Tuesday, May 23, 2006

To Trade or to Grab

”Competition makes discrimination costly, and independently forces people who are truly racist to re-evaluate those beliefs when they must, because the corporation wants to make money rather than accommodate tribal grievances, work together with people of different groups. Athletic teams, military units and multinational corporations are the places where racism runs into the most difficulty. In each case people are working have an obvious common goal, and there is no time to waste worrying about such extraneous considerations as racial hostility. Thus, the more freely market forces play out, the more quickly racism recedes.”

Or so I claimed in my last post on American racism. That commerce erodes hate, discrimination and segregation is now supported by this report from the BBC. It notes how the most downtrodden castes in India now have opportunities their parents could not have imagined, due to, basically, globalization, economic reform and multtinational corporations:

"The economy has created the need for jobs," he [Bindeshwar Pathak, social entrepreneur] says, showing us the various activities in his centre. "More people are needed to work for these multinational companies who need women to sew their garments, make handicrafts, work in their factories."

"Before this centre, these women would have never even thought of a life like this, or a way out. Now, even their children feel they can be proud of their mothers."

Economic growth has changed the lives of the lower caste in Indian cities as well.
Arun Chowdhury, a lower caste businessman, runs a thriving outdoors advertising firm in Delhi.

A dozen men work for him, many of them from the upper caste.

In the pursuit of wealth and employment, ancient social barriers have become irrelevant.

"I've never felt that because of my caste, my advertising business has suffered," says Arun.

"No one ever asks me. It is not important in the cities like Delhi. It is commerce and trade that is important now. Everyone wants to make money."

Prosperity, or more accurately the potential for prosperity, has surprisingly salutary effects on the choices people make. When one reads, just to take a few examples from today's news, of rioting over wages in Bangladesh or sporadic civil warfare in Mali, one wonders why the modern West has mostly escaped the kind of violent instability that is routine in much of the world. As I say this, note that the West gave the world two of the most brutal outbreaks of interstate violence in the form of the two World Wars. And certainly the brutalities of the U.S. Civil War provide additional evidence that we have no innate cultural predilection to avoid violence. So I am reluctant to attribute the chaos and looting that still grips so much of the world to something as amorphous as "culture." Postwar Western Europe and North America (and even the word “postwar” is striking in its optimism) have been remarkably tranquil, even able to absorb with relative equanimitythe social upheavals associated with the baby boomers moving into young adulthood. (While the late 1960s were turbulent in the U.S. and Western Europe, it is useful to contrast our experience then with those of other societies with excesses of angry young men now - the Middle East with its jihadism and China with its rapidly ballooning violent protests over property seizures.)

Why? A key ingredient in this outcome is the opportunity for gains through cooperation. There are two ways in this world to get what you want from someone – to persuade him to give it to you (by giving him something he wants), or by taking it from him, with the corresponding risk that he will fight back. The former is trade, and as people at least since Adam Smith have known, trade tends to promote cooperation. And the greater the potential gains from trade, the more incentive societies have to restrain predatory behavior, whether in the form of civil war, aggressive rent-seeking via the state or ordinary street crime. And so richer, more open countries tend to be less plagued by these problems, whose roots lie in the intrinsic makeup of the human species. This is the great promise of globalization – as more societies merge into the immense global commercial traffic, the incentive to get along rises, and the incentive to emphasize the arbitrary differences of tribe – religion, language, ethnicity, caste – correspondingly fade. Globalization raises the return to funneling activity into positive-sum cooperative trade rather than zero-sum politics.

But let us be cautious; let us not be over-deterministic in thinking about the nature of man. Commercial forces will restrain him from his worst impulses, but they can never guarantee anything. Here are another's remarks that are broadly consistent with the above analysis:

The elaborate financial interdependence of the modern world has grown up in spite of ourselves. Men are fundamentally just as disposed as they were at any time to take wealth that does not belong to them. But their relative interest in the matter has changed.

In very primitive conditions robbery is a moderately profitable enterprise. Where the rewards of labor are small and uncertain, and where all wealth is portable, the size of a man’s wealth depends a good deal on the size of his club and the agility with which he wields it. But to the man whose wealth so largely depends upon his credit, dishonesty has become as precarious and profitless as honest toil was in more primitive times. The instincts of the City man may at bottom be just as predatory as those of the robber baron, but taking property by force has been rendered impossible by the force of commercial events.

The writer was Norman Angell, the work was The Great Illusion, and the year was 1910.


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