Culture Matters: Why Do We Pretend Otherwise?

Another Romney storm in an American teacup. But it’s one that recurs in the world of social policy and economics.

Romney made some remarks about culture and prosperity in Israel, comparing the economic effects of Israeli and Palestinian cultures. It may have been a hand-waving generalisation that you wouldn’t accept from a student, but it was hardly extreme. The WSJ reports it indirectly as:

Controversy erupted earlier this week when Mr. Romney, who is an unabashed Israel supporter, told donors in Jerusalem that Israel enjoys more robust per capita gross domestic product, in part, because of its culture.

A back-off on Fox News, then a reassertion in the National Review online:

But what exactly accounts for prosperity if not culture? In the case of the United States, it is a particular kind of culture that has made us the greatest economic power in the history of the earth. Many significant features come to mind: our work ethic, our appreciation for education, our willingness to take risks, our commitment to honor and oath, our family orientation, our devotion to a purpose greater than ourselves, our patriotism. But one feature of our culture that propels the American economy stands out above all others: freedom. The American economy is fueled by freedom. Free people and their free enterprises are what drive our economic vitality.

It’s interesting that the title of the article is Culture Matters Culture Does Matter. Culture Matters is the title of a 2001 book by Lawrence Harrison and Samuel Huntington that is another in many attempts to identify cultural variables in economic performance. Harrison followed with  The Central Liberal Truth.  In both he identified 20-something axes of culture that he claims determine if a society is progress-prone or not.

In many ways this is the holy grail of development economics, and of macroeconomics. There have been many attempts since Weber’s belief that Protestantism fuelled enterprise – from Hofstede’s cultural dimensions in the 1980s and its  derivatives, to endogenous growth theory (sort of), to the World Bank focus on institutions, to Granato, Ingelhart and Leblang in the 1990s, to Akerlof and Kranton on identity values in people’s decisionmaking (utility functions) in the early 2000s.

The reality is though, that despite these attempts, in economic theory cultural variables remain fundamentally marginal. Growth economics is still primarily modelled by relationships between quantifiable and differentiable macro variables. As I’ve written before, the messy world of culture – so hard to measure – doesn’t get a substantial look in.

The blowback

So why the noise about relatively innocuous remarks? Two reasons. Firstly, it’s Israel-Palestine, stupid.

Secondly, those on the Left instinctively see talk of cultural variables as a slippery slope to “blaming the victim”. Whether it’s African-American households under-performing in comparison to Asian or Indian households of similar background, or underdeveloped nations under-performing in comparison to developed ones, it threatens the world view of the compassionate Left that has settled since the 1960s.

It’s a problem because as Steve Kates points out, recognising the role of culture was once mainstream and non-controversial.

I can only speculate that it stems from two deep, implicit beliefs. Firstly, that we are all noble, blank slates who can take any lifepath at any time if only the bad guys get out of the way, and secondly that all economic success – personal or national – is rooted in exploitation and that any inequality is, in itself, evil.

I can still remember development economics of the 70s and 80s, dominated by Marxist-derived nonsense that underdevelopment was due solely to nasty Western countries exploiting  the poor nations of the world, and that Western wealth was mainly due to ripping off colonies.

We can see these implicit beliefs in approaches to capitalism and economic success today, to educational success, to paternalist questions of diet and exercise. There is an ideological denial that personal values, predispositions, character and culture – leading to choices – have an effect on outcomes, short term and long term. It’s black-and-white thinking, as all ideology is.

This fear of blame and embrace of exploitation-thinking drives an unwillingness to discuss cultural variables in good faith, and the consistent assumption that people are moulded by nefarious external forces.

Both of which lead to the conclusion that someone has to intervene to protect the poor unfortunates. Someone with the right values, of course.

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