A nation beset by rotten-to-the-core institutions will eventually fail. It’s happened countless times throughout history. From Charles Hugh Smith at oftwominds.com:
We are in effect so busy arranging the beach umbrellas per our instructions that we don’t notice the approaching tsunami.
Economists focus on what can be easily measured: sales, profits, prices, tax revenues, etc. Since the decay and failure of institutions isn’t easily quantified, this decay doesn’t register in the realm of economics. Since it isn’t measured, it doesn’t exist.
But institutional decay and failure is all too real, and it begs the question: how can a society and economy thrive if its core institutions fail? The short answer is they cannot thrive, as institutions are the foundations of the social and economic orders.
As I explain in my new book, Global Crisis, National Renewal, the conventional view has a naive faith that “great leaders” can reverse institutional rot. This faith overlooks the systemic sources of institutional decay and failure which are outlined in the graphic below, The Lifecycle of Bureaucracy, a.k.a. institutions.
Leaders are constrained by the nature of centralized organizations and the incentive structure that slowly shifts from rewarding efforts to further the institution’s core mission to self-service and protecting an ossified, failing institution from outside scrutiny and reform.
As Samo Burja explains in his insightful essay, Why Civilizations Collapse, those inside institutions are by design so compartmentalized that few (if any) even recognize the institution is failing. As long as everything is glued together in each little compartment, no one grasps the entire institution has lost its way. And since no one recognizes it, no one attempts to save it.
