Noah Smith thinks culture explains economics (he just doesn’t know it.)
Noah Smith had some fun ripping apart a recent post I did on China, so now it’s payback time. Here’s Smith:
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 å”å? 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.
Yes it was “utter sloppiness,” but not quite for the reason Noah assumes. Start with the fact that I wasn’t even thinking about race. I had in mind the well-known tendency of Chinese cultures in SE Asia to do very well at making money. And I mean very, very, very well. The 7 million ethnic Chinese that live in Thailand dominate the economy. Ditto for the 7 million Chinese in Indonesia or Malaysia. Or the somewhat smaller numbers in the Philippines or Burma. And the Thais are the same race as the Chinese, so it’s not about race.
So what made Noah hear the non-existent “dog whistle?” I think that Americans have a very difficult time coming to terms with cultural explanations, partly because of our history, and partly because these theories really can be insulting. If you’ve met lots of sophisticated people from Europe or Asia or practically anywhere else, you’ll find they are much more comfortable talking about culture. Indeed if you deny that cultural factors can explain economic performance they’ll view you as an imbecile. Or an American. (But now I’m repeating myself.) For instance, if you meet a Chinese person try asking them what part of China they are from. If they don’t say Guangdong province or Shanghai, tell them that you think “Wenzhou people” are better at making money than people from their home province. Ten to one they won’t say they are insulted, rather they’ll say something like “well sure, but we have better spiritual values.” Outside the US, people are realists about culture.
Noah Smith does (may?) have the misfortune of being an American, but he is certainly no imbecile. In the comment section of the post he responded to my example by speculating that the ethnic Chinese Thai have a different culture from the non-Chinese Thai, for instance they may be more entrepreneurial, etc. Somehow he thought he was refuting my argument with this observation, apparently because he attributed any cultural differences to selection bias. Those who were more entrepreneurial moved from China to Thailand, and that explains their success. I find that explanation very far-fetched. Large numbers of Chinese moved to SE Asia from very restricted areas in China, often a single town. They moved due to extreme poverty. They moved hundreds of years ago. We’re not talking about a few thousand Chinese grad students moving to the US in recent years.
But even if I am wrong, Noah has basically accepted that culture is important, now it’s just a matter of how important. People moved around often in ancient times. Any sort of selection bias that could have produced the alleged entrepreneurial superiority of the 30 million ethnic Chinese in SE Asia, could just as easily explain some sort of cultural difference in Japan, which is mostly made up of people who moved from Korea and China a few thousand years ago.
Some Americans associate cultural explanations with bigotry, the perception that one culture is superior to another. I think that’s unfortunate, but I won’t deny that many people (especially conservatives) do make invidious comparisons. Anyone who has traveled knows it’s hard to avoid cultural bias. If you queue up in East Asia and see one person after another cut in front of you, it’s hard not to think that the western approach to queuing is “right” and the Asian approach is “wrong.” What we fail to see is all the Western traits that visitors from Asia would find annoying, like our disgusting eating habits. Another problem is that people over weight the importance of making money. Even if the Chinese are better than the local Thais at making money, it hardly implies any overall cultural superiority. Indeed many people who visit the two countries say the Thais seem much happier. If you are a utilitarian then I suppose that should matter more than money. But I find all these comparisons as silly as arguing whether a bear or a giraffe is a “better animal.” Bears are better at catching fish in rivers, and giraffes are better at eating leaves off trees. Cultures develop in one way or another to address specific problems faced by their society. Unlike animals, however, cultures evolve fairly rapidly.
In the comment section Noah Smith pointed out that ethnic groups like the Greeks often do much better in countries like the US, then they do in their home countries. For some reason he seems to think this fact argues against cultural theories of development. But the more sophisticated proponents of cultural explanations rarely focus on personal qualities like “laziness.” The Greeks aren’t lazy (the Germans work fewer hours per year.) Nor are people in less developed countries lazy–they often work extremely hard, indeed they move to the US to do jobs that are supposedly too hard for Americans, like picking lettuce. Instead, the argument is usually based on the notion that some southern European cultures have less civic virtue, and end up with less effective governance. If true, you would expect Greeks to do very well in other countries with different cultures, and hence different governance.
Update: I see Noah has a new comment which suggests our views on Greece aren’t that far apart.
Some might argue that I haven’t addressed the meat of Noah’s criticism. That’s because when you’ve lost it’s best to cut your losses and change the subject. Noah did a nice job of satirizing my China post, which I now see was a piece of utter sloppiness. Indeed he used many of the very same of “anti-cultural” arguments that I’ve used against others at various times in my blog. I could almost accuse him of plagiarism. But my post wasn’t offensive, and I still think I’m right about China. I just haven’t come up with a way of persuading others of what I see. Back to the drawing board.
PS. Is there any form of sloppiness worse than “utter” sloppiness? Perhaps unutterable? How would Noah describe John Derbyshire?
PPS. Noah never actually said the SE Asian Chinese were more entrepreneurial, he agreed with another commenter who made that claim.
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12. April 2012 at 05:43
Professor,
When I read your post on China, I didn’t even perceive it to be a cultural argument, much less a racial one. I simply assumed that Japan is a country within close geographic proximity that went through a similar industrialization/growth spurt within recent history, therefore serving as a pretty good example of what is possible. (And, if anything, China would do even better than Japan did because they have a larger land mass and richer deposits of natural resources.)
Was I wrong in interpreting you that way? Were you actually getting at something more “cultural?” I think my interpretation – even if incorrect – is a better explanation than anything that invokes race, culture, disposition, etc., because it’s rooted only in historical data.
Is it “racism” to compare and contrast economies in similar regions of the world? If we want to look at what’s possible in, say, Macedonia, wouldn’t we take into account the historical economic experience of the Czechs, Slovaks, Bosnians, etc.?
12. April 2012 at 06:25
When you are talking about the Chinese expat community and culture in SE Asia, are you also arguing that culture was the reason why the Chinese immigrants to these areas ended up becoming very economically important? Or simply why they continue to be economically important after the initial immigrants are successful?
12. April 2012 at 06:41
Ryan, Regional factors and cultural factors are obviously highly correlated. But when they aren’t (say New Zealand or Singapore or Israel) it seems like cultural factors dominate.
Brett, I actually don’t have strong views on why this occurs, just that it is obviously in some sense “cultural.” Perhaps they brought an entrepreneurial culture from China, or maybe they created one from scratch in SE Asia. But it is what it is. Culture matters.
12. April 2012 at 06:53
PS. Is there any form of sloppiness worse than “utter” sloppiness? Perhaps unutterable? How would Noah describe John Derbyshire?
Yeah…sorry that came out a bit harsh-sounding…
Derbyshire is not sloppy, he’s full of it! “Sloppiness” to me just means “conscious oversimplification”; arguments that are simply specious could not have been improved by stating them more carefully!
As for culture being important, I agree that it might be VERY important, I just think it’s an extremely difficult thing for us economists to predict and understand.
12. April 2012 at 07:02
Scott,
Any argument involving differences between ethnic groups should start with a “maybe”. Then it would make sense to define the characteristic supposed to have the mentioned effect and the extent to which that characteristc can be demonstrated to be present among the entire “ethnic group” (Thais? ethnic Chinese? Chinese never subjected to PRC socialisation?). Then there is the term “cultural” . Cultural traits are not immutable. They change over time. They are also difficult to capture. Among East Asia area specialists (many with professional training in fields where “culture” is a serious obstacle to scholarship) you would probably not be accused of racism, but of orientalism. Unfortunaletly those fields have yielded little that can be made useful for others than fellow specialists, diplomats and journalists (and management types). It is simply too difficult or the right minds have yet to be attracted. But do not worry, your are an economist, an expert in a much less intellectually challenging field… .
As to Chinese, the ethnic Chinese of, say Singapore used to have serious problems dealing with PRC officials in the many “cooperation” projects agreed upon by their respective governments. One famous example of a cultural disconnect was the model industrial town near Suzhou built by Singapore’s state sector. The Singaporeans had many problems getting this off the ground while the municipal government was busy building unanticipatedly a competing industrial development next door; less advanced, cheaper and soon sold out.
What looks like a much more reasonable approach to China’s future path of development is to take into account factors like literacy, socialization, infrastructure procurement by the state and a form of bureaucratic government not (yet) checked by nuances in the “consent of the governed”, to put it euphemistically. The problematic term “culture” may then be avoided.
Culturally (in the sense used in the management dsicipline) , there are vast differences among Chinese ethnic groups, other Sinic people (people with linguistic and cultural/historical/religious/governance similarities with the former Imperial China) and non-sinic peoples in the area. I guess the japanese, Koreans and Mongolians have undergone cultural impulses from Imperial China that may still have some effect. But Japan and Korea were much more feudal and dynastic than China. The Thais date from the 17th century (as a political entity). Vietnam is an amalgamation of ethnicities, and always hostile to its neighbour in the North.
The diaspora Chinese themselves may well be an example of selection bias (often compared with Jews) and forced exceptionalism/discrimination. And A Singaporean apparatchik may have similarities with an apparatchik from Beijing; not necessarily with a sweatshop entrepreneur in Cambodia or Indonesia of a Taiwanese technology expert trained in California whose (grand) parents would rather see Taiwan go back to Japan than to China..Etc.
12. April 2012 at 07:08
An anecdote that I mean to illustrate this “cultural” proclivity the chinese have for making money, fwiw. About three years ago I did some leadership training in Taiwan for a large, global company. Teams of 4 or 5 people from countries around Asia came to comprise a group of around 35 people. We did a competitive team building exercise during the training, and if I didn’t know any better I’d say that national characteristics revealed themselves in the approaches of the country teams. It was an excellent experiment, really.
For example, I’d tell you that the Singaporans were very concerned with the rules of the game. The Thai team had great fun. And the Chinese team was HIGHLY competitive and aggressive. At one point a woman took her shoes off and stood on the table top to be at the center of the team while urging them to complete the task more quickly.
One could obviously go too far drawing conclusions from this kind of vignette, but there it is. I’ll also say that at that very moment I felt just a whiff of fear for the economic future of my country…. I’ll certainly always remember this day, rightly or wrongly.
12. April 2012 at 07:33
[…] and Scott‘s argument about China’s culture is going nowhere. They’ve got bogged down talking about whether culture affects economic potential or not. […]
12. April 2012 at 07:36
I think you and Noah are in danger of agreeing that culture is important for economic growth and that it is therefore also an important determinant of China’s medium term economic growth.
You’ve both ended up asking the wrong question. The problem for Chinese growth is not whether or not they can carry on doing new things, but its whether growth will be permitted by the CPC when they start to become relative economic and absolute political losers.
I posted on this earlier in the week, but I’ve a whole new post in light of this latest discussion.
My basic argument is that you can be a well cultured, entrepreneurial, pragmatic, but despotic ruling committee keeping down a well cultured, entrepreneurial, pragmatic people. As happened through most of human history – China might not regress, but its political leaders might be able to do better in a stagnating China that a booming China.
12. April 2012 at 08:00
Scott
There’s an interesting article in The Australian about how Chinese are less “honest” than Australians in doing business, and will try to take advantage of people foolish enough to be taken advantage of. That’s just they way they do business there. Not just to foreigners, but to each other as well. It’s a good article because it doesn’t make any cultural judgments.
http://www.theaustralian.com.au/national-affairs/opinion/economy-killed-by-kindness/story-e6frgd0x-1226325263151
12. April 2012 at 08:10
It was really pleasure to read both articles and you really did well by that last paragraph. Both you and Noah are right of course. Noah because you really cannot predict how “culture” institutions in China will really evolve and you because I also think that “culture” or more specifically “institutions” are crucial for the well being of the society.
But generally I am more on Noah’s side. My opinion is that there are probably multiple equlibria of how institutions may evolve and that many of those things depend on pure luck more then on some cultural predisposition especially on general traits like “entrepreneurship”. Look at the difference between South and North Korea. It may take just one mad dictator to set whole nation completely off track in spite of cultural similarity to other people living just few miles away.
12. April 2012 at 08:23
“Culture” is clearly too loaded a term in our “culture.” Perhaps if we figured out a term that referred to a group of people’s sense of how much they want/expect the government to provide for them vs what they want/expect to have to do for themselves? Or maybe measuring this by group is even too presumptuous. In any case, I do think that something akin to “culture” matters. Hmmm.
12. April 2012 at 08:47
I’m not American but still very uncomfortable with any ‘culture’ argument. But apart from the potenitally unpleasant moral aspect, the reason why I think this is a bad way to look at things is because ‘culture’ is not a a precisely defined concept or even a precisely observable scientific object.
To me studying culture is not suited for modelization, as by essence you expect your model to grasp some general phenomenon and culture is in essence the description of both idiosyncratic collective manners.
As JV Dubois puts it, the theory of institutions already tackle your point about economic development. In short the way people make beliefs does have an impact on the economy. And technology does have an huge impact on institutions as well (the web is an obvious example) – hence institutions/culture are not exogenous at all.
As a conclusion, quantifying which is more important (demography, capital accumulation, technology, institutions/culture) for economic prosperity doesn’t look easy. But, globalization points towards the cultural part not being the lead factor.
12. April 2012 at 09:51
‘…so now it’s payback time.’
I love it when you talk like that.
Here’s an example of Chinese making money;
http://seattletimes.nwsource.com/html/opinion/2017951095_bruce11.html
————quote————–
“In China, if you have money, you can have the best,” the surgeon said. “Under the table, it is a capitalist system.”
Officially, the cost of a stay is minimal, but at a Beijing hospital, to be operated on by a senior surgeon required an envelope with about $800. A surgery on a fractured femur cost about $8,000; on a tibia and femur it was about $20,000. At provincial hospitals the costs are lower. So is the quality.
China’s standard of living is one-fifth that of the United States, and few Chinese have health insurance. Patients who cannot afford the surgery are discharged, sometimes with their damaged joints allowed to fuse.
“It is the first time I have seen this,” the surgeon said.
To his surprise, many people, even farmers, did have the cash.
Many Chinese save half their pay. They borrow from family members, are supported by their work unit or are paid by the person who injured them.
….In Beijing, Shanghai and Guangzhou are private hospitals owned by U.S. corporations that follow the American way of openly charging for service. My surgeon says the physicians he knew in Beijing preferred the government hospital, where they could make more money from drug-company rebates and the patients’ red envelopes.
—————endquote—————
12. April 2012 at 10:14
Finally, something brings clarity from Noah!
“I agree that it might be VERY important, I just think it’s an extremely difficult thing for us economists to predict and understand.”
Noah, the logic flows like this:
1. Scott is right culture is predictive.
2. You are right, it is hard to for economists to understand.
That’s a testament to how little you grasp as economists compared to say the people you should be studying and taking notes from… the businessmen.
Trust me, everyday in the field, SMB entrepreneurs are making sweeping generalizations about cultures and sexes and races in millions of micro-transactions in order to earn a living.
Now you might not like those assumptions, you might be upset with the effects of those decision in the aggregate, you might favor laws to try to keep outcomes you don’t like from happening.
And on and on and on…
BUT, as I told you with Derbyshire, these easier solution is to view those cultural stereotypes this way:
The less predictive the generalization is, the more profit opportunity there is for people who test those assumptions.
So only the WILDY predictive generalizations (ones pretty much true) about cultures will have very little profit in sifting through unique circumstances looking for contrarian upside.
—–
If you just look for the cultural stereotypes where where no makes a profit fighting the assumptions… those are true.
12. April 2012 at 10:34
Noah, You said;
“I agree that it might be VERY important”
We’re close. I’d say it is very important.
Rien, I agree with your observations–indeed I think it’s consistent with what I wrote. Everything’s complicated, business cycles, inflation, interest rates, current accounts, etc, etc. We often discuss complicated things that are poorly defined.
Rob, Interesting anecdote.
Left Outside, Sure that’s possible, but it seems rather unlikely to me given how decentralized power in China has become (relative to the days when Mao was in power.)
Don’t get me wrong, I expect China to “fail” at some point, and only end up about 75% as rich as the US. The cause of that failure will be bad government policy. But by that time China will have been a democratic country for many decades.
Tim, Thanks for the link. I obviously am not qualified to comment, but my hunch is that people in Australia do business more honestly than about 98% of humans. If I’m right, it would tell us much more about Australia than China. I’d add that when you compare cultures, “honesty” is highly contingent on context. People might be highly honest in one context and not another, and vice versa in a different culture. We tend to notice the worst in people different from ourselves, not the best. When I pay close attention (on trips) I see lots of things I like better about Asian culture, and lots of things I don’t like as much.
JV, I actually agree with you and Noah, I must have used the Korean example a dozen times in this blog (to show that culture isn’t everything.)
Nubdaug, Good point.
Axel, You said;
“I’m not American but still very uncomfortable with any ‘culture’ argument. But apart from the potenitally unpleasant moral aspect, the reason why I think this is a bad way to look at things is because ‘culture’ is not a a precisely defined concept or even a precisely observable scientific object.
To me studying culture is not suited for modelization, as by essence you expect your model to grasp some general phenomenon and culture is in essence the description of both idiosyncratic collective manners”
I think this mixes up two very different issues. Lots of things that can’t be precisely defined are worth thinking about. On the other hand I agree that it’s hard to model, and I certainly wasn’t trying to make my Chinese post mostly about culture–it was a sort of throwaway observation. As Noah points out you get roughly the same answer using geography—China is close to those other fast growing economies that didn’t get stuck in the middle income trap. In contrast, Brazil is close to lots of other countries that did get stuck in the middle income trap. So if I’d used geography, which is much more precise, I’d get a similar answer. Then why use culture? Because cases like Singapore, New Zealand ansd Israel convince me that when the two diverge, culture is more reliable. But if I’d known than Noah was going to hammer me I would have used geography–as life is too short to be wasting time defending bad posts.
Patrick, Yes, that’s how things work over there. My only additional comment is not to form stereotypes about China that are unchanging. It’s now a totally different country from what I visited in 1994 (which was quite different from 1974), and I’d guess in another 20 years it will totally change again. At some point medicine will become more “normalized.” I know someone in Beijing who works for an insurance company. A new but fast growing concept in China.
12. April 2012 at 10:53
I just think there are so many unanswered questions about culture.
1. How persistent is it over time?
2. Are there big composition effects (i.e. if power shifts from Group A to Group B, will the overall culture change)?
3. Are different dimensions of culture subject to different amounts of persistence and/or composition effects?
4. How much can we know about culture from meeting individual people?
5. How much can we know about culture from reading what people write?
6. In what ways does culture affect growth through institutions, as opposed to through individual behavior/norms?
7. How does culture change with per capita GDP?
8. How does culture change under different labor arrangements, social policies, income redistribution, etc.?
9. How does culture change when a country’s industrial structure changes?
10. How much do we mentally exaggerate cultural differences when we perceive differences in language, dress, and race?
There are more. My point is, culture is something that we don’t understand. We have a tendency to invoke it when there are residuals we can’t explain. This would be OK, if we didn’t then turn around and pretend that we could understand and predict the dynamics and impact of culture. If you’re going to label a residual, don’t then use the semantics of your chosen label to pretend to understand the residual!
That was the point of my post (stripped of humor)…
12. April 2012 at 11:36
maybe @Noahpinion should read Tino Sanandaji http://www.Super-Economy.blogspot.com on why the US never can become Sweden? Culture (trust)
Tino Sanadaji recently got his PhD in the US. He’s of Swedish Kurdish extraction and has large insights in comparing the US and Sweden. He would probably agree with the arguments in prof Sumners post on China.
Personally I don’t see culture as something soecifivpc but a set of learnt behaviors over a very long time. (I’m a follower of Skinners Radical Behaviorism)
12. April 2012 at 12:34
Noah, So this is how I responded to Axel:
“I think this mixes up two very different issues. Lots of things that can’t be precisely defined are worth thinking about. On the other hand I agree that it’s hard to model, and I certainly wasn’t trying to make my Chinese post mostly about culture-it was a sort of throwaway observation. As Noah points out you get roughly the same answer using geography””China is close to those other fast growing economies that didn’t get stuck in the middle income trap. In contrast, Brazil is close to lots of other countries that did get stuck in the middle income trap. So if I’d used geography, which is much more precise, I’d get a similar answer. Then why use culture? Because cases like Singapore, New Zealand and Israel convince me that when the two diverge, culture is more reliable. But if I’d known than Noah was going to hammer me I would have used geography-as life is too short to be wasting time defending bad posts.”
If I had used geography, would you have hammered me?
Old Whig, I’m increasingly convinced that the Nordic culture explains a lot about their model–both the high taxes and the free markets. As you may know I have a paper over at SSRN called “The Great Danes.”
12. April 2012 at 12:57
I’ll second Ryan — I’m a Chinese Malaysian living in the US and it never occurred to me that what Scott wrote was drawing on any idea of culture as a predictive variable for national income. I thought the key idea was that like most other developed nations, we can expect a developing country that becomes developed to level off at a high level somewhat below American per capita national income.
My idea re culture is similar to Scott’s view of market inefficiencies. Yes, they exist and do matter, but can you build useful theories out of them? Models which rely on the EMH and ignore culture still seem useful; if there’s a good model which incorporates market efficiencies or culture for predicting macroeconomic variables, I’m not aware of one.
My misgivings about the uselessness of culture largely stem from personal observation at how quickly culture and perceptions of it can change. (Someone else some months back posted a link in the comments of this blog to a paper arguing that the Japanese and Germans used to be seen as lazy, indolent and individualist in the 19th century.) In my case I’ve observed how culture in Singapore has changed dramatically from what it used to be when it was part of Malaysia.
Singapore today has a culture of being “kiasu” (afraid to lose) and a stickler for rules which nobody in the region ever observed prior to Lee Kuan Yew’s essential creation of a Singaporean nation-state in the 1960s. What Rob speaks of would not have been the stereotype of Singaporeans in the 1950s, but it is the stereotype today.
And for better or for worse, it is true. Comparing Singaporeans and Malaysians, Singaporeans will split a restaurant bill down to the cent, while Malaysians won’t mind rounding. Singaporean companies routinely rely on foreigners for even management and white-collar positions because these people bring a less sticklish about the rules mentality to the job than most locals do. Yet none of this was the case a few decades ago.
Culture may have driven the end-result of what we see in Singapore today, but how far can we attribute these things to culture if they are just as easily attributable to Lee Kuan Yew’s creation of Singaporean institutions? If culture is so malleable, let’s think about how we can mould culture instead and model those factors, instead of trying to model culture itself.
12. April 2012 at 13:25
Sorry for the “hammering”…I guess I get too much of a rush out of writing “takedowns”…
Yes, I agree location is good for China, but I also think that what’s even more important, geography-wise, is China’s large size. Its huge domestic market will attract investment via the standard agglomeration story. It is basically an enormous free-trade zone with a huge and fairly mobile population.
I do think China would benefit enormously from repealing the hukou system, which limits mobility and produces resentment.
Random tangent:
I also think that the big hurdle for China (other than the possibility of political infighting and unrest) is energy. With the declining importance of oil, energy transport costs are going to go up, making availability of local energy supplies more important for business costs (and hence for agglomeration effects). A lot of China’s cost advantage has come from its abundant supplies of coal, but the numbers I’ve seen indicate that China has been using its coal so fast that its production of coal might peak in the next 1-2 decades. Of course there are lots of substitutes, but they may cost a lot more. A sudden and permanent rise in energy costs seems like it could conceivably disrupt China’s industrialization, especially if it coincides with a global oil peak. But maybe this is just me talking crazy-talk…
12. April 2012 at 13:57
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 http://critical-thinker.net/?p=666“>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.
12. April 2012 at 18:24
I’m still trying to figure out how making most assumptions about cultural stereotypes is harmful in the aggregate.
First movers make assumptions; the ones that make the right assumptions have advantages.
At some point the “facts” as everyone knows them tip the other way, and the smart money is instead betting against the stereotype, doing the work to sift for gold in a less competitive stream.
Along the way cultures themselves wake up and make changes.
This seems like very basic statistical theory for economists to make use of, why wouldn’t they use these kind of assumptions when modeling predictions?
it only gets dicey if you are a bi government technocrat that doesn’t want this process to play itself out in the free market.
If that’s you SUDDENLY making assumptions can put us squarely into Jim Crow laws.
The lesson isn’t not to make assumptions based on cultures, it is to not let governments matter that much, or you can make use of facts.
EVERYBODY must be molested by the TSA, so we aren’t profiling.
it is dumb.
12. April 2012 at 19:13
“Some might argue that I haven’t addressed the meat of Noah’s criticism. That’s because when you’ve lost it’s best to cut your losses and change the subject. Noah did a nice job of satirizing my China post, which I now see was a piece of utter sloppiness.”
Not many bloggers would have been big enough to write this. You have my respect Scott Sumner.
12. April 2012 at 19:35
If I understand Noah correctly he’s saying that development is such a big complicated subject that you need microfoundations like North or Buchanan otherwise you’ll end up following trends or leaning on your biases.
I think he’s right, although I think Scott’s personal judgments are probably about as good as they get, I wouldn’t feel too comfortable getting more than two steps away from solid micro.
I also think you might underestimate the selection bias on the chinese diaspora. Not in the sense of who emigrates like grad students but over a few generations the ethnic minorities who both survive and resist integration will probably be doing pretty well economically. That probably doesn’t explain all the success but I don’t think you can shrug it off.
12. April 2012 at 20:07
Yeah, and who better to emulate when it comes to race relations than the Chinese. I mean, they must really understand cultural differences to have managed an ostentatious display of the ethnic diversity at the Beijing Olympics without inviting a single representative of said minorities. Amazing what throwing off the shackles of human sensitivity can accomplish.
And really, I for one can’t think of any more enlightened way of managing a multicultural world, and I think of that every time I imagine how great it must be to have grown up an ethnic Tibetan, or Hmong, or Uighur, etc. as minorities amongst such plain speaking people, who in addition to not sharing the West’s silly racial inhibitions are also quite expert at the ‘redevelopment’ of their traditional hamlets and cities with all the subtly of a bulldozer, quite literally. But certainly those things are not related in any case.
Very persuasive stuff as usual here Scott.
12. April 2012 at 20:15
As a Malaysian Chinese, I can strongly relate to the culture argument. For those who are not aware, Malaysia practices “pro-Bumiputra (pro-indigineous/Malay)” policies, resulting in the vast majority of opportunities (education placement in top schools, business deals, cheap housing, etc) being channeled towards the Malay community. On the surface, it appears to be a form of affirmative action, but bear in mind that the Malaysian population comprises around 70% Malays. So, the so-called affirmative action policies actually favor the majority. And the Malay politicians in Malaysia insist on maintaining rights of Malays in obtaining these excessive privileges, which is often perceived as “racial supremacy” in Malaysia.
Despite the oppressive policies that have been implemented since 1970, the Chinese community has continued to thrive and are responsible for the vast majority of business activity in Malaysia. They have still managed to succeed given the “handicap”, which demonstrates a cultural resilience and determination to overcome the overwhelming odds. I am not saying that Chinese are superior to other races in Malaysia, but there is a certain cultural element to it that is possibly unmeasurable as we do not see the same kind of success for other races in Malaysia. But I can attribute part of this to the kind of upbringing in Chinese families. Since I was young the message that was drummed into my head was to keep working hard in order to overcome the overwhelming odds. Despite 40 years of oppressive policies, Malaysia has remained rather peaceful and the Chinese community seemed to have accepted it as a way of life, simply working harder (among other things) to overcome the handicap. This is very much in line with the peaceful/passive approach taught by Confucius.
Now, back to China. I think what a lot of analysts miss and what is written by Professor Zhang Weiwei in his book, “The China Wave – Rise of a Civilizational State”:
“Good governance matters more than democratization. China rejects the stereotypical dichotomy of democracy vs. autocracy and holds that the nature of a state, including its legitimacy, has to be defined by its substance, i.e. by good governance, and tested by what it can deliver.”
…
“China is still faced with serious challenges such as fighting corruption and reducing regional gaps. But China is likely to continue to evolve on the basis of these ideas, rather than by embracing Western liberal democracy, because these ideas have apparently worked and have blended reasonably well with common sense and China’s unique political culture, the product of several millennia “” including 20 or so dynasties, seven of which lasted longer than the whole of U.S. history ……… While China will continue to learn from the West for its own benefit, it may be time now for the West, to use Deng’s famous phrase, to “emancipate the mind” and learn a bit more about or even from China’s big ideas, however extraneous they may appear, for its own benefit. This is not only to avoid further ideology-driven misreading of this hugely important nation, a civilization in itself, but also to enrich the world’s collective wisdom in tackling challenges ranging from poverty eradication to climate change and the clash of civilizations.”
These are just excerpts from his marvelous book, which I think gives some very insightful thoughts from a true Chinese perspective.
13. April 2012 at 01:39
johnleemk: very good post and I completely agree. I could offer another fact – compare the culture of Japanese samurai-businessmen with today’s “soushoku danshi” – those are young Japanese who refuse to work as hard as their parents did. The difference is just a few years and yet the culture is different. So while I do not think that “culture” is completely irrelevant to economy, it is too malleable to use it as grounds for economic predictions. Like in this Scott’s sense that Chinese are “pragmatic” and that is why China will “inevitably” look like Japan in 20-or so years.
Noah & Scot – Geography: actually this is a weird one. If anything, China does not depend that much on its neighbors. China, it has more trade with USA than with Japan and Korea together. For China the trade with Germany is almost as important as is the trade with Korea.
Also generally, China and Japan (two biggest economies in Asia) are more closed than one would suspect. In China total value of export is around 25% of GDP, for Japan it is only 13% – for USA it is 9,8% but for Germany it is over 36%.
If you combine two and two, you will see a picture where the biggest Asian economies are relatively closed relative to each other with large part of trade done with USA and EU countries. The economic integration is nowhere near as far as it is within the EU for instance. So if someone says that economic prosperity of Poland is driven by it being integrated into EU economic area (as oposed to domestic demand or trade with countries outside of EU) I would tend to agree. But if somebody is that the success of China is stemming from it being integrated into some “asian” economic area I would be more sceptical.
13. April 2012 at 06:01
Is this investment, or bonkers central planning?
http://www.economicpolicyjournal.com/2012/04/maintaining-gdp-growth-in-china.html
13. April 2012 at 08:21
Johnleemk, I certainly agree that Lee has changed Singapore’s culture. However if Lee had been leader of Afghanistan I predict he would have been less successful. Do you agree, and if so, why?
Noah, I agree on hukou, and would add that the system will almost certainly be gone withing 25 years.
I agree peak oil could be a problem (although I lean toward the view that we are far from peak oil.)
I think China’s big size was a huge disadvantage in one respect–I believe there are diseconomies of scale in governance. That’s why the smaller east Asian economies usually did better. To the extent size is an advantage, I believe it is by making China more competitive. China’s so big that even the SOEs must often compete, whereas in smaller countries the SOEs are often monopolies. Foreigners often pay little attention to the provinces, viewing China as a monolith (although I can see you have quite good knowledge of Asia.) Provincial level competition (trying to keep up with Shanghai) is actually good for China.
Lorenzo, You said;
“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.)”
I’m puzzled, doesn’t your second paragraph contradict your first? And if the Chinese blend in to Australia doesn’t that suggest they may become as rich as Australia? After all, some groups (like Aborigines) don’t blend in well to modern Australian society.
I should have read your entire post before commenting, I see we actually agree:
“What you call ‘culture’ I tag as trust, networks, and framings. More analytically tractable.”
Ron, To show you how hard it is to get beyond one’s ego, the main reason I saw Smith was right was I recognized that some of his points were arguments I had made against “culture” a few years back. So even I am egotistical. 🙂
But thanks for that comment.
e, Good observations, I hadn’t anticipated selection bias of survivors, I was thinking in terms of emigrants.
Majorajam, As usual your comment (whether accurate or not I can’t say) has no bearing at all on anything I wrote in this post.
Shihong, Very good observations. I’d add that this isn’t unusual. In America the Jewish and Japanese immigrants were discriminated against, and have done well. Ditto for Indians in Africa. Certainly there are many unanswered questions as to how and why culture matters, but it clearly does matter.
JV, You said;
“Like in this Scott’s sense that Chinese are “pragmatic” and that is why China will “inevitably” look like Japan in 20-or so years.”
I don’t think that’s quite what I said, but perhaps I worded my post poorly. I meant to say that this was the most likely outcome. Countries with similar cultures do tend to end up with similar per capita GDP, if they become integrated into the global economy. Obviously it’s possible that China will go back to Maoism and end up like North Korea, but that seems very unlikely to me. However I agree (as I said) that Smith was right in claiming that “pragmatism” is sloppy reasoning, I’d need to build a stronger argument.
James, China’s a huge country, there is plenty of both. Living standards are soaring AND there is massive waste on an epic scale.
13. April 2012 at 16:00
Incidentally or not Scott, you did repudiate the wisdom of American racial sensibilities:
Fyi, as it appears you are unawares, that’s a statement of values, (indeed, a paint-peelingly naive one), and one corroborated by the entire thrust of your post, which is that it’s ignorant and/or intellectually dishonest to push back when the chin pullers explain how ‘culture’, (to indulge a euphemism), is the great sifter of wheat and chaff.
So, ironically enough, it was your response to me had nothing to do with what I wrote, as usual.
As to those values, the ‘comfort level’ the Chinese have about discussing ‘culture’ (e.g. thinking nothing of complaining that Tibetans don’t wash, Americans are dim, Jews are rich, Arabs are fevered and Africans are lazy, etc.) fits quite nicely with that country’s majoritarian approach to governance.
It also has its parallels in American society, with predictable consequences for social cohesion. Malcolm X was not wrong when he said that whites could only ‘help’ blacks by arresting their own racial animus, and even more so when he said it was in their own self-interest to do so.
14. April 2012 at 11:57
Majorajam, You said;
“Incidentally or not Scott, you did repudiate the wisdom of American racial sensibilities”
I don’t know why you are unable to distinguish between the words “race” and “culture.”
And I’m sure you have many amusing theories to explain economic differences between cultures.
16. April 2012 at 18:48
Apologies for not buying your fig leaf professor, but cultural prejudice is actually not meaningfully distinct from racial prejudice, and certainly not as it relates to the ostensible superiority of Han Chinese vis a vis the minorities in their orbit both within and outside of mainland China. More to the point, it is not distinct from the way in which prejudice works in practice.
For example, if I said, ‘American Jews do well economically because money is all they care about’, would that be, as it appears you’d have it, a normative statement about cultures, or unvarnished bigotry? But talking in vague terms about culture is clearly a convenient way for people who’s thoughts tend toward Charles Murray to avoid the spotlight. Ehem.
As to my thoughts, unlike some, I’m not under the illusion that attributing a model’s gross inadequacy to whatever it is that flatters my own narrow prejudices constitutes good practice on any level. But if I were to want to amuse you with my own brand of rank speculation, I suppose I’d say that ‘culture’ is a lousy way to circumscribe the elements of social success that really matter: the degree of cohesion and education of its members and of corruption in its elite. Something I imagine Kant would recognize. You less so.
20. April 2012 at 14:27
Majorajam, I never said the Han were superior, nor do I believe that. I presume you didn’t read my entire post. And putting words in my mouth isn’t going to impress me at all.
So “cohesion and education” matter, and “culture” doesn’t. Can I assume that you agree with me, but use different terminology? If so, why all the name calling?
20. April 2012 at 19:16
Scott since you are obviously a horrible racist, do you know any good jokes about the Irish?
And not a limerick either.
30. April 2013 at 16:57
[…] that I shouldn’t have called the Chinese “pragmatic.” It’s clear from this follow-up post, and the comment section where he responds, that Noah and I actually have pretty similar views on […]
2. October 2013 at 01:56
[…] Start here. Noah’s opinion of Chinese culture here and here. Scott responds here, here and here. This too. Here is Noah on the success of […]