Tuesday, July 31, 2012

A country's culture does make a difference

It's no surprise that the AP and NPR have mischaracterized Romney's speech on the importance of culture in the economic success of a country. Of course, Palestinian radicals want to make it seem as if Romney was making a racist comment, but if you read his entire remarks, he was actually making a very thoughtful comment, based on his reading of David Landes's "The Wealth and Poverty of Nations." First he counters the argument that the natural resources and physical characteristics account for the differences in peoples as Jared Diamond wrote in "Gun, Germs, and Steel" by looking at Israel.
And you look at Israel and you say you have a hard time suggesting that all of the natural resources on the land could account for all the accomplishment of the people here. And likewise other nations that are next door to each other have very similar, in some cases, geographic elements. But then there was a book written by a former Harvard professor named ‘The Wealth and Poverty of Nations.’ And in this book Dr. Landes describes differences that have existed—particularly among the great civilizations that grew and why they grew and why they became great and those that declined and why they declined. And after about 500 pages of this lifelong analysis—this had been his study for his entire life—and he’s in his early 70s at this point, he says this, he says, if you could learn anything from the economic history of the world it’s this: culture makes all the difference. Culture makes all the difference.
Romney argues that the people who came to Israel to settle realized that they had to be self reliant. He refers to a book, "Start-Up Nation," by Dan Senor and Saul Singer about Israel's economic success and the cultural factors that led to it.

If you look at countries by GNP per capita according to the IMF, it is startling to compare Israel with its neighbors. Israel's is $30,975. Even if you want to buy into the Palestinians' arguments that their GDP is limited because of Israeli restrictions and thus we should discount their figure of $2,465, how about Jordan which doesn't suffer from those restrictions but has a GDP of only $5,900. Surely, there is a difference between Israel's and Jordan's cultures that accounts for a lot of that difference. Just consider what Israel must spend on defense and security situated as it is in such a hostile environment. How else do you explain the differences in economic growth?

But I do discount those Palestinian complaints that Israel is to blame for all their ills. They're the ones who chose Hamas to lead them in Gaza. How has that turned out for them. The most telling example of the differences in culture came from when Israel unilaterally pulled out of Gaza. They left behind high-tech greenhouses that had been built there as an asset on which Palestinians could have built a basis for commercial success. Within hours of the Israelis leaving, Palestinians looted and destroyed those donated greenhouses and lost their opportunity to build up their economy.

As Max Boot points out, there are Arab intellectuals who have been issuing reports and papers agreeing with Romney's basic premise.
This drew an outraged reaction from veteran Palestinian processor Saeb Erekat who claimed: “It is a racist statement and this man doesn’t realize that the Palestinian economy cannot reach its potential because there is an Israeli occupation.”

In point of fact, there was nothing offensive–or particularly novel–in Romney’s observation. His words could have been drawn from the UN’s Arab Human Development Reports, written by Arab intellectuals, which have reached damning conclusions about the lack of freedom, education, women’s rights, and other factors holding back the Arab world. As the latest such report notes: “The Arab region is dominated by long-standing state structures which have inhibited the empowerment of Arab individuals and communities.”

The Arab Human Development Reports were considered big news when they first started coming out a decade ago because they represented a break with an age-old tradition in the Arab world: that of blaming outsiders for all of one’s woes. For decades Arab rulers, echoed by compliant intellectuals, have chosen to blame “Zionists,” “imperialists” and other bogeymen for their countries’ shortcomings. Thankfully, the Arab Spring represents a moment of self-awareness in which Arab publics are realizing that their own leaders are the cause of their woes.

There has been a corresponding, welcome development in the Palestinian Authority, where Prime Minister Salam Fayyad has been working to increase educational and economic development in the West Bank rather than simply claiming that “Israeli occupation” (which is nonexistent in the entire Gaza Strip and much of the West Bank) makes any progress impossible. Yet when push comes to shove, it is all too easy for veteran politicos like Erekat to fall back into veteran “blame the oppressor” mode and to damn anyone who speaks the truth–namely, that if Israel could prosper with no mineral resources, while surrounded by vastly larger enemies bent on its destruction, then why can’t Palestinians prosper with the support of the entire Arab world?

Much of the answer, of course, is that Palestinian development has been hijacked by corrupt opportunists (like those who dominate the Palestinian Authority) and fanatical extremists (like those who run Hamas). Gov. Romney was guilty of no gaffe. He was just telling it like it is: If Palestinians are to prosper, their culture–characterized all too often by anti-Semitism and blame-mongering–needs to change. Saeb Erekat’s comments only underline the point.
And, as Charles C.W. Cooke reminds us, there is a difference between culture and race although Palestinian activists were quick to jump on the liberals' favorite excuse and call Romney's comments racist.
Contra the fashionable conceits of our post-modern zeitgeist, some cultures are in fact better than others. (The Left selectively knows this, too: Just ask a progressive about how women and homosexuals are treated in Saudi Arabia and their cultural equivalence falls apart in a matter of seconds.) Cultural superiority has to do with more than just the scale of the GDP that it engenders, but GDP is often an indicator of a society’s virtues.
In fact, the rejection of the idea that culture contributes to economic success is similar to the liberals' rejection of the idea that individual effort is responsible for much of the success of a business. They prefer to look to government's assistance, but that doesn't explain why some succeed and some don't. It doesn't explain why a country like Russia, with plenty of government assistance for roads and other infrastructure as well as bountiful natural resources has a GDP of only $16,736.

Instead of rejecting Romney's point, it would be better to examine why some countries are wealthy and some are poor. Clearly, cultural differences such as having respect for the rule of law as well as for hard work and individual enterprise play an important role. David Landes has written an extremely well-researched book looking at just that question. Democrats liked to make fun of George W. Bush as some sort of intellectual ignoramus who didn't, contrary to evidence, read books. Well, here Romney is basing an argument off of the books he has read and critics just want to cry racist instead of dealing with the much more thoughtful point he was making.

UPDATE: Daniel Rothschild at AEI also writes on the intellectual framework behind Romney's speech.
The truth is, culture matters greatly for economic growth, and culture is a huge determinant of whether societies grow or remain stagnant. David Landes’s classic The Wealth and Poverty of Nations is a classic explication of this idea. More recently, Dierdre McCloskey argues that the Industrial Revolution (that is, the reason we have countries with Israeli-level GDP and we’re not all as poor as the Palestinians) went hand-in-glove with a rhetorical and ideological transformation in Europe towards favoring property, trade, and commerce. (And historian Martin Wiener traces Britain’s decline in the twentieth century to a “declining industrial spirit.”)

Douglass North won a Nobel Prize for his work on the role that institutions play in economic growth–including “informal constraints,” or culture. In his 1990 book Intitutions, Institutional Change and Economic Performance, he writes, “[F]ormal rules, in even the most developed economy, make up a small… part of the sum of constraints that shape choices…. In our daily interaction with others, whether within the family, in external social relations, or in business activities, the governing structure is overwhelmingly defined by codes of conduct, norms of behavior, and conventions.” These informal constraints “come from socially transmitted information and are part of a heritage we call culture.” (Links to sources in original)
Rothschild also the link between Mitt's remarks on the importance of culture and the debates over Obama's "you didn't build that" speech.
Indeed, the role of culture is the subtext of the great “you didn’t build that” debate. America is culturally a country that basically believes in free enterprise and the idea that we are, in fact, largely responsible for our own successes in life. It is that culture that has been responsible for our economic dynamism and economic growth. Culture is not genetic; it is not unalterable, and it can and does change over time.

The question facing America is whether we intend to keep that culture.
And that is what this election is about.