Rich But Divided

Review: Todd G. Buchholz, ‘The Price of Prosperity: Why Rich Nations Fail and How to Renew Them’

'Charging Bull' by Arturo Di Modica

Economic instability, terrorism, war, plagues of locusts, rivers turning into blood—these are obvious signs that a country is in jeopardy. Not all causes of societal collapse are obvious, however. Some lurk beneath the surface. Others appear beneficial to the society—until it is too late.

In The Price of Prosperity, author Todd G. Buchholz identifies prosperity, which is usually thought of in uniformly positive terms, as a threat to national stability. He considers why wealthy nations collapse, and why they are sometimes more at risk than their poorer counterparts.

Buchholz, a White House director of economic policy under President George H.W. Bush, describes how the prosperity of nations undermines the cultural unity that binds them together. With wealth comes many blessings but also falling birth rates, eroding work ethic, and a diluted sense of patriotism.

As history from Rome onwards demonstrates, prosperity turns children from economic assets into liabilities, creating a strong disincentive to childbearing. While children in poor nations are needed to work and later to care for parents in their old age, in rich nations they are optional and costly to raise.

Plummeting fertility rates are evidence of greater individualism and egoism in developed countries. With more focus on the self comes less focus on the group, which leads to less patriotism, unity, and work. These are replaced by indifference, anomie, and leisure, which is subsidized by smothering welfare states.

Buchholz writes that the downside of prosperity is becoming evident in the United States. The average age of people in the United States is rising, a greying that is slowly causing economic and elder care problems first encountered by countries like Japan and Russia. The typical government response to these problems has been to re-shape the demographic pyramid through pro-natalist policies or, more immediately, through increases in immigration.

These policies may well fuel national decline, however. Low levels of patriotism coupled with the arrival of immigrants who may have no emotional attachment to their host country is a recipe for a national identity crisis. If it is not already undergoing an identity crisis, can the United States avoid this fate?

Buchholz lays out a plan to encourage unity within the United States, drawing on historical examples including the breakdown of Yugoslavia, the success of Alexander the Great, the struggle for nationhood in Turkey, Japan, Costa Rica, and Israel.

Shared moral fables, Buchholz writes, are necessary to instill virtue in the citizenry. Instead of promoting the cynical view of U.S. history, he writes it is important to promote the exceptional and admirable aspects of our history. The nation should work to inculcate civic pride in immigrants, too. Buchholz recommends requiring immigrants to visit the nation’s most important historical landmarks, and mandating an extensive American history exam (to supplement the existing U.S. citizenship test) for aspiring immigrants. High scorers should be prioritized for citizenship.

Though written by an economist, this book focuses more on culture and history than economics. In fact, it identifies the goal of most economists, prosperity, as an accelerant of social problems. It also brainstorms ways to knit prosperous countries back together again—to make them not only rich, but whole.