Reith 2012: Ferguson’s Rules of Law (and his enemies)

A few days ago, I finally got round to listening to the last of this year’s Reith Lectures given by Niall Ferguson. During his quartet of lectures, titled The Rule of Law and its Enemies, he has aimed, as he said, to unlock the black boxes of democracy, capitalism (not that I’d say this needed unlocking), the rule of law, and civil society.


I found the lectures highly enjoyable and easy to follow and understand. First Ferguson would give a historical background, from which he then reasons his argument. And at just 25-30mins long each, followed by a Q&A session, not having enough time is hardly an excuse to avoid them.


He posits this year’s series on looking what has gone wrong in the West, that it is no longer the outright leader of the world. As evidence he cites the figure that the average American is now only x5 richer than the average Chinese (rather than x20 not long ago) and as a method of understanding this ‘fall’, he takes a look at the institutions/ areas mentioned above. Although I don’t entirely agree with the idea that the West’s decline in power is a direct result of an actual decline (more than as a result of the rise of the rest), it is still very much worth hearing him out.

 A mountain to crush the future

That said, in his first lecture, Ferguson did address one issue with which can definitely be held up as decline, our accumulation of public debt. This should not be confused with the current debate surrounding the deficit, the yearly amount our government overspends. Although this and the rate it should be cut is important, Ferguson focuses on the already established debt mountain, adding with it that future liabilities in the form of pensions and social care will form a crushing burden for future generations. He offers the American figure of $200tn as the different between current Federal liabilities and future Federal revenues in the USA. This surely strikes fear into the hearts anyone concerned with the future, and Ferguson adds that this is not even a complete figure.


This landscape can be viewed in just about every Western country and results from our current society living beyond its means, at the expense of future generations. This represents a breaking of the social contract laid out by, not Rousseau, but Edmund Burke. That of a social contract between the living, the dead, and the not yet born. Ferguson argues that failure to redress this imbalance will result in a pursuit of Mediterranean countries down a spiral of tax rises, spending cuts and a loss of credibility. Restoring the intergenerational contract is the West’s biggest challenge.

 The flow of capital under the law

In his next two lectures, Ferguson focuses on finance and the importance of the rule of law. On finance he argues that what is needed in order to reform the financial sector now, is not complex regulation (which will more than likely stifle the industry) but greater punishment and better oversight. Here again I find myself agreeing with him – after all, it seems that when the bankers have decided whether to undertake risky investments or break any laws, after balancing the risks, they still decide to go ahead. Far more severe punishments and robust supervision would go a long way to reforming banking culture.


Regarding the rule of law, Ferguson highlighted the importance of law in encouraging economic activity, and as a result actually spent quite some time talking about China. Necessary for further Chinese development, he says, is that the Chinese Communist Party establish itself as a legal entity (the reasons for which can be found in the lecture), and that the 150,000 or so lawyers in China, form quite a positive force for political change.

An educational cure

It’s Ferguson’s final lecture in the series where I find myself in greatest disagreement though. The talk is ostensibly about civil society, participation in which Ferguson describes as in decline (he does provide evidence, though this is contested in the Q&A). However, he spends what seems like the majority of his time speaking about the benefits of an expansion of private and independent secondary education, together with increasing the number of bursaries available to students from less well-off background and a voucher system. While a state monopoly is good at providing basic education, he argues, it is not good at providing a good education. Ferguson describes this as a plea for ‘biodiversity’ in the system.


In support of his prescription, he quotes statistics from the OECD’s PISA survey of education, citing our ‘poor’ performance. And the impressive turn arounds at many failing schools after gaining academy status. What’s more, he cites the promising progress that Toby Young is reporting at his West London Free School and the exam result triumph of the Success Academy in Harlem, New York. For a fuller outline of his argument, it’s probably best just to listen to the lecture.


And while I do (again) find myself in agreement with Ferguson that a higher level of independence for the schools is a good thing, I don’t agree that an influx of private schools into the system will help matters. In fact I disagree that private education system is necessarily better than state.


Firstly, I’m not convinced that the logistics of the move would work out – for the most part, our population doesn’t have the money to send their children to a private school, and for the state to pay for a voucher system would appear to be very expensive; an odd suggestion for someone who earlier advocated the rebalancing of public finances.


Secondly, if you were to consult the PISA results (handily available via Google) I would highlight Sweden & Denmark. Ferguson singles these countries out for praise as leaders in education reform that has enabled more children to attend private schools, though their PISA results peg them about level with the UK. Granted, it may be that the policy hasn’t had enough time to take effect but even if that’s so, that would mean it’s still too earlier to judge the success of the scheme.


A better direction for reform, it would seem, is to look at how often & when we test students, what subjects & options for study students have, and how much support is given to teachers (small, fewer classes & longer training). In short, the system to look at is Finland’s. I first heard about Finland’s education earlier this year by watching a documentary called The Finland Phenomenon. Finland’s system differs from others for many reasons – no private schools, no standardised tests, no homework, no league tables, schooling beginning at 7 – and yet it ranks 1st in pretty much every PISA category.


So I can’t agree with Ferguson on the expansion of the private sector education, especially when so, so many other people are cheering on alternate possibilities.

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