Read the full transcript of British historian Niall Ferguson’s talk titled “Are We The Soviets Now?” at ARC Australia conference 2024.
Listen to the audio version here:
TRANSCRIPT:
NIALL FERGUSON: Well, thank you very much indeed. I’m now about to do something rather counterintuitive. Having just listened 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 particular piece, “We’re All Soviets Now”, for Bari Weiss’s Free Press, I think you could say I got a reaction. And most people’s reaction was how 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 may 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.
Gerontocracy in American Politics
Of course, before the coup d’etat 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 we’re in, 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 chart on the other side of this slide, the United States is a real outlier, 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 Kamala Harris as candidate doesn’t alter the fact that American politics is, by the standards of the rest of the developed world, somewhat geriatric.
The Soft Budget Constraint
The Soviet Union’s economy was characterized by the soft budget constraint, which meant that state-owned enterprises were under almost no pressure to be economically efficient. That’s in fact true of the U.S. federal government, too. I spend a lot of my time thinking about U.S. 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 try to sum up what I call Ferguson’s Law, which states that when a great power is spending 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 Habsburg, 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 a little younger, that economic growth is the result of fiscal stimulus up the wazoo, to use a technical term. If you’re running a deficit of more than 6% of GDP in two concurrent years when you’re at full employment, you have a soft budget constraint.
Rising Cynicism and Declining Belief in the System
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. So, 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 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.
The Public Health Crisis
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 as 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 COVID did.
Some of you will be aware of the mental health epidemic, or ill health epidemic, 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 Deaton 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 chart, 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 the case, I think, very compelling that something’s badly wrong. 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 COVID that did it. Because of opioids, 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 elegy before J. D. Vance was even born. I remember the east end of Glasgow. They shut down the steelworks, they shut down the shipyards. Glasgow in the 1970s was already a Rust Belt. By the 1980s, deaths of despair was our major export. Anybody seen the movie Trainspotting?
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 on their holidays to Blackpool. You all moved 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 Deaton’s work on deaths of despair, 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 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’d 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 Gorbachev introduced the anti-alcohol campaign, of course, people drank way more. Because the party’s legitimacy was so gone that if you were told not to drink in the Soviet Union, you ordered a litre of vodka and polished it off for breakfast.
The Detachment of the Democratic Party
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. It’s called the Democratic Party.
I love this polling data. It takes people who went to Ivy League universities or comparable elite universities and who have incomes above $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, favour 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 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. And 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 Republicans to Democrats in the academy are tiny and impossible to calculate in some subjects because you can’t calculate a ratio 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.
The Role of Elon Musk
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 platform 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 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 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 Ticky Fullerton back onto the stage. Thank you.
