World on Fire by Amy Chua

Paying the price of freedom

By Yasmin Alibhai-Brown

12 December 2003

Like happy confetti, complacency was scattered on the world after the fall of the Berlin Wall, to celebrate the marriage of a champagne-swilling, hubristic West and the previous prisoners of old Communism. History was over, we were unreliably informed by Francis Fukuyama; global capitalism, Enlightenment values and occidental democracy had eradicated all present and future alternatives.

Our evidently superior ways would settle the unsettled; differences would be eradicated as the peoples of the world -Tanzanian peasants, stoic Icelanders, ferocious Tamil fighters, everyone - embraced a life of endless sex, shopping, good and bad freedoms, and the vote every five years. The American free-market guru, Thomas Friedman, even claimed that no two countries that both have McDonalds have ever fought a war with each other. (Nato bombing Belgrade? Israel attacking the Lebanon?)


Amy Chua, Professor of Law at Yale University



Then came 11 September, when Saudis in the West, with plentiful access to these goodies, blew up these dreamy expectations and much else. America became The Avenger - swaggering, excitable and paranoid - seeking dangerous new confrontations with threats (or promises) of a more aggressive new imperialism. The hyperpower declared that democracy and free-market globalisation could and would be imposed by force, and that this is exactly the kind of tough love the oppressed crave and need.

Are we aware of what happens when democracy suddenly materialises and markets are liberalised in lands which have not been through the long struggles that led the West to where it is today? Do we know the devastation and imbalance caused by these developments? These are the central questions in this provocative, accessible, well-researched and nuanced book. And the answers are resoundingly pessimistic, even though Amy Chua herself is not an anti-globalist, and is profoundly American in the way she sees the world. This may be the real strength of the book. Chua cannot be dismissed as left-wing, unpatriotic, self-loathing (accusations thrown at Noam Chomsky and Michael Moore), nor is she remotely to be identified with emotional polemicists rushing to explain why the world hates America. Chua is a professor at Yale Law School and her discourse is cautious and evidence-based.

Her conclusions are that spreading globalisation and democracy is setting the world on fire. Ethnic tensions, violence, corruption, inequalities are getting worse. This market-fest is leading to the concentration of fabulous wealth in the hands of already resented, ethnically-distinct minorities.

These groups were always viewed with envy and suspicion, sometimes with good reason. East African Asians, of whom I am one, were detested by most Africans who were vastly poorer, and kept down by us. We never tried to understand the reasons behind this loathing. Today, Chua reveals, these minorities are the victims of organised violence on an unprecedented scale.

You enter this brutality in the first pages. Chua describes the murder of her adored Aunt Leona, her father's twin sister in the Philippines. A wealthy, Gucci-loving Chinese Filipino who presented real diamonds to her young nieces as birthday trinkets, but whose Filipino servants were made to live in dank, urine-soaked quarters, she had had her throat cut by her chauffeur. Only 1 per cent of the population, the Chinese own most businesses. All menial jobs are done by Filipino masses. Hundreds of Chinese Filipinos are kidnapped, including children, and murders are horribly common.

The same tensions are rising in Russia where they now say "Yids control everything". The recent arrest of the oil billionaire Mikhail Khodorovsky, a Russian Jew, comes as this perception spreads. In South and West Africa they hate Asians and Lebanese traders respectively, and so on.

But then Chua steps into more intractable areas and her thesis cracks, unable to bear the weight of complex histories. The US is unconvincingly presented as a market-dominant minority, envied by the wretched of the earth; but visceral hatred of the US is often a response to unjustifiable foreign policies. Chua also attempts to present Arab hatred of Israel largely through this paradigm of ethnic economic advantage. She overemphasises the myths of Jewish enterprise, understates the billions of dollars which prop up the country, and seems not to understand that this last blighted, cruel intifada and the brute responses to it are entirely about nationhood, identity and rights.

Her analysis of the new world disorder is impeccable, but Chua loses her energy and clarity when it comes to suggesting alternatives. She is not an advocate of a radical response, like, say, George Monbiot who in The Age of Consent calls for a global redistribution of influence and wealth. There is no courageous challenge to existing institutions, no bold ackowlegement that the Scandinavian social-democratic model, with relatively high taxes and low income differentials, makes for better societies.

Instead she suggests affirmative action, good works by the rich, spreading the benefits of markets. All are thoroughly American solutions, which the world is expected to buy into - exactly the kind of thing Chua warns us against in the first place.

Yasmin Alibhai-Brown's 'Who Do We Think We Are?' is published by Penguin



Jan. 24, 2003, 3:00PM

One-size-fits-all foreign policy can be trouble


How Exporting Free Market Democracy
Breeds Ethnic Hatred
and Global Instability.
By Amy Chua.
Doubleday, $26; 340 pp.

IN America even the little guy does not begrudge Bill Gates. But what if Microsoft's founder, and all the other high-tech millionaires and CEOs and those successful at business, were of a separate, distinct ethnicity? Imagine that almost everyone with private-sector wealth had a religion, a diet or an appearance different from that of the ordinary American and that they rarely intermarried.

There are countries like that. They have what author Amy Chua calls "market-dominant minorities." Think of the Chinese in Burma and Indonesia, the English in Zimbabwe and South Africa, Indians in Kenya and Fiji, Jews in Panama and Russia.

America has successful minorities. But it has nothing like the Chinese-Filipinos, who are 1 percent of the population but own all the big department stores and all but one of the major banks in the Philippines. If that described America, this country would be more careful in promoting capitalism and democracy as twin solutions.



In much of the world, Chua argues, capitalism and democracy produce ethnic disaster. Capitalism allows the minority to get rich, and democracy allows the majority to get even. The result: riots against Chinese in Indonesia. Invasions of white farms in Zimbabwe.

Chua is not entirely a bystander. Now a professor at Yale University, she grew up in a "third-tier tycoon" Chinese-Filipino family that owns a plastics conglomerate in Manila. She says her family has "safe-deposit boxes full of gold bars, each one roughly the size of a Snickers bar." Her Aunt Leona, who FedExed her one of those bars as a graduation gift, was later hacked to death by a chauffeur.

Why? It is not explained, and perhaps it does not have to be.

Poor people the world over tend to see members of the dominant ethnic minority as thieves who have won by cheating. That is how the Indonesian majority saw the Chinese tycoons after the collapse of longtime Indonesian President Suharto, and it's also how many Russians in the 1990s saw the seven new private-sector billionaires, six of whom were Jewish.

In most cases, Chua argues, the new rich are largely self-made. Even when a few enjoy official favor, it is after they have become rich -- and the favor is not extended to their kin. A few dozen Chinese were partners with Suharto, but the hundreds of Chinese shopkeepers burned out by mobs had no pull. And further: When the successful minority is chased away and its property seized, the whole country suffers -- as Uganda suffered after expelling Indians and as Indonesia suffers today. That would not be true if the minority were parasites.

Usually the minority wins its position by working, saving, investing and trading harder and more sharply than anyone else. Having succeeded, it is hated -- partly because it succeeded, partly because it takes favors and puts on airs. And partly because it is different.

This is not the story everywhere. Japan, China, Taiwan, Singapore, Argentina and Chile have market-dominant majorities.

World on Fire could have been an argument for socialism, but it isn't. Chua has no use for socialism. Her argument is for capitalism leavened by philanthropy and regulation and for democracy limited by constitutional law. It is for change that is gradual and fitted to local ways.

It is also a warning to foreign minorities to be more generous and, perhaps, to assimilate. In Thailand the Chinese were encouraged to assimilate, and their dominance has been less of a problem.

The book would have been better had it explored this subject and stopped. But Chua has a good theory and wants to explain too many things with it. Three-quarters through her narrative she goes on to argue that Israelis are the market-dominant minority of the Middle East and Americans the market-dominant minority of the world, which explains the fight over Palestine and 9/11 and "why they hate us." This is all very provocative, but it is more analogy than analysis and might better have been shrunk to a comment or left for another book.

The gist of this book is about countries different from the United States, sometimes in ways that are shocking. It ends on a familiar appeal for foreign aid, but most of it is fresher than that. It should make Americans think twice about exporting their political culture wholesale without a thought of who dislikes whom.

Bruce Ramsey wrote this for the Seattle Times.





Volume 14, Issue 4.   April 1, 2003.

Free Market Furies

Sasha Polakow-Suransky


World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability
By Amy Chua, Doubleday, 340 pages, $26.00


Amy Chua's new book is not likely to receive a warm reception at the Department of State, the World Bank or the International Monetary Fund. For more than a decade, the received wisdom in those precincts has held that free markets and rapid democratization represent the one and only legitimate path to economic development. Turning the Washington Consensus on its head, Chua contends that the simultaneous introduction of unfettered free markets and rudimentary democracy can lead to disaster in countries where small "market-dominant minorities" control a disproportionate share of the nation's wealth and arouse the vengeance of resentful majorities.

Chua's critique is all the more damning because she is not a flower-child, anti-globalization firebrand out to denounce the establishment. A former Wall Street lawyer, she's currently a professor at Yale Law School and a self-described proponent of free markets. Unlike such celebrants of the global economy as New York Times columnist Thomas Friedman, or those on the left who reflexively denounce globalization, Chua makes a nuanced but formidable argument about the potential dangers of the free-market version of democratic capitalism in the developing world.

To begin with, Chua suggests that the concept of "free-market democracy" underlying current development programs is an oxymoron. In many Third World countries, she argues, "Markets concentrate wealth, often spectacular wealth, in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority." Under the old order of crony capitalism, market-dominant minorities bought protection from corrupt, indigenous dictators such as Gen. Suharto in Indonesia. But now, Chua says, minority elites such as the Chinese in Indonesia (who make up 3 percent of the population but control 70 percent of the private sector), Indians in Kenya, Lebanese in Sierra Leone, Jews in post-Soviet Russia and whites in Zimbabwe are at the mercy of populist nationalist leaders. Under these circumstances, Chua warns, combining free markets and democracy can become "an engine of potentially catastrophic ethnonationalism" as "opportunistic vote-seeking politicians" arouse "a frustrated 'indigenous' majority ... a0gainst a resented, wealthy ethnic minority." In the worst cases, the Chinese in Indonesia, white farmers in Zimbabwe and Tutsis in Rwanda have become the targets of ethnic violence, property confiscations and even genocide.

Some of Chua's anecdotal case studies provide strong support for her argument. She notes that after Suharto's downfall in Indonesia, Chinese shops were torched, more than 150 women were gang-raped and Chinese capital fled Indonesia. Her account of Hutu power in Rwanda is also compelling. "Many Westerners ... insist that the horrors of Rwanda had nothing to do with democracy," writes Chua. "But the fact remains that a majority of the Rwandan people supported, indeed personally conducted, the unspeakable atrocities committed in 1994." The will of the resentful Hutu majority, she argues, ultimately manifested itself in the form of genocide against market-dominant Tutsis.

Other cases Chua cites, however, are more complex than she makes them out to be. Is democracy really the explanation for Zimbabwe's problems? Although Zimbabwe's black majority has a hypothetical stake in President Robert Mugabe's program of land confiscation and redistribution, blacks themselves have suffered the most under Mugabe's autocratic rule and would have likely ousted him in the March 2002 elections had it not been for massive fraud. And Chua's application of her market-dominance theory to the former Yugoslavia is even less persuasive. Though Serbs made up the largest share (36 percent) of the Yugoslav population and were less wealthy than the Croats and Slovenes, Chua does not explain why the comparatively poor Bosnian Muslims and Kosovar Albanians bore the brunt of then-President Slobodan Milosevic's genocidal fury.

Chua's theory becomes still more tenuous when she generalizes it to specific regions and then to the entire world. She argues that Israel represents a regional market-dominant minority in the Middle East and that the United States occupies the same role on the global stage, thereby drawing the ire of poorer regional and global majorities. Although Israel's economy indisputably leads the region and the U.S. economy overshadows the world, it's a stretch to argue that anti-Zionism and anti-Americanism are byproducts of the same kind of ethnic envy directed against market-dominant minorities in Indonesia or Rwanda. Moreover, there is no global democratic polity through which these angry masses could express their will. Chua's theory is more convincing when applied to individual countries rather than the world at large. And her excessive reliance on anecdotal cases begs for a more systematic, statistical analysis of democracy's dangers in countries with market-dominant minorities.

As some critics have pointed out, many of the market-dominant minorities mentioned in World on Fire have existed for a long time; they did not develop as a result of the recent explosion of global commerce. But Chua may well be right that the simultaneous arrival of unfettered laissez-faire markets and the most rudimentary form of majoritarian democracy (without constitutional safeguards or minority protections) has further concentrated wealth in market-dominant groups while exacerbating majority ethnic resentments. Even if the pattern isn't universal, Chua has identified a major risk of the current free-market orthodoxy.

Chua's policy prescriptions include support for Malaysian- and South African-style affirmative-action programs, which, unlike parallel Western policies assisting minorities, spread benefits to disadvantaged ethnic majorities. She also calls for genuine, liberal democracy with protections for minority rights. Though Chua does not offer a comprehensive solution for the ills of global capitalism and occasionally overreaches in applying her argument, World on Fire deserves to be widely read. It is a welcome antidote to the recycled mantras of the market-cheering right and the tired rhetoric of the anti-globalization left.

Sasha Polakow-Suransky


World On Fire" by Amy Chua
A new book argues that when Third World countries embrace democracy and free markets too quickly, ethnic hatred and even genocide can result.

By Michelle Goldberg

Jan. 13, 2003  |  The case Amy Chua makes in "World On Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability" is so clear and persuasive it almost seems as if it had been obvious all along. Yet her argument, that rapid switches to majoritarian rule and free-market democracy in many Third World countries benefit certain ethnic groups over others and lead to vicious sectarian strife, is quite new, if occasionally overstated. Writers such as Robert Kaplan have long argued that the Western obsession with exporting democracy to countries without the institutions to support it is naive and often dangerous, fostering demagogues and communal hatreds. Chua builds on this argument in an essential way, showing how expanding markets exacerbate the problem by enriching already-dominant minority groups even as democracy empowers angry majorities.

"World On Fire" is about a phenomenon Chua calls "market-dominant minorities," groups like the Chinese in Southeast Asia, Jews in Russia, whites in Zimbabwe and Indians in East Africa and Fiji. Market-dominant minorities control hugely disproportionate percentages of their countries' resources. Filipino Chinese comprise just 1 to 2 percent of the Philippines' population, but control all of the country's major supermarkets, fast-food restaurants and large department stores, and all but one of the nation's banks. A similar situation obtains in Indonesia. Jews make up a similarly tiny proportion of Russia's population, but of the seven "oligarchs" who control virtually all of the country's business, six are Jewish. Lebanese dominate the economies in Sierra Leone and Gambia, while Indians dominate the economy in Kenya, along with a smaller, indigenous minority tribe called the Kikuyu. Similar examples abound worldwide.

It's enormously touchy to talk about the economic element of communal violence, especially regarding Jews, since rhetoric about one ethnic group exploiting another is so often a precursor to atrocity. But that's exactly why Chua's book feels so urgent. No matter how politically incorrect it is to talk about, her book makes clear that minority market domination is a reality in much of the world, one that's tied up in many ways with smoldering group hatreds and explosions of mass slaughter, and one that's made worse by Western policies.

Chua, a professor at Yale Law School, is a careful, precise writer, and she makes it very clear that she's not blaming prosperous ethnic groups for violence directed against them, or blaming capitalism alone for fomenting genocide. It's a point she makes over and over again. (Her lawyerly penchant for summing up and reiterating her main arguments far too many times is the book's greatest flaw.)

"The point, rather, is this," she writes. "In the numerous countries around the world that have pervasive poverty and a market-dominant minority, democracy and markets -- at least in the form in which they are currently being promoted -- can proceed only in deep tension with each other. In such conditions, the combined pursuit of free markets and democratization has repeatedly catalyzed ethnic conflict in highly predictable ways. This has been the sobering lesson of globalization in the last twenty years."

Nevertheless, "World On Fire" is not an anti-globalization screed. Chua is a former Wall Street lawyer who worked to help developing countries privatize their resources, and she continues to believe that, in the long term, markets offer the best hope for developing countries. Her scathing assessment of the way the West has foisted liberalization on the rest of the world is driven not by ideology, but by a careful examination of globalization's unintended consequences.

"Back in the early nineties," she writes, "I believed that the proceeds of privatization, as a World Bank official put it, would go to roads, 'potable water, sewerage, hospitals, and education to the poor.' Like many in the 1990s, however, I was viewing emerging market privatization through a rose-colored lens." Later, she adds, "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."

Explaining why market-dominant minorities exist would probably require another volume, and Chua makes only a cursory attempt to do so. In some cases, of course, it's obvious -- the white minority in South Africa and Zimbabwe accumulated capital and expertise at the expense of the grotesquely exploited majority, who cannot now catch up without massive government help. Elsewhere group prosperity is attributable to superior business networks. Cameroon's Bamileke, for example, "operate an informal capital market so efficient it constantly threatens to put government-owned banks out of business," Chua writes. The reasons for Jewish economic success are more mysterious -- especially in Russia, where they've been repeatedly subjected to vicious pogroms -- and "World On Fire" does little to illuminate them. Chua is less interested in how minority groups come to dominate than what happens when they do.

She argues that when economic liberalization and democracy are rapidly introduced to countries with market-dominant minorities, the two forces necessarily come into conflict. "Markets concentrate enormous wealth in the hands of an 'outsider' minority, fomenting ethnic envy and hatred among often chronically poor majorities," she writes. "Introducing democracy in these circumstances does not transform voters into open-minded cocitizens in a national community. Rather, the competition for votes fosters the emergence of demagogues who scapegoat the resented minority and foment active ethnonationalist movements demanding that the country's wealth and identity be reclaimed by the 'true owners of the nation.'"

In Indonesia, for example, free-market policies undertaken under Gen. Suharto, the U.S.-backed dictator, vastly enriched the country's tiny Chinese minority, who in tursupported the strongman. By 1998, Chua writes, Chinese made up 3 percent of the population but controlled 70 percent of the private economy. That was the year democracy protests and riots forced Suharto to resign. His fall was accompanied by orgies of anti-Chinese violence -- Chinese women began wearing "anti-rape corsets," locked steel chastity belts. "[T]he prevailing view among the pribumi majority was that it was 'worthwhile to lose 10 years of growth to get rid of the Chinese problem once and for all,'" she writes. "Meanwhile, the U.S. State Department called resoundingly for free markets and democratic elections."

Many other countries share elements of this dynamic, though Chua sometimes seems to be stretching her thesis in order to fit in as many places as possible. She's overreaching somewhat when she says, early on, "markets and democracy were among the causes of both the Rwandan and Yugoslavian genocides." Clearly democracy was a factor in both, but the economic factors are much trickier. The gap in status between minority Tutsis and majority Hutus is indeed attributable to globalization, but of the old-fashioned, colonial kind -- Belgian colonizers favored minority Tutsis over majority Hutus because of what was seen as their Caucasian-like features. And while Serbian hatred of the Croats was fanned by Croatian economic dominance, the Bosnians they butchered were as poor as they were. Chua makes these caveats herself in the relevant chapters, but they dilute some of the grand claims she lays out in her introduction.

Still, her larger point, that the policies seen as panaceas by the West can actually make things worse, holds true. Electoral democracy is often touted as an antidote to the tyranny and tribalism ravaging much of the globe. "For globalization's enthusiasts, the cure for group hatred and ethnic violence around the world is straightforward: more markets and more democracy," Chua writes. She notes that after Sept. 11, Thomas Friedman wrote of the Middle East, "Hello? Hello? There's a message here. It's democracy, stupid! Multi-ethnic, pluralistic, free-market democracy."

This one-size-fits-all prescription for curing the world's ills is implicated in the Rwandan genocide of 1994. As Chua writes, Hutu dictator Juvénal Habyarimana, who ruled from 1973 until the early 1990s, may have been corrupt and totalitarian, but he did protect the Tutsi population. Once he responded to Western -- particularly French -- calls to adopt multiparty democracy, though, Hutu supremacy became a potent weapon for Habyarimana's political enemies. The genocidal Hutu Power movement was buoyed on a groundswell of popular support. Meanwhile, Chua points out, the "freedom of the press" encouraged by the West stopped the government from shutting down the hugely influential, rabidly anti-Tutsi newspaper Kangura.

"Sudden political liberalization in the 1990s unleashed long-suppressed ethnic resentments, directly spawning Hutu Power as a potent political force," Chua writes.

The idea that democracy, America's most cherished value, has exacerbated the last century's bloodletting is terrible to contemplate. Yet Chua's book ultimately supplies a tiny measure of hope. Unlike Kaplan, Chua doesn't believe that enlightened autocracy is the answer for the developing world. For her, the problem isn't democracy itself but the speed at which it's implemented. Rushing it, especially without protections for individual rights or institutions for upholding the law, can be dangerous.

Kaplan believes that the right kind of despots can sustain a stable environment for capitalism to flourish, creating the middle-class institutions necessary to sustain democracy. One of his models is prosperous, undemocratic Singapore. Chua's analysis, though, shows us that no amount of economic growth will turn countries that have market-dominant minorities, like Indonesia, into countries like Singapore, that don't. Prosperity and stability won't come to those countries until they find a way to narrow the chasm between rich minorities and poor majorities.

To that end, Chua argues for sweeping reforms that would give disenfranchised populations a stake in their nation's resources, as well as massive affirmative-action policies of the kind being undertaken in South Africa and, with notable success, in Malaysia. Such a policy is a huge departure from the free-market evangelism of people like Thomas Friedman, but one more likely to lead to prosperous societies that can, eventually, turn into real democracies.

Of course, it's not terribly likely that her recommendations are going to be implemented in most places anytime soon. In the end, "World On Fire" is valuable less for its prescriptions than for the perspective it offers on the seemingly incomprehensible violence shaking the world. With the fall of communism and the emergence of al-Qaida, it's no longer fashionable to see ethnic conflict in materialist terms -- the new battles are framed as a clash of civilizations rather than a scramble for resources. It's a scarier opposition, because it's so intractably defiant of reason. "World on Fire" suggests these conflicts might not be so primordial and irrational after all. It might be cold comfort to realize how atavistic enmities abroad have been inflamed by our own government's policies, but at least these policies can, ultimately, still be changed.

About the writer
Michelle Goldberg is a staff writer for Salon based in New York.



Old Wine, New Bottle
World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability by Amy Chua

Recent years have seen horrendous ethnic riots and mayhem in Southeast Asia, mostly directed against minority Chinese.

In this lucid but at times uneven study,
AMY CHUA, a professor at Yale University, would have us believe that this is ethnic backlash against what she terms "market dominant minorities" and is the direct consequence of globalization.

In contrast to Thomas Friedman's famous "golden arch" theory -- "no two countries that both have McDonald's have ever fought a war against each other" -- Chua's "sobering" thesis proposes that "global spread of markets and democracy is a principal, aggravating cause of group hatred and ethnic violence throughout the non-Western world."

However, anti-Chinese sentiments in Southeast Asia are as old as the history of migration. In early 15th century, Ming dynasty Grand Eunuch Admiral General Cheng Ho (Zheng He) discovered an enclave of enterprising Chinese in Java. Six hundred years later, ethnic Chinese remain the dominant players in the regional economy, from the Philippines, Burma, Vietnam, Thailand, to Malaysia while the region's "indigenous" peoples have continued to remind them, in words and deeds, that "Hakka" (one of the major groups of immigrant Chinese) means "guests" in their native tongue.

It is certainly true that the "native" resentment of the minority Chinese has far from diminished in the age of global capitalism. Chua offers the thought experiment by explaining to the American reader that ethnic Chinese in Southeast Asia, making up just two percent of the population, are in control of the equivalent of Microsoft, General Electric, Chase Manhattan, Exxon Mobile, "and the rest of America's largest corporations and banks, plus Rockefeller Center and two third of the country's prime real estate", while roughly 75% of the remaining population in that area "owned no land, and, as group, had experience no upward mobility as far back as anyone can remember."

Chua then argues that "America don't hate Bill Gates, even though he has owned as much as 40 percent of the American population put together." The Chinese in Southeast Asia, on the other hand, are periodically subject to overt public discrimination and vicious violence, particularly when a political patron, such as Indonesia's General Suharto, is toppled from power.

The May 1998 anti-Chinese riots in Indonesia lasted three days, where, recounts Chua, "screaming Muslim mobs smashed windows, looted shops, gang raped 150 women, almost all of them ethnic Chinese." About 5,000 Chinese and stores owned by the Chinese were burnt to the ground, resulting in a capital flight of between $40-100 billion, largely to Singapore. Local sentiment, says Chua, felt it was "worthwhile to lose ten years of growth to get rid of the Chinese problem once and for all."

Chua's thesis is this "Chinese problem" is no Southeast Asian aberration, but is repeated elsewhere, with different market-dominant minorities under threat. She cites the example white elite in Bolivia, making up 5 to 15 percent of the population and in control of the country's most valuable natural resources, while its Amerindian majority lives in poverty, "with no secondary education, no access to sanitation, and terrible teeth."

In post-Soviet Russia, six out of its seven most powerful oligarchs, those who succeeded in wresting control of the country's natural resources, happen to be Jews. "Potanin [the only non-Jewish oligarch] grabbed Norilsk Nickel, Russia's metals colossus, Khodorkovsky took Yukos, Berezovsky and Abramovich got Sibneft, and so on."

Even in Israel, Chua sees the European Ashkenazi Jews as the dominant minority. "Ashkenazi Jews continue to be disproportionately represented among professionals, managers, academics, and big business, while Sephardic Jews predominate in low-skilled occupations and in poor `development' towns in outlying areas where there is high employment." The number of European Jews with university degrees is three times higher than that of Sephardic Jews who made up of 55% of the country.

In most cases, the rise of a minority group to economic domination is unique and the reasons for its staying power complex. Consider, for example, the unusual ability of overseas Chinese to maintain their economic position for centuries without any direct military support. And while the Bolivian elites and Russian oligarchs, may be equally despised with an equally ruthless hold on their respective countries' wealth, one was a foreign group who rose to power through conquest, while Russian Jews have lived in the country for centuries.

But it is in the Middle East where Chua's thesis seems to be particularly pushing the envelope. She notes that globalization has "wildly benefited disproportionately an `outside' market-dominant minority -- in this case, the Israeli Jews -- fueling ethnic resentment and hatred among a massive-demagogue-incited population that considers itself the `indigenous' `true owners of land.'" The Arab-Israeli conflict, "pitting the region's 221 million, largely poor Arabs against an Israel's starkly more prosperous 5.2 million Jews, is a classic example of an intensely popular majority-supported enthnonationalist movement against a hated market-dominant minority."

Reducing the hatred between Jews and Arabs to a matter of market dominance is both a stretch and distortion. While Israelis are a minority when compared to the Arabs as a whole, they are in fact the majority in their own country and in what used to be Palestine.

Chua's sensible point is that regardless of what one thinks of Western- (read American-) style capitalism and democracy, it may not be desirable to impose them both simultaneously all around the world without taking account of local situations and power structures and doing some preparatory work first.

However, one might advise the author to confine her analysis to a narrower scope. Ethnic hatred can be described more simply. The poet Yeats, for one, offers a more compelling perspective:

I study hatred with great diligence,

For that's a passion in my control

A sort of besom that can clear the soul

Of everything that is not mind or sense.

Michael Hsu                   


In her recent book, World on Fire, Yale University professor Amy Chua argues that it is the resentment of long-standing minority domination that has so much of the world’s citizens ready to take up arms. Pat Sewell examines the author’s contentions and assesses her sweeping proposals for solving the most challenging problem facing global society since the Second World War. – YaleGlobal

Mixing Free Market, Minority Domination and Democracy Results in World On Fire

Pat Sewell
YaleGlobal, 10 February 2003

Many Americans trust that unleashed markets and universal suffrage elsewhere will yield general material betterment, domestic tranquillity, and amity among democracies old and new. Thomas Friedman proclaims a "Golden Arches Theory of Conflict Prevention", asserting "no two countries that both have McDonald's have ever fought a war against each other".

But do freer markets and oxygenated "democracy" instead defy established expectation by mobilizing the wrath of the many? Do open markets and popular incitement sometimes kindle backlash and serve to excuse suppression by the few? Amy Chua contends that when injudiciously introduced, as most often happens, wide open markets and hot-housed majoritarianism form "a principal, aggravating cause of group hatred and ethnic violence throughout the non-Western world". On regional and global planes, too, the dynamic of World on Fire augurs ill for stability, not to mention peace.

Chua outlines this dynamic early and with characteristic clarity: "When free market democracy is pursued in the presence of a market-dominant minority, the almost invariable result is backlash. This backlash typically takes one of three forms. The first is a backlash against markets, targeting the market-dominant minority's wealth. The second is a backlash against democracy by forces favorable to the market-dominant minority. The third is violence, sometimes genocidal, directed against the market-dominant minority itself."

This study illuminates widespread global patterns of violence without oversimplifying them. It exposes and highlights the ethnic underpinnings of world politics. Chua maintains that Western globalists and anti-globalists alike miss the "ethnic dimension of market disparities" by seeing only class warfare rather than recognizing ethnic struggle. She pulls no punches in arguing an array of cases buttressed by evidence carefully drawn from a variety of sources. Testimony based on her personal experience lends further strength to the work. World on Fire offers fascinating as well as luminous reading.

"Ethnicity" here invites characterization. The concept enjoys quite a wide scope in the present context. Identification with a group transcending primary face-to-face relationships keys a "shifting and highly malleable" sense of belonging to a kinship web projected over time and across space. Physical differences, geographic origin, linguistic, religious, or alternative cultural lines may mark this identity. Examples of Chua's ethnic market-dominant minorities include Chinese in Southeast Asia; "Whites" in Latin America; Jews in Russia; Croats in the former Yugoslavia; Ibos, Kikuyus, Tutsis, Indians and Lebanese, among others, in Africa. Numerically preponderant "indigenous" peoples likewise take on distinct ethnic identities. Their persistent poverty relative to the conspicuous enrichment of others, indignities on a grand scale and in interpersonal relations, and the apparent prospect of instant change, when aroused by electoral encouragement to popular participation and heralded by a charismatic leader, provide conditions apt to trigger confrontation. "Ballot boxes brought Hitler to power in Germany, Mugabe to power in Zimbabwe, Milosevic to power in Serbia -- and could well bring the likes of Osama bin Laden to power in Saudi Arabia."

Identity in Chua's predominantly ethnic usage faces its sternest test when applied to Americans as a planetary market-dominant minority. We become a "close cousin" of ethnic minorities, "a national-origin minority" relative to the world's other peoples. Like the market-dominant minorities that stir reaction within state ambits, Americans, "wielding disproportionate economic power", let alone brandishing military might and flaunting political domination, build resentment and prompt vindictive acts throughout the world. Chua suggests that, ironically, U.S.-driven laissez-faire capitalism and supercharged populism feed a polyglot global majority's convergent anti-Americanism.

World on Fire considers Israeli Jews as a regional market-dominant minority. As such this regional minority contributes to a familiar pattern underlined by Amy Chua's prediction: "if popular elections were held throughout the Arab world, Israel would be a common whipping boy among vote-seeking politicians." The book does not seek to relate Middle East instability to mondial instability, or to take note of the widespread if not worldwide identification of Israeli Jews with Americans as a single global market-dominant force. A chapter entitled "Why They Hate Us" focuses upon the U.S. Chua does classify Ashkenazi Jews as a market-dominant minority within Israel, and touches upon Palestinians as a potential entrepreneurial factor throughout the region.

This book will not appeal to ideologues. Those who wish their exports of markets and democracy pure -- purely American, notwithstanding the logical difficulty of embracing exceptionalist notions too -- may well discount Chua's nuanced treatment of the interplay among key variables across a wide range of situations. Or they may condemn nativist demagoguery abroad while overlooking the economic shock therapy which World on Fire cogently shows may contribute significantly to the rise of mobocracy. The book courageously advances its argument in the face of people who glorify "American parochialism" and celebrate a song that salutes "not knowing 'the difference between Iraq and Iran'" in a land some of whose lawmakers pride themselves on never having held a passport.

By setting terms for a fresh debate on the dire side effects of liberalizing economies and developing polyarchies, Chua might be thought to incur responsibility for suggesting what alternatives best to undertake. A vivid and compelling alarm sounded about a raging global inferno calls for guidance on measures of containment. World on Fire introduces several: "'leveling the playing field' between market-dominant minorities and the impoverished 'indigenous' majorities around them;" giving majorities "a greater stake in global markets;" the promotion of "liberal rather than illiberal democracies;" and initiatives by market-dominant minorities "to forestall majority-based, often murderous ethnonationalist backlashes."

Readers of their elaboration will differ on which of these proposals appear desirable and feasible. Some will probably find none suitable, for one reason or another. I find appealing the "controversial strategy" of majority-backed governmental intervention to "'correct' ethnic wealth imbalances" through programs similar to those called "affirmative action" within the West. This would seem effective and feasible, given a popularly-elected government. But it would violate free-market expectations and, immodestly used, threaten the individual rights (including property ownership rights) or rights of the minority that liberalism associates with majority rule. Both attributes of feasibility and those of questionable desirability may be displayed today by the Hugo Chavez presidency of Venezuela.

Desirable yet less feasible may be reliance upon acts of magnanimity by market-dominant minorities. History seems replete with instances in which such did not occur. However, Chua may have in mind rather modest concessions, at least those by market-dominant Americans. She sees the wisdom of making more beneficent contributions (toward health care, family planning, and alleviating chronic environmental problems such as lack of potable water, for instance) to lie "in their potentially far-reaching symbolism."

Beyond her brilliant diagnosis, Professor Chua, who teaches at Yale Law School, makes an auspicious start toward rectification by broaching provocative proposals. But maybe the process of prescribing remains near its beginning, leaving the application of remedies pending. One senses that a dialogue on what to do, taking full account of World on Fire's path-breaking findings, has only begun. Clearly this dialogue warrants urgent continuation of the work here so ably initiated.

Pat Sewell conducts the Global Leadership Forum at Mount Holyoke College.


The power of the ethnic minority

Martin Jacques salutes Amy Chua's World on Fire, a book that faces up to the true nature of globalisation

Saturday February 21, 2004
The Guardian

World on Fire
by Amy Chua
346pp, Heinemann, £12.99

There is a plethora of books about globalisation, many saying roughly the same thing. This one is different. It is rare, indeed, to read a book about globalisation where ethnicity is at the core of the argument. That must have something to do with the fact that the great majority of authors of such books are white and from the west. The author of this book is a Chinese-Filipina. That is also surprising because, alas, there is little Chinese writing on ethnicity either. But this book is a gem. It is not that everything Amy Chua argues is correct - it is not - but her theme is different, rich and compelling.

Her starting point is that in many developing countries a small - often very small - ethnic minority enjoys hugely disproportionate economic power. As she points out, this is not true in the west: on the contrary, we are accustomed to small ethnic minorities occupying exactly the opposite situation, a very disadvantaged economic position. The classic case is southeast Asia, where the Chinese, usually a tiny proportion of the population, enjoy an overwhelmingly dominant economic position. In the Philippines, the Chinese account for 1% of the population and well over half the wealth. The same is true in varying degrees in Indonesia, Burma, Thailand, Laos, Malaysia and Vietnam.

As Chua argues, rich and powerful minorities attract resentment everywhere: but when those minorities are ethnically different - and highly visible - then that resentment can carry a dangerous charge. "In the Philippines, millions of Filipinos work for Chinese: almost no Chinese work for Filipinos. The Chinese dominate industry and commerce at every level ... all of the Philippines' billionaires are of Chinese descent. By contrast, all menial jobs ... are filled by Filipinos." There is very little social intermixing and virtually no intermarriage. And the disparities, Chua argues, have grown more acute with globalisation and western-inspired market reforms.

Southeast Asia is an acute but by no means isolated example. Throughout Latin America, a small white elite has traditionally enjoyed both economic and political power, as well as cultural and racial pre-eminence. However, while in east Asia anti-Chinese sentiment has long been a powerful political force, in Latin America, at least until recently, there has been little ethnic - as opposed to class - resentment against the white elite. The dominance of a small white elite has long existed in southern Africa. Although the black majority now enjoys - as do their counterparts in countries such as Indonesia and Malaysia - political power in South Africa, economic power remains firmly in the hands of a tiny white elite. In east Africa, that economic elite is largely Indian; in west Africa, it is often, though in a less extreme form, the Ibos. The picture that emerges is that in much (though not all) of the developing world, economic power is largely concentrated in the hands of - to use Chua's phrase - a "market-dominant" ethnic minority.

She argues that this disparity between the economic power of a small ethnic minority and the disadvantaged position of the majority ethnic group is a source of great political instability. Ethnicity, as we know, is potentially a highly combustible issue. "That ethnicity can be at once an artifact of human imagination and rooted in the dark recesses of history - fluid and manipulable yet important enough to kill for [Chua's aunt, who came from an extremely rich Chinese family in Manila, was murdered by her Filipino chauffeur with the complicity of her Filipina maids] - is what makes ethnic conflict so terrifyingly difficult to understand and contain." As Chua rightly argues, the mass killing of Tutsis by the Hutus in Rwanda in 1994 and the grievance felt by the Serbs towards the Croats in the Balkans were partly related to the economic advantage enjoyed by the Tutsis and Croats respectively, and the deep rifts that this engendered.

One of the difficulties faced by many developing countries is ethnic diversity of a scale utterly unfamiliar in the west, even the United States. Africa is the most extreme example. The major exceptions to this are China, Japan, South Korea and Taiwan, all relatively homogeneous, ethnically speaking, and very successful economically. Chua argues that globalisation has exacerbated the ethnic disparities in wealth in many countries, with the "market-dominant" ethnic minorities, for a variety of reasons, enjoying disproportionate rewards, thereby fostering growing instability. This is liable - as happened in Indonesia with the fall of Suharto and the anti-Chinese riots - to boil over at any time.

Further, she suggests that the western mantra of free markets plus democracy is ill-conceived and a recipe for disaster in such circumstances. Here the author, in challenging such a verity, not to say cliché, of modern western discourse is on powerful, if heretical, ground. The western assumption is that democracy engenders a more liberal and tolerant society, but where that society is marked by a profound ethnic cleavage, the reverse may be true. There is no doubt that the anti-Chinese riots in Indonesia reflected the sentiments of the majority; similarly, in Zimbabwe, Robert Mugabe's desire to appropriate white farms was not least a populist appeal to the overwhelmingly black electorate. For Chua, free markets exacerbate ethnic divisions and, furthermore, democracy can act as the vehicle for a huge ethnic backlash by the majority. She believes that the idea that the two somehow form some kind of virtuous circle is wrong. Historically, this was never the case in the west: the rise of capitalism and the market long predated the achievement of democracy. And when democracy was achieved, the market was rapidly attenuated by redistribution and the welfare state, the antithesis of the kind of market policies preached and applied to the developing world by the Washington consensus.

One of the refreshing aspects of this book is not just the centrality of ethnicity, but the honesty with which Chua treats the issue. She doesn't shy away from talking about ethnic divisions or racial prejudice. She is also thoroughly realistic about their tenacity and endurance. The roots often reach back centuries, as in the case of the Chinese in southeast Asia.

In the latter part of the book, Chua widens the geographical reach of her argument beyond the nation-state and suggests that the Middle East conflict should, in certain respects, be seen as a regional conflict between a "market-dominant" ethnic minority, the Israeli Jews, and the overwhelmingly larger Arab majority, far poorer and getting relatively poorer all the time. Finally, she considers the position of the United States in the post-cold-war world and argues that its global position is akin to that of a market-dominant ethnic minority (overwhelmingly white and perceived by others as such), which helps to explain the tidal wave of resentment against the US since September 11 and the sympathy for that event among many in the developing world.

In the western world, we are still largely in denial about the importance and potency of ethnicity. That is basically because the western world stands in such a privileged position towards the rest of the world, a situation that is intimately linked to colour: whites rarely, with the obvious exception of Jews, experience systemic prejudice. Rather they mete it out and enjoy the benefits of racial advantage. It is a pleasure to read a book that presents ethnicity as a fundamental organising principle of the era of globalisation.

· Martin Jacques is a visiting fellow at the London School of Economics Asian Research Centre.








A Problematic New View On Why They Hate Us, And What to Do About It

A Review of Amy Chua's World on Fire


Friday, Apr. 11, 2003

Amy Chua, World on Fire (Doubleday, 2003)

Why do they hate us? Answering this question - along with its corollary, What to do about it? - will be the overarching priority of American foreign policy in the first decade of the 21st century.

A Babel of commentators have offered plausible but finally unconvincing answers: jealousy, humiliation at the disjunction between abject prospects and TV- and Internet-stoked dreams, the military presence in Saudi Arabia and invasion of Iraq, U.S. support for Israel, and religious fundamentalism.

In her recent book World on Fire, Yale law professor Amy Chua posits a different, contrarian explanation - one that is both fascinating and highly problematic.

Chua argues that anti-Americanism is the unexceptional and, by now, predictable result of "the three most powerful forces operating in the world today: markets, democracy, and ethnic hatred." According to Chua, free-market reforms result, often quite rapidly, in what she terms market-dominant ethnic minorities. At the same time, democracy empowers poorer majorities, unleashing resentment. It's an explosive mix - with consequences that range from the merely destabilizing to the truly horrific.

From Property Confiscation and Crony Capitalism, to Genocide

Chua claims that the confiscation of property is often the first result of the mix. Mobs destroy minority-owned businesses, or a newly-elected representative of the poor majority nationalizes prize properties and industries. Examples include the seizure of white-owned farms in Zimbabwe and the nationalization of the Venezuelan oil industry.

Alternatively, democratically elected leaders may collude with an affluent minority to establish a system of crony capitalism, enriching the former and protecting the latter. Marcos' Philippines (working with Chinese entrepreneurs) and Moi's Kenya ( in cahoots with ethnic Indian business leaders) are representative examples.

The third and grimmest prospect is ethnic cleansing and genocide. The massacres of the lighter-skinned and wealthier Tutsi minority in Rwanda, and the better educated Croats in Serbia are two of the most recent examples.

Chua is careful to distinguish the Holocaust as singularly complex and evil - and largely attributable to the fanatic, ingrained anti-Semitism in Germany and Europe more broadly. Yet she contends that the rise of National Socialism fits her thesis, at least to some extent. It too, she argues, was the result of rapid democratization and free market reforms during the Weimar era.

Rapid Market and Democratic Reforms Can Have Horrifying Consequences

The bulk of World on Fire is devoted to other instances of the often-horrifying consequences of rapid market and democratic reform.

For instance, Chua describes the paroxysm of murder and looting that accompanied the launch of capitalist democracy in Indonesia. Free markets produced an entrepreneurial and affluent ethnic Chinese minority. Then the fall of Suharto, after 30 years in power, unleashed Muslim rage at Chinese wealth.

Rioting left 2000 dead and tens of thousands raped. Chinese women took to wearing steel rape protection belts (produced by Chinese-owned factories). The newly elected government abolished rice supply contracts with Chinese firms and awarded them to Indonesian firms with disastrous results: rice supplies plummeted from corruption and incompetence. Indonesians starved.

To take another example, privatization in Russia yielded dislocation and resentment. Chua makes much--perhaps too much--of the fact that six of the seven oligarchs who acquired the bulk of Russia's privatized assets were Jews. Russian anti-Semitism is centuries old, but the rise of the Jewish oligarchs during widespread social and economic crisis did much to inflame it.

The backlash was swift. Under pressure from increasingly popular nationalists, and unhappy with criticism from an increasingly confident press, Putin confiscated independent station NTV, which Vladimir Gusinsky, a Jewish oligarch, controlled, and then TV-6, the property of another Jew, Boris Berezovsky.

The West viewed the confiscation as atavistic Russian autocracy. But most Russians understood it as the seizure of Jewish property. General Albert Makashov, a Communist Party representative spoke to the Duma: "Who is to blame? The executive branch, the bankers, the mass media are to blame. Usury, deceit, corruption and thievery are flourishing in this country. That is why I call the reformers Yids." In an editorial, he elaborated: A "Yid" is a "bloodsucker feeding on the misfortunes of other people." And then in a mass rally, he promised, "I will round up all the Jews and send them to the next world!"

These are riveting cases, but not all of Chua's examples serve her argument, however broadly construed. She describes a "pigmentocracy" in Latin America, the result of "racial mixing" by colonizers, a caste system that runs from the dark and poor to the light and rich. But Chua concedes that economic success yields racial mobility through marriage to a lighter skinned spouse.

For example, a traveler asks a Brazilian lawyer with African facial characteristics what it's like to be a black woman in Brazil. She says, "But I'm not black." Chua explains that since the lawyer enjoyed prestige and a good income, she "naturally she called herself white." The lawyer's self-image is less suggestive of a rigid caste system than of a fluid continuum that permits economic success to transcend race.

Chua's sketch of the Kikuyu of Kenya is similarly inconclusive, in part because the Kikuyu are Kenya's most populous tribe. And when she describes the Chinese of Singapore as a market-dominant majority, she reaches too far to fit a messy world into a pat thesis.

Chua Versus Friedman

Chua is an easy, graceful writer who adeptly interleaves her own experiences with her thesis. For instance, she explains that she is ethnically Chinese, with an aunt who was also ethnically Chinese who was murdered in the Philippines. She also notes that she has a Jewish husband - a biographical detail possibly included to insulate the author from intimations of anti-Semitism that might arise from her highly charged discussion of Jewish oligarchs in Russia.

She is not an economist, however, and readers expecting a rigorous financial analysis of free market reform will be disappointed. She relies heavily on secondary sources and misses the relevant work of such important economists as Joseph Stiglitz. Nor is she a sociologist: her examination of the social effects of market and democratic reform is anecdotal.

Instead, Chua frames her thesis in opposition to the view of the New York Times columnist Thomas Friedman on the same subject. Chua describes Friedman the "brilliant proponent" of the view that free-market democracy is the universal prescription for the multiple ills of underdevelopment.

But Chua herself considers views like Friedman's the thinnest hypocrisy, for the version of free-market democracy America extols is not that which we practice. She points out that the export model lacks the redistributive tax policies and social safety net that "dampen the conflict between market wealth disparities and democratic politics in the industrialized West."

Indeed, the laissez-faire economy coupled with universal suffrage, Chua argues, is a model that "Western nations abandoned a century ago." The West has no business forcing this model on others.

Chua argues that the gradual expansion of suffrage through the elimination of property, gender and racial requirements may have been critical to the creation of a durable capitalist democracy. Free markets need time to create a middle class that values stability and tends to vote reliably with its wallets and purses.

A more cautious rollout of market and democratic reforms in developing countries may then be necessary for either to take root--Chua's most deflating prospect. Democratic moderation is also a hard argument for the World Bank and the IMF to make, one with supremacist overtones (you're not ready for democracy, not yet), and of course no American president could defend it. Her prescription may be wise, but it may not be feasible.

America the Resented

Meanwhile, Chua also brings her argument close to home. She contends that the fear and loathing of Americans - both in its sneering European form and its deadly Islamic extremist version - is akin to that leveled at ethnic Chinese in Indonesia, the Croats in Serbia, and Israelis in the Middle East.

The people of the United States, in Chua's view, are a global market-dominant minority. "Just 4 percent of the world's population, America dominates every aspect--financial, cultural, technological--of the global free markets we have come to symbolize."

The result is envy, frustration, humiliation--and murderous rage. September 11th has much in common with the Rwandan massacres and Serbian ethnic cleansing, Chua suggests. While the vast majority condemned the killing of innocents, there was a quiet but widely-held sense that, as Cambridge lecturer Mary Beard wrote in the London Review of Books, "the United States had it coming."

The Problems with Chua's Arguments on the "Why They Hate Us?" Issue

There are obvious problems with this view. For one thing, America hasn't exported much democracy to Arab countries. Islamicist militants and liberal American intellectuals agree on one thing: U.S. support for corrupt, autocratic and deeply unpopular Arab regimes is the largest part of Muslim anti-Americanism - a fact that the focus on the Israeli-Palestinian conflict sometimes obscures.

For another thing, Chua's view doesn't account for the cultural envy and emulation--Palestinians in Nike shirts, Frenchmen quaffing Coke--that so complicates a clear understanding of the phenomenon.

Chua fails to engage other thorny topics, including the thorniest: the reasons certain ethnic groups excel under free-market conditions. In a bare paragraph, she suggests that the spirit of capitalism and the Protestant work ethic may play a part. But that doesn't go very far to explain Chinese dominance in Southeast Asia or the prevalence of Jewish oligarchs in Russia.

There are many reasons that Israel's per capital GDP is $19,000 while Saudi Arabia's, despite its oil riches, is barely one-third that level (Egypt's GDP is $2,800). The stereotypical and racist explanation that Jews are somehow "smarter than Arabs" can't be one of them.

A Failure to Offer Compelling Solutions

Professor Chua should be commended for retaining a dispassionate, critical perspective while addressing such explosive topics as the dominance of Jewish capitalists in Russia and Israel's economic success relative to that of the rest of the Middle East. Despite her compelling description of the consequences of free-market democracy in developing countries, however, her proposed solutions are often vague.

In the end, ironically, Chua comes around to endorsing a prescription quite close to Friedman's prescription. She, too, supports free markets and universal suffrage. But she would add - and temper it with - a suite of well-intended but impractical policy prescriptions: increased stock ownership in third-world countries, affirmative action for the disenfranchised majorities, and philanthropy and social investment by market-dominant minorities.

In the end, addressing the explosive mix that Chua describes will require politicians with imagination, courage and candor - and more practical solutions than these. Both are in short supply.

 Peter Lurie is general counsel of Virgin Mobile USA, a wireless voice and internet service.






"World on Fire" by Amy Chua



Vengeful majorities

December 2003

In many poor countries, markets concentrate wealth in the hands of prosperous ethnic minorities. In these places, democracy can be an engine of vengeance

Amy Chua

One morning in September 1994, I received a call from my mother in California. In a hushed voice, she told me that my Aunt Leona, my father's twin sister, had been murdered in her home in the Philippines, her throat slit by her chauffeur. My mother broke the news to me in our Hokkien Chinese dialect. Population, Chinese Filipinos control about 60 per cent of the private economy, including of ethnic conflagration. I am speaking of the phenomenon of market-dominant minorities: ethnic minorities who, for varying reasons, tend under market conditions to dominate economically, often to a startling extent, the indigenous majorities.

Market-dominant minorities can be found in every part of the world. The Chinese are a market-dominant minority throughout southeast Asia. In 1998, Chinese Indonesians, only 3 per cent of the population, controlled roughly 70 per cent of the private economy, including all of the big conglomerates. In Myanmar, the Chinese dominate the economies of Mandalay and Rangoon. Whites are a market-dominant minority in South Africa - and, in a more complex sense, in Brazil, Ecuador, Guatemala and much of Latin America. Indians have historically been a market-dominant minority in east Africa, the Lebanese in west Africa and the Ibo in Nigeria. Croats were a market-dominant minority in Yugoslavia, as Jews are in post-communist Russia (six of the seven biggest "oligarchs" are of Jewish origin). India has no market-dominant minority at the national level but plenty at the state level.

Market-dominant minorities are the Achilles heel of free market democracy. In societies with such a minority, markets and democracy favour not just different people or different classes but different ethnic groups. Markets concentrate wealth, often spectacular wealth, in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority. In these circumstances, the pursuit of free market democracy becomes an engine of potentially catastrophic ethnonationalism, pitting a frustrated indigenous majority, easily aroused by opportunistic politicians, against a resented, wealthy ethnic minority. This conflict is playing out in country after country today, from Bolivia to Sierra Leone, from Indonesia to Zimbabwe, from Russia to the middle east.

Since 11th September, the conflict has been brought home to the US. Americans are not an ethnic minority. But Americans are perceived as the world's market-dominant minority, wielding disproportionate economic power. As a result, they have become the object of the same kind of popular resentment that afflicts the Chinese of southeast Asia, the whites of Zimbabwe, and the Jews of Russia.

Global anti-Americanism has many causes. One of them is the US-promoted global spread of free markets and democracy. Throughout the world markets are perceived as reinforcing US wealth and dominance. At the same time, global populist and democratic movements give strength and voice to the impoverished masses. The result is that Americans have directed at themselves what the Turkish writer Orhan Pamuk calls "the anger of the damned."

For globalisation's enthusiasts, the cure for group hatred and ethnic violence around the world is more markets and more democracy. Together, markets and democracy will gradually transform states into a war-shunning, prosperous community, and individuals into liberal, civic-minded citizens and consumers. Ethnic hatred and religious zealotry will fade away.

I believe, rather, that in the numerous societies around the world that have a market-dominant minority, markets and democracy are not mutually reinforcing. Because markets and democracy benefit different ethnic groups in such societies, the pursuit of free market democracy produces highly combustible conditions. In absolute terms, the majority may or may not be better off - a dispute that much of the globalisation debate revolves around - but any sense of improvement is overwhelmed by its continuing poverty relative to the hated minority's economic success. More humiliating still, market-dominant minorities, along with their foreign investor partners, invariably come to control the crown jewels of the economy, which are often symbolic of the nation's patrimony and identity - oil in Russia and Venezuela, diamonds in South Africa, silver and tin in Bolivia, jade, teak and rubies in Myanmar.

Introducing democracy under such circumstances does not transform voters into open-minded co-citizens in a national community. As America celebrated the spread of democracy in the 1990s, the world's new political slogans were these: "Georgia for the Georgians," "Eritreans out of Ethiopia," "Kenya for Kenyans," "Kazakhstan for Kazakhs," "Serbia for Serbs," "Hutu Power," "Jews out of Russia."

The backlash against a market-dominant minority typically takes one of three forms. The first is a backlash against markets that seem skewed in favour of the market-dominant minority. The second is an attack on democracy by forces favourable to the market-dominant minority. And the third is violence, sometimes genocidal, against the market-dominant minority itself.

Zimbabwe illustrates the first kind of backlash - an ethnically targeted anti-market reaction. For many years, Robert Mugabe has encouraged the violent seizure of 10m acres of white-owned commercial farmland. As one Zimbabwean argued, "The land belongs to us. The foreigners should not own it. There is no black Zimbabwean who owns land in England." Mugabe has been more explicit: "Strike fear in the heart of the white man, our real enemy." Most of the country's whites are third-generation Zimbabweans. They are 1 per cent of the population, but they have for generations controlled 70 per cent of the best land, largely in the form of highly productive 3,000-acre tobacco and sugar farms.

Watching Zimbabwe's economy take a free fall as a result of the mass land grab, the US and Britain, together with dozens of human rights groups, urged Mugabe to step down and called for "free and fair elections." But the idea that democracy is the answer to Zimbabwe's problems is naive. Perhaps Mugabe would have lost the 2002 elections in the absence of foul play. But even if that is so, it is important to recall that Mugabe himself is a product of democracy. The hero of Zimbabwe's black liberation movement and a master manipulator of the masses, he swept to victory in the elections of 1980 by promising to expropriate white land. Repeating that promise has helped him win every election since. Moreover, Mugabe's land seizure campaign was another product of the democratic process. It was deftly timed in anticipation of the 2000 and 2002 elections, and calculated to mobilise popular support for the teetering regime.

In the contest between an economically powerful ethnic minority and a numerically powerful impoverished majority, the majority does not always prevail. Rather than a backlash against the market, in some cases there is a backlash against democracy. The world's most notorious cases of "crony capitalism" have all involved partnerships between a market-dominant ethnic minority and a co-operative autocrat. Ferdinand Marcos's dictatorship in the Philippines sheltered and profited from the country's wealthy Chinese before he was driven from office in 1986. In Kenya, former President Moi, who had once warned Africans to "beware of bad Asians," was sustained by a series of "business arrangements" with local Indian tycoons. And the bloody tragedy of Sierra Leone's recent history can be traced in significant part to the regime of President Siaka Stevens, who converted his elective office into a dictatorship during the early 1970s and formed an alliance with five of the country's Lebanese diamond dealers.

In Sierra Leone, as in many other countries, independence (which came in 1961) was followed by a series of anti-market measures and policies that took direct aim at market-dominant minorities. People of "European or Asiatic origin," including the Lebanese, were denied citizenship. Stevens's approach thus represented a complete about-face - a pattern that's been repeated in country after country. Stevens protected the Lebanese, and in exchange, they - with their business networks in Europe, the Soviet Union, and the US - generated enormous profits kicking back handsome portions to Stevens and other officials. (It is just such webs of pre-existing relationships with the outside world that have often given economically dominant minorities their advantages in this era of globalisation.) Stevens was succeeded by others, who struck the same deal while also courting foreign investment and aid. In 1989 and 1990, the IMF championed a free market reform package that included a phase-out of subsidies for rice. Already living in poverty, Sierra Leoneans saw the cost of rice treble, and many blamed the Lebanese. In any event, the rebel leader Foday Sankoh had little trouble finding recruits for his insurgency. Some 75,000 died in the ensuing chaos.

The third and most ferocious kind of backlash is majority-supported violence aimed at eliminating a market-dominant minority. Three recent examples are the ethnic cleansing of Croats in parts of the former Yugoslavia, the attacks on the Chinese minority in Indonesia and the Tutsi slaughter in Rwanda. In each case, democratisation released long-suppressed hatreds against a prosperous ethnic minority.

In the former Yugoslavia the Croats, along with the Slovenes, long enjoyed a strikingly higher standard of living than the Serbs and other ethnic groups. Croatia and Slovenia are largely Catholic, with strong links to western Europe, while the Eastern Orthodox Serbs inhabit the rugged south and lived for centuries under the Ottoman empire. By the 1990s, per capita income in northern Yugoslavia was three times that in the south. The sudden coming of electoral democracy helped to stir ancient enmities. In Serbia, Slobodan Milosevic swept to power in 1989. In a famous speech delivered in March 1991 - including an allusion to Croat and Slovene market dominance - Milosevic declared: "If we must fight, then my God we will fight. And I hope they will not be so crazy as to fight against us. Because if we don't know how to work well or to do business, at least we know how to fight well!"

Critics of globalisation draw attention to the grotesque imbalances produced by free markets. Defenders of globalisation respond that the world's poor would be even worse off without global marketisation, and recent World Bank studies show that, with some exceptions, including most of Africa, globalisation's "trickle down" benefits the poor as well as the rich in developing countries. But both sides of the argument tend to see wealth and poverty in terms of class conflict, not ethnic conflict. This might make sense in the advanced western societies, but the ethnic realities of the developing world are different.

The anti-globalisation movement asks for more democracy. But unless democratisation means more than unrestrained majority rule it can be short-sighted, even dangerous. The fall of Suharto's Indonesian dictatorship in May 1998, for example, was accompanied by an eruption of anti-Chinese violence. For three days, Chinese shopkeepers huddled behind locked doors while Muslim mobs looted. In the end 2,000 people died and tens of billions of dollars - belonging to Chinese cronies of Suharto - left the country, plunging the economy into a crisis from which it has still not recovered. Moreover, little noticed in the west, the post-Suharto government has nationalised about $58bn of Chinese assets.

Markets, democracy and ethnicity are notoriously difficult concepts to define. In the west, the phrase "market economy" refers to a broad spectrum of economic systems based on private property and competition, with varying degrees of government regulation and redistribution. Yet for the past 20 years the US has been promoting raw, laissez-faire capitalism throughout the non-western world - a form of markets that the west abandoned long ago. Russia, for example, has a single income tax rate of 13 per cent - unthinkable in a large developed democracy. The measures being implemented today outside the west include privatisation, the elimination of state subsidies and controls, and free trade and foreign investment initiatives. They rarely include welfare or redistribution measures.

Democracy, too, can take many forms. I take "democratisation" to refer to the efforts, largely US-driven, to implement immediate elections with universal suffrage. It is striking to note that at no point in history did any western nation ever implement laissez-faire capitalism and universal suffrage at the same time. In the US, the poor were disenfranchised by property qualifications in virtually every state for many decades after the constitution was ratified.

It is ethnicity, however, that gives the combination of markets and democracy its special combustibility. Ethnic identity is not a static, scientifically determinable status but shifting and highly malleable. In Rwanda, for example, the 14 per cent Tutsi minority dominated the Hutu majority economically and politically for four centuries, as a kind of cattle-owning aristocracy. But for most of this period, the lines between Hutus and Tutsi were permeable. The two groups spoke the same language, intermarriage occurred, and successful Hutus could "become Tutsi." That ceased after the Belgians arrived and, steeped in specious theories of racial superiority, issued ethnic identity cards on the basis of nose length and cranial circumference. The resulting sharp ethnic divisions were later exploited by the leaders of the Hutu Power movement, especially after US and French pressure to democratise in the early 1990s. Along similar lines, all over Latin America today - where it is often said that there are no "ethnic divisions" because everyone has "mixed" blood - large numbers of impoverished Bolivians, Chileans, and Peruvians are suddenly being told that they are Aymaras, Incas, or just indios, whatever identity best resonates and mobilises.

Ethnic identity is rarely constructed out of thin air. Subjective perceptions of identity often depend on more objective traits assigned to individuals based on physical features, language differences, or ancestry. If you tell black and white Zimbabweans that "ethnicity is a social construct" you will not be taken seriously. Moreover, there is zero intermarriage between blacks and whites in Zimbabwe, just as there is almost no intermarriage between Chinese and Malays or Arabs and Israelis. Ethnicity can be both palpably real and an artefact of the imagination rooted in the recesses of history - fluid and manipulable, yet real enough to kill for. This is what makes ethnic conflict so hard to understand and contain.

I do not propose a universal theory applicable to every developing country. There are certainly developing countries without market-dominant minorities: China and Argentina are two major examples. Nor do I argue that ethnic conflict arises only in the presence of a market-dominant minority. There are countless instances of ethnic hatred directed at economically oppressed groups. And I am emphatically not suggesting that free market democracy is more likely to lead to ethnic conflict than authoritarianism or communism.

The point, rather, is this: in the many countries that have pervasive poverty and a market-dominant minority, democracy and markets - at least in the raw forms in which they are currently being promoted - can proceed only in deep tension with each other. In such conditions, the combined pursuit of free markets and democratisation has repeatedly catalysed ethnic conflict in highly predictable ways. That has been one of the least discussed lessons of globalisation over the past 20 years.

Where does this leave us? What are the implications of market-dominant minorities for national and international policymaking? Commentators such as Fareed Zakaria and Robert D Kaplan have suggested holding back on democracy until free markets produce enough economic and social development to make democracy sustainable. In The Coming Anarchy, Kaplan contrasts Lee Kuan Yew's prosperous, authoritarian Singapore with the murderous, "bloodletting" democratic states of Colombia, Rwanda, and South Africa, and condemns America's post-cold war campaign to export democracy to "places where it can't succeed." This is a refreshingly unromantic view, but ultimately unsatisfactory. As one writer has observed, "If authoritarianism were the key to prosperity, then Africa would be the richest continent in the world." Ask (as some do) for an Augusto Pinochet or an Alberto Fujimori, and you may get an Idi Amin or a Papa Doc Duvalier.

The best economic hope for developing and post-communist countries does lie in some form of market-generated growth combined with some form of democracy, with constitutional constraints, tailored to local realities. But if global free market democracy is to succeed, the problem of market-dominant minorities must be confronted.

The most obvious step is to try, in consensual ways, to dilute the market dominance of certain groups. In South Africa or Latin America, for example, educational and other opportunities for the indigenous majority should be strongly backed by the international community. Yet research suggests that spending on education, if not accompanied by major socioeconomic reforms, produces few benefits.

The underlying causes of market dominance are poorly understood and in any event seem highly intractable. Political favouritism, though often a sore point with the majority in societies with a market-dominant minority, tends to be more the consequence than the cause of market dominance. Most market-dominant minorities, whether the Bamiléké in Cameroon or Indians in Fiji, enjoy disproportionate economic success at every level of society down to the smallest shopkeepers, who can rarely boast of useful political connections. Indeed, many of these minorities succeed despite official discrimination against them. Any explanation of their success will include the effect of own-group networking as well as a host of intangibles such as religion and culture.

To level the playing field in developing societies will thus be a painfully slow process, taking generations if it is possible at all. More immediate measures will be needed to address the potentially explosive problems of ethnic resentment and ethnonationalist hatred that threaten these countries. Western-style redistributive programmes - progressive taxation, social security, unemployment insurance - should be encouraged, but, at least in the short run, have limited potential. There simply is not enough to tax, nor a reliable transfer mechanism. Other possibilities include the idea of Peruvian economist Hernando de Soto (in The Mystery of Capital ) to give the poor in the developing world formal, legally defensible property rights to the land they occupy but to which they very often lack legal title. This would make it easier for them to join the market system.

A more controversial strategy consists of direct government intervention in the market designed to "correct" ethnic wealth imbalances. The leading example of such an effort is Malaysia's New Economic Policy (NEP), a programme established after violent riots in 1969 by indigenous Malays angry over the economic dominance of foreign investors and the country's Chinese minority. The Malaysian government adopted sweeping ethnic quotas on corporate ownership, university admissions and jobs.

In many respects, the results have been impressive. While the NEP has not lifted the great majority of Malays out of poverty, it has helped to create a substantial Malay middle class - between 1970 and 1992 the percentage of Malays occupying the country's most lucrative professional positions went from 6 per cent to 32 per cent. The former prime minister, Mahathir Mohamad, defended the policy in these terms: "With the existence of the few rich Malays at least the poor can say their fate is not entirely to serve rich non-Malays. From the point of view of racial ego, and this ego is still strong, the unseemly existence of Malay tycoons is essential."

But few countries enjoy the prosperity to make NEP-type programmes feasible. Affirmative action in favour of disadvantaged majorities - rather than minorities as in the west - also risks alienating the wealthy educated minority who may abandon the country taking their skills and assets. Moreover, such programmes can exacerbate ethnic tensions rather than relieve them, especially when politicians are themselves ethnic partisans. In his own mind, Slobodan Milosevic was conducting a form of affirmative action on behalf of a long-exploited majority.

For better or worse, the best hope for global free market democracy lies with market-dominant minorities themselves. Or at least they are in the best position to address today's most pressing challenges. To begin with, it must be recognised that some market-dominant minorities engage in practices - bribery, discriminatory lending, labour exploitation - that reinforce ethnic stereotypes and besmirch the image of free market democracy. In Indonesia, Suharto's "crony capitalism" depended on a handful of Chinese magnates and fuelled huge resentment of the Chinese community generally.

More positively, if free market democracy is to prosper, the world's market-dominant minorities must begin making significant and visible contributions to the local economies in which they are thriving. There are some famous models here. The University of Nairobi, for example, owes its existence to wealthy Indians in Kenya. The Madhvani family, owners of the largest industrial group in east Africa, provide education, healthcare and housing for their African employees, and also employ Africans in top management. In Russia, there is the unusual case of the Jewish billionaire Roman Abramovich, whose philanthropy won him election as governor of the poverty-stricken Chukotka region in the Russian far east. More typically, however, building ethnic goodwill requires collective action through ethnic chambers of commerce, clan associations, and so on.

The argument of this essay is about unintended consequences, not about apportioning blame. My own view, for example, is that the results of democratisation in Indonesia have been a disaster. But if forced to place the blame somewhere, I would point to 30 years of autocracy and crony capitalism under Suharto. Similarly, in Iraq, with its complex mix of religious and ethnic groups, popular democracy might produce undesirable results. But that is not the fault of democracy. If anything, the blame rests with Saddam Hussein's regime which fostered divisions of various kinds. This does not, however, alter the fact that given the conditions that exist in many postcolonial countries - created by history, colonialism, divide and rule policies, corruption, autocracy - the combination of laissez-faire capitalism and unrestrained majority rule can have catastrophic consequences.

Amy Chua is professor of law at Yale University. Click here for her website







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