Book Review: The Economics And Politics of Race: an International Perspective by Thomas Sowell

Policy makers in the U.S. have answered these questions in the affirmative. They have decided that certain groups of Americans, in particular blacks, are poorer than average because of the prejudice they face and the discrimination with which they have been forced to contend, not only today but historically. The answer to these disparities, it is argued, is not only to eliminate such discrimination, but to make up for the past by instituting programs of “affirmative action.”

But what if some have advanced less rapidly than others not because of the attitude of the external society, but because of the internal values and constitution of the groups themselves? If this is the case, current polities are irrelevant at best, and possibly counterproductive as well.

In this landmark study, Dr. Thomas Sewell, a Senior Fellow at the Hoover Institution of Stanford University and well known as a leading black economist, uses an international framework to analyze group differences. Examining the experience of given groups in more than a dozen countries, he seeks to determine how much of each group’s economic fate has been due to the surrounding society and how much to internal patterns that follow the same group around the world.

The Italians in Australia and Argentina, for example, show social and economic patterns similar in many respects to those of Italians in Italy or in the United States. Chinese college students in Malaysia specialize in very much the same fields that they specialize in in American colleges—a far different set of specializations from those of other groups in both countries. Germans have, similarly, concentrated in very sire-ilar industries and occupations in South America, North America, or Australia.

Analyzing the successes of each group, Sowell points to the group’s culture, which rewards some behaviors over others, as the determinant of skills, orientations, and therefore economic performance. “Race may have no intrinsic significance,” he writes, “and yet be associated historically with vast cultural differences that are very consequential for economic performance.”

In Southeast Asia, for example, the overseas Chinese have been subjected to widespread discrimination. Quota systems were established in government employment and in admissions to universities in Malaysia, and a “target” of 30 per cent Malaysian ownership in business and industry was established. In Indonesia, a 1959 law forbade the Chinese to engage in retailing in the villages. Chinese-owned rice mills were confiscated. In the Philippines, it was decreed that no new Chinese import business could be established, and Chinese establishments were closed by law.

Despite all of this, Dr. Sowell points out, the Chinese thrived. As of 1972, they owned between 50 and 95 per cent of the capital in Thailand’s banking and finance industry, transportation, wholesale and retail trade, restaurants and the import and export business. In Malaysia, the Chinese earned double the income of Malays in 1976, despite a massive government program imposing preferential treatment of Malays in the private economy. In the U.S., as in Southeast Asia, writes Sowell, “the Chinese became hated for their virtues.” Despite discrimination, the Chinese advanced rapidly in the U.S., as did the Japanese, who met similar forms of racial bigotry, including special taxes and job restrictions.

In Europe, the author points out, precisely the same story can be told with regard to Jews. Anti-semitism was a powerful force in many countries, yet Jews continued to advance. Although Jews were only one percent of the German population, they became 10 per cent of the doctors and dentists, 17 per cent of the lawyers and won 27 per cent of the Nobel Prizes awarded Germans from 1901 to 1975. In the U.S., Sowell points out, “Although the Jewish immigrants arrived with less money than most other immigrants, their rise to prosperity was unparalleled. Working long hours at low pay, they nevertheless saved money to start their own small businesses . . . or to send a child to college. While the Jews were initially destitute in financial terms, they brought with them not only specific’ skills but a tradition of success and entrepreneurship which could not be confiscated or eliminated, as the Russian and Polish governments had confiscated their wealth and eliminated most of their opportunities.”

In the case of blacks in the U.S., Dr. Sowell notes that West Indians have advanced much more rapidly than native born American blacks because of major cultural differences. In the West Indies, slaves had to grow the bulk of their own food and were able to sell what they did not need from their individual plots of land. They were given economic incentives to exercise initiative, as well as experience in buying, selling and managing their own affairs—experiences denied to slaves in the U.S.

The two black groups—native born Americans and West Indians—suffered the same racial discrimination, but advanced at dramatically different rates. By 1969, black West Indians earned 94 per cent of the average income of Americans in general, while native blacks earned only 62 per cent. Second generation West Indians in the U.S. earned 15 per cent more than the average American. More than half of all black owned businesses in New York State were owned by West Indians. The highest ranking blacks in the New York City Police Department in 1970 were all West Indians, as were all the black federal judges in the city.

It is a serious mistake, Sowell believes, to ignore the fact that economic performance differences between whole races and cultures are “quite real and quite large.” Attitudes of work habits, he believes, are key ingredients of success or failure. The market rewards certain kinds of behavior, and penalizes other behavior patterns—in a color-blind manner. Blaming discrimination by others for a group’s status, he states, ignores the lessons of history.

Political efforts to address the “problems” of minorities usually fail, Sowell reports, because they refuse to deal with the real causes of such difficulties: “. . . political ‘solutions’ tend to misconceive the basic issues . . . black civil rights leaders . . . often earn annual incomes running into hundreds of thousands of dollars, even if their programs and approaches prove futile for the larger purpose of lifting other blacks out of poverty.”

Crucial to a group’s ability to advance is the stability of its family life and the willingness to sacrifice: “. . . more than four-fifths of all white children live with both their parents. But among black children, less than half live with both parents . . . What is relevant is the willingness to pay a price to achieve goals. Large behavioral differences suggest that the trade-off of competing desires vary enormously among ethnic groups . . . The complex personal and social prerequisites for a prosperous level of output are often simply glided over, and material wealth treated as having been produced somehow, with the only real question being how to distribute it justly.”

If we seek to understand group differences, it is to “human capital” that we must turn our attention, Dr. Sowell declares. The crucial question is not the fairness of its distribution but, “whether society as a whole—or mankind as a whole gains when the output of both the fortunate and the unfortunate is discouraged by disincentives.”

It is possible that many civil rights leaders, academicians and politicians have a vested interest in perpetuating the current myths about the causes of group differences, but the rest of us are under no obligation to view the world through the blinders of such special interest groups. Many are likely to oppose the conclusions of this important book. They will not, however, be able to ignore it.