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Niall Ferguson: Reith Lecture pt.1 - The Human Hive

Tuesday 19 June 2012, 10:00

Richard Fenton-Smith Richard Fenton-Smith

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Professor Niall Fergusson presents The Reith Lectures on BBC Radio 4

"Society is a contract… the state is a partnership not only between those who are living, but between those who are living, those who are dead, and those who are yet to be born."

This quote from the 18th Century political theorist and philosopher Edmund Burke summarises much of the argument put forward in the first of the 2012 Reith Lectures given by the economic historian Niall Ferguson, which broadcast on Radio 4 this morning.

Professor Ferguson says we are currently witnessing an unparalleled breach of this partnership because of the huge debts being racked up by governments, which are set to be passed on to younger - and unborn - generations.

Furthermore, says Professor Ferguson, many governments are dishonest about their true level of debt. The present system, he says, is "fraudulent" and "huge government liabilities are hidden from view."

"No legitimate business could carry on in this manner and the last corporation to publish financial statements this misleading was Enron."

In the lecture, Professor Ferguson listed a series of proposals for reform of government finances:

  • Public sector balance sheets should be drawn-up so that government liabilities can be compared to assets.
  • Governments should adopt the Generally Accepted Accounting Principles, which corporations abide by.
  • Above all, governments should be prepared, on a regular basis, to make absolutely clear the inter-generational implications of current fiscal policy.

In the current climate, austerity is something young voters in particular should welcome, he argues - but concedes that winning support for this is a mountainous task.

But, says Professor Ferguson, if we do not embark on wholesale reform of government finance, we will end up with the scenario where Western democracies are going to carry on until one after another they follow Greece and other Mediterranean economies into "the fiscal spiral of death".

Alternatively, we all become like Japan and face decades of low to zero growth.

What do you think of the issues raised in the lecture?

  • Are Western democracies in denial about their debt levels?
  • Are the alternatives to austerity more effective?
  • Do you agree the baby boomers have benefited at the expense of younger generations?

Listen to the full lecture on the Radio 4 website

Download Niall Ferguson's 2012 Reith Lectures

Richard Fenton Smith is a Senior Broadcast Journalist for News and Current Affairs Radio.

Niall Ferguson's first Reith Lecture, titled The Human Hive, will be repeated on Radio 4 on Saturday, 23 June at 22:15 BST.

The second lecture in the series, titled The Darwinian Economy, will examine the issue of financial regulation. This will broadcast on Radio 4 on Tuesday, 26 June at 09:00 BST

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  • rate this

    Comment number 1.

    At last, someone who points out the profligacy of relying on future income (taxation) to pay for present follies. He also implies that the position of successive chancellors on hypothecation (ring-fencing funds for their - apparently - intended purpose) is foolish, even fraudulent.
    The effect of this and of the present ethos of financial dealings (to be covered, it seems, in another lecture) on society at large is summed up in a well-known song,
    "I want it all and I want it now!"

  • rate this

    Comment number 2.

    I thought this was supposed to be a programme that fermented the best of thinking and outlined potential future directions. Instead the "unbiased" BBC has handed a neocon, neoliberal "thinker" huge amounts of unchallenged airtime to propagate the exact muddle-headed "solutions" that got us into this sorry pass instead.

    How about a real alternative thinker who doesn't subscribe wholeheartedly to the Chicago school of economic wrecking? No. Bit too radical and non-Conservative for the BBC to consider, just as they never get alternative viewpoints on their news programmes or bulletins either. Pathetic - our greatest economists will be spinning in their graves.

  • rate this

    Comment number 3.

    This is completely the wrong format for his kind of content and it really does make you wonder what on earth the radio 4's editorial team are up to. When at the end of the lecture he essentially says the message of this lecture is to "vote conservative" , how can this be seen as anything other than 45 min political broadcast.

    Don't get me wrong I disagree with Fergusson's views but they should be part of a debate on wider issues of economic history and policy. Wouldn't it have been much better, fairer and in keeping with the BBC's mission of impartiality to have had a series where Fergusson was in conversation with someone on the left such as Will Hutton, to provide both sides of the argument.

  • rate this

    Comment number 4.

    Niall Ferguson argues that the older generation are leaving unsustainable debts to the younger generation and suggests that budget cuts, logically to fall on older people, are the solution. The current generation of pensioners paid 40+ percent of income in direct taxes, as opposed to the 30 percent paid by current workers. Another solution would be to raise direct taxes. In any case UK government debt has been incurred by the bank rescue, not by government expenditure. The problems are too complex to deal with in four short lectures. Demonising pensioners, most of whom live on savings through pension plans, is no answer.

  • rate this

    Comment number 5.

    I was fascinated by Niall's analysis, based on the development and decline of the UK's institutional framework. In his next lecture he mentions the word 'Darwinian', and likewise he implies that these institutions are experiencing a Darwinian cycle of flourish, flower and decline.

    I agree that the insertion of party-political comments is not helpful, and people tend to jump on this with arguments-by-assertion for and against. However if we listen to Niall's theories, they are fascinating enough to keep us out of the political mud-wrestling.

    I'd like to hear the evolutionary analysis extended a bit. For example, if Darwin posits the survival of the fittest by natural selection ('fittest' being 'most adapted to the environment' and not 'best'), then what does that mean for the evolution of our institutions? How can we adapt them to improve 'outcomes'? Because after all we are part of the evolutionary process, and can affect it to a certain extent for better or worse. Maybe more will be explored in the next lecture.

  • rate this

    Comment number 6.

    It's kind of worrying that Niall Ferguson attends the (not so secret anymore but still respectfully ignored by the media) Bilderberg meetings in Chantilly, Virginia and within Days is delivering lectures.

    The sequence of events (and the BBC's blackout on Bilderberg) raises all kinds of questions about their agenda or their complicity in global power games.

  • rate this

    Comment number 7.

    All too true, but we have seen just how willing voters are to listen to politicians with their hearts not their heads.

    The crunch has come sooner than any of us really predicted and the future for my kids looks much bleaker than when I was their age. Yet my financial future looking towards retirement (with no final salary pension) also looks poor compared to my parents. This makes it really tempting to vote for promises of jam tomorrow.

  • rate this

    Comment number 8.

    Niall Ferguson calls for 'economic heroism' (in making cuts): It is easy to be heroic with other people's lives and a typical Chicago school approach.

    The Chicago school of economic theorists can't even accept intra-generational solidatority so why should we believe that they really think that one generation owes anything to future generations? What is his, and their, true agenda?

    I can't wait for the next lecture when, I hope, he will criticise our North Sea Oil money being spent on one generation via tax cuts rather than being spread across the generations by investing it in productive infrastructure.

  • rate this

    Comment number 9.

    Professor Ferguson is selective in his use of figures. The high percentages of government debt to GDP in 2012, which he cites as evidence that governments are pushing debt onto the shoulders of future generations, are high because of the current recession. The much lower figures for 2000, given in the printed version of his lecture, are more representative of recent levels - 40% 0f GDP for the UK rather than 80%, for example.
    This level was typical for the UK since 1975, and is much lower than it had been at any time since 1915. Professor Ferguson told us that debt had exceeded 250% of GDP after the Napoleonic wars; but he did not tell us that it had reached 180% of GDP after the 1914-18 war, had remained over 150% 0f GDP for most of the time until 1939: had reached 238% of GDP in 1948; and had then fallen steadily to reach 44% of GDP in 1975. It fell further in the 1980s before rising in the recession of the early 1990s, and falling again into the 2000s.
    The figures do not therefore support Professor Ferguson's argument that governments have recently been keeping voters happy by increasingly financing public expenditure by borrowing. In the UK, government borrowing had fallen slightly as a proportion of GDP in the 40 years before the recession began, and had fallen very substantially since 1948.
    This Reith lecture is a statement of political policy supported by carefully chosen and misleading data. It is not an analysis of historical evidence; and it it is not what we expect from a Reith lecture.

  • rate this

    Comment number 10.

    Bilderberg academic henchman preaches austerity for the young

    Posted By admin On June 18, 2012 @ 7:40 am In Featured Stories | 19 Comments

    Alexander Baron
    Digital Journal [1]
    June 18, 2012

    A distinguished academic is about to deliver a lecture on the virtues of austerity. For us little people, not for himself and his masters.

    Why the young should welcome austerity is the title of the article by Niall Ferguson published by the BBC [2] on June 17. According to his own website [3], Ferguson is Laurence A. Tisch Professor of History at Harvard University, and his many affiliations include the Hoover Institution. Small world, did he ever run into Antony C. Sutton [4] on his travels?

    Probably not; the world may be small but academics’ minds are smaller, certainly when their lucrative sinecures depend on willful blindness.You see, according to Professor Ferguson, austerity is good. For us, but not for him. There is no mention in his essay of his flying second class or taking the bus instead of a limousine to the last Bilderberg meeting.

    That’s right, the learnéd professor is a Bilderberger; he attended the recent meeting [5] at Chantilly [6]. And the advice he will be giving in his Reith Lecture [7] is that the young of Britain and the world should pay off national debts now to avoid a miserable future. And to whom should they pay these debts? Follow the money, namely the people who paid for Professor Ferguson’s ticket.

    No mention that all this debt has been conjured up out of thin air, just pay so that banksters can continue holding lavish functions, jetting around the world, dictating to the people of Greece, Spain and anywhere else they choose.

    Do we really need lessons from Professor Ferguson on how to run our economies? Or should we be looking for alternatives, like breaking the chains of the banksters and freeing mankind from slavery by taking control of our own currencies: pounds, dollars, drachmas and everything else?

  • rate this

    Comment number 11.

    I always understood a contract as being a confirmation of a mutual agreement. This mythical inter generational 'contact' alluded to in this lecture has no such characteristics. Correct me if I'm wrong but it seems to me that it is instead an assumed or imposed 'contract' with one generation stealing a prosperity for the present from the future without even a discussion let alone a contract. As I myself understand
    Burke, his intergenerational concerns, being informed as they were by his paternalistic /traditionalist/monarchist sentiments, had been affirmed by what he himself had seen regarding the environmental degradation the unregulated profligacy of the East Indian Company had wreaked on India.

  • rate this

    Comment number 12.

    Brilliant as his lectures are in terms of global perspective, his obsession with the supremacist view of the "West" casts doubts on his biased analysis...in the 500 years he refers to, do we now have a more JUST world(?) or have any prospects of saving the Environment with half a millennia of greed and exploitation that it has pursued?

  • rate this

    Comment number 13.

    David Sawers above writes such rubbish I couldn’t stop myself responding to his comment.  The reason that government debt was so high after the two wars was that production of consumer goods virtually ceased in wartime, as industrial effort was devoted to the production of munitions.  Because exports were practically non-existent, these activities had to be funded through bond issues.  Such debt was possible to pay off, because after the war we had a solid manufacturing base which could be switched from munitions production to exportable goods.  To describe current debt as the result of recession is pure self-delusion, just as saying that debt levels of 2000 are a more accurate representation of our current financial health is utterly mendacious.  We have been in recession only since 2008, so he is choosing to overlook eight years in which government debt soared while GDP increased.  What is so worrying in the current situation is that the debt was not incurred with a large proportion of our economic engine out of action.

  • rate this

    Comment number 14.

    I was unsettled by this lecture. Prof. Ferguson attempts to rally support from those he flippantly refers to as the 'indignados' by referring to this clearly sensitive issue of intergenerational responsibility. The young, who seem to a larger extent to be the disenfranchised, might understandably want the older generations to share the load and to take more responsibility for the future of society and of the planet. However the suggestion that the disenfranchised should whole-heartedly support austerity measures is wrong, and politically motivated. His political allegiance is not even barely concealed - he calls on the young to 'join the tea party' - and this could be forgiven if it weren't so obviously self-contradictory. The austerity measures proposed clearly do not serve the future generations, unless we are talking only about the monied classes. What a lecture like this serves to unhelpfully reinforce is the sense that there are only two options, austerity or profligacy. There must be a third way and as far as I can tell, this is what the occupy movements are attempting to work out. We need the public space for genuine discussion of alternatives, rather than airtime devoted to the self-satisfied prating of the well-off. Ferguson appears as the mouthpiece of the rich, their public, academic justification.

  • rate this

    Comment number 15.

    The worse lecture I have ever heard on this programme. It was so bad that I can't even be bothered to give quality feedback to this obnoxious point of view.

  • rate this

    Comment number 16.

    There was some interesting material covered in this first lecture; Niall Ferguson's call for governments to publish genuinely transparent accounts is the only way we can make an informed choice at the polling station.

    But sadly, like so many conservative thinkers, Niall Ferguson fails to identify it is not only the public sector that's to blame for the massive debt Western governments face. Moreover, no consideration is given here to providing and maintaining public services as part of this "partnership" with future generations

    I listened with growing irritation as Niall Ferguson delivered what sounds more like a Party manifesto speech than a Reith lecture. It really was not the appropriate content for this forum. I will listen to his thoughts on market regulations - but I'm not going to like it.

  • rate this

    Comment number 17.

    Why have the BBC allowed such a right wing polemic to have uninterrupted airplay in this manner?
    Niall's lecture was politically partisan to say the least, I believe David Cameron was mentioned by name at least once. It would have been far better to include him in a debate format where he could be challenged on his views. Instead he was allowed to make unqualified statements like (in praise of right wing policies) 'however, we are right' or 'if young Americans knew what was good for them, they would all be in the tea party', utterly unchallenged . His historical narrative was totally bias; his account would have us believe that the civil war ushered in a utopian age of prosperity for all. No mention that those 'five hundred years of prosperity' encompassed slavery, workhouses, grotesque inequality and bloody repressions of normal people by his beloved 'institutions'. He also fails to understand or acknowledge one of the basic arguments of the left; that in a global community, where all the historical presidents he is at pains to outline have little relevance, 'institutions' do not add to the wealth of society at large, they have no Sovereign allegiance and act to take wealth out of the system and distribute it to a minority. The BBC should have thought more carefully about this.

  • rate this

    Comment number 18.

    I found this lecture to be puerile Teaparty politics. It had no serious academic basis.

    The lecturer's opinions belong in Francis Wheen's book "How Mumbo-Jumbo Conquered the World".

    Please round up the lecturer and immolate him in the interests of science.

  • rate this

    Comment number 19.

    Most of this blog seems to be from people complaining about the audacity of the BBC inviting someone right of centre to give a talk. This is obviously ridiculous. The purpose of the Reith lectures is to encourage lively intellectual debate and thinking. You don't have to agree with it. The role of the BBC is not to be a preserve of left wing thinking. The Reith lectures over the years has had people from the whole political spectrum and so should this continue. Therefore, for the people who strongly disagree with what was said, why not use this blog to offer some counter arguments as there is seems to be very little of this so far.

  • rate this

    Comment number 20.

    Well, I hope Steve Keen - don't know that Will Hutton cuts it for me - gets to expound the post Keynesian alternative at similar length and in a similarly prestigious a format (the Reith's).
    Mason Gaffney - Corruption of Economics - http://homepage.ntlworld.com/janusg/coe/!index.htm
    Henry George - Progress and Poverty. landvaluetax.org


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