I got an email from a reader suggesting that I read this book and it was a very good suggestion. The book is seriously flawed, but Ms Chua has some wonderful insights. One can’t help but wondering if she knows of the flaws but was too afraid of the PC police to finish her argument.
Ms Chua’s argument is that countries in the developing world (with a few exceptions) are characterized by: 1) large indigenous populations that are poor and 2) market-dominant minorities. In many countries a small subset of the population controls the vast majority of the country’s wealth. This small subset – the market-dominant minority – also happens to be a distinct racial or ethnic group.
Most countries in the developed world are not characterized by such a relationship – they do not have a market-dominant minority (rather they have a market-dominant majority).
Ms Chua goes on to argue that this difference between the developing and the developed world implies that the policies that created wealth in the developed world – i.e. free markets and democracy – will not work in the developing world.
Instead, free markets will cause more wealth to accrue to the market-dominant minority. While democracy will empower the disgruntled majority. The result is likely to be ugly and violent. Or as she puts it:
the sobering thesis of this book is that the global spread of markets and democracy is a principal, aggravating cause of group hatred and ethnic violence throughout the non-Western world. In the numerous societies around the world that have a market-dominant minority, markets and democracy are not mutually reinforcing. Because markets and democracy benefit different ethnic groups in such societies, the pursuit of free market democracy produces highly unstable and combustible conditions.
Perhaps an example will help clarify the concept of a market-dominant minority:
Since the creation of Microsoft, the software industry has produced the largest crop of billionaires and multibillionaires in American history. Now imagine that all these billionaires were ethnic Chinese, and that Chinese-Americans, although just 2 percent of the population, also controlled Time Warner, General Electric, Chase Manhattan, United Airlines, Exxon Mobil, and the rest of America’s largest corporations and banks, plus Rockefeller Center and two-thirds of the country’s prime real estate. Then imagine that the roughly 75 percent of the U.S. population who consider themselves “white” were dirt poor, owned no land, and, as a group, had experienced no upward mobility as far back as anyone can remember. If you can picture this, you will have approximated the core social dynamic that characterizes much of the non-Western world.
Ms Chua discusses this dynamic in many countries, including Thailand, the Philippines, Malaysia, Zimbabwe, Burma, Vietnam, Indonesia, various Indian states, Sri Lanka, Bolivia, Peru, Guatamela, Ecuador, Mexico, Venezuela, Russia, Angola, Namibia, South Africa, Kenya, Nigeria, Cameroon, Ethiopia, Eritrea, Guinea, Rwanda, Uganda, Tanzania, Egypt, etc. She also discusses regional dominance by minorities in East and West Africa and the Middle East (Jews, in the last). Her analysis can also be extended to view Americans as a global market-dominant minority.
The list is quite impressive and the case is rather overwhelming. Ms Chua’s lens does a remarkably good job explaining conflict throughout much of the developing world. She even argues that most "nationalizations" are less about socialism than about taking assets from market-dominant minorities.
She makes many other interesting points along the way. For example, she argues that the US promotes very free markets and very universal elections throughout the developing world. Both are terrible ideas if the countries are characterized by the presence of market-dominant minorities (though they may work in cases where there are no market-dominant minorities, as with the Asian Tiger economies).
While the analysis appears not to be relevant to most developed economies, she notes that demographics in most developing countries are changing. Whites in the US for example, may be a market-dominant minority by the end of this century. The list of successful democracies with dominant racial minorities is not an encouraging one (since I’m pretty sure there are no countries on the list).
Unfortunately, Ms Chua’s analysis falls short on two accounts.
She is incredibly observant with respect to racial and ethnic differences, yet she fails to notice that the same racial and ethnic groups keep rising to the top regardless of where they are. Is this really an accident? For example, the Chinese are dominant in virtually every southeast Asian economy. China itself – and the other northeast Asian countries – don’t have market-dominating minorities. Isn’t the obvious conclusion that the Chinese are smarter? Jews seem to rise to the top everywhere as well. Ms Chua not only doesn’t draw the obvious conclusion. She rejects it in one sentence:
It seems safe to say that this entrepreneurial dynamism—together with frugality, hard work, willingness to delay gratification, and intense desire to accumulate wealth almost as an end in itself—cannot be traced to any single cultural, much less genetic source.
Actually after reading her book, it seems incredible unsafe to say anything like that. The evidence to the contrary is overwhelming.
Drawing the obvious conclusion – that racial differences exist and that some racial groups will therefore consistently be more successful than others in a free market – makes her argument even more powerful and sobering. Free markets will continue to benefit some groups at the perceived expense of others. Freeing markets will therefore continually and irreconcilably exacerbate racial tensions. That is some heady shit. Too bad no one is allowed to discuss it.
Ms Chua is also unfortunately pro-democracy. In reading her book, the reader is confronted by lots of violence that springs from democratic movements. It should not be a stretch to conclude that such a system simply will not work in the presence of "diversity" and free markets. Ms Chua refrains from considering any alternatives – as if such a thought is verboten.
These flaws aside, the book is worth reading for its principled account of problems caused by diversity. Ms Chua should be applauded for being interested in racial differences and being willing to write about them. One only wishes she would have followed her conclusions to the end.