Vinod's Blog
Random musings from a libertarian, tech geek...
Tuesday, December 16, 2003 - 04:50 PM Permanent link for Market Minorities
Market Minorities

I just saw from my monthly events update for the World Affairs Council that Amy Chua will be speaking here in San Francisco in 4 weeks.  I first read about Amy's book "World on Fire" on GNXP.   Her work is eye-opening because she is one of the few who brings up serious issues with globalization in an intellectually honest manner that's still mindful of underlying economic theory. (a feat the Naomi Klein's of the world fail to do in spectacular fashion)

In this article in the Wilson Quarterly, Chua presents a summary of World on Fire.  The gist of her argument is that while the forces of capitalism, democracy, and international trade are a force for the general good in developing countries, the benefits disproportionately accrue to a national elite who for one reason or another are best able to surf these forces.  Amplifying the caustic mix of envy and greed is racism - in the nations she profiles the elite aren't merely the economic or political elite but are rather a distinct racial subset -- a market dominant minority.  

The overseas Chinese of SouthEast Asia are a striking & often cited case.  For example, within the Phillipines:

...Although they constitute just one percent of the population, Chinese Filipinos control as much as 60 percent of the private economy, including the country’s four major airlines and almost all of the country’s banks, hotels, shopping malls, and big conglomerates.

...Nearly two-thirds of the roughly 80 million ethnic Filipinos in the Philippines live on less than $2 a day. Forty percent spend their entire lives in temporary shelters. Seventy percent of all rural Filipinos own no land. Almost a third have no access to sanitation. But that’s not the worst of it. Poverty alone never is. Poverty by itself does not make people kill. To poverty must be added indignity, hopelessness, and grievance. In the Philippines, millions of Filipinos work for Chinese; almost no Chinese work for Filipinos. The Chinese dominate industry and commerce at every level of society. Global markets intensify this dominance: When foreign investors do business in the Philippines, they deal almost exclusively with Chinese.

Examples of this abound throughout the developing world (Whites in Africa, Indians in Africa, Croats in Yugoslavia, Jews in large parts of E. Europe...).   It's important to note - and Amy is quite diligent about this - that the majority populations are NOT worse off as a result of globalization.  In fact, they are often quite measurably better off and see their incomes, life expectancies, health and so on improve on an absolute basis.   They just don't progress as fast as the minority population and they see and react to the widening of the gap.  This mix fuels a particular type of hostility -

...Market-dominant minorities are the Achilles’ heel of free-market democracy. In societies with such a minority, markets and democracy favor not just different people or different classes but different ethnic groups. Markets concentrate wealth, often spectacular wealth, in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority. In these circumstances, the pursuit of free-market democracy becomes an engine of potentially catastrophic ethnonationalism, pitting a frustrated “indigenous” majority, easily aroused by opportunistic, vote-seeking politicians, against a resented, wealthy ethnic minority.

Chua's work is fascinating because it makes us look at the American experience through a different set of lenses and further recognize our own exceptionalism.   One could argue that much of American idealism towards the common man and individualism was because throughout our history, we've had a market dominant majority.   When our markets won, our majority won in a manner that was both visible and invisible.  So much so, in fact, that when most Americans use the words "market" and "minority" in a sentance, the word "disadvantaged" is assumed to not be far behind.  

Chua's article provides an interesting window into how the Chinese reciprocally view the native Filipinos.  Chinese slurs used against the ethnic Filipino's (lazy, stupid...) echo similar rationalizations offered by the American Market Majority to explain its own success against the various market minorities US culture has absorbed throughout history.

However, her work isn't automatically a case for a highly redistributive state.   Before you accuse me of turning into a Rawlsian softy, Chua also carefully notes that simple minority / majority status isn't a proper yardstick for judging what's more accurately different economic ability:

Most market-dominant minorities, whether the Bamiléké in Cameroon or Indians in Fiji, enjoy disproportionate economic success at every level of society down to the smallest shopkeepers, who can rarely boast of useful political connections. Indeed, many of these minorities succeed despite official discrimination against them. Any explanation of their success will likely include a host of intangibles such as the influence of religion and culture.

The Chinese in the Phillipines, for example, were practically refugees when they first arrived in the country - a clear market disadvantaged minority.   Their success - while later the result of leveraging the vast Chinese Diaspora - was almost certainly initially grounded in an ability to create more than the majority Filipinos - despite a hostile native environment.   This is important and worth repeating - the minority here is in not using the tools of state to "oppress" the rest of the nation - to the contrary, they seem to be making their $$ using good old fashioned skill, hard work, and initiative and often despite the state working hard to "oppress" them.  

The angry Filipino's that Chua describes do NOT have a legitimate grievance on most levels.  On most liberal democratic grounds - morality, property rights, ethics, etc. - they do NOT have a case that justifies the murder, rioting, and looting they engage in.   However, that doesn't deny the fact that they feel justified in this behavior and policy needs to accommodate this somehow regardless of how we view their legitimacy.  Simply increasing policing, for example, while legally legitimate, may not be the lowest social cost option here.   A tough nut to crack indeed.

Anti-globalization wacko's take note - if you're going to critique capitalism meaningfully, here's how you do it.

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