If you think that culture matters but institutions do not, look at North and South Korea. If you think that culture does not matter at all, look at differences among different ethnic groups within countries.
South Korea/North Korea per capita income ratio: 14. (Source: CIA World Factbook)
American Asian/American black average household income ratio: 1.9. (Source: U.S. Census)
From a global standpoint, it sure looks like economic policy (a term I prefer to the vague “institutions”) matters a lot more than culture. And controlling for IQ would make culture look less significant than it already does, without making a dent in disparity between North and South Korea.
Dec 10 2006 at 8:38pm
I suspect that poor childhood nutrition lowers IQ. The average IQ in North Korea is probably much lower than in South Korea. This may well statistically explain some of the North / South Korea economic disparity.
Dec 10 2006 at 9:00pm
Right, but insanely bad Communist economic policies are almost extinct, hanging on in North Korea and Cuba and not many more places. When China switched from Maoism to capitalism, that was 20% of the world’s population right there. The ratio of GDP per capita between Hong Kong and Canton up the river used to be enormous, but it’s been closing fast for 25 years.
Even non-foaming at the mouth Fabian socialism is on the way out, as in India which opened up 15 years ago.
So, while in the past, ideological policies mattered most, in the future differences in GDP per capita between countries will correlate mostly with things like culture, IQ, genetic differences, and the fine details of economic policy within an overall framework of regulated capitalism.
Dec 10 2006 at 9:15pm
I would say that blacks and Asians in the USA are part of the same culture. Sure, there are some difference in subculture, but also a good deal in common.
Culture is also important in what kind of economic policy and institutions you actually end up getting. Try to run a nanny state in Sweden, you get one thing. Try it in Argentina and you get something else. I don’t think you can separate culture from political systems. Unfortunately for Iraq.
Bruce G Charlton
Dec 11 2006 at 1:33am
Excellent posting and comments so far.
I agree with James Miller that IQ is affected by childhood stresses such as malnutrition and would add severe infection disease (which actually also imposes prolonged depression of food intake).
I agree with Steve Sailer that the balance of importance between policy and culture is shifting.
And I would suggest to Matt C that before dismissing the importance of cultural difference he looks at the work of Thomas Sowell, which certainly seems to show prolonged sub-cultural (eg ethnic) differences across many generations even within a larger culture – but where these differences can change quickly (eg in Japan) in ways that are probably inconsistent with an IQ explanation.
Dec 11 2006 at 5:06am
Though Thomas Sowell is a great writer and clearly a heavyweight thinker… the fact that he dismisses almost out of hand a genetic explanation by citing a one in a thousand study (usually which Jensen et al have shown the flaws in) or concentrating on ad-hoc but plausible explanations without looking at the greater picture…seriously hurts his credibility.
That is unfortunate because hes a storehouse of knowledge otherwise.
Ironic. Just like Murray and Herrnstein wrote about…the more the environment is the same…the more glaring seem genetic differences.
Dec 11 2006 at 5:14am
That doesnt seem right to me. A fair system would have that divide a lot higher than 1.9
Does the household income control for the source of funds?
For example is a black on welfare (of say $500 a month) counted as a positive $2400 a year? It really should be negative $2400 if there was any sense in the statistic, as that is what other people are forced to subsidize that individual. There are far more blacks than A.Asians on welfare per capita Id wager.
And then theres Affirmative Action that applies way more to blacks than A.Asians as LaGriffeduLion showed here http://www.lagriffedulion.f2s.com/robinhood.htm
Dec 11 2006 at 8:54am
Household income does not count government assistance (it does count social security) or other benefits. While blacks are disproportionately represented among the poor and criminals, the overwhelming majority of them are lower middle-class or above.
Dec 11 2006 at 9:39am
A natural experiment that is the contrapositive to Korea would be Vietnam. Has anyone ever studied the economic losses that have occurred in South Vietnam due to the capture of that territory by the communists? In that case the culture remained constant while the institutions/economic policies changed rapidly.
Dec 11 2006 at 10:30am
Please note a distinction between per capita and per household income. I would also want to know if Asian and black households have similar numbers of persons. Given rates of single-parent households, I would expect fewer adults and more children in the average black household. If they have similar numbers of persons per household, that factor would explain much of the difference. Is the proper frame of comparison income per household, per person, per adult, or per adult wage-earner? I suppose there is something to be said for each.
Dec 11 2006 at 12:08pm
“I suspect that poor childhood nutrition lowers IQ. The average IQ in North Korea is probably much lower than in South Korea. This may well statistically explain some of the North / South Korea economic disparity.”
And where does that poor childhood nutrition come from? — But honestly, what are you going to do with your high IQ in a country with the institutions that North Korea has, anyway? Not make money with it, that’s for sure.
Dec 12 2006 at 9:56am
I agree with Matt above. Bryan threw his analysis together too quickly and it shows. He’s not comparing similar things. Is he trying to claim that all Americans of Asian decent have the same culture as North Koreans? They don’t even have the same culture as South Koreans. And to lump all Asians together as if they’re all the same is ignorant. Not a few Asians would complain and point to very different cultures in China, Japan, the Koreas, Vietnam, etc.
Also, Bryan pretends that culture and economic institutions are water tight chambers. They’re not. Institutions and culture are highly correlated with each other.
Even the studies that compare the success of recent immigrants against their coworkers at home don’t do justice to the issue, because every culture has rebels. Often those rebels move to the US. Naturally they succeed in the US where the culture and institutions are very different from those at home. Those immigrants already have an affinity for our culture or they wouldn’t have moved here. Once here, they adopt our economic culture.
This is just another example of an economist taking an arrogant attitude toward another field and dismissing the results without having seriously considered them. Bryan will swallow evolutionary psychology without even tasting it, but he won’t even consider the sound research into culture/institutions/economics.
Again, I suggest he read Nobel Prize winner Douglass North.
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