World on Fire World on Fire World on Fire

by Amy Chua

  China, although it does not have a market-dominant minority, is an interesting case in point. Conventional wisdom in the West has it that since 1980, China has been rapidly marketizing without democratizing. Politics professor Minxin Pei, however, questions this conventional wisdom in a recent Foreign Affairs article called, “Is China Democratizing?” According to Pei, China has pursued significant political liberalization over the last two decades. But these changes have gone largely unnoticed in the United States, because “American politicians and news media measure the progress of political reform in other countries against a single yardstick—the holding of free and open elections” at the national level.27

  China’s political reforms, however, have had far-reaching effects. Throughout China there are now semi-open local village elections, which, despite their limitations, offer a nontrivial measure of political participation and, more critically, legitimate competitive elections as an important part of the political process. Nationally, while the Chinese Communist Party (CCP) retains its dictatorial position, significant measures have made even the national government somewhat more responsive to popular grievances and attitudes. For example, new mandatory retirement rules for government and CCP officials, while attracting little attention abroad, transformed a ruling elite dominated by aging, anti-market revolutionaries into one composed mostly of middle-aged, well-educated technocrats who have much more progressive economic and political outlooks.

  At the same time, the National People’s Congress (NPC) is no longer just a rubber stamp, but increasingly a potential challenger to the CCP’s power. Recent polls indicate that citizens view the NPC, along with a more independent legal community and local people’s congresses, as channels for popular grievances and political participation. In addition, writes Pei, the Chinese government has shifted “from mass to selective repression,” targeting a relatively small number of highly visible dissidents while granting the great majority of citizens far more economic and personal freedoms than they have enjoyed in generations.28

  But despite these and other political reforms, China today remains fundamentally autocratic at the national level. Indeed, advocates of the “markets first, democracy later” approach often cite China as a case in their favor. China, after all, stunningly quadrupled its per capita income in just eighteen years, by contrast to, say, democratic Russia, which in Robert Kaplan’s words, “remains violent, unstable, and miserably poor despite its 99 percent literacy rate.” “My point,” writes Kaplan, “hard as it may be for Americans to accept, is that Russia may be failing in part because it is a democracy and China may be succeeding in part because it is not.” Kaplan may be right. At the same time, I wonder whether the real lesson China holds for other non-Western countries is not that authoritarianism may best promote markets, but rather that democratization comes in many guises. It is still too early to tell.

  The Middle East: The Long Road Toward Democracy?

  As I suggested in chapter 10, if some version of free market democracy is the long-term goal in the Middle East, holding overnight elections is probably not the best way to achieve it. On the contrary, immediate majority elections in many of the Arab states would likely bring to power intensely anti-market, anti-Israel, anti-American, anti-globalization regimes. Moreover, counterintuitively, democratic elections in many Middle Eastern countries could well sweep in antidemocratic regimes. As Fareed Zakaria puts it, many “Islamic fundamentalist parties are sham democrats. They would happily come to power through an election but then set up their own dictatorship. It would be one man, one vote, one time.”29

  What are the alternatives? In the long term, prominent Egyptian intellectual Saad Eddin Ibrahim believes that, despite their extremism, “Islamic militants are tamable through accommodative politics of inclusion. Running for office, or once in it, they recognize the complexities of the real world and the need for gradualism and toleration.”30 Meanwhile, a number of thoughtful Middle Eastern scholars, such as Abdolkarim Soroush of Iran, have called for the gradual establishment of democracy within an Islamic framework. There are few, if any, examples of successful “theocratic democracies”—which, unlike American democracy, do not call for a sharp separation of church and state—but this avenue may offer some long-term hope for at least certain countries in the Middle East.31

  In the meantime, the United States must, even if just for our own security interests, make much more concrete efforts to stop the breeding of fanaticism and terrorism among Middle Eastern populations. The goal should not be holding elections as soon as possible, but neither should it be uncritically propping up the current authoritarian regimes. Instead, as Zakaria says, the U.S. government should continually press the Arab states on an array of other issues:

  [t]he Saudi monarchy must order a comprehensive overview of its funding (both private and public) of extremist Islam, which is now the kingdom’s second largest export to the rest of the world. It must rein in its religious and educational leaders and force them to stop flirting with fanaticism. In Egypt, we must ask President Mubarak to insist that the state-owned press drop its anti-American and anti-Semitic rants, end the glorification of suicide bombers and begin opening itself up to other voices in the country. In Qatar we might ask the emir, who launched Al-Jazeera, to make sure that responsible, moderate Muslims appear as regularly on his network as extremist bin Laden sympathizers. None of this will produce democracy, but it will slow down the spread of illiberal voices and viewpoints.32

  Market-Dominant Minorities:

  Taking the Lead against Ethnonationalism

  The previous sections on markets and democracy did not offer any quick fixes to the problem of market-dominant minorities and ethnonationalist backlash. There is a reason for this: Even assuming that free market democracy is the optimal end point for most non-Western countries, in the short run markets and democracy are themselves part of the problem. So long as markets continue to reinforce the stark economic dominance of a resented ethnic minority, as they have throughout the non-Western world, then the introduction of democratic politics, putting political power into the hands of the impoverished “indigenous” majority, will always be a source of tremendous potential instability. And we can only “adjust” and “restrain” market capitalism and democracy so much before we undermine them altogether.

  Fortunately or unfortunately, then, the best hope for global free market democracy lies with market-dominant minorities themselves. This is adamantly not to blame market-dominant minorities for the ethnonationalist backlashes against them. But it is to suggest that market-dominant minorities may be in the best position to address the most pressing challenges threatening free market democracy today.

  One of the ironies about market-dominant minorities is that they are so often perceived as “leeches” “draining away the nation’s wealth” and “a menace to the economy” when in fact they are usually a crucial source of national economic vitality and growth. This irony makes the problem of market-dominant minorities a special case of ethnic conflict, presenting both distinctive obstacles and opportunities. The obstacles stem from the overlap of class and ethnic division: In addition to all the usual problems of ethnic hatred, market-dominant minorities face the specific problem of economic resentment, often associated with stereotypes of greed, selfishness, disloyalty, and exploitation. The opportunities stem from the reality that market-dominant minorities have the skills and resources to contribute to economic growth and development.

  The challenge is to grapple with these obstacles and take advantage of the opportunities. In what follows, I begin by addressing a topic that is often treated as taboo: whether market-dominant minorities engage in objectionable practices that reinforce or exacerbate ethnic hatred. I then discuss possible affirmative measures that market-dominant minorities might take to forestall majority-based ethnonationalist backlashes against them. Ideally, and if only out of self-interest, market-dominant minorities would voluntarily take steps to foster the reality and the pe
rception that they are vital, public-spirited contributors to the national interest rather than “arrogant” and “exploitative” “outsiders.”

  Objectionable Practices

  It should be stressed at the outset that there are some market-dominant minorities who are victimized solely because of their ethnic difference and their disproportionate wealth. It should also be stressed that even where objectionable practices by these minorities can be identified, they in no way justify or excuse the kinds of violence and human rights abuses often inflicted on them. On the other hand, it is unfortunately often the case outside the West that some members of market-dominant minorities engage in practices—such as bribery, discriminatory lending practices, and violation of workplace regulations—that not only are illegal or otherwise objectionable in themselves, but also reinforce invidious ethnic stereotypes. Although there is no guarantee that eliminating these practices would improve ethnic relations, it seems important nonetheless, given the special dangers associated with market-dominant minorities, to identify such practices and take measures to curb them as much as possible.

  Corrupt relations between members of the indigenous ruling elite and members of market-dominant minorities have a long history in the developing world and invariably fuel bitter resentment among the indigenous majority. In Indonesia, for example, the intense anti-Chinese violence that erupted in May 1998 was inseparable from the association of a few Chinese magnates, such as Liem Sioe Liong and Bob Hasan, with the Suharto regime’s “crony capitalism.” As is sadly often the case, vicious popular reaction unleashed itself not on the relatively few wealthy Chinese who were actually complicit—and who used their wealth to go into hiding abroad—but rather on ordinary, struggling, middle-class Chinese Indonesians, whose shops were burned and looted.

  Similarly, in post-Communist Russia, the symbiotic relationship between President Yeltsin and a tiny handful of ruthless Jewish entrepreneurs galvanized the deep anti-Semitism latent in Russian society; honest, middle-class Russian Jews pay the highest price, often in the form of violence and desecration. In Kenya, the corrupt cronyism between President Moi and a few Indian tycoons has fueled massive resentment of Kenya’s Indian community generally, who are the regular objects of ethnic brutality and looting.

  But it is not only the wealthiest members of market-dominant minorities who engage in illicit practices; the problem is often more general. Throughout Southeast Asia many Chinese-controlled firms routinely violate tax laws, banking and lending laws, and laws concerning overtime regulations and worker safety. Even more disturbing in Southeast Asia is the common practice among Chinese businessmen, particularly in Indonesia, Thailand, and the Philippines, of importing tens if not hundreds of thousands of illegal workers from mainland China. As is true even in the United States, local workers fume when illegal immigrants take over jobs at lower wages.33 Indeed, in Indonesia, where roughly 6 million working-age Indonesians (almost all pribumi) were unemployed in 1996, the violent protest that erupted when a Chinese conglomerate imported a thousand illegal workers from China seems understandable.34

  Similarly, allegations that market-dominant Western investors expose local workers to hazardous and exploitative conditions are all too familiar. In 1995–96, writes Naomi Klein in No Logo,

  the Gap’s freshly scrubbed facade was further exfoliated to reveal a lawless factory in El Salvador where the manager responded to a union drive by firing 150 people and vowing that “blood will flow” if organizing continued. In May 1996, U.S. labor activists discovered that chat-show host Kathie Lee Gifford’s eponymous line of sportswear (sold exclusively at Wal-Mart) was being stitched by a ghastly combination of child laborers in Honduras and illegal sweatshop workers in New York.

  In June 1996, Life magazine created more waves with photographs of Pakistani kids—looking shockingly young and paid as little as six cents an hour—hunched over soccer balls that bore the unmistakable Nike swoosh. But it wasn’t just Nike. Adidas, Reebok, Umbro, Mitre and Brine were all manufacturing balls in Pakistan where an estimated 10,000 children worked in the industry, many of them sold as indentured slave laborers to their employers and branded like livestock.35

  To be sure, not all child labor is conducted under “indentured slave” conditions. Moreover, members of the “indigenous” business community also violate workplace and safety laws, and “indigenous” political elites often tolerate such violations in exchange for bribes or kickbacks. But the perception among an economically disadvantaged majority that a disproportionately wealthy “outsider” minority disregards the country’s laws and exploits the indigenous population can only exacerbate ethnic resentment.

  What to do about such illicit practices is less obvious. As economists put it, there is a “collective action” problem. In theory, if any single firm decides to comply with workplace and other regulations when its competitors do not, the likely effect is to put the compliant firm out of business. As a result, calling on individual businesses to take corrective measures is unlikely to have much effect. On the other hand, looking to the state is not promising either. The obvious problem is that the governmental actors who would have to implement reform are often the same ones corruptly benefiting from the violations.

  One as-yet unexploited resource may be the surprisingly strong ethnic organizations, both commercial and social, that many market-dominant minorities already have in the developing world. Chinese “chambers of commerce” and “clan associations” can be found throughout Southeast Asia; Indian and Lebanese counterparts exist, respectively, in East and West Africa; similar associations exist among the Bamiléké, Ibo, Kikuyu, and other “entrepreneurial” African groups. The success of these organizations in overcoming collective action problems in a variety of commercial contexts—through informal trust, peer pressure, and monitoring practices—has been widely observed. If leaders of the minority communities in a given developing country can be persuaded of the importance of, and overall gains to be had from, eliminating corrupt or illicit business practices, these organizations may have the right set of incentives and capabilities to play a significant role.

  Apart from breaking the law, market-dominant minorities sometimes engage in behavior that indigenous majorities find objectionable for a variety of reasons, some of which are themselves objectionable. Market-dominant minorities are often criticized for acting “insularly,” for indulging in “conspicuous consumption,” or for “flaunting” their ethnic pride. As a Chinese-Indonesian economist presciently worried in 1997:

  I see the problem through the eyes of my pribumi friends: I see the shopping malls, the posh restaurants, the hotels and lavish weddings, full of young Chinese who don’t seem to have any interest in national problems. These people don’t know they’re living on a time bomb. They don’t mix with native Indonesians, so they don’t know how much they’re envied and resented.36

  But what is to be done about ethnic minorities who “don’t mix” with the indigenous majorities around them? This is a tricky and morally complex issue. It is hardly clear that forced assimilation and acculturation, even if it were possible, would be desirable. Nevertheless, as will be discussed in the next section, there are important constructive measures that market-dominant outsider groups might take to counter the perception (justified or not) of their insularity and indifference to the welfare of the nation.

  A More Honorable Way:

  Voluntary Generosity by Market-Dominant Minorities

  After my aunt was murdered in 1994, my other family members in the Philippines hired personal bodyguards, erected barbed-wire fences, and bought some man-eating watchdogs. This is also how many whites in South Africa, Jewish oligarchs in Russia, and other market-dominant minorities live—in fear.

  Similarly, after September 11, Americans across the country despaired that our lives might never be the same again. We spoke of our “loss of innocence” and worried that we might have to give up our free and open way of life in order to protect ourselves from those sava
gely and psychotically angry at us around the world. Most Americans ultimately rejected that vision of life. Otherwise, “the terrorists would win.”

  But what is to be done about the underlying hatred, not just against Americans at the global level, but against market-dominant minorities everywhere in the world?

  One long-term strategy—in my mind more likely to be effective and certainly more dignified than erecting barbed-wire fences—is for market-dominant minorities to make significant, visible contributions to the local economies in which they are thriving. Although such efforts to date have been relatively few and by no means always successful in promoting goodwill, some valuable models can be found.

  In East Africa, powerful families of Indian descent—among them the Madhvanis, Aga Khans, Mehtas, and Chandarias—have made immense contributions to their local communities, often concentrating heavily on indigenous African welfare and development. Indians, for example, were principally responsible for creating the University of Nairobi, East Africa’s first nonracial institution of higher education. More recently, the Madhvanis, owners of the largest industrial, commercial, and agricultural complex in East Africa, not only provide educational, health, housing, and recreational facilities for their African employees, but also employ Africans in top management and offer a number of wealth-sharing schemes. Similarly, Kenya’s powerful industrialist Manu Chandaria, who owns fourteen companies and employs five thousand workers in Kenya, has become a household name because of the millions he has poured into local education, health, and environmental conservation.37