen the movie brain spotting so I understand deaths of Despair because I grew up in a part of the world that pioneered that kind of social crisis and no matter how impressive the UK economy was under Margaret Thatcher the deaths of Despair north of the Border were a terrible blot on that achievement for which as a whole the Scots have never wholly forgiven the conservative party the most deprived Community with the lowest life expectancy in England is Blackpool and I'm

sure nobody here would ever contemplate going their holidays to Blackpool you all move to Australia to get away from places like Blackpool but here's the thing the average American now has the same chance of a long and healthy life as someone born in Blackpool the average American and if you were born in Rust Belt West Virginia you're way worse off than the punters in Blackpool so I racked my brains and racked my brains as I looked at Angus deon's work on deaths of Despair and I kept asking myself why have I seen this before what

does this remind me of and then I remembered the only other Advanced economy where there has ever been a comparable decline in life expectancy a comparable increase in particularly male midlife mortality the Soviet Union in the 70s and 80s and you can see the data here the extraordinary deterioration in male life expectancy at Birth uh in the Soviet Union compared here with France and the explanation essentially alcohol consumption on a scale that probably set some kind of historic world record I don't think human beings have ever consumed as much alcohol as people particularly men did

in the dying phase of the Soviet Union I was from Glasgow I remember going to Moscow and what was still Leningrad and being deeply impressed I had never seen drinking like it I have never seen it since what's the explanation why did Soviet Men drink themselves to death oh and smoke themselves to death the price of cigarettes was subsidized so was the price of vodka there never was an anti-tobacco campaign as soon as gorbachov introduced The anti-alcohol Campaign Of course people drank way more uh because the parties's legit imacy was so gone that if you

were told not to drink in the Soviet Union you ordered a liter of vodka and Polished it off for breakfast so what's the explanation the explanation in the Soviet case was that people had completely lost their belief in the system and regarded the party as a massive scam the cynicism was bone deep well there's a party which is equally detached from the lives of ordinary Americans in the United States today and it's called the Democratic party I love this polling data it takes people who went to ivy league universities or comparable Elite universities uh and

who have uh incomes above uh $150,000 and it Compares their attitudes with the attitudes of ordinary Americans and if you look down the list you'll see the enormous difference that has opened up between ordinary Americans and the ivy league Elite it's not just on the issue of Israel in the Middle East I can assure you it is across the board huge percentages up to 90% of Ivy League types favor rationing of gas meat and electricity to respond to the challenges of climate change you will not be surprised to find that this is a minority position

amongst regular people and I want to suggest to you that the party which is entirely dominant in the elite universities entirely dominant in blue States like California where I live the party is as detached from the lives of ordinary American Americans as the party in the Soviet Union was detached from the lives of ordinary Russians and this breeds a deep disillusionment and disenchantment with the system in so far as you can back it out of political donations political contributions roughly 95% of the journalistic profession is democratic and in the academy there are some Fields like

anthropology sociology where it's 100% there are literally no Republican donors in those fields in fact it's above 80% in just about every field except engineering the ratios of uh Republicans to Democrats in the academy uh are tiny and impossible to calculate in some subjects because you can't calculate a ratio uh if there are zero Republicans so the party controls the institutions of elite formation and propaganda I mean the media the party also controls much of the economy corporate donations tilt overwhelmingly to the Democratic side the counties that vote Democrat are overwhelmingly richer than the counties

in the United States that vote Republican so the party as in the Soviet system also controls the economy there's just one exception and it's a very big exception big in more ways than one because Elon Musk is the richest man in the world and he went rogue he went rogue in a way that I think may prove decisive in this election that is just now days away but his going rogue predates his endorsement of Donald Trump elon's going rogue began with his purchase of Twitter and his conversion of Twitter into X if he had not

done that then the ecosystem of the network platforms that dominates the media and therefore the transmission of news in the United States would have remained as it was in 2020 a monopoly of the democratic party and its various surrogates it's a big exception but ladies and gentlemen my message to you is that we cannot leave freedom to Elon the reason I'm here is that I passionately believe that we have to organize our civil society better if we are to avoid sliding down that path to degradation and despair that characterized the late Soviet experience I agree

it's early stage the disease is not as far Advanced as it was in the Soviet case but the disease is there it's there in the data that I've shown you and it's possible that it could happen here too in the same way that you can see it happening in parts of the British Isles as well as parts of Canada the United States is telling us something important economic growth is not enough especially if it's propelled by an unsustainable fiscal policy if it's based on a soft budget constraint we need to have foundations of social legitimacy

too and those foundations of social legitimacy will not will not exist if we as active citizens do not urgently rebuild our civil society and reclaim the domain of associational life from the party with that I'll invite you uh to give me the mandatory Round of Applause it is after all a party event comrades and I will be timing the Applause and then please welcome Tikki Fon back onto the stage thank you