The Myth of the Lazy Poor

On his recent trip to Israel, Mitt Romney attributed the poverty of the Palestinians to their “culture,” citing the work of economic historians David Landes and Jared Diamond. Middle East experts have rightly denounced Romney’s remarks as racist, ignorant, and untrue. Jared Diamond himself took to the op-ed page of the New York Times to set the record straight: “That is so different from what my book actually says that I have to doubt whether Mr. Romney read it.”

This kind of claim is common among our political elite. We regularly hear accusations against the “culture of poverty” on our own shores, ranging from the famous Moynihan Report in 1965 to the so-called “welfare queen” that Ronald Reagan created to get elected. The inverse is equally common. Peruse your local bookstore, and you’re bound to find half a dozen authors attributing the rapid growth of China (or, a few years ago, Japan) to their unique Eastern brand of capitalism.

But these stereotypes — good and bad — are hardly ever true, as proven by this excerpt from Cambridge development economist Ha-Joon Chang’s eye-opening book Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism:*

Having toured lots of factories in a developing country, an Australian management consultant told the government officials who had invited him: “My impression as to your cheap labor was soon disillusioned when I saw your people at work. No doubt they are lowly paid, but the return is equally so; to see your men at work made me feel that you are a very satisfied easy-going race who reckon time is no object. When I spoke to some managers they informed me that it was impossible to change the habits of national heritage.”

This Australian consultant was understandably worried that the workers of the country he was visiting did not have the right work eithic. In fact, he was being quite polite. He could have been blunt and just called them lazy. No wonder the country was poor — not dirt poor, but with an income level that was less than a quarter of Australia’s.

The country in question…was Japan in 1915. It doesn’t feel quite right that someone from Australia (a nation known today for its ability to have a good time) could call the Japanese lazy. But this is how most westerners saw Japan a century ago.

In his 1903 book, Evolution of the Japanese, the American missionary Sidney Gulick observed that many Japanese “give an impression…of being lazy and utterly indifferent to the passage of time.” Gulick was no casual observer. He lived in Japan for 25 years (1888-1913), fully mastered the Japanese language, and taught in Japanese university. After his return to the US, he was known for his campaign for racial equality on behalf of Asian Americans. Nevertheless, he saw ample confirmation of the cultural stereotype of the Japanese as an “easy-going” and “emotional” people who possessed qualities like “lightness of heart, freedom from all anxiety for the future, living chiefly for the present.” The similarity between this observation and that of today’s Africa, in this case by an African himself — Daniel Etounga-Manguelle, a Cameroonian engineer and writer — is striking: “The African, anchored in his ancestral culture, is so convinced that the past can only repeat itself that he worries only superficially about the future. However, without a dynamic perception of the future, there is no planning, no future, no scenario building; in other words, no policy to affect the course of events.”

After her tour of Asia in 1911-1912, Beatrice Webb, the famous leader of British Fabian socialism, described the Japanese as having “objectionable notions of leisure and a quite intolerable personal independence.” She said that, in Japan, “there is evidently no desire to teach people to think.” She was even more scathing about my ancestors. She described the Koreans as “12 millions of dirty, degraded, lazy, and religionless savages who slouch about in dirty white garments of the most inept kind and who live in filthy mudhuts.”

This was not just a western prejudice against eastern peoples. The British used to say similar things about the Germans. Before their economic take-off in the mid-19th century, the Germans were typically described by the British as “a dull and heavy people.” “Indolence” was a word that was frequently associated with the Germanic nature. Mary Shelley, the author of Frankenstein, wrote in exasperation after a particularly frustrating altercation with her German coach-driver: “the Germans never hurry.” It wasn’t just the British. A French manufacturer who employed German workers complained that they “work as and when they please.”

The British also considered the Germans to be slow-witted. According to John Russell, a travel writer of the 1820s, the Germans were a “plodding, easily contented people…endowed neither with great acuteness of perception nor quickness of feeling.” In particular, according to Russell, they were not open to new ideas; “it is long before [a German] can be brought to comprehend the bearings of what is new to him, and it is difficult to rouse him to ardor in its pursuit.” No wonder that they were “not distinguished by enterprise or activity,” as another mid-19th century British traveler remarked.

Germans were also deemed to be too individualistic and unable to cooperate with each other. Once again, compare this with a comment by the African observer that I quoted above: “African societies are like a football team in which, as a result of personal rivalries and a lack of team spirit, one player will not pass the ball to another out of fear that the latter might score a goal.”

British travelers in the early 19th century also found the Germans dishonest — “the tradesman and the shopkeeper take advantage of you wherever they can, and to the smallest imaginable amount rather than not take advantage of you at all… This knavery is universal,” observed Sir Arthur Brooke Faulkner, a physician serving in the British army.

Ever since the East Asian economic “miracle,” it has become very popular to argue that it was Confucian culture that was responsible, at least partly, for the region’s economic successes. Confucian culture, it was pointed out, emphasizes hard work, education, frugality, cooperation, and obedience to authority.

But, before the East Asian economic “miracle,” people used to blame Confucianism for the region’s underdevelopment. For Confucianism does have a lot of aspects that are inimical to economic development.

Confucianism discourages people from taking up professions like business and engineering that are necessary for economic development. At least in theory, individual peasants could gain entry into the ruling class if they passed the competitive civil service examination (and they occasionally did). Artisans and merchants, however, were not even allowed to sit for the examination.

To make matters worse, the civil service examination only tested people for their scholastic knowledge of the Confucian classics, which made the ruling class scornful of practical knowledge. Scholar-bureaucrats were supposed to live in “clean poverty”…and thus they actively looked down upon money-making.

Confucianism also discourages creativity and entrepreneurship. It has a rigid social hierarchy and, as I have noted, prevents certain segments of society (artisans, merchants) from moving upwards. This rigid hierarchy is sustained by an emphasis on loyalty to superiors and deference to authority, which breeds conformism and stifles creativity.

We can perform the same exercise with any culture’s belief system. Take the case of Islam.

Muslim culture is today considered by many to hold back economic development.

Alternatively, we could say that, unlike many other cultures, Muslim culture does not have a fixed social hierarchy… Therefore, people who work hard and creatively are rewarded. Moreover, unlike in the Confucian hierarchy, there is no disdain for industrial or business activities. Muhammad, the Prophet, was a merchant himself. And being a merchant’s religion, Islam has a highly developed sense of contracts… This orientation encourages the rule of law and justice — Muslim countries had trained judges hundreds of years before Christian countries. There is also an emphasis on rational thinking and learning — the Prophet notably said that “the ink of the scholar is more sacred than the blood of the martyr.” This is one of the reasons why the Arab world once led the world in mathematics, science, and medicine.

All this is not to deny that how people behave makes a difference to economic development. But the point is that people’s behavior is not determined by culture.

People from rich countries routinely believe that poor countries are poor because their people are lazy. But many people in poor countries actually work long hours in backbreaking conditions. What makes them appear lazy is often their lack of an “industrial” sense of time. When you work with basic tools or simple machinery, you don’t have to keep time strictly. If you are working in an automated factory, it’s essential. People from rich countries often interpret this difference in sense of time as laziness.

It is true that there are a lot more people “lazing around” in poor countries. But is it because those people culturally prefer lounging about to working hard? Usually not. It is mainly because poor countries have a lot of people who are unemployed or underemployed (i.e., people may have jobs but do not have enough work to occupy them fully). This is the result of economic conditions rather than culture. The fact that immigrants from poor countries with “lazy” cultures work much harder than the locals when they more to rich countries proves the point.

As for the once much-vaunted “dishonesty” of the Germans in the past, when a country is poor, people often resort to unethical, or even illegal, means to make a living. Poverty also means weak law enforcement, which lets people get away with illegal behavior, and makes breaking the law more “culturally” acceptable.

“Living for today” or being “easy-going” — words that many people associate with Africa and Latin America nowadays — are also the consequences of economic conditions. In a slowly changing economy, there is not much need to plan for the future; people plan for the future only when they anticipate new opportunities (e.g., new careers) or unexpected shocks (e.g., a sudden inflow of new imports). Moreover, poor economies offer few devices with which people can plan for the future (e.g., credit, insurance, contracts).

In other words, culture changes with economic development. It would be far more accurate to say that countries become “hardworking” and “disciplined” (and acquire other “good” cultural traits) because of economic development, rather than the other way around.

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*This excerpt has been lightly edited to accommodate American spellings and this blog’s punctuation style.

Outsourcing Isn’t an Excuse to Abandon the Working Class

Barack Obama and Mitt Romney agree on one thing: Outsourcing is a problem.

Of course, they disagree on who’s to blame. To Obama, it’s private equity firms like Romney’s Bain Capital. To Romney, it’s deficit spending like Obama’s 2009 fiscal stimulus.

(As I pointed out two weeks ago, there’s plenty of evidence that the 2009 stimulus created millions of jobs right here in America. But never mind.)

“Countries around the world are…giving their workers and companies every advantage possible,” says Obama, but “we can win that competition.”

On Romney’s website, you can find the same language. He says our tax code “needs to be more competitive and business friendly.” We need to create a “level playing field for American products in foreign markets.”

This rhetoric is more dangerous than it seems.

It’s true that many of our exports are at a disadvantage. In countries that we trade with, the average manufacturing wage is 65 percent of the American average. In Mexico, manufacturing workers earn 11 percent of what their U.S. counterparts make. In China, they earn 3 percent.

So, the question is: Just how “level” does Mitt Romney want the “playing field” to be?

When it comes to outsourcing, Romney has a solution, but he won’t say it…because you won’t like it: The easiest way to create a “level playing field” is to lower American wages.

The dirty secret about Republican economics is that it’s all about cheap labor.

While most of the industrialized world (and much of the developing world) has experienced rising real wages in the past thirty years, American wages have stagnated.

Union membership has plummeted. The minimum wage has failed to keep up with inflation. Taxes and regulations that previously restricted the rich from siphoning the wealth of the middle class have been eviscerated.

In short, Mitt Romney’s game plan has already been put to the test.

We were told that it was a new era. We were told that we needed to sacrifice our job security, our wage increases, our retirement benefits — all in the name of globalization. We were told that America couldn’t compete with those costs around its neck. We were told that the manufacturing sector was deadweight. We were told that the working class was pulling us down. We were promised a better world filled with high-tech jobs and rapid innovation, low taxes and rising asset prices, cheap imports and even cheaper investments.

We did everything we were told. We gave up our protections and our power. And, in return, we got lower economic growth, higher inequality, productivity growth that went almost entirely to the top 1 percent, and — irony of all ironies — even bigger trade deficits.

All that cheap labor didn’t make us “competitive” after all.

All it did was line corporate coffers with more profits than ever before.

But not everyone made that mistake. According to the conservative Heritage Foundation, U.S. tax revenue is currently 27 percent of GDP. In Denmark, it’s a whopping 49 percent. They have the world’s highest minimum wage and arguably the lowest level of income inequality. Yet their unemployment rate (7.7 percent) is currently lower than ours (8.1 percent), and their economy grew at the same rate as ours from 1979 to 2007.

For another comparison, look at Sweden, where tax revenue is 48 percent of GDP. They consistently battle Denmark for the world’s lowest level of income inequality, yet they’re also ranked as the second most competitive country in the world (after Switzerland). Their unemployment rate (7.8 percent) is also lower than ours, and their economy grew faster than ours from 1979 to 2007.

Needless to say, unions are more prevalent and powerful in both of these countries than in the U.S. But arguably the most heavily unionized country is Germany, where employee representatives sit on corporate boards and have a say in industry-wide decisions. Germany’s unemployment rate (5.6 percent) is way lower than ours, and they boast a large trade surplus.

Clearly, we can raise wages and compete in the global economy at the same time. We don’t need a “level playing field” to beat outsourcing. We just need a proactive government.

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This op-ed was published in today’s South Florida Sun-Sentinel.

What’s Sauce for the Goose Is Sauce for the Gander

by Norman Horowitz

Yesterday, I questioned the hypocrisy of punishing Ozzie Guillen for “admiring” Fidel Castro while simultaneously honoring the repression of our trading partner China. I also questioned the hypocrisy of apologizing to the victims of Castro’s dictatorship while simultaneously ignoring the victims of the US-backed dictatorship of Fulgencio Batistia, whom Castro overthrew.

Today, I have a new “proportional dilemma”:

[Last month,] Pope Benedict XVI…met with Fidel Castro for a half-hour before departing for Rome, wrapping up a weeklong trip to Mexico and Cuba.

The pope did not meet with Cuban dissidents during his trip…

The site where the pope delivered Wednesday’s Mass — Havana’s Plaza of the Revolution — is the same place where Castro…delivered countless speeches over the decades.

If critics of the Castro government were looking for a more direct challenge to Cuba’s one-party state and a push for greater political freedoms, Benedict did not deliver.

If Catholics insist that Ozzie Guillen must apologize, will they also insist that Pope Benedict apologize? If Guillen must step down from his job for five days as punishment, must the Pope also step down for five days?

Be Careful Whom You Admire

by Norman Horowitz

Ozzie Guillen said something “politically incorrect.” For his punishment, the Miami Marlins have suspended him for five games.

In his “politically incorrect” remarks, Guillen expressed admiration for Fidel Castro. In response, the team apologized to “victims of [Castro’s] dictatorship.”

It appears that it no longer matters that Fidel Castro led a movement that overthrew Fulgencio Batista:

[Batista] was the United States-aligned Cuban President dictator and military leader who served as the leader of Cuba from 1940 to 1944 and from 1952 to 1959, before being overthrown as a result of the Cuban Revolution.

…Batista suspended the Constitution and revoked most political liberties, He  aligned with the wealthiest landowners who owned the largest sugar plantations, and presided over a stagnating economy that widened the gap between rich and poor Cubans. Batista’s increasingly corrupt and repressive regime then began to systematically profit from the exploitation of Cuba’s commercial interests, by negotiating lucrative relationships with the American mafia, who controlled the drug, gambling, and prostitution businesses in Havana, and with large multinational American corporations that had invested considerable amounts of money in Cuba. To quell the growing discontent amongst the populace — which was subsequently displayed through frequent student riots and anti-Batista demonstrations — Batista established tighter censorship of the media, while also utilizing his anti-Communist secret police and U.S.-supplied weaponry to carry out wide-scale violence, torture and public executions; ultimately killing as many as 20,000 Cubans.

The victims of Batista’s dictatorship never received an apology…from the Marlins or anyone else in this country.

Moreover, the “Batista transgressions” were, to the best of my knowledge, unreported in our freedom-loving country by our freedom-loving mainstream media.

To punish Ozzie Guillen for speaking of his admiration of Fidel Castro is about an un-American an act as I can remember anyone perpetrating in the game of baseball.

At this very moment, representatives from the mainstream media outlets are visiting China, a horridly repressive country that does not honor copyrights, and they are honoring their repressive television service.

So riddle me this: If it is a good thing to be nice to a repressive country and their media, why is it a bad thing to say something nice about Fidel Castro?

Our hypocrisy is stunning and sad.

Quote of the Day: Noam Chomsky

American decline is real, though the apocalyptic vision reflects the familiar ruling class perception that anything short of total control amounts to total disaster. Despite the piteous laments, the United States remains the world dominant power by a large margin, and no competitor is in sight…

— Noam Chomsky (MIT)