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World on Fire, by Amy Chua. Doubleday,
2002, 304 pages.
The Trouble with
Trade by Bruce
Ramsey
In "World on Fire," Amy Chua, a young professor at
Yale Law School, argues that capitalism and democracy, the twin ideals of
foreign policy, are often undone in countries with a market-dominant
minority — a distinct group better at business than any other group.
Think of the Chinese in Indonesia and Burma; the Lebanese in West Africa;
the Indians in Fiji and East Africa; the English in Zimbabwe and South Africa;
or the Jews in Russia.
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Bruce Ramsey is a journalist in Seattle.
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Chua comes from a "third-tier" family of Filipino-Chinese tycoons, the
owners of a plastics conglomerate in Manila. The family has vacation homes,
servants, and "safe deposit boxes full of gold bars, each one roughly the size
of a Snickers bar." Chua's aunt sent her one of these goodies before the aunt
was hacked to death by the chauffeur. The aunt was Filipino Chinese, the
chauffeur native Filipino.
The Chinese are not loved by the native Filipinos, the Indonesian
pribumis, the Malaysian bumiputras, the Tibetans, or Burmese.
These folks will often privately admit that the Chinese are more
enterprising. A Tibetan guide once told me that if he had 100 yuan (about
$12) he would drink it up with his friends, whereas a Chinese would put it in
the bank and invest it in his business. He respected the Chinese for that. But
he also resented the Chinese for being in his country, for keeping to
themselves and showing by little things that they thought themselves
superior (which they do).
What does all that have to do with the market? When clotted and crusted
markets are opened up to commerce, it is groups like the overseas Chinese
who are in a position to make the most of it. They already know business and
they have connections abroad. As they build wealth in these markets,
however, they often build resentment as well. It does not particularly
matter that minority investment causes everyone's wages to go up. After 30
years of Suharto capitalism, the Indonesian kampong of 1995 was much
improved over the kampong of 1965. The average Indonesian had
better food and medicine, and many had televisions. But that did not protect
the Indonesian Chinese from being burnt out. |
| In no country did
pure capitalism and pure democracy exist at the same time. But those two
things are what America is offering for export: the simple, stripped-down
models. |
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A riot is not democracy, but balloting may express the same urges. Ask
the resentful majority what it wants, and it may want to get even. Chua
argues that this happens more often than Americans know. We assume that
the nationalizations in the mid-20th century — oil and railroads in
Mexico, for example — were ideological. In China and Cuba they were.
But often it is ideological cover for the dispossession of a minority — in
Mexico's case, the gringos.
All this might lead up to an argument for some kind of insular socialism,
but it does not. Chua is in favor of the things she criticizes. But she argues
that markets and democracy evolved in the West over a long period. The
franchise was at first limited to property owners, and expanded slowly; and
even with universal adult voting, majorities are restricted by law.
Capitalism, in turn, evolved from laissez faire to the welfare state. In no
country, she says, did pure capitalism and pure democracy exist at the same
time. But those two things, she says, are what America is offering for export:
the simple, stripped-down models.
A libertarian will argue that what Chua thinks of as a laissez-faire system
(what's going on in Russia, for example) is not the genuine article. Fine;
adjust the definitions. A country that has evolved a relatively pure
capitalism will have institutions — courts, fraternal societies,
insurance companies, savings banks, unions — to make the system
work the way people want it. The institutions will have evolved with the
economic system, and the economists who justify the economic system may
not think about them. But they are there; and if capitalism is dropped from
dirigibles ready-made into a non-capitalist society, those institutions will
not be in place. Neither will the habits of mind that make capitalism work.
These institutions and habits may be developed, but some groups will
deploy them faster than others.
| Chua reminds us
that while we may define a free society in a kind of recipe — "simple
rules for a complex world" — key ingredients are often left out of the
mix. |
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It is the same with democracy. America doesn't have pure democracy
and never has. The libertarian will be less defensive of that, because the
democracy he advocates (if he advocates it at all) is strictly limited by
constitutional law. But such a system cannot be dropped from the sky,
either. Unless people have a clear idea of the meanings of their
constitutions, and have the will to defend those meanings, the constitutions
won't matter.
Chua reminds us that while we may define a free society in a kind of
recipe — "simple rules for a complex world" — key ingredients are
often left out of the mix.
For the market-dominant minorities, this book is a warning: to be
clannish is to court danger. It is wise to intermarry and assimilate, if you
can. The Chinese assimilated in Thailand in a way they did not in Malaysia. It
was easier in Thailand, because the Thais are ethnically and religiously
closer to Chinese — there is no revulsion over eating pork, for example
— and partly because the Thai government promoted assimilation. As a
result, the Chinese in Thailand are politically more secure and accepted
than the Chinese elsewhere in Southeast Asia. But Thailand is not the usual
case.
Nor is America. It is not realistic to ask every country to become an
unlimited melting pot, because most countries don't want it.
The last third of Chua's book is an attempt to analyze Israel and America
as "market-dominant minorities" in the Middle East and the world,
respectively. It's an analogy, and it is stretching her argument.
The book ends on a weak and unconvincing appeal for foreign aid. She
admits that redistribution of wealth will do nothing to alter the division of
talents, and says that it has been proven that education alone will not do
much. She mentions Hernando De Soto's campaign to create property rights
for the poor, and endorses it, but says that will not be enough;
government-to-government aid is needed. She reaches this position by a
process of elimination, and does not argue for it, which is pathetic. It would
have been much more honest to admit that she doesn't have an answer.
The strength of this book is in its clear and colorful outlining of the
problem. It is a reminder not to take those rankings of capitalism and
economic freedom from Heritage and Cato too seriously. What they measure
is important — but there are other factors, unmeasured, that may get
between an enterpriser and his bars of gold.
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