Monday, April 09, 2012

The Culture Fairy


Scott Sumner: I like you. You are a friendly, serious guy, and more intellectually honest and open-minded than most. However, with all due respect, I am now going to have to criticize something that you write, and use it as an example of a kind of economic analysis that I do not like. And I am going to employ sarcasm, because it is entertaining.

Scott Sumner predicts China's future:
China boosters like Robert Fogel claim that China will soon grow to be twice as rich as the EU.  Others pundits claim it will get stuck in the middle income trap.  Both the boosters and pessimists are wrong.  Like Japan, like Britain, like France, indeed like almost all developed countries, it will grow to be about 75% as rich as the US, and then level off.  It won’t get there unless it does lots more reforms.  But the Chinese are extremely pragmatic, so they will do lots more reforms. (emphasis mine)
I'm with Sumner all the way up until the end. It's just common-sense, reasonable stuff. Why shouldn't China follow the path that other countries followed? Why shouldn't the Solow Model hold? And then...and then...and then at the end, Scott summons the Culture Fairy. China's continued growth is dependent on further reforms. But we know that they will do lots more reforms because...because the Chinese are extremely pragmatic.

We know this about The Chinese, you see. It's a fixed characteristic of their culture. Easy to observe...just open your eyes! Also, they're very good at the violin. Not such great drivers, though, I'm afraid.

Also, we know that this sweeping cultural characterization is fixed, eternal...structural. Pragmatism is ever the hallmark of the Chinese, from the days of the An Lushan Rebellion to the Ming Dynasty shipping ban, to the Qing embargo on foreign manufacturers, to the Great Leap Forward and the Cultural Revolution, to...oh, wait. Never mind. Those must have been some other Chinese. Or a mistake. Data blips. Aberrations.

And there are other peoples we know to be pragmatic. Take Koreans, for example. The Koreans are pragmatic, just look at South Korea if you want proof. Any other country populated by Koreans would naturally develop just the same!

OK, end sarcasm.

Maybe I just read Scott wrong. Maybe he just meant that the current Chinese regime is an inherently pragmatic one, blessed with institutions that embed pragmatism...nope, it's cultural stereotypes all the way:
If we want to learn from the Chinese culture, learn from Singapore (or Hong Kong), which is how idealistic Chinese technocrats would prefer to manage an economy...China...will join the ranks of Japan, Korea, Taiwan, and the other moderately successful East Asian countries.I expect China to end up in the “normal” category, mostly based on its cultural similarity to other moderately rich East Asian countries.
First of all, notice how confident these pronouncements are. They are stated as facts: This will happen, that will happen. Period. No verbal qualifiers or admission of uncertainty. To quote Tyler Cowen: "That is from Scott Sumner, Q.E.D."

But my real gripe is that this is emblematic of a type of economic analysis that just does not sit well with me at all. It goes like this:

Step 1: Take the parts of the economy you can't explain (i.e. the residuals) and label them either "culture" or "technology".

Step 2: Make ultra-confident pronouncements about the future behavior of culture and/or technology.

What I don't like, first of all, is that Step 2 just never makes any sense. The thing you are calling "culture" or "technology" is precisely the part that you couldn't explain with your models. Hence, it is the least likely thing for you to be able to predict going forward.

Admit it, economists: You don't know what is going to happen with technology. You don't know what is going to happen with culture. If you did, you would have included those things as endogenous variables in the model instead of simply labeling the residual.

But I have to say, of the two, I dislike "culture" a LOT more than I dislike "technology". The reason is that it takes about 5 seconds for "culture"-based arguments to turn into racism in the mind of the average reader. The Chinese will end up like the Japanese and Koreans because...why? Because of Old Man 孔子? No, John Q. Public, admit it: I'll bet you yuan to won that you were thinking it's because they all have similar hair, eyes, and noses.

This is sloppiness. Sheer and utter sloppiness. Sloppiness delivered confidently, at a rapid clip, in short direct statements. But BS fired out of a machine gun is still BS. China's future development depends very heavily on whether it continues to reform. Whether it will do this is not known. It cannot be predicted by invoking hand-waving stereotypes about Chinese culture. A lot of very smart people have been trying to predict the future path of Chinese institutions, and they are well aware of these stereotypes. Trust me, they are well aware. And their level of uncertainty is high. Ours should be equally high.

Update: Scott has a thoughtful response.

60 comments:

  1. One rather important difference between China and Japan, South Korea, Hong Kong and Singapore is that those other four were all occupied by Western military forces.

    China is going to get to a level of development where further advance will require individual freedom, reduction of corruption and the rule of law ( I know those three overlap ). All of those will require that the leadership surrender power. It is likely that China will choose stability over economic progress.

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    1. Please note that the leadership of China has *already* chosen a massive reduction in stability and power in exchange for economic growth. If they were still in pre-1980 lockdown, we wouldn't even be talking about them.

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    2. Another thing, i think, is that even for Japan a lot of things were exogenous. W.r.t. a player like China- absolutely everything is endogenous (Prices, technological development, “culture” (yes – I went there), international institutions and regulations (e.g. the existence of a cap and trade regime), etc.).

      Also, I agree that “culture” usually is used in a sloppy way to actually describe a unexplained residual, but it is also the subject of very interesting and deep analysis w.r.t. e.g. endogenous preferences and such.

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    3. W.r.t. a player like China- absolutely everything is endogenous

      en·dog·e·nous ( n-d j -n s). adj. 1. Produced or growing from within. 2. Originating or produced within an organism

      China's growth is driven by exporting Western designs built using Western technology to Western markets. The largest private employer in China is Foxconn - a Taiwanese company doing contract manufacturing for, among others, Apple. There is very little about the roots of China's growth that is "endogenous".

      To achieve high levels of personal income they are going to have to allow domestic market to grow and that is going to require major changes within China - in a way that stuffing containers full of iPhones does not.

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    4. Taiwan has never been occupied by western military forces (though the Nationalists were allied). Hong Kong & Singapore are former British colonies, but I don't know if I'd compare it to South Korea & Japan's military occupation.

      I recall the recently-fired John Derbyshire complaining about explaining things in terms of culture: "What are the upstream variables?"

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    5. “There is very little about the roots of China's growth that is "endogenous".”

      Sure, but moving forward a lot of things are.

      As Noah pointed out in a previous post, China can steal technology and get away with it (which will have an effect on the incentives to innovate). Surely, the price of many goods would differ to a much bigger extent if China for some reason exited from the world market than if e.g. South Korea (or even Japan) did. The semi-planed/state interventionist economic model will have many more proponents in the developing world (and developed) due to Chinas success than it would otherwise (in a way that a single data point like e.g. South Korea or Singapore never could achieve) which, among other things, might make people view a system with less personal freedom as an alternative system rather than a more primitive system (i.e. maybe they could create a picture of a tradeoff between personal freedom and economic growth – and if this sounds silly, note that many capitalist societies successfully marketed the notion that there is a severe tradeoff between every move towards equality and economic growth) . Etc.

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    6. Hong Kong & Singapore are former British colonies, but I don't know if I'd compare it to South Korea & Japan's military occupation.

      More accurately, Hong Kong and Singapore were British military bases - not mere colonies and prosperity grew up around the oasis of law and order that the British military created.

      I did not mention Taiwan and I note only that it appears that many westernized Chinese fled there after the Communist revolution.

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  2. "The Chinese will end up like the Japanese and Koreans because...why? Because of Old Man 孔子? No, John Q. Public, admit it: I'll bet you yuan to won that you were thinking it's because they all have similar hair, eyes, and noses."

    Noah, you are off your god damn gourd. Seriously. If you THINK like this, it is very hard to make real arguments to you. I feel like you just ripped off your mask and are an freshman cultural studies major.

    Hypothesis: Because liberals are soft, they equate hard with mean, they NEED it to be the same thing.

    I read it as, China isn't going to go the way of North Korea, Thailand, Vietnam, Pakistan, (and hopefully India pull it out too).

    That's not hand waving. They are a big giant COMMUNIST country. You can sprinkle capitalism on anything and it improves, but sooner than later, you gotta really own the stuff you earn.

    The fun bit is why the US is so far ahead. That's pretty damn smug, and you glossed right over it.

    Drove right past it. Nothing to see there.

    Note: take that "US wins because" pionion Noah has, and then you compare it to the next class of countries (Japan, South Korea) and see what they do like the US that the other countries aren't doing.

    Then look at China.

    OR you could think about their eyes and noses.

    ---

    Final note: you should look at data for how well off Swedes in the US are compared to Sweden.

    Those damn tall blonde bastards work hard no matter where you put 'em.

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    1. Well THAT certainly didn't make any sense.

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    2. "The fun bit is why the US is so far ahead."

      As usual, because American workers spend their life at work instead of taking care of their kids like those European Socialists. Hourly labor productivity in the US and Western Europe is about the same.

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    3. If they keep raising socialists, staying at home with them is horrible.

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  3. Let's not generalize by culture...instead let's generalize that spending in infrastructure is always valuable. I wonder who does that?

    How could you write about China and pragmatism and not mention my hero? Deng Xiaoping was a pragmatic consequentialist. He went around saying that it didn't matter whether a cat was black or white...what mattered was whether it caught mice. How could you forget to mention him? Sheesh. His pragmatism is why China is where it is today. You can't understand China without understanding why China sucked under Chairman Mao but rocked under Deng Xiaoping. I think you need to read my post on The Dialectic of Unintended Consequences.

    How well will a country do? That question depends entirely on how well it utilizes its most valuable resource. You know what a country's most valuable resource is? It's people. Sounds cheesy right...but you can't put a price on people's ability to see how to use resources in new, valuable, innovative, creative and productive ways.

    China was stagnant under Chairman Mao because he wasted China's most valuable resource. He misallocated people and blocked China off from foreign investment. Foreign investment is extremely valuable because it gives people more opportunities to discover their comparative advantage.

    Right now America is split into two parts...the private sector and the public sector. The private sector is run by the spirit of Deng Xiaoping while the public sector is run by the spirit of Chairman Mao. By preventing taxpayers from choosing which government organizations they give their taxes to...we're blocking our public sector off from foreign investment. We're allowing 538 Chairman Mao's to misallocate a huge chunk of our nation's most valuable resource.

    We both agree that investment in the public sector is important...but hopefully you'll come around and realize that the money that's invested in the public sector should be guided by our most valuable resource...150 million of our most productive, creative citizens...and NOT guided by 538 Chairman Mao's who think they know best for our country.

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    1. "Right now America is split into two parts...the private sector and the public sector. The private sector is run by the spirit of Deng Xiaoping while the public sector is run by the spirit of Chairman Mao. By preventing taxpayers from choosing which government organizations they give their taxes to...we're blocking our public sector off from foreign investment. We're allowing 538 Chairman Mao's to misallocate a huge chunk of our nation's most valuable resource. "

      BWAHAHAHAHAHAHAHAHAHAHAH!!!!!!!!!!!!!!!!!11

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    2. Xero,

      To be a fool is unfortunate, but no crime. But a talkative, uninvited fool is pathetic indeed.

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    3. I would probably read more of his comments if he didn't plug his blog posts in each one.

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    4. I know, right? I'm genuinely concerned that he's actually spambot. ;-)

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    5. I would probably read more of his comments if he didn't plug his blog posts in each one.

      Xerographic always makes the same point so there is no need to read more than one of his posts. There is presumably a reason why he chose a screen name that connotes copying of existing material.

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    6. Yes, Xerographica is a human spambot, as is Morgan Warstler. Every blog or forum has at least one of them. ;)

      But it's OK, I have no problem with incoherent ranting. Just look at a couple of the blogs on my link list...WABAMM

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    7. Noah Noah Noah. How many times have I commented on your blog? Maybe a few times perhaps? And how many times have you made a single argument against giving taxpayers the freedom to choose which government organizations they give their taxes to? 0. You've made ZERO arguments against tax choice.

      Don't you think it's just a little strange that you can't even make one argument against tax choice? I don't think it's strange...you know why? Because I know that you really don't want to embarrass yourself.

      Don't worry though! It's never too late to take econ 101.

      "Thomas Carlyle famously called economics "the dismal science". I saw this in action when on a panel, interviewing health economists. We decided to ask all candidates an amusing "unexpected" question at the end: "Which concept from economics should be better known by the general public?"
      Any economist reading this will already know how they all answered: "opportunity cost"." - Jonathan Wolff

      How many posts have you made on the opportunity cost concept? 0. You've made ZERO posts on the opportunity cost concept. How many arguments have you made against the tax choice concept? 0. How many posts have I made on the opportunity cost concept? Maybe a few perhaps?

      Is this all a coincidence? Not likely. Well...I guess it might appear to be a coincidence to somebody that has no idea how the opportunity cost concept is essential to the efficient allocation of scarce resources.

      Yup, so it's absolutely no surprise that when I talk about the opportunity cost concept all you hear is "incoherent ranting". Like I said...it's never too late to take econ 101. It might help you with your dissertation.

      You're in luck! A spot just opened up in my class...Teaching Economics to Liberals.

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    8. You are one weird dude, Xerographica.

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    9. Can you do a post on the economic value of tolerance?

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    10. But it's OK, I have no problem with incoherent ranting

      Noah, you're a better man than me.

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    11. Can you do a post on the economic value of tolerance?

      Maybe. Unlike "tax choice", it does sound like something that interests me! ;-)

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    12. Maybe. Unlike "tax choice", it does sound like something that interests me! ;-)

      It would be pretty awesome if you did. Here's a great paper on the subject...The Conditions of Tolerance...but nothing, that I know of, beats Mill's Chapter III: Of Individuality, as One of the Elements of Well-Being

      "Its ideal of character is to be without any marked character; to maim by compression, like a Chinese lady's foot, every part of human nature which stands out prominently, and tends to make the person markedly dissimilar in outline to commonplace humanity."

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  4. China, tick. Now tell us about the enterprising meritocracy that is the USA which is 33.33% richer than any other country can ever become.

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    1. Sumner: "Like Japan, like Britain, like France, indeed like almost all developed countries, it will grow to be about 75% as rich as the US, and then level off." (before the end)

      Smith: "I'm with Sumner all the way up until the end."

      Noah, do you really think Sumner can confidently generalize about about the US vis-a-vis Japan, Britain, France etc. better than he can about China?

      Do you really share this confident generalization?

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    2. Well, I think that if China continues to reform, and if global resource constraints don't become too big of a deal, there is no reason why China won't follow the Solow growth model, which says that countries with similar institutions converge to similar incomes.

      Of course those are big "ifs". I'm more worried about the political process blocking reform. I think that's more likely than Sumner thinks it is.

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  5. 'Why Nations Fail' by Daron Acemoglu and James Robinson.

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  6. Anonymous7:13 AM

    I read the article 3 times and could not understand the point you were trying to make. Do you dislike the fact that Chinese are being labelled "pragmatic", a very American attribute or do you think that being pragmatic is a bad thing in itself.

    Also do you think individual behavior/choices are irrelevant and should not brought into the mix when discussing how people pull themselves out of centuries of miserable living ?

    For people living in "third world" countries, personal choices/behaviors are the only leverage accessible to them to improve their lives. In India/China, people had 0 access natural resource, heck even today access to water is a huge problem. Social patterns that were and in some cases still are highly corrosive. No infrastructure of any kind ( physical, social, institutional ). The only facet of human existence people could control was how they behaved in extremely difficult circumstances.

    As much as I would love to see countries like India/China develop in a fashion similar to the US and EU, I don't think that is possible. I don't know how China will develop, but I doubt the Chinese don't get "pragmatism" or that the policy elites would shy away from adopting "pragmatism" as a national policy or guiding principle.

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    1. Noah's post was rather clear.

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  7. "This is sloppiness. Sheer and utter sloppiness. Sloppiness delivered confidently, at a rapid clip, in short direct statements. But BS fired out of a machine gun is still BS."

    This is excellent.

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  8. Noah: You wrote: ...just open your eyes! Also, they're very good at the violin. Not such great drivers, though, I'm afraid. I spit my morning joe all over my keyboard. With regard to the driving habits, here in NY we refer to it as DWO. (Driving While Oriental.)

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    1. Oh, that's a real knee-slapper...hyuk hyuk hyuk...

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    2. MaxUtility7:12 PM

      Replying to someone who misses sarcasm with more sarcasm may not be an effective strategy. But yes, a real knee slapper.

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  9. Anonymous9:56 AM

    I think I could shoot down this analysis more easily without even digging into particulars:

    Scott Sumner paraphrases Stephen Roach. End of story.

    That's all Scott is doing here. He brings nothing new to the table. He's just playing with tidbits Stephen Roach left on the table.

    If there's an argument about China's economic development begging for fair criticism, it's Roach's, not Scott Sumner's because Scott Sumner doesn't have a new argument. He's using Roach's.

    Sincerely, Lulz4l1f3.

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  10. I should only add:
    Scott's wife is Chinese
    He spends a ton of time in China

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    1. Marrying Sumner is pragmatic!

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    2. Has he written anything about China which would show that he actually knows what's going on?

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  11. Liqian Ren12:17 PM

    I like most of the arguement and the conclusion on culture but I think it is not the best evidence to make your point. And I believe economists dismiss culture too readily as you seemed to do. I also don't think of a good example of your use of North/South Koreans as similar in culture but vary in growth. The two Koreans have vastly different political cultures!

    Suppose it is highly uncertain that Obama will get elected (use intrade probability), but someone makes a claim that Obama will be elected 100%. Since you can only predict on elected/or not, then it is reasonable for Scott to make a prediction based on his own opinion on whether China will embark on forms. I think it is the judgemental call but Scott made it sound like economic analysis.

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  12. So here's a comment I just read on another blog, which I think illustrates Noah's point:

    "Regarding the Rodan-Rosenstein book – politics and institutions are epiphenomena – they are not fundamental causal factors. Haiti is an African country while the Dominican Republic is predominantly mestizo with a small but influential white minority. So you have the difference between Africa and Central America duplicated on a single island."

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  13. Noah you said: "Maybe I just read Scott wrong. Maybe he just meant that the current Chinese regime is an inherently pragmatic one, blessed with institutions that embed pragmatism..."

    I hate to say it cause I'm always wondering why you don't go after Sumner more. But this seems a reach-to me at least. I didn't think anything like it when I read it. I think your guote above nails it. Maybe you did read him wrong and it's a statement about the current Chinese regime.

    That's my take on it anyway. If you didn't read it wrong then I did. The main point of his post is wholy reasonable. I mean we can question how much Singapore is a model to be emulated but that's another judgment.

    Japan once grew as China did. In fact it was growing every year by 12, 14, or even 16% until the oil shocks of 1973. After that it only grew by 3% after.

    Again I hate to defend Sumner certainly against you who I see on some level at least of being more on the same side as me -but maybe I'm wrong.

    I mean usually I feel you give him too much of a pass-though about economic issues mostly. The only thing I really objected to in regards to the "Culture Fairy" was that miserable Bell Curve author's latest on the "the decline in the White Race since the 60s" or whatever it is. Yet even you seemed to be a little to open-minded and scientific about that-eveyrone was like David Brooks acting like it's a perfectly reasonable conversation. For my taste anyway.

    Yet on this I see it as a total reach. It never occurred to me that there was anything untoward in the "pragmatic" line. Again, just my opinion.

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  14. That miserable author in question being Charles Murray of course.

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  15. Noah, I think you were half right. The "pragmatic" argument was weak, given the Cultural Revolution, etc, etc. I suppose what I was thinking is that the current government is somewhat pragmatic in their approach to policy reforms, but obviously things could revert back to the days of the Cultural Revolution or Great Leap Forward. Indeed I've used that very argument in my blog against people who talk about "Chinese culture" so I can hardly disagree with you.

    I plead innocent to the implied racism charge, as I can't be resposible for idiots who read my blog. You are right that Chinese look like Japanese (to us westerners, not to the Chinese themselves) but to many westerners they also look like the people of countries like Thailand. And yet the Chinese who live in Thailand, Malaysia, Indonesia, etc, are far richer than the locals. I have never heard any attribute that income difference to anything other than culture. I look forward to hearing your explanation. If it's not culture, what is it? Discrimination? Actually the government of Malaysia strongly discriminates against the ethnic Chinese.

    If I was a Freudian I'd say that people who see hidden assumptions of racism in arguments that are clearly not racist must have some deep-seated "assumptions." But fortunately I'm not a Freudian. :)

    Here's another argument. Suppose the per capita income of North Korea was currently about the same as some other countries like Nepal, or Nicaragua, or Rwanda, or Yemen. And you were told that in 50 year one of those 5 countries would be about as rich as South Korea. Which one would you guess, and why? I'd guess North Korea, for "cultural reasons."

    BTW, when I was young places like South Korea and Taiwan were poor. I predicted they would become rich relatively fast. Most development experts disagreed. I was right and they were wrong. I see no reason to stop now, as I think I have very good reasons for making these grand unsubstantiated forecasts.

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    1. Shorter:

      act like America, grow fast. act like Europe, grow slow

      sumner is Freudian

      noah needs to improve thinking like opposition, it is called empathy.

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    2. Scott,

      'And yet the Chinese who live in Thailand, Malaysia, Indonesia, etc, are far richer than the locals.'

      I’m not disputing that this is true (though I would like to see sources for this assertion), but supposing it is true, 'culture' as an explanation doesn’t necessarily follow, it could be all those Chinese who emigrated to those countries were the more entrepreneurial types, analogous to high international mobility of the rich. I bet 'Westerners' in China would be a lot wealthier than the average Chinese as well.

      'Suppose the per capita income of North Korea was currently about the same as some other countries like Nepal, or Nicaragua, or Rwanda, or Yemen. And you were told that in 50 year one of those 5 countries would be about as rich as South Korea. Which one would you guess, and why? I'd guess North Korea, for "cultural reasons."'

      If North Korea catches up to South Korea, I think the change of political institutions will be more to do with it than 'cultural reasons'. China hasn’t been growing because of 'cultural reasons', it’s been growing because the Communist Party adopted market-oriented reforms as opposed to Cultural Revolution and 'Great Leap Forwards'. I think that has got a lot more to do with politics than it has to do with 'culture'.

      Acemoglu and Robinson actually rebut the 'culture' theory of development in Chapter 3 of their new book 'Why Nations Fail' (which I was alluding to in my earlier comment above).

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    3. *Correction: It should be Chapter 2 (not 3). In Chapter 3 they lay out their 'model'.

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    4. Thanks for dropping by, Scott!

      And yet the Chinese who live in Thailand, Malaysia, Indonesia, etc, are far richer than the locals. I have never heard any attribute that income difference to anything other than culture. I look forward to hearing your explanation. If it's not culture, what is it?

      Selection bias. DavidN already got there. Note that in the United States, people of Indian and Greek descent are much richer than the locals (and, in fact, richer than people of Chinese descent). Care to draw any conclusions about Indian and Greek growth?

      Of course, it may be that culture plays an important role in the performance of these immigrant groups. I just don't think we can use that to make big predictions about the futures of their ancestral nations. Also, it may be that culture works differently for small diaspora groups than for large nations. Since culture (almost by definition!) is something we don't understand very well, I think we should keep this possibility open.


      Here's another argument. Suppose the per capita income of North Korea was currently about the same as some other countries like Nepal, or Nicaragua, or Rwanda, or Yemen. And you were told that in 50 year one of those 5 countries would be about as rich as South Korea. Which one would you guess, and why? I'd guess North Korea, for "cultural reasons."

      I'd guess either Nicaragua or North Korea, because of their proximity to much larger rich countries - I am a strong believer in economic geography.


      BTW, when I was young places like South Korea and Taiwan were poor. I predicted they would become rich relatively fast. Most development experts disagreed. I was right and they were wrong. I see no reason to stop now, as I think I have very good reasons for making these grand unsubstantiated forecasts.

      With a forecasting record like that, what are you doing being an econ professor? You could get super-rich starting a geopolitical consulting and investment firm! Ian Bremmer would be yesterday's news!!

      (I kid, I kid...)

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    5. Anonymous4:14 PM

      Oh boy,the wealth of the Chinese disapora in South-east asia has to do with the historical role Chinese played in south-east asian trade, China as by far the largest and most complex economy in the regions acted as the best source of expertise and above demand for south-east asia mainland and island. It also provided labour for a region that until the 20th century was rather sparsely populated. Wherever they were they were deeply emeshed in the commerical and international sectors of the areas economy, areas that have seen the most expansion over the past two centuries (plus they served as the middle management for european colonial empires).

      That level of participation means that the Chinese dispora has capital social (know the right people), human (you can afford the son an education and give him job in the company) and financial built up for generations that give them economic influence far beyond their demographic weight. But its not "cultural" its simply a function of inherited social advantage/position/privelege emanting ultimately from the economic and demographic weight of the middle kingdom.

      The problem with the recourse to "entrepreneurial culture" is that you find such behavior pretty much in any culture that has substantial market exchange. And since culture is always shifting and adapting, its quite easy to generate new norms and morals if there's material gain involved anyway.

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  16. Noah, I'm teaching so I'll have to address some of your comments later (you are wrong about the Southeast Asian Chinese.)

    But I will answer your last point. I am rich, and I got that way investing in Asia. I am willing to submit proof for that assertion via US mail, if you promise to keep my proof confidential.

    I should also say that your Greek example proves nothing, as their success in America occurs in a non-Greek culture. Many people falsely assume cultural arguments always refer to individual characteristics. In point of fact the usual argument against Greek culture (at least among the sophisticated) is not that Greeks are lazy (they aren't) but rather that Greek culture leads to bad governance via a lack of civic cohesiveness. That argument may or may not be true, but your counterexample would have no bearing on it.

    There's lots of evidence that culture plays a huge role in economics, which could survive any of your criticism. I would suggest starting with Cahuc and Algan's research on cultural differences in Europe based on attitudes toward civic welfare.

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    1. OK, OK, you don't have to send proof. I will take your word for it. :)

      BUT, a lot of people got rich investing in Asia in the last 20 years or so. I still am skeptical that you have special insight into the nature of Asian cultures that allows you to predict their future economic performance (though maybe you do!!).

      I have lived in Japan and I think I have some special insights into Japanese culture. I have mostly positive impressions of that culture. Also, I think I could get rich investing there, despite it being a rich country. However, this does not make me sanguine about its future ability to catch up with the U.S. in terms of per-capita GDP.

      Your statement about Greeks is exactly the same as something I wrote in my comment; it seems possible for a culture to have very different effects on a diaspora vs. a racially homogeneous nation. Thus, it may be that Southeast Asian Chinese performance is due to Chinese culture, but that that same culture will not be effective in preserving political stability and carrying out institutional reform in the PRC.

      Note that the periods when Southeast Asian Chinese were getting rich were exactly the same period when their PRC cousins were turning their country into a socialist basket case.

      As another example, look at the good performance of American Jews compared to the long-time poverty of Israel (which has only recently gotten richer).

      P.S. - For some reason, I happen to have a lot of Southeast Asian Chinese friends here at Michigan. They do not have a lot of glowing things to say about the PRC culture...Nor do Taiwanese people. So "Chinese culture" is not monolithic. Even within the PRC, the culture of different regions probably varies greatly.

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    2. The 4.4 million Americans with Swedish origins are considerably richer than the average American. If Americans with Swedish ancestry would form their own country their per capita GDP would be $56,900, more than $10,000 above the earnings of the average American.

      http://www.newgeography.com/content/001543-is-sweden-a-false-utopia

      I think you can just grant, some cultures trump others, and the US system is best.

      Why fight it?

      The real feeling of your bit, the real venom,was that everyone thought this was based on eyes, hair, and noses.

      You are losing the plot.

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    3. I am rich, and I got that way investing in Asia.

      hey wait, what about good old "That’s because for every 1,000,000 investors you’d expect one guy to outperform the market for 20 consecutive years." EMH?

      hmm ;)

      i have no opinion on culture (i clearly have none, evidenced by my playlist on doubletwist), however I do think its too broad a term and tends to wax into nostalgia. All the British colonies seem to be doing pretty darn good. Asia seems to be doing well by adopting market economies like the British colonies. hmm.

      If we are reducing "culture" to "willingness to experiments and/or adopt new ideas that seem to work really well in that place over there" then it seems to me the willingness to copy what other people are doing to keep-up-with-the-Jonses is the defacto human condition that differentiates us from other animals.

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  17. "
    BUT, a lot of people got rich investing in Asia in the last 20 years or so. I still am skeptical that you have special insight into the nature of Asian cultures that allows you to predict their future economic performance (though maybe you do!!). "

    Heck, there are a lot of pundits living in very nice houses in the USA who are 100% full of it.

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    Replies
    1. When there is love in the air, it doesn't have to be particularly hot for the average gas bag to be the median exemplar of mediocre verbal controls. The future performance f revolutionary institutions needs must be thoroughly independent of moral tact: allowances are seldom made for prior claims to historical integrity that fail correspond to flawless genealogical continuity.

      Until bachelors promise devotion to their final end, vengeance in due measure must assert five-fold grievanceL as the victim's lusty target and the pschopathic injustice of their fleeting insanity, triple e rated advertisements assuring few reators they share a of homer's ruthless devotion to Christian Odyssey..

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  18. Morgan, you missed it. Immigrants are self selected. There's no venom here, only in your mind

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  19. My general working principle is that culture-as-explanation is the last refuge of the analytically bereft.

    The success of the overseas Chinese in SE Asia can largely be explained by trust and networks. (Think Jews in the diamond trade.) You get linked dialect or even common-ancestral-village networks where reputation information flows very speedily. In a situation where the default attitude of rulers to commerce was to fleece it, and the general environment was low trust, networks of trust extending across rulerships had strong advantages. Their success was also more acceptable because it was not threatening to local rulers (Chinese could not aspire to political office).

    One sign of this is that the overseas Chinese are not nearly as economically important in high trust societies. The overseas Chinese do fine in Australia, but not extraordinary in the way they do in SE Asia.

    (Michael Backman wrote a report for DFAT's East Asia Analytical Unit years ago Overseas Chinese Business Networks in Asia which covered this.)

    Chinese culture has been agrarian, with cities and commerce for a long time. The necessary framings are built into people's outlooks.

    Which is the point where I will concede culture matters. Folk coming from a hunter-gatherer culture lack the relevant framings and have real difficulties adjusting to modern commercial-industrial life.

    Deepak Lal's division of culture into its material and cosmological aspects (pdf) (short summary here) captures this element (and why language groups can seem to matter: they come with attached framings).

    What you call 'culture' I tag as trust, networks, and framings. More analytically tractable.

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  20. Nice one Lorenzo.

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