Thursday, March 18, 2010

Lessons of success from societies' oppressed minorities

From The Age, March 9, 2010, by Tim Colebatch, economics editor:

...In Indonesia, ...maybe 3 per cent of the population, the Chinese were estimated to control 75 per cent of Indonesian business. Yet they were deprived of full citizenship, banned from speaking Chinese languages, practising Chinese religions or holding public office, had their schools closed and lived in fear for the future.

It was a situation familiar to many European Jews throughout history. They too were a small minority. They came to acquire extraordinary economic power, yet usually they had no civic rights. They were banned from public office and many occupations, and were vulnerable to the hostility of rulers or mobs driven by hate - culminating in Hitler orchestrating the murder of more than 80 per cent of all the Jews in central and eastern Europe.

But how did such a small minority in Europe - and now, in Australia and the United States - acquire such a central role in the economy, the arts and the professions? ...

...Jerry Muller, himself Jewish and a professor at the Catholic University of America in Washington, has published a book of four essays, Capitalism and the Jews, that sets out to explain why Jews have enjoyed such exceptional success in modern capitalist societies such as ours.

Most of the reasons, as he sees it, are the same reasons that the Chinese now dominate commerce in Indonesia and South-East Asia, or the Indians in Fiji, or the Greeks and Armenians in the old Turkish empire. But some are uniquely Jewish.

...by and large, Jews usually lived in towns, whereas the vast majority of people around them were farmers. With notable exceptions, Jews made their living from commerce and trades, not agriculture. That is crucial to what followed.

Muller begins the story in the high Middle Ages, with the Catholic Church agonising over biblical injunctions against usury: then taken to mean money-lending in general, not the modern meaning of lending at excessive interest rates. The compromise adopted was that Christians should not take part in this evil - but since it was a necessary evil the Jews could do it.

So the role of providing finance - the future engine of capitalist development - was passed to the despised minority of traders and tradesmen. This, too, is crucial to the story.

Muller is too polite to say it, but his argument clearly implies that the rest of us are disadvantaged because we are descended from a long line of farmers who had their brains dulled by working the land as their parents had done before them. By contrast, Jewish children for centuries grew up in the towns learning to live by their wits, and mastering skills of commerce and finance.

A study of the German corporate elite of 100 years ago found that 32 to 40 per cent of them were Jewish. In Hungary, 54 per cent of commercial establishments were Jewish-owned. It was a similar story throughout Europe and, in a lesser degree, in the United States, Canada and Australia.

Muller sums up his argument in a nutshell: ''As the development of modern capitalism created new economic opportunities in Europe and its colonial offshoots, Jews were disproportionately successful in seizing them. That is because the Jews of Europe were well positioned by their premodern history. ''Their experience, and the cultural propensities it engendered, predisposed them towards commerce and finance, and towards the free professions.''

The most important cultural propensity was to education. In Prussia in the late 19th century, Muller recounts, Jewish children were 10 times more likely to go to university than other German children. ''By the early 20th century, in the … larger cities of central and eastern Europe, such as Vienna, Warsaw, Prague or Budapest, Jewish lawyers, engineers, pharmacists and architects at times comprised the majority of practitioners, in cities where Jews generally made up 5 to 10 per cent of the population.''

A second propensity was a willingness to invest in new ideas. A classic example is the film industry, which quickly became dominated by Jews.

And a third was the propensity for hard work.

These are the same traits that explain the success of the overseas Chinese in Indonesia, and of Chinese students in Australia. If there is a moral here, it is that most of the factors that created Jewish exceptionalism are not exclusive to Jews.

Even those of us whose forebears spent too much time driving ploughs in the rain through wet European soils can make it - if we study hard, take risks and work hard to make them come off.
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