PART THREE

Why Don't Economies Converge to a Single Economic Growth Path?

by Carole E. Scott

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Lamm, Landes, Lee, and Lingle on Culture's Importance

In order to measure the influence of culture, you have to know what it is. Former Colorado Governor Richard Lamm says that it "'...is that complex whole which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society...'" It is, in short, "the 'learned' behavior we acquire as a member of a society." [Lamm, 25]

Lamm once accepted the "...standard south-of-the-border excuse that [Latin America's] poverty and problems were caused by 'Yankee Imperialism.' It sounded logical and was reinforced by my (then) orthodox liberalism that had to find 'victims' and 'oppressors'" [Lamm, 25] Later he changed his mind, coming to believe that dependency theory, which holds that the LDCs are being held back by the DCs and that their poverty is explained by the DCs wealth, was dead wrong. He attributes his changed view in large part to a book by Larry Harrison, Underdevelopment is a State of the Mind. According to Harrison, culture, values, and attitudes are the most important factors in determining a country's level of economic development, either facilitating or getting in the way of   economic development.

Japan, South Korea, Taiwan, and Hong Kong, Lamm says, disprove the belief of Classical economists that economic power depend upon the availability of abundant natural resources. Made clear by their economic success is that human resources are more important. Adding value to natural resources, which may be obtained from abroad, is more profitable than producing natural resources.

"North Korea's poverty," he believes, "flows from a flawed economic and political system--change these factors and I suggest North Korea will do well. East Germany differed from West Germany because of a dysfunctional political and economic system. But note that even communism cannot completely suppress German industriousness. East Germany had the most prosperous economy in the Eastern Bloc. China and Taiwan share the same cultural traits, but China is governed by a flawed economic and political concept that prevents it from duplicating Taiwan's success." [Lamm, 25]

His thesis is that "...those cultures which stress education, delayed gratification, a work ethic, the acquisition of skills, etc. have an incredible advantage over those which do not. Those countries and cultures which have built institutions that recognize merit in advancement (what you know, rather than who you know), political stability, and which instill in their people a desire for education and self-betterment are the countries that have succeeded in the new international market place. Success and performance are closely linked to attitudes and values. Understand the difference in attitudes and values, and you will much better understand the difference in performance." [Lamm, 25]

It is unfortunate, Lamm says, that criticism of a culture offends the liberal orthodoxy, which considers this as being as bad as attacking a race. He believes, however, that while all cultures deserve respect, they are not all equal. It does a country no good, he believes, to tell it that its problems are exclusively caused by external factors.

"Korea...leaped out of colonialism. What was its secret? Observers generally cite the high rate of literacy; the motivation of the people and their ability to save, delay gratification, and build for the future." [Lamm, 27] Hong Kong, when still a colony, had a much higher standard of living than did many countries rich in natural resources it lacked. The reason? Hong Kong has "...a culture that stresses hard work, skills, and motivation....The principal variable that separates the success of Hong Kong and Taiwan from the poverty of Brazil and Kenya is culture." [Lamm, 27]

Although economic historian David Landes is not certain why some countries are so much wealthier than others are, he is confident that he knows why many of his colleagues hide the most obvious explanation for this. They dare not cite culture and values as a cause, because doing so would be terribly politically incorrect.

In his view, it was not an accident that Europe and the land it settled, the United States, are so rich, and even though they sometimes exploited the underdeveloped world, their much greater wealth cannot be accounted for by this. While scientific discovery is necessary for industrialization, as is illustrated by ancient China's failure to gain much from pioneering work in the sciences, knowledge has to be exploited in order to contribute to economic growth.

Like Max Weber, he believes that culture matters. Wealthy countries are those whose cultures foster thrift, hard work, tenacity, patience, skepticism, and honesty. The gulf between the rich and poor countries will, he believes, continue to grow until and unless poor countries' cultures are modified so that they foster these qualities.

Culture, believes Lee Kuan Yew, the former Prime Minister of Singapore who today dispenses advice on how to achieve economic growth to other East Asian countries, is destiny. A society, he says, that does not place much value upon learning, scholarship, hard work, thrift, and the deferment of present enjoyment for future gain isn't going to grow rapidly.

He believes that there has been an unfortunate, fundamental shift in America's culture that threatens its economy. "The liberal, intellectual tradition that developed after World War II claimed that human beings had arrived at this perfect state where everybody would be better off if they were allowed to do their own thing and flourish. It has not worked out, and I doubt it will. Certain basics about human nature do not change. Man needs a certain moral sense of right and wrong. There is such a thing called evil, and it is not the result of being a victim of society. You are just an evil man, prone to do evil things, and you have to be stopped from doing them. Westerners have abandoned an ethical basis for society, believing that all problems are solvable by a good government, which we in the East never believed possible." [Zakaria, 111]

Lee  he does not believe there is one model for development that will fit all countries. This is because, while in East Asia people believe the individual exists in the context of his family, and the government does not try to provide what the family provides, this is not true in the West. There people believe the government can replace the family. But though he is skeptical of the government's ability to solve social problems, he does think it can successfully promote economic growth and technological advancement. Economic growth, he believes, depends upon what the people do with their lives. The government's role is to foster economic growth by creating a setting in which people can live happily and succeed and express themselves.

The East, he admits, had an advantage over the West in industrializing because it could look to what the West had accomplished over many decades, copy it, and grow faster. In the future growth will be more difficult for the East to achieve because there will be nobody to copy. The East will have to guard against the tradition there of strict discipline, no talking back to teachers, and rote learning so that these characteristics do not interfere with the search for new technologies and products.

Progress demands that societies adapt. However, he believes in the integration of useful attributes into a culture, rather than assimilation.

Christopher Lingle claims that, "Despite claims that 'Asian values' provide a culturally specific impetus for growth, there are indications that some traditional Asian institutions may eventually impose constraints on growth.For example, 'saving face' and guanxi (institutionalized crony networking) result in zero-sum exchanges that could inhibit the efficient use of scarce economic resources." [Lingle, October 1996]

"Singapore's regime, he claims, "has implemented a system that governs by intimidation, that depends upon a form of crony capitalism, that relies upon the professionalized corruption of a highly trained technocracy, and that operates in the context of a 'parasite' economy." [Lingle, October 1996] Singapore's stock and property markets exhibit the classic symptoms of bubble markets that will inevitably collapse. At the first whiff of stagnation, the regime's legitimacy will disappear.

"No one can deny," he admits, "that the Tiger economies have been successful at narrowing the gap in per capita output and income with the most advanced economies in the world. But that was yesterday. The current upheaval has exposed the fault lines of property overhang, inappropriate government policy, and the specter of shifting comparative advantage." [Lingle, September 1997]

He doubts that Asia's "...institutional rigidity can be sufficiently overcome to prevent further crises. While pervasive corruption blocks rapid adjustment in many East Asian economies, an inherent conservatism also impedes necessary responses. For example, Japan's banking sector remains enmeshed in the bureaucratic snares that contributed to the property and asset bubble that burst in the late 1980s."

Short biographies of these men appear below in the Appendix.

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Appendix

Richard Douglas Lamm received a Bachelor's degree from University of Wisconsin in 1957 and a Law degree from the University of California in 1961. A certified public accountant, he was a  Colorado State Representative, 1966-1974; Colorado Governor, 1975-1986; unsuccessful candidate for Colorado's 1992 Democratic Senate nomination; and, since 1987, the Executive Director of the University of Denver's Center for Public Policy and Contemporary Issues. He is the author of several books, including The Angry West, co-authored with G. Michael McCarthy, and Pioneers and Politicians, with Duane A. Smith. He is known for being out spoken.

The following quotes outline his position on several political/economic issues.

"When a resolution to amend the U.S. Constitution to require Congress to balance the budget was proposed, I opposed it. ... I was wrong. Congress must be required to endure the pain of cutting other programs or face the taxpayer with new taxes if they want a new spending program. If we do not do this, the economy will someday collapse into chaos."

"People long these days for statesmen, but I would be satisfied with just untainted politicians. We don't even elect objective politicians these days; we elect special-interest gladiators who fight mostly for the special interest who elected them."

"America's health-care system is wasting tens of billions of dollars ... . We are using our limited capital to give hip replacement to people with Alzheimer's disease; to remove cataracts from people dying in hospices."

"We can either import large numbers of low-skilled workers or we can reach down and train our own underclass. We cannot do both."

"We have come to view the legal system like the lottery, as our outside chance to get rich without working for it. ... That is a form of economic cancer."

"We have millionaires subsidized by Medicare while blocks away, children go without health care."

David S. Landes, a noted economic historian with a special interest in the economic history of Europe and of the Middle East, is the Coolidge Professor of History and Professor of Economics at Harvard University.

Lee Kuan Yew was the authoritarian Prime Minister of Singapore from its independence in 1959 until 1990, when he allowed his deputy to succeed him.Today he is Singapore's very powerful "Senior Minister." Like Lamm, he is prone to speak his mind with impolite frankness. He is quite critical of the West and, it seems, the United States in particular. He attributes the guns, drugs, violent crime, vagrancy, and unbecoming behavior in public--in short, the breakdown of civil society--in the United States to the erosion of the moral underpinnings of its society and the diminution of personal responsibility.  

Christopher Lingle, who received his Ph.D. in economics from the University of Georgia, has taught at several universities, including in the United States the University of West Georgia, the University of South Alabama, and Emory University. He has spent most of his time as an academician at universities in Africa, Asia, and Europe. Currently he is a Visiting Associate Professor of Economics, Wheatherhead School of Management, Department of Economics, Case Western Reserve University. He is the author of Singapore's Authoritarian Capitalism: Asian Values, Free Market Illusions, and Political Dependency (1996) and The Rise and Decline of the Asian Century (1998).

He gained attention world wide while teaching at the National University of Singapore when he was threatened with arrest for writing an article for the International Herald Tribune that was critical of East Asian political regimes. To avoid arrest, he fled from Singapore.

"Singapore's material success--it has generated a foreign exchange surplus of nearly $100 billion--has," he says, "beguiled many. Indeed, observers of all stripes applaud Singapore and cite it as validating their favorite theories: Its industrial policies have been highly praised by left-wing academics, while others have described it as a triumph of communitarian democracy. The data, it seems, provide verification for disparate ideological positions. My experience as a student of Asia, a foreign resident in Singapore, an employee of the regime's university, and finally as a defendant in a well-publicized trial there have led me to a different conclusion: The regime in Singapore has developed an insidious new form of authoritarianism." [Lingle, October 1996]