TCG National Conference 2003
AMY CHUA
TCG National Conference, June 13, 2003
AMY CHUA: It's wonderful to be here this morning. Thank you all for getting up and coming. I should say that people in my own field, which is law, tend to talk mostly only to each other, so I find it truly admirable that theatre leaders, like yourselves, want to engage in conversations with people from other disciplines and, as Joan mentioned, that your frame of reference encompasses global as well as national perspectives. I think that, given where we are in the world today, this could not be more important. But I am just delighted and really honored to be part of your conference this year. I would also like to give a special thanks to the board of directors and the staff of TCG for inviting me and for organizing this talk.
As coached, my plan is to speak for about 30 or 40 minutes and, what I think I'll do, is I'll just start by presenting the main thesis of my book, and I'll try to illustrate that thesis with specific examples from countries all over the world, ranging from Indonesia to Venezuela to Sierra Leone. I'll then shift my focus to the United States and say a little bit about how I think we fit into this picture and, in particular, I'll say something about the implications of my analysis for the challenge to reconstruct Post-war Iraq. And then we'll open things up for questions.
So, let me begin by taking you back to 1989: the fall of the Berlin Wall, the death of communism. As you may remember, a kind of consensus—really, a triumphal consensus—emerged at that time, not only in the United States, but, to a considerable extent, around the world. And that consensus was that markets and democracy, working hand in hand, would transform the world into a community of modernized, productive, peace-loving nations. In the process, ethnic hatred, religious zealotry and other backward aspects of underdevelopment would be swept away. Unfortunately, if you look at the last 15 years, something very different has happened. Since 1989, we have seen the proliferation of ethnic conflict, intensifying nationalism, fundamentalism and anti-Americanism, confiscations, expulsions, calls for re-nationalization and two genocides of magnitudes unprecedented since the Nazi Holocaust. Why? What happened? Part of the answer, I think, lies in the relationship and, increasingly, the explosive collision between what I think are the three most powerful forces operating in the world today: markets, democracy and ethnic hatred. And the main point I want to make this morning is that contrary to conventional wisdom is that markets and democracy, at least in the raw form that they're currently being promoted, may not be mutually reinforcing in the developing world. On the contrary, in many non-Western countries, markets and democracy may be on a collision course. And the reason for this has to do with a phenomenon that is absolutely pervasive outside the West, and yet almost never acknowledged—in fact, viewed as taboo and not politically correct to talk about. And this is the phenomenon of market-dominant minorities. And by this I mean ethnic minorities who, along with foreign investors, can be expected, under market conditions, to economically dominate the indigenous majorities around them, at least in the near to midterm future.
Examples of market-dominant minorities include the Chinese throughout Southeast Asia. Most recently, I think unknown to most Americans, ethnic Chinese have literally taken over the economies of Rangoon and Mandalay in Burma. Other examples are Indians throughout East Africa and parts of the Caribbean, the Lebanese in West Africa and parts of the Caribbean, the Ibu in Nigeria, the Bamiléké in Cameroon, Tutsi in Rwanda, Kikuyu in Kenya, whites in South Africa, whites in Zimbabwe, Croatians in the former Yugoslavia, Jews in post-Communist Russia, Tamils in Sri Lanka, Bengalis in Assam, the list goes on really strikingly as I try to document in detail. Now, at this point, let me flag something that I hope is obvious from that list. And that is—and this is also why I think this topic shouldn't be taboo—that is that groups can be market dominant for very different reasons. I'm certainly not equating market dominance with any kind of inherent superiority. Groups can be market dominant for reasons ranging from superior entrepreneurialism—whatever that means—to a history of apartheid or colonial oppression. So, if, as with whites in South Africa, a minority uses force to relegate the majority to inferior education and inhumane conditions for over a century, then you're likely to be a market-dominant minority and this has nothing to do with culture. On the other hand, by market dominance, I am not talking about vague ethnic stereotypes—and this sounds strange, but, in a way, that's something that we have the luxury to be concerned with in this country. Instead, by market dominance, I am talking about actual, starkly disproportionate control of major sectors of the economy. So, in the Philippines, where my own family is from, the Chinese—and my own family is ethnic Chinese—the Chinese make up just 1 percent of the population, but control as much as 60 percent of the private economy, including all the major airlines and virtually all the major banks and businesses. Similarly, in Zimbabwe, up until just a few years ago, before Mugabe's land seizures, whites also constituted about 1 or 2 percent of the population, but controlled 70 percent of the country's best land, largely in the form of the 3,000 plus acres of very productive commercial farms. Less well known, but very typical of many Latin American countries: In Guatemala, a tiny minority of very light-skinned elites control almost all of the nation's wealth, while Mayan Indians, nearly 70 percent of the population, live in abject poverty. Similarly I recently spent a lot of time in Bolivia, a country that's having a lot of problems along with Peru, and, at one point, I was having dinner with a wealthy, very intelligent businessman, who was actually the brother of the country's new president. And he said to me, and this is a direct quote, "This is a country where 3 percent of us run everything—politics, culture, the economy—and 65 percent of the population have no future." It's very striking in a country, Bolivia, where the majority of the population are Amerindian—and very visibly so—principally Quechua and Aymara Indians. The president is very white, at least by U.S. standards. He spent most of his life in Connecticut. He was educated at the University of Chicago and he speaks Spanish with an English accent.
The phenomenon of market-dominant minorities has a number of very sobering implications for international policy, for all of us. Most crucially, in developing countries with a market-dominant ethnic minority, markets and democracy will tend to favor, not just different people, different classes—but different ethnic groups. Markets will magnify the often astounding wealth of the market-dominant minority, with its huge head start, while democracy increases the political power of the impoverished indigenous majority. In such circumstances, which are very different from those in the West—in all the Western European countries and the United States we don't have a market-dominant minority—but in such circumstances, where the rich aren't just rich, but also belong to a resented outsider ethnic group, then the pursuit of free-market democracy often becomes an engine of potentially catastrophic ethno-nationalism, pitting, on the one hand, a poor indigenous majority, easily manipulated and aroused by opportunistic, vote-seeking politicians, against these wealthy outsiders. And these outsiders include both these foreign investors and these foreigners within.
Let me quickly illustrate with Indonesia, which provides an ongoing illustration. Free-market policies in the '80s and '90s led to a grotesque situation, I would say, in which the country's tiny 3-percent ethnic Chinese minority controlled an astounding 70 percent of the private economy. People—especially economists I know—often like to blame the extreme economic dominance of the Chinese minority on crony capitalism. It's a way of protecting markets. And they say, "Look, if we just had really uncorrupt, really good, strong, free and fair markets, then the Chinese wouldn't be so dominant and all ethnic groups would rise equally. And, unfortunately, I think that that is just the easy way out and flies in the face of all the historical facts. It's important to acknowledge that the Chinese in Indonesia and in all the Southeast Asian countries are economically dominant at every level of society. So it's true that, while they own all the major conglomerates, and all the billionaires are ethnic Chinese—and certainly a handful of those are very corrupt—it's also the case the Chinese dominate trading in rural areas and small-scale retail and wholesale commerce in urban areas. In other words, most of these Chinese are middle class and not the recipients of political favoritism. In any event, this extreme economic dominance of this tiny, 3-percent, outsider Chinese minority naturally provoked massive, widespread, long-suppressed hostility among the indigenous pribumi majority. Here, again, it's important to note that this hostility and envy existed and intensified, despite the fact that all boats were lifted during this period. In my own view, the debate on globalization typically gets stuck in a really boring way with half the people saying globalization lifts all boats and the other half of the people saying globalization is bad for the environment and doesn't help the poor. I think that the really disturbing thing about my arguments is that they hold even when all boats are lifted because how much are they lifted by? During this period, the '80s and '90s, in Indonesia, average incomes did go up all around, but sometimes by one penny a day. And these small improvements were overwhelmed by the majority's continuing very extreme poverty and by the contrasting hated minority's very visible, very extraordinary success.
Now, what happens when you democratize in these circumstances? Well, unfortunately, the introduction of democracy in 1998 in Indonesia, which was hailed with euphoria in the United States, produced a violent backlash against both the Chinese and against markets. Five thousand homes of ethnic Chinese were burned and looted. Two thousand people died. One hundred and fifty ethnic Chinese women were gang-raped. Free and fair elections in the middle of all these—which Thomas Friedman of the New York Times was especially excited about—naturally gave rise to ethnic scapegoating by demagogic politicians, who found that the best way to get votes was not by proposing sound economic policies, but by calling for confiscation of Chinese assets and the establishment of a people's economy that would finally return Indonesia's wealth to the pribumi majority, the country's true owners. Because of these calls for confiscation and the violence, most of the wealthiest Chinese Indonesians left the country, taking with them between $40 and $100 billion of ethnic Chinese-controlled capital, plunging that country into an economic crisis from which it has still not recovered.
And what I argue, in the book, is that whenever free markets and democracy—at least, again, in their current form—are pursued in the presence of a market-dominant ethnic minority, the almost invariable result is not peace and prosperity, but backlash. This backlash, moreover, doesn't just come in just kind of any old form, but typically takes one of three very predictable forms. The first backlash is a backlash against markets, targeting that hated minority's wealth, for example, by confiscation or nationalization of that minority's assets. The second kind of backlash is a backlash against democracy by forces favorable to that rich minority. The third and most vicious form of backlash is majority-supported violence, basically aimed at killing off the hated minority itself. And these three kinds of backlashes are playing out all over the non-Western world today in countries with totally different histories, cultures, geographies and backgrounds—and let me try to illustrate some of these. So, the first kind of backlash I mentioned is an ethnically-targeted anti-market backlash. Let's go back to the case of Indonesia. Again, I think, unknown to most Americans, the Indonesian government is currently sitting on about $58 billion worth of nationalized industrial assets, almost all formerly owned by Chinese tycoons—and these assets, formerly very productive, are just stagnating. They're just sitting there while unemployment and poverty deepen. But the government is afraid to re-privatize those assets precisely because there is so much hostility among the indigenous majority against Chinese and, unfortunately, now against U.S. vultures swooping back in to control the economy. In part, as a result—or largely as a result—a frightening 40 million Indonesians today are underemployed or unemployed. Needless to say, these 40 million extremely poor, frustrated, often ideologically lost Indonesians—particularly the young men—are prime targets for extremists, fundamentalists and terrorist organizations. And Indonesia is just one example of a much larger global pattern. The confiscations in Zimbabwe, in Ethiopia are other examples of an ethnically targeted anti-market backlash. These are not about communism or socialism, really. It's about leveling the class structure. It's really about stepping into that hated minority's shoes through confiscation or nationalization.
Now, perhaps more surprisingly, you're also seeing the same phenomenon—that is a growing number of ethnically tinged anti-market movements—in Latin America. And I say this is surprising because this is a developing region that, historically—at least in the last 50 years—has seen much less ethnic strife. There's been class conflict, a lot of corruption, but not really ethnic strife—and that's because of the much more muted ethnic lines. From the beginning, the Spanish colonizers—who were evidently less repressed than the British—mixed freely with the indigenous populations, from the very beginning, creating lines that are not really black and white, but really a spectrum. Of course, it's not true that there are not ethnic issues. Many of you have probably had conversations or debates about this. The result is really what sociologists have called a pigmentocracy—that is a spectrum with the taller, lighter skinned, much wealthier minority at one end and the shorter, darker Indian- and African-blooded masses at the other end. Nonetheless, there has been a powerful mestizo narrative: "We're all mixed; there are no ethnic problems here." However, this may be changing with globalization. In Bolivia, for example, Felipe Quispe, an Aymaran Indian known as El Mallku, or the Great Condor, recently stunned the elite establishment by fermenting a powerful indigenous movement in La Paz that was explicitly anti-white and anti-market. The reason it's so surprising, is because there's been so much internalized race self-hatred that most people didn't want to be identified as Indian. But, again, this is changing. As a Bolivian friend of mine put it, " For the first time in history, an organized Aymara leader is asking those who are not indigenous to leave the country." And Mallku's rhetoric is a lot like Robert Mugabe's in Zimbabwe. Some quotes from him are, "Bolivia's land belongs to the Aymara and Quechua Indians and not the whites" and "We indigenous peoples are like foreigners in our own land; the whites should leave the country." There's sometimes a tendency, in the United States, for people to romanticize indigenous leaders. The Financial Times described El Mallku as "a natural born rebel with a cause." But Mallku is not altogether a savory character. He was jailed in the 1990s for guerilla warfare; he's been accused of corruption; and he may have participated in blowing up electrical infrastructure a few years ago. Much more appealing and reasonable is Quispe's fellow Aymara Indian Evo Morales, who placed second in the last presidential election and probably would have won if it had been a majority vote. Morales has not been nearly so hate-mongering and yet—and this is very striking—he too campaigned on an explicitly ethnic and pro-nationalization platform, emphasizing that Bolivia's indigenous peoples are the absolute owners of the land.
So, I think what we're seeing here is some of the unpredicted, at least by some, forces of globalization at work. The movement in Bolivia was very closely patterned on the Conaie movement in neighboring Ecuador, which was also an indigenous movement and also explicitly anti-market and anti-U.S. In the 1990s, after the fall of the Berlin Wall and that burst of optimism, I think most people just thought it was going to be so easy. Most people thought the spread of globalization was going to bring about capitalism and democracy and human rights and liberal values and that all these things would kind of go together. But what we've seen is that illiberal ideologies, identity politics and ethnic demagogery and ethnic hatred can cross borders too, with just as much speed and just as much intensity. And this is, I think, perhaps, the single most important new trend in Latin America today. Not just in the Andean region, in countries like Peru and Bolivia, where Amerindians are a majority or a near-majority of the population—that's where it's most stark—but you also see variations of this same phenomenon throughout Latin America even in countries, like Brazil and Venezuela, where it's less of an ethnic conversation, but you're also seeing populace leaders appealing to the poor, disaffected masses by campaigning on anti-American, anti-IMF, anti-free market policies and increasingly coming to power in free and fair elections. The election in 1998 of Hugo Chavez, in Venezuela, is probably the most striking and, many would say, most disastrous example of this. A lot of people in this country prefer to forget it, but Chavez came to power in legitimate elections. I think one of the biggest disgraces for the United States was when, in 2002, our government hailed the coup against Chavez as a victory of democracy. We can't just call anything that's pro--United States democracy. But I am not a fan of Hugo Chavez; I don't think he's particularly rule-of-law oriented; he's not been good for the country—but he was democratically elected. And it's interesting to ask how he did it. He didn't really have any policies, but he generated mass support for himself by, in some ways, scapegoating. He championed the rights of the extremely poor, generally darker-skinned majority—and there was a little ethnic twist in there. He called himself the "Indian from Barinas." And he ferociously attacked foreign investment, the United States and the country's extremely wealthy business elite. He called Cuba a "Sea of Happiness" and, on those slogans, won.
Okay, so those are all examples of the first kind of backlash I mentioned: an anti-market backlash. But there's a second kind of backlash, maybe even more common. And that's because, as you all know, in the contest between an economically powerful, tiny ethnic minority and a numerically powerful, poor majority, the poor majority doesn't always win. Very often, the money wins. Instead of a backlash against the market another very likely outcome is a backlash against democracy, favoring the market-dominant minority at the expense of majority will. Examples of this are extremely common. Sometimes we don't even recognize it. And here, let me just say to move on, kind of as a thought experiment: If you try to think, in your own minds, of the world's most outrageous, notorious examples of crony capitalism, I think you will find that every single one of them involved a market-dominant ethnic minority. So, General Suharto in Indonesia—the U.S. government prefers to forget this, but Indonesia was a U.S. darling for years and that's because, under Suharto, Indonesia pursued aggressive economic liberalization and pro-foreign investment policies. But to that end, in order to do that, Suharto had no choice. He had to reach out to his country's tiny Chinese business community. Throughout his rule Suharto not only protected the Chinese politically—which he did, he clamped down on all journalism, anti-Chinese labor movements—but he also affirmatively directed lucrative business opportunities to a very few, a select handful of them, really, just three men. And these Chinese returned—the Chinese, on the whole, returned these favors both by generating enormous economic growth for the country—which they did; I think it's important to acknowledge that—but also by adding enormously to the personal wealth of the Suharto family. Other examples of crony capitalism: Ferdinand Marcos in the Philippines. Again, I don't know if most people know this, but Marcos was—his dictatorship was extremely Chinese-friendly. Imelda Marcos collected—all you had to do, if you were Chinese, was give Imelda Marcos big birthday presents every year, you know, on the order of $9,000, and she was a silent partner in most Chinese corporations. But many of the Chinese were happy with that. When they realized that their assets weren't going to be confiscated, that, instead, they would just have to give these birthday presents to Imelda, they were fine with it. Many of my own relatives in the Philippines look back fondly to the Marcos days. Another example—outrageous examples of crony capitalism: Kenya, President Daniel Arap Moi's very corrupt regime in Kenya, which just, finally, came to an end. If you look closely, you see that that, again, was propped up, very closely bound up, with a tiny handful of extremely wealthy Indian tycoons. And, finally, Sierra Leone. I think when most of us think about Sierra Leone, we just think of mass anarchy, but if you ask yourself, "What did that country look like before the rebels took over?" you will find a pattern that is typical throughout West Africa. And that is President Siaka Stevens, the indigenous president, again in a symbiotic, milking relationship with a small cohort of enormously rich Lebanese businessmen who control the diamond industry. In all these cases, a president-turned-dictator, along with a handful of this extremely entrepreneurial market-dominant minority, essentially milked the country for years, generating vast amounts of wealth for themselves with almost none of it going to the majority of the population. So, that's all examples of the second kind of backlash—a backlash against majority will, against democracy.
Finally, I argue—this is tricky—that both the Rwandan and the former Yugoslavian genocides are, in part—and I really want to stress "in part" here because there was so much more going on in both of those cases—but I still suggest that they are both, in part, manifestations of the third kind of backlash that I mentioned, that is, ethnic cleansing targeting a starkly disproportionately wealthy market-dominant minority. And I'm not going to go into detail here, but I'm happy to take questions. I will just point out that the Tutsi, in Rwanda, were a 14-percent minority who, for hundreds of years, politically and economically dominated the 80-percent Hutu majority, in part because the Belgians favored the Tutsis, who were supposedly taller, with finer, lighter features. And I think this case—I just mention it because it illustrates how artificial and manipulatable and made-up, in some ways, dangerously made-up, this idea of ethnicity is. Before the Belgians came there were distinctions, but the lines between the Hutu and Tutsi were much more porous. It was almost more of a class thing. Wealthy Hutus could become Tutsis, in a sense, and there was more intermarriage. When the Belgians came to rule the country, they pursued divide-and-conquer policies, but what they did is they brought in scientists, specious scientists who measured everybody's noses and lip sizes and calculated everything and then issued ethnic identity cards and, after that, people were either Tutsi or Hutu and that was etched in stone. Now the result of this was that the 14-percent Tutsi minority was always almost like an overlord minority and, unfortunately, for the long-oppressed, humiliated Hutu majority, by the time democracy came around, it was all about revenge. The killings of 800,000 Tutsis over just three months, were, unfortunately, majority supported and, in fact, majority executed.
Now, what does all this have to do with the United States? How do we fit into this picture? And I have two answers and I think that they're both sobering. First, we are, and we have been, the principle exporters of markets and democracy. The United States, both on its own and with international institutions, like the World Bank and the IMF, has often imposed on the poor countries of the world the very market policies and democratic processes that have fueled the ethno-national dynamics I have just described. And I'll have more to say about this and what I think we should do about going forward in a moment. But there's a second point I want to make about the United States, very different kind of point. And, here, let me shift gears a little bit. So far, in my comments today, I have focused on dynamics within individual countries. In the final part of my book, however, I suggest by analogy that, at the world level, the United States itself has come to be perceived as a kind of global market dominant minority wielding wildly disproportionate economic power relative to our size and numbers. Just 4 percent of the world's population, we are seen everywhere as the principle engine and the principle beneficiary of global capitalism. And, in part, as a result—there are other factors—but, in part, as a result, the U.S. has become of mass, popular, often demagogue-fueled resentment and hatred of the same kind that is directed at so many other market-dominant minorities around the world. No, obviously the analogy is not perfect. For one thing, Americans are not an ethnic minority—instead, we're a national origin minority, which is a close cousin. Although, I should say that I think that our face to the outside world is definitely white. I think it's George W.'s face. There are other reasons that the analogy isn't perfect and that's because there is no democracy at the global level. And, of course, again, there are many other factors in play: our cultural dominance, our foreign policy, our military practices. Nevertheless, with those caveats, I think you'll see precisely the same kinds of backlashes that I've just described also operating today at the world level, only now directed at the United States, whether, for example, in the form of U.N. resolutions passed in the General Assembly, every one of which seeks to redistribute wealth away from the United States, or the Sept. 11 terrorist attacks.
Now, I teach at a law school and my lawyer colleagues often say to me, "Why do you make this analogy? It's so imperfect that it undercuts your whole argument." But one of the reasons that I really like this analogy is because it highlights a deep inconsistency in U.S. policy—and this is an inconsistency that the rest of the world is acutely aware of and, I think, a tremendous source of resentment against us. And that is that, when the U.S. calls for world democratization—and here I'm going to give us the benefit of the doubt—when the U.S. calls for world democratization, what we envision, at best, is a world of lots of democratic countries with ourselves at helm leading all those countries. The last thing most Americans want is a true world democracy in which our economic and political fate is determined by a majority of the world's citizens or a majority of the world's countries. The idea of the U.N. General Assembly controlling U.S. foreign investment policy, for example, would not be appealing to most Americans. And this makes sense. Like other market-dominant minorities, we don't trust the relatively poor, frustrated, resentful majorities surrounding us to necessarily act in our best interests.
Now, what should we do about all this? What are the implications of market-dominant minorities for international policy making—and for everyone? Should we stop trying to promote markets and democracy in non-Western countries? And my own view, and I have to admit this is partly personal, is, I think, absolutely not—we shouldn't stop trying. In my own view, I believe that some form of market-generated growth offers the best hope for developing countries. And I'm also not in the "markets now, democracy later…or maybe never" camp, that has become increasingly popular and, I think, is principally associated with Robert Kaplan these days and I can explain why I'm not in that "markets first, democracy later" camp. So, in other words, despite the title of my book—which I did not come up with, that was my publisher—despite the title of my book, I am very much in favor of promoting both markets and democracy globally. But there are many different versions of free-market democracy and I think we have clearly been exporting the wrong version. In fact, I think we've been exporting a caricature. There is no Western nation today with anything close to a laissez-faire system. Even with our complaints, we have social security, antitrust laws, anti-monopoly laws, progressive taxation—at least until very recently we had progressive taxation. And yet, for the last 20 years, we have been urging poor countries around the world to adopt a bare-knuckled brand of capitalism that the U.S. and Europe abandoned a long, long time ago: basically raw capitalism with no safety nets or redistribution. It's the same with democracy—although I think this point is more controversial. Since 1989, the United States has been pressing developing countries, with the glaring exception of the Middle East, to implement immediate elections with universal suffrage. Now, we have to be honest. This is not the path that any of the Western nations took. In all the Western nations, including the United States, we explicitly disenfranchised the poor for many generations, with explicit property qualifications. Now, in my own view, that's off the table, disenfranchising the poor. You'd be surprised. Even—I've talked to people from Ecuador, many other countries, this is the business class, who say, "Why can't we do that? You did that. We need to stabilize markets. Why can't we disenfranchise our poor for a couple generations?" [laughter] But in my own view, that should be off the table. I think, more importantly, even today, democracy in the West means much more than just unrestrained majority rule. It's also about—well, I think every country has to figure out for itself what it is—but at a minimum, I also think it's about minority protections, constitutionalism, human rights. A lot more is needed than just shipping out ballot boxes for elections, which, of course, brought people like Slobodan Milosevic to power.
So, that's one of my main policy thrusts. I think we need to rethink the kinds of markets and democratic processes that we should be promoting, for starters. We should actually try to know something about the countries that we're supposedly helping. I do think we have to find ways to spread the benefits of global capitalism beyond just a handful of market-dominant minorities and their foreign investor partners and to find ways to give the poor majorities of the world a stake in a market economy. I think even those of us who have traveled a lot tend to forget how different the non-Western world is from our own society. In the United States, you know, we gripe a lot, but it's the solid fact that the vast majority of Americans—even members of the lower and middle classes—own shares in major U.S. corporations, often through pension funds, and they want the New York Stock Exchange to do well. This is absolutely not the case in the non-Western world, where the corporate sector is often controlled by, privately held by single families belonging to a market-dominant minority. So, in South Africa, which has been a democracy since 1994, still owns, still just represents 2 percent of the Johannesburg Stock Exchange. Similarly, throughout Southeast Asia, Latin America, Africa, almost no members of the poor majority have any stake whatsoever in the corporate sector. So, for these majorities, what are free markets? What is privatization? What do they see? For them, it means unemployment—because in order to privatize, and to realize efficiencies, you need to get rid of redundant labor—so it means unemployment and higher prices for electricity, fuel and water because of the removal of subsidies. Once we realize what market policies have bought, then it's almost rational, it's almost rational that they would vote for an anti-market leader.
Now, I also make a very different kind of policy suggestion and this is that I call on market-dominant minorities themselves—whether it's the Lebanese in West Africa, or the Chinese in Belize or Southeast Asia, or the Indians in East Africa, or the U.S. at the global level—to step up and take a role. That is, I try to make the case that it is in the best interests of market-dominant minorities to avoid objectionable practices and to make voluntary and visible contributions to the economies in which they are so clearly thriving and dominating. It's not so much for the redistributive potential, because I don't think we should underestimate the depth of poverty, but I think the symbolic importance of such gestures of generosity and humility and cooperation should not be underestimated.
And this is a good transition to the topic I want to close with and this has to do with perhaps the most pressing question of our day and that is: What about the United States and Iraq? And I certainly don't have all the answers. But I do think that my analysis has two implications. First of all, to put it kind of mildly, it's not going to be easy to turn Iraq into a Madisonian free-market democracy. Now, I am certainly not the only one making this point. The challenges facing us in Iraq—liberated Iraq—have become painfully obvious, almost ridiculous, in the last few months, but this is exactly the kind of thing that I do try to warn about in my book. Now, before the war, there were all these pundits comparing Iraq to post-Second World War Germany and Japan. And, from the start, I was saying these are not good analogies. These are terrible analogies for this reason: By 1945 Germany had exterminated most of its non-Aryan population and, like Japan, was strikingly ethno-homogenous. They were not ethnically diverse countries. Unfortunately, I think the better analogy to a post-Saddam Iraq is a post-Tito Yugoslavia. Like the former Yugoslavia, Iraq's ethnic dynamics are extremely complicated, including cross-cutting conflicts across Kurds, Shi'ites, Sunnis, many horrendous massacres and, as a result, deep feelings of hatred and the need for revenge. And, as you all know, the Shi'ites represent a 60-percent, long-oppressed majority in Iraq and it's impossible to know what kind of candidate—fundamentalist or moderate, conciliatory or vengeful—they would vote for in free elections. And I think this is the big shift in the rhetoric of the Bush administration. Before they were calling for a democracy and elections; it's very markedly different now. Their rhetoric is about stability and rule of law and free markets. And that's because you see exactly what could have been predicted: Islamic clerics out there trying to gather votes, in some ways, by scapegoating. And there does seem to be a strong feeling among the Shi'ite majority clearly that they want the U.S. out, that they want some kind of Islamic state—and this may not be consistent with the interests of other ethnic groups and may not be consistent with the kinds of free markets that the U.S. wants to see installed. In countries as ethnically divided as Iraq, everything has ethnic ramifications. Who will comprise the police? Who has experience in engineering and oil? Given Saddam Hussein's incredibly unfair and repressive regime, some ethnic groups, in particular the Baath Party and the Sunnis will have a head start in terms of education and economic experience. They're very likely. And, again, as I have warned, markets and democracy may well benefit different ethnic groups, creating tremendous instability.
At the same time, and this brings me to the second implication, because the U.S. is the world's most powerful and most resented market-dominant minority, every move we make, with respect to Iraq, is being closely, and possibly even unfairly, scrutinized. Obviously, international opinion was overwhelmingly against the U.S. going to war with Iraq. It's important to see that this opposition was closely bound up with deep feelings of resentment and fear of American power and suspicion about American motives—and, unfortunately, the latest developments seem to just feed perfectly into these suspicions. Right? Obviously, we have not found the weapons of mass destruction. It's become clear, again, at best, that the administration was operating on a sort of delusional, naïve view that the Iraqi people would be so grateful after being liberated that they would all be ready to work hard, that we would put a stock exchange and, fueled by oil wealth, free-market democracy would turn Iraq into a rich, liberal country and then there would be a domino effect. This is not happening. On the contrary—and I realize I'm out of time, but I did just receive an e-mail from a contact, a friend, in Baghdad and I guess the thing I…. It is a truly explosive situation. Anti-Americanism is very intense and pervasive there and deteriorating, partly because basic services are just not available. People feel like their lives are worse and I just want to say that, ironically, there are great ethnic divisions, but the one unifying strand seems to be hatred of the idea of the United States as an occupational force. Many Americans today are bewildered—maybe not the people in this room—but indignant at the depth and pervasiveness of the anti-Americanism around the world today and I'm sure we've all had these conversations with out friends. What nation has done more for the rest of the world than the United States? What nation isn't self-interested? What would France be doing if it were the world's superpower? Why do they hate us? And I think there is some truth to this. There's much truth to that—but the fact of the matter is that, because we are the world's sole superpower, we are going to be held to a higher standard than everyone else. Market-dominant minorities always are. The Chinese in Southeast Asia have been that region's principal economic engine, generating enormous wealth over the generations. And yet, if you ask anybody on the streets, they will say the Chinese are leeches, sucking out the wealth of their nations and the reason for their country's poverty. So, for this reason I think it's obviously in the U.S.'s own self-interest to avoid taking any further actions that smack of hypocrisy or look glaringly self-interested and display a lack of concern for the rest of the world, including the Iraqis themselves. Obviously, the key here is oil and I would prefer to view this as a window of opportunity. It's getting harder and harder. But I think it's vital that the U.S. take symbolic, visible measures to ensure that the new government, unlike Hussein's regime, do include the Iraqi people in the benefits of Iraq's oil wealth.
Okay, one caveat before I stop—because my thesis is often misunderstood. Well, two caveats. First of all, this is not a universal theory. I know it seems very, very broad, but there are certainly developing countries without market-dominant minorities. Argentina and China are two major examples. Most important—and here I really will close—my argument…I am emphatically…this is not about blame, but about unintended consequences. I am emphatically not trying to blame ethnic conflict on markets or on democracy or on globalization. Really, it's about unintended consequences. So, in Indonesia, the results of democratization, in my own view, have been absolutely disastrous. But if you were to force me to point a finger and say who's to blame, I would say it's 30 years of plundering, U.S.-supported autocracy and crony capitalism by Suharto. Similarly, with Iraq, overnight elections might very well bring unstable results. But it's not democracy's fault. On the contrary, if anything, the blame rests with the incredibly repressive regime of Saddam Hussein. But this doesn't take away from the reality that, given the conditions that we actually have now in most post-colonial countries—and these are conditions created by history, by colonialism, by divide-and-conquer policies, by corruption, by autocracy—given these actual conditions, the combination of laissez-faire capitalism with unrestrained majority rule may have catastrophic consequences.
Thank you. I'm happy to take questions. [applause] Thank you very much. I can't believe it. I'm happy to take questions.
JACK KRAUSHAAR: I came all the way from Rochester, N.Y., to this conference and, if I'd only heard your talk, it would have been worth it.
CHUA: Thank you.
KRAUSHAAR: But I feel a little but like I've been run over by a train. But I do have a question. Can the United Nations, in any way, address some of the issues as a leading force for a kind of market democracy and all the things you've been talking about? Do you think that they can be of some help in this area, besides us?
CHUA: Yeah. Well, first of all, about being run over by a train: A lot of people have this reaction to the book. They say, "This is so depressing." But, as I was telling some people last night, I'm actually an optimist. I really am. I believe that we have done things so foolishly and so naïvely, in some ways. If we just paid a little attention, some things are so predictable. I also think, again—it's not so clear from the newspapers-—but I think this is a moment where I think that Americans are actually unusually thoughtful. And that's because—compared to 1989 when everything seemed like it was going to be so easy. Even for some of the most pro-market people, Latin America is going south; Russia didn't turn out so well; there was the East Asian financial crisis; 9/11. I think people are wondering, "Maybe we can make some small improvements." [laughter]
But, as for the United Nations: I have to be very honest. It goes back to my second kind of backlash. The U.S. is so powerful right now that any organizations that we don't participate in or support really are just at a terrible disadvantage. So what you're seeing—now, the U.N., I wouldn't want to necessarily over-idolize the U.N. You know, the members of the U.N. are not, in themselves, democratically elected. There are some flaws. There are some reasons why that's not the world's government. But I think, rather, that the counterbalances are coming from elsewhere. For instance, I think that the European Union is one big reaction to the United States' extreme dominance. It's a way—and I have many friends in Latin America and this is also true of the regional efforts there, to band together in a way to counter U.S. power, I think. But to answer your question frankly: I'm not sure. I'm not sure and I think it depends. That's why the United States has to realize that it's really in our own self-interest to be more a part of the international community, even if it seems like we don't need it or something. It's just a very dangerous policy, to be all alone. It's a big world. So, not a very good answer.
CAROLINE JACKSON-SMITH: Thank you for a brilliant analysis. But I wanted to ask you—Caroline Jackson-Smith, I teach at Oberlin College in African American studies and am also a director. I want to ask—you said capital market dominance in the U.S. and I can see why you would say that in the way that you did, but I feel like we need to dig a little more in terms of the history of the United States and see how we basically modeled this pattern by the Europeans who were, at one time, a minority, a big ethnic minority, who became the market-dominant group here.
CHUA: Majority, though.
JACKSON-SMITH: Well, they were not originally the majority, when they came.
CHUA: Absolutely.
JACKSON-SMITH: So, I think, if we go back a little bit, I wanted to see if you could comment about the role of slavery, which helped to develop this current noxious form we have. I always felt that, after Sept. 11, we gathered insight into how the world is because, within our country, have always been, you know, 300 years of people complaining about the way that capitalism developed here in the disadvantageous way.
CHUA: That's a great question and, actually, I do devote a chapter to this. I basically agree with your points. Here's what I mean. I do think it's possible to make stark statements. I don't think that any of the Western European nations or the U.S. today has a market-dominant ethnic minority in the very strong sense that I'm using it. So, whatever you hear about Koreans or Jews, our economy is not controlled by an ethnic minority, if you look at the 10 wealthiest Americans. Now, you're absolutely right that it's a totally different matter when you look at our history. Interestingly—if you go back to the Native Americans, of course that's right—but, interestingly, it is complicated. I looked for a long time at the Boston Brahmins, for example. Was there ever a time when we had this white Protestant group that was? And, actually, it's not quite the case that they were a market-dominant minority. It is the fact that, in this country, there's been a tremendous amount of upward mobility. So, in the 19th century, 20th century, even when Boston was controlled by a few bankers, the Scandinavians, the Germans, the Italians, the Irish were coming over. Different groups progressed differently. Some did much better than others. But it wasn't….
JACKSON-SMITH: But they weren't Native American or African or, for many centuries, Asian.
CHUA: Right, right. So, what I say is that the core racial or ethnic problem we have in this country is sort of the reverse, in some ways, than the countries I've been talking about. We basically have the problem of an economically and politically dominant white—which is a complicated term—majority and economically and politically oppressed minorities. So, economic and political power are not split. And, in some ways, it's worse. I'm not talking about which is better, which form of oppression is better. But you're actually even more on target because there have been periods, in the United States, where we did have this exact situation. And I look at about seven Southern states right after the emancipation proclamation and in those, I think it was seven Southern states, blacks, disenfranchised blacks, were, in fact, a majority and the whites were a minority. And we responded, in the United States, no better than thee developing world. We responded with Jim Crow. We disenfranchised, so basically adopting a South Africa-like policy. So, you're exactly right. Also, one more point about that West non-West distinction, which you are right to blur: I also talk about, even though we don't have a market-dominant minority at a national level, in our inner cities you do see very similar things with the Korean Americans, orthodox Jews—similar rhetoric and even the same kind of feeling, which is that these groups came later, "This is our territory," "Get out," and the L.A. riots I talk about. So, I think you're absolutely very perceptive to blur that distinction.
DAN O'NEILL: I would like to share your optimism because anybody listening to you…. [laughter] Help me share your optimism. Is anybody in the administration listening to you because I think the administration is going to be in place for the next six years. We need to start with a president who actually reads books.
CHUA: Well, this is an interesting question because I've been—my book has been well-received by surprising groups. For example, I was asked to give a talk to the CIA. And I'm more optimistic on the private side. For example, a lot of business groups. Again, I would never ask for altruism. It's clearly profit motive. But I think a lot of people are realizing that it's very expensive to build bigger and bigger, higher and higher barbed wire fences, private security forces are expensive. For the same amount of money, you could build a local hospital and a local school. And I have talked to groups like that. As to—I have had interesting receptivity to varied groups that you'd be surprised by, but I guess I'll just end by saying this is one surprising thing that happened to me. I got piece of maybe hate mail from Karl Rove. [applause] This has never happened to me before. This is actually an unusual letter, I think. It's a letter that came and said, you know, "Dear whatever, I've seen your book. I'm looking forward to reading it, but I do want to say that, from the title and the reviews I've read, I'm quite sure I will disagree with you. Best regards, Karl Rove." I can't believe it. It's like a gratuitous slap in the face. So, yes, the administration has not been—but the World Bank and the IMF and many groups, but....
O'NEILL: It would seem complimentary, but he controls the policy and the resources.
CHUA: Yeah. The administration matters.
OSKAR EUSTIS: Oskar Eustis. The concern that I have about your optimism, which is obviously the topic today to talk about: You talk about unintended consequences as if the assumption is that everything bad about the centralization, the limitation of resources in the world is unintended. And it is quite clearly the intention of an awful lot of people and I think one of the things that is most frightening to many of us about this administration is the gloves off glee about the idea of embracing the centralization and restriction of resources both domestically and internationally. And that's an ideological struggle. It does not seem to me a question of President Bush wising up; it's a question of the interests of the people who are controlling our administration. I'd be very curious to hear you talk about the actual conflict of interest that's going on.
CHUA: I, unfortunately, agree with a lot of what you're saying. That's why I try to put caveats in like giving the benefit of the doubt. I mean, I think—I didn't get into how sincere are we really about promoting democracy everywhere. As soon as the—
EUSTIS: Patently not. It doesn't even seem to me that that's a debatable issue. We do not promote democracy.
CHUA: It actually depends. In the '90s and in the Clinton administration, there was, you know, there was a tremendous feeling…. A lot of money was poured into democratization efforts in Latin America, Eastern Europe. Indonesia really was hailed as, "Finally, they're going to democratize." Even right now, I don't know what your views are, but the Bush administration is calling for democracy in Burma. Now I, of course, do favor democracy in Burma. To me, that's another case where people need to pay attention to what's happening. There is so much anti-Chinese hatred because the Chinese are in a crony capitalist situation with the junta right now. But, to go back to the heart of your question, yeah, in a way—I'm just going to be honest. It's what I do. I want—I would like to have some effect and I would prefer to, since I write about international policy—you know, to try to make a difference. I try to frame things not in terms of what's the right thing to do because I don't think groups like that listen at all, but rather in terms of self interest. Certainly, there's mass concern and confusion, even in the Bush administration, about Iraq right now. And there are different ways to go. I do think there are different ways to go. And some ways are much, much more dangerous. And you might be right. The gloves off—I fear that. I fear that and I worry about it. In my own mind, I can't understand how even a wildly self-interested administration could think that we could go at it alone and do that and not just expose ourselves to tremendous danger. I really don't have much to add except that I agree. Sometimes I wake up and that's how I feel.
AARON POSNER: Are there—Aaron Posner, Arden Theatre Company in Philadelphia—are there hopeful examples of seemingly uninterested and unaware or deeply self-interested, maybe it is in our self-interest to change, that are comparable?
CHUA: Well, I think that in Latin America…. You know, one thing, it's easy to criticize the United States, but glimmers of light: for example, philanthropy. This is something that doesn't exist in the developing world. Since this is a theatre group—it's astounding how much philanthropy there is in the United States. Latin American is, I think—I mean, I'm talking very slowly. My own relatives in Southeast Asia, you know, philanthropy is not really…hardly exists at all. The rich people don't even pay taxes, let alone philanthropy. But I do think that there is this feeling among market-dominant minorities now—some market-dominant minorities—that, again, it costs just as much to hire private body guards and, you know, maybe we need to try to…. And, what's interesting is that you see different groups. So, for example, in Belize, the Chinese. There are different groups that are market dominant and some give money to the local Rotary club and others, like the Chinese, have not and they have been principally more resented and targeted. Now, as to hope: Thailand is an interesting case, because you know that I am often asked, "Are there any counterexamples of this? Are there any market-dominant minorities where there are markets and democracy and none of this bad stuff happens?" And, interestingly, I think that one of the answers—and I don't think you can make this happen—but it is assimilation and mixture, which is one of the reasons that you don't have this problem so much in Latin America. In Thailand, the Chinese are a market-dominant minority. They're about 10 percent of the population. They control most of the economy. But, partly because of religious reasons—the Thais are Buddhist, whereas the Indonesians and the Malaysians were Muslim, so intermixing between the Chinese and the Thais has been much easier. And it's not all a pretty story. In the 1920s and 1950s, the Thai government basically—they didn't kill off the Chinese, but they said, "Look, if you want to succeed in this country, you have to become Thai." So, they had sort of coerced assimilation. The result is that the Chinese adopted Thai last names, spoke only Thai, closed down Chinese schools, Chinese newspapers. So, that's kind of a weird case where I don't know if it's a success story, exactly, but it is a country where you have an ethnic minority that's not completely assimilated, but where there isn't so much resentment and it's, you know, kind of a market and democratic system. Yeah, I don't know, as to hope. It depends.
MICHAEL JOHNSON-CHASE: Michael Johnson-Chase from Lark Theatre in New York. I'm curious to know, do you think that China's advancing economic identity is actually something that will shift attitudes toward America, as the principle minority economic power in the world?
AMY CHUA: Oh, that's a great question. Where we might go from now is actually very interesting because obviously everybody's reacting, you know. I don't think we're just going to stay here and China and even all of Asia's sort of regional efforts in that area, I think you're right that this is a big factor. I mean, China has a way to go. So, I don't know. I don't have a good answer. I want to say something about China though. It's interesting, China's often mentioned as the case that's cited for the view that I briefly mentioned, "markets first, democracy…maybe no democracy"—China along with Singapore. People like Robert Kaplan, a lot of people, quickly, once they saw the challenge democracy posed to markets, quickly retreated and said, "Well, maybe they're not ready for it." And the reason I'm not in that camp is for lots of reasons, but one of the reasons is that you just—well, it's true, Singapore is a success case—but neither of these countries have market-dominant minorities, by the way, so they don't have this problem I'm writing about. But, how can you be sure you're going to get a beneficent dictator? That's the problem, right? That's why I think that view is…. You can call for a Lee Kuan Yew, like Singapore, and you could get Saddam Hussein or Idi Amin. But I don't have much of an answer to your larger question.
AUBRA GASTON: I'm Aubra Gaston from Tucson, Arizona, and I'm praying for the day that you become a playwright. [laughter]
CHUA: Don't have the talent.
GASTON: My question is: We have seen colonialism for centuries and centuries with France, Belgium, all these countries that have just raped every other country of the world, including United States, but what I'd like to have you address is, do you see any role for these reparations that people are beginning to talk about now? Isn't that just—it's almost a superficial, hypocritical kind of thing to talk about reparations?
CHUA: I think that hypocrisy is rampant and so maybe this is a cynical thing to say. I think that, whatever the reasons that you make big payments to disadvantaged groups, formerly disadvantaged groups, or build the hospitals and the schools for P.R. purposes, I would take any of those benefits—unless they are just a substitute for something else, to cover something else up and that's always the concern. Are we going to give AIDS relief to Africa, so that we can really…? So, for me, that's the question. It's not the actual reparations themselves. I think any transfers of generosity…. I sort of end the book saying that maybe they don't solve the problem, but acts of generosity—I don't see how they could possibly hurt. Acts of humility and generosity—I just don't see how it could hurt. But whether it's a subterfuge for something else or distracts attention is a very real problem.
BARCLAY GOLDSMITH: Barclay Goldsmith, Borderlands Theater in Tucson. I just wanted to thank you very much for your analysis. I just wanted to mention the fact that the Southwest is, in a sense, occupied America in the terms that the war with Mexico brought in a minority of Anglos or white people to run the economy. But, what's even more frightening today, is this huge wall that's being proposed to go along the Mexico border with the United States that's 20 feet high and has tremendous searchlights that will keep people from coming across. But, in a sense, the economy in Mexico, particularly in the borders, is now being run by American runaway factories. And then you have this tremendous issue even it stops wildlife. It's kind of a devastating effect. So, these are some of the things that dovetail right into your analysis.
CHUA: Well, thank you. I had wanted to end on an optimistic note. But I think it's a good point because I think we have choices. I think there are two big paths we can go. One is the analogy of the barbed wire fences. We can build higher and higher walls to protect ourselves more from the people, let them get angrier and angrier. Or, we can reach out—this is what I'm trying to…I think would be a better vision. I do think a lot of Americans share it. I don't know how many. But the other vision is to try to be more cooperative, try to be more participatory, try to view ourselves as part of a larger community. I think why theatre, one of the reasons that—I limit my acceptances, but I really wanted to come to this group. I think that there are common ties that bind people and that would be a much better way to go than the analogy you brought up that's just perfect, higher and higher walls. So, thank you.
