The World is Still on Fire

Before writing a controversial book on Asian parenting, Amy Chua wrote a very good book called World on Fire – How exporting free market democracy breeds ethnic hatred and global instability (2003). Her key point in the book – borne of personal experience as well as extensive research – is that in most countries outside of the United States and Western Europe, economic power is held by an ethnic minority group. She refers to them as MDM (market-dominant minority). For instance, in Chua’s country of origin (the Philippines), the ethnic Chinese make up 1% of the population but control 60% of the private economy. The reason why MDM’s often become the dominant economic force in a country is complicated – history, culture and education are factors, as are domestic and international networks and access to capital.

If the values of capitalism and those of democracy have always coexisted uncomfortably, then Chua’s book highlights the conditions in which these two pillars of freedom come into open conflict – namely, when economic power and political power are disaggregated. The free flow of capital increases the wealth of the MDM (often extraordinarily, relative to the majority population) which breeds resentment and hatred among the majority, and universal suffrage means that the majority can act on those resentments – often with bloody consequences. In short, capitalism makes the MDM rich and stokes hatred among the majority population, and democracy hands the majority a hammer.

(Personal note: I spent a part of my childhood in Sierra Leone (West Africa) in the Eighties, before the place went to hell in a hand basket, and saw the native Sierra Leoneon vs Lebanese (MDM) dynamic up close. At best it was tense, and sometimes very ugly. The country grew progressively worse during the four years my family lived there, and exponentially worse after we left.)

Because these conditions do not really exist in the West, policymakers there working on advancement of the developing world suffer from a blind spot. Their prescription has always been a combination of free market capitalism and democracy – the conditions that allowed the West to thrive. Superpowers like the United States, and institutions like the World Bank push this prescription. But Chua’s point is that – except for a few rare cases – this is a recipe for disaster. If you force markets open first, you simply accelerate the wealth gains of the MDM. If you force democratic reforms first, you are inviting violence on the MDM. Do them both simultaneously, and the two feed off each other. Pushing capitalism and democracy is adding accelerant to pre-existing embers of ill-feeling.

Western policy makers often point to countries such as South Korea, Japan, Taiwan and Singapore as evidence for the success of the capitalism + democracy prescription of development. But, Chua makes the point that these countries are very much outliers. In Singapore the majority population (Chinese) is market-dominant (not to mention the fact that its democratic freedoms are restricted), and South Korea, Japan and Taiwan not only do not have MDMs, they do not really have minority populations at all.

From the book, I created a list of countries and regions, and their relevant MDMs.

a) is there a correlation between social disharmony – crime, violence, civil unrest – and the size of the ethnic population (1% of the population as in the Philippines, or 30% as in Malaysia )?
b) is there a correlation between social disharmony and the size of the wealth gap (e.g. if you normalize for (a))?
c) are there predictable effects when national MDM’s are regional majorities (e.g. China, ethnic Chinese and Southeast Asia) and vice-versa?

When it comes to examples, Chua has an embarrassment of riches to choose from – or should I say, an embarrassment of poverty?). But it is still curious that she mentions Uganda only briefly, a country which perfectly aligns with her thesis. In Uganda, the MDM’s were ethnic Indians, enormously rich relative to black Ugandans and deeply resented. And in a spectacular incident in 1972, Idi Amin expelled the Indians from the country, giving them just 90 days to leave. Below is a news report from that time:

The World on Fire can make for uncomfortable reading – especially for those wedded to the idea that the spread of capitalism and democracy will make the world a better place. Some points:

1) In both the United States and Europe, the path towards democracy was slow and did not involve instantaneous universal suffrage – for the longest time, they disenfranchised all kinds of people for all kinds of reasons – racial and economic. This may have been unjust, but it also left these countries unaware of the downsides of sudden democracy. “For the last twenty years the United States has been vigorously promoting instantaneous democratization – essentially overnight elections with universal suffrage – throughout the non-Western world. In doing so we are asking developing and post-Communist countries to embrace a process of democratization that no Western nation ever went through.”

2) Even as it champions democracy around the world, the United States certainly does not champion world democracy (against which it has fought tooth and nail). Chua’s argument is that the US is a global MDM. I would suggest that one interesting example of this is FIFA – the world football (soccer) organization where each member nation has one vote – Togo has the same voting power as Germany, and the Faro Islands have the same voting power as Italy. The result is endemic corruption (Sepp Blatter and his despicable cronies) and bizarre decision-making (Qatar as a World Cup host nation).

When I first heard about the thesis of this book, I was very excited because it I thought it grasped – in a very real and concrete way – the essential contradiction that exists between capitalism and democracy. But having read the book, I think The World on Fire is asking an even more fundamental question: are people happier when they are better off but other people are way better off, or are people happier to be poor as long as everyone else is also poor? Would you rather live in Indonesia or North Korea? That is obviously an idiotic question. Of course you would rather live in Indonesia. But is the average Pribumi happier than the average North Korean? That is a more difficult question.

The weakest section of the book is at the end when Chua tries to come up with possible solutions to the problem of MDM’s. This isn’t necessarily a criticism – she’s dealing with huge, varied and intractably-difficult problems. One question I have, however, is: do the same problems remain as a country moves up the wealth scale? Especially as wealth advantages level off (I believe economists call this “diminishing marginal utility” or something). Or put it another way: imagine if you live in a poor, poor country where you spend your days eating rats. The arrival of MDM and their economic activities may improve (somewhat) the wealth of the country as a whole. You’re now eating cow gristle, which is a lot better than eating rats, but you resent the MDM deeply because they’re eating steak. But as you move up the wealth scale, you stop eating gristle and you start eating hamburger meat. Well, hamburger meat is not steak, but it’s still a lot better than gristle. Meanwhile, the MDM can only go from eating steak to eating Wagyu steak (and Wagyu is very nice but, at the end of the day, it’s still just steak). Do you still resent the MDM as much as when you were eating cow gristle? In other words, on a country’s developmental trajectory, is this form of ethnic conflict a temporary blip that – if you could manage it somehow – will eventually diminish as a country gets richer? Or is it conflict all the way up?

The World on Fire has received some criticism in academic circles, especially in Chua’s rather loose definition of “ethnic minority” and how that definition changes when she is talking about different countries. But in her defense, it seems to me that in a real-world, practical book like this, it isn’t really all that important to come up with a formal, uniform definition. All that really matters is the perception of the majority. If you are a Tutsi getting hacked to death with a machete, do you really care that the way Hutu define ethnicity is inconsistent with how a Burman defines it? And Chua does a good job defining ethnic boundaries as perceived within individual countries or regions.

As Chua mentions many times in her book, majority resentments towards MDM in a democracy are low-hanging fruit for politicians to demagogue the issue. How does a politician resist the temptation to rile up the populace, feed off the resentment and garner votes in the process? Come to think of it, does it even matter if the claims of economic dominance of MDM (or even what constitutes an MDM) are true or not, as long as the majority perceive it to be true? Even in a country where MDMs do not exist, can a venal and opportunistic politician convince the majority otherwise through disinformation campaigns? Would such a tactic involve a constant and unrelenting propaganda machine, fueling ethnic resentment while removing social safety mechanisms which would consequently make people feel more anxious and less secure? If the world is indeed on fire, can we argue that the flames have now engulfed Mara Lago, FL and burned through Trump Tower?