Category Archives: nationalism

Book Review: Open: The Story of Human Progress by Johan Norberg

On March 25, 2021 at noon ET, CEI is hosting a double book forum featuring Johan Norberg, the 2019 winner of CEI’s Julian L. Simon Memorial Award, and Patrick Moore, a Greenpeace cofounder and author of Fake Invisible Catastrophes and Threats of Doom. Register here, where video of the event will also be viewable afterwards.

Liberalism—in the correct sense of the word—needs fresh voices. The ideological conversation is different than it was a decade ago, and many market-liberal thinkers have not kept pace. Today’s debate is over whether society should be open or closed, not which side of the Iron Curtain was better.

This is where the Swedish economist Johan Norberg performs a valuable service. He is fighting the current battle, not the last one. His newest book, Open: The Story of Human Progress, is a superb defense of the pro-freedom side of the debate. And he defends it against the nationalists and populists who are attacking it right now.

People over a certain age on the political right tend to still use the word “socialism,” but often as a catch-all term for things they dislike. This is different from the word’s commonly understood meaning of state ownership of the means of production, belief in dialectical materialism, teleological stages of history, or any of the other things socialists actually believe in.

People under a certain age on the political left often say they favor socialism. But they, too, have given the word a new and different meaning. They typically define socialism as a more-or-less market economy with a large welfare state, as in the Nordic countries. They are also often careful to add the qualifier “democratic” as an implicit nod to what socialism’s original meaning entails.

When people give the same word different meanings, confusion reigns. When people today lob the s-bomb, they are often talking  at each other, not to each other. The real debate is elsewhere.

This tactic is great for getting people riled up, though. The heat-without-light approach has advanced the careers of people like Fox News host Tucker Carlson and former President Trump on the right, and Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez on the left. But it makes substantive debate difficult.

Openness and liberal institutions have generated more wealth for more people than any other socioeconomic system in history. But they are also unpopular. Norberg has some ideas on why, drawing on a mix of history, economics, and psychology. He sums up his thesis on page 6:

As I will argue, the reason that the Enlightenment and the Industrial Revolution started in Western Europe was that this region of the world happened to be the most open, partly just out of luck. It has been repeated in every place that has gone through similar institutional changes. It is not the triumph of the West, it is the triumph of openness.

First, the history. The last two centuries have seen a mass enrichment unlike anything in human history. As economic historian Deirdre McCloskey has pointed out, people today are 30 times wealthier than our ancestors were in about 1800. Not 30 percent more, but 30-fold. As President Biden once said about a different issue, this is a big deal. Since the Great Enrichment began, life expectancies have doubled. Infant mortality is down by more than 90 percent. Famines today have political causes, not natural ones. Violence, both intentional and accidental, are sharply down across the board. A few years ago, the percentage of world population living in absolute poverty—$1.90 per day or less—fell below 10 percent for the first time ever. Almost every long-run trend is showing improvement.

This historical process is as important as the taming of fire or the invention of the wheel. This is what Norberg defends. And it needs defending, because the openness and liberal values that made it all possible are unpopular. Psychology helps to explain why.

People respond to threats more sharply than to good news. In lab experiments, people feel the sting of loss about twice as sharply as a gain of similar amount. Psychologists call this loss aversion. We evolved this trait because mother nature is a superb economist. People have only so much attention to give to things, so we have evolved ways to economize on it. When things are going well, we can leave them alone, and save our scarce attention for dealing with threats. We are hardwired to pay more attention to threats, because long ago there was a survival advantage in doing so.

This tendency is not unique to humans, and long predates us. In a way, the modern life we all enjoy runs counter to hundreds of millions of years of natural selection processes. No wonder liberals have an uphill battle!

In the last two centuries or so since the Great Enrichment began, threats have become progressively less menacing. People don’t have to worry nearly as much about famine, disease, or violence. But that same impulse still exists. Now it gets channeled differently. Socialists—actual ones—viewed capitalists as threats. Populists, from William Jennings Bryan to Josh Hawley, frame various elites as threats. Nationalists view immigrants and foreigners as threats.

Who and what people consider to be threats changes with the times. But that core psychological mechanism remains constant. Some kind of outside Other always poses a threat to the in-group, which must always be defended. This in-group can be a family, tribe, race, nation, political party, or just about anything else. People can also have multiple in-groups at the same time, and can shift seamlessly between them. A Republican and a Democrat who would be enemies in one setting might become fast friends at a baseball game if they like the same team, then go back to being enemies when the game is over.

The key point is that the in-group/out-group dynamic is in everybody’s DNA, and is where the urge to close society comes from. Norberg here draws on the political psychologist Karen Stenner’s 2005 book The Authoritarian Dynamic, which argues that about a third of people have an underlying authoritarian impulse in them—but it doesn’t express itself unless people feel threatened. During normal times, they are just as open and amiable as anyone else. But when they feel threatened, “they react explosively,” Norberg writes on p. 343. “They become intolerant of diversity and dissent and willing to restore unity by government control, even if it wrecks rule of law and free speech.”

Liberal institutions are powerful enough to double lifespans and increase prosperity 30-fold in a handful of generations. At the same time, they are vulnerable to attacks like this.

Prior liberal flowerings got started in societies as diverse as Ancient Greece and Song dynasty China. But none of them lasted. The general intellectual climate wasn’t open enough to openness. Plato was executed essentially for nonconformity. After Mongol invaders ended the Song dynasty, the succeeding Ming dynasty responded to the threat by destroying the world’s most advanced fleet of oceangoing ships and banning nearly all foreign contact.

That vulnerability is why the open society will always need defending, especially as its attackers change tactics every generation or two. Norberg’s defense is perfectly suited for this generation’s emerging threats. Populist and nationalist governments have come to power in recent years in countries such as Brazil, Mexico, Hungary, and elsewhere. President Trump’s trade war, immigration restrictions, race-baiting were slowing the longest economic expansion in U.S. history and causing cultural divisions even before COVID-19 hit.

Even after he cost his party the House, the Senate, and the presidency, the Republican party is continuing along a national populist trajectory. The progressive wing of the Democratic party is pushing similar policies in different packaging, on issues from international trade to technology policy. The United Kingdom’s Brexit debate, which should have been about escaping the European Union’s burdensome regulatory, agricultural, and tax policies, was instead hijacked by ugly nationalist impulses, and became divisive for all the wrong reasons. Strongman governments and nationalist political parties are springing up in places that should know better, such as Eastern Europe, which bore the brunt of both fascism and communism in the 20th century.

Norberg writes clearly and persuasively, with passion, and without anger. It is an impressive performance, and a joy to read. He has only one notable slip in 384 pages, and that is his support for a carbon tax on pages 330-331. Ironically, this comes in a section about the knowledge problem in economics. A centralized body such as Congress is unlikely to have the on-the-ground knowledge it needs to put an accurate price on carbon emissions.

Perhaps more significantly, the carbon tax suffers from public choice problems—which basically means that politicians tend to behave like politicians. A cardinal rule of politics is that policies are made and enforced by the government we have, not the government we want. Even if Congress did overcome the knowledge problem, it is unlikely that people like Nancy Pelosi and Mitch McConnell, or whoever succeeds them down the road, would craft a carbon tax on the merits. For Norberg, a carbon tax is “supposed to be an incentive, not a source of revenue.” This is surely not how a carbon tax would work under a real-world government.

That quibble aside, Open is one of the best books of its kind to come out in years. It is the right defense of the right values at the right time.

Norberg is not the only voice in favor of openness. Recent works by economists Virgil Storr and Ginni Choi, psychologist Joseph Henrich, and experimental economist Bart Wilson are other recent contributions. Matt RidleySteven Pinker, and Deirdre McCloskey have all been flying the flag for openness, tolerance, and dynamism for years. But just as Julian Simon was in his day, these voices of reason are too often drowned out by a chorus of doomsayers.

Markets are inherently dynamic and ever changing. No one is in charge of them, and no one directs the process. Markets work best when people are open, tolerant, and cooperative. People need to get along with people who look different, speak differently, and may live far away. It takes trusting strangers. That not natural to the human brain, which evolved to fit a hunter-gatherer world. But open markets have gotten us this far. If we let them, they can take us much farther. Whether we do or not will be this generation’s defining debate.

New President, Same Bad Policies

The Trump administration’s trade war gave economics teachers countless real-world examples of bad policy they can use in the classroom. A new open letter encourages President Biden to provide a similar service by becoming the “climate president.” Signees include prominent business leaders and activists such as Jeff Bezos, Leonardo DiCaprio, and Bill Ford.

Here are a few basic lessons of economics and politics they should have considered before signing on:

  • Green policies are Trump’s trade war in fancier packaging. This is an important, but overlooked, theme in the new administration. The climate doesn’t care if new technologies or business models come from America, Europe, Asia, or Africa. But politicians and their donors sure do. This is why President Biden is continuing President Trump’s “Buy American” policies. The main difference is that Biden is adding a green label to the nationalist branding. Businesses see climate legislation as a weapon against foreign competitors, the same as Trump’s tariffs. Politicians see ways to do favors for these companies, harm enemies, and appeal to voters’ patriotism, all at the same time. But this would raise consumer prices and leave supply networks less resilient—not a good idea during a pandemic and amidst a still-reeling economy.
  • Rent-seeking is a thing. Rent-seeking is the technical term for getting special favors from government. Political connections are often less risky and more profitable than gambling on a new technology. Solyndra was not an isolated incident. When Washington puts millions of dollars up for grabs, many companies will compete in Washington rather than in the marketplace. This leaves fewer resources available for developing new technologies. It also shifts priorities toward what Washington wants, rather than what might actually work.
  • Policy is made by the government we have, not the government we want. It is naïve to believe that Congress, with people like Mitch McConnell and Josh Hawley on one side, and Charles Schumer and Nancy Pelosi on the other, would actually pass climate legislation with the public interest as their top priority. That’s not the way real-world politics works. They’re going to jam in climate-unrelated pork and special interest giveaways. They will lock in today’s technologies so innovators who are less politically connected don’t displace them, as nearly happened with CFL light bulbs and LEDs. In Washington, even the best-meaning policies—especially the best-meaning policies—will not pass in anything resembling their intended form.
  • Green jobs aren’t new jobs on net. They replace other jobs. Putting a million dollars into one project means taking away a million dollars from somewhere else, as Frédéric Bastiat’s broken window parable points out. Calling a project green does not change this. Some green projects are worthwhile. Some are not. But Congress and the president are in a poor position to be able to determine which ones are which—not all the way from Washington, and not without prices and supply and demand giving them feedback. Nor do legislators have any incentive to listen to these signals, with 2022 and 2024 election preparations already underway.
  • There are better ways to address the issue. Even without a carbon tax and a Green New Deal, pre-COVID carbon emissions in the U.S. had been declining for several years. This is because entrepreneurs, wherever they are allowed to, are figuring out how to do more with less. New farming technologies are reducing the need for farmland, leaving more left over for wildlife. Smartphones and tablets are replacing music players, paper maps, VCRs, cameras, newspapers, compasses, metronomes, and more. This dematerialization is reducing demand for metals, plastics, paper, and other resource-intensive materials. As a result, the economy has already passed “peak stuff” for many resources, as Andrew McAfee points out in his recent book More from Less. As CEI founder Fred Smith likes to say, you don’t have to teach grass to grow, but you do have to take the rocks off of it. Congress and President Biden will achieve more of their environmental goals by removing regulatory rocks than with top-down planning, taxes, and subsidies.

The open letter signers’ hearts are in the right place. But no president can do what they ask. Our political structures cannot deliver those things. The letters’ signees would be better off putting their talents and resources to use exploring bottom-up solutions than in a top-down political system that is structurally unable to deliver on its promises. Bottom-up processes are messy, and filled with trial, error, and failures. They also don’t look as good at press conferences. As we’ve already seen with America’s declining carbon emissions and dematerialization, it works. But it will only continue if Washington lets it.

Economics Can Help Explain Conspiracy Theorists

There is a lot of conspiracy theory garbage floating around. On January 6, it took a violent turn. Five people died in a coup attempt at the U.S. Capitol, over obviously false claims of a stolen election. It is important to understand what causes this behavior in order to prevent future violence, and to prevent a future breakdown of liberal institutions. Over at Fortune, I explain that a little bit of basic price theory can improve our understanding:

If you think of irrationality as a consumer good, much like a car or a television, you can better understand why people sometimes say and do crazy things. Think of it like this: People buy more cars and televisions when they are cheap, and fewer when they are expensive. 

This logic applies to conspiracy theories.

Read the whole thing here. For readers interested in further exploring the economics and evolutionary psychology of conspiracy theories, I recommend Bryan Caplan’s book Myth of the Rational Voter and Michael Shermer’s book The Believing Brain.

Best Books of 2020: Joseph Henrich – The WEIRDest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous (New York: Farrar, Straus, and Giroux, 2020)

It’s early, but The WEIRDest People in the World: How the West Became Psychologically Peculiar and Particularly Prosperous by Joseph Henrich will likely be one of the new decade’s most influential books. Henrich complements work by Joshua GreeneRichard WranghamJonathan HaidtSteven PinkerMichael Shermer, and others on the psychological underpinnings of modern liberalism—liberalism in the more-or-less original sense of the word.

Henrich’s book has two main arguments. One is historical: The Catholic church, completely unintentionally, set off a social chain reaction that created modernity. The second is psychological: People in modern societies are psychologically distinct than people in traditional kin-based societies.

He uses the acronym WEIRD for Western, Educated, Industrialized, Rich, and Democratic, to describe the unusual people in modern market-liberal societies. If you are reading this book review, then you are probably WEIRD, and so is nearly everyone you know. But we WEIRD people are the outliers in human history. Outside of Europe, East Asia, and North America, there are very few of us.

Most human societies are built on kin-based structures. This was true during our hunter-gatherer past, which was about 190,000 years of our 200,000-year history—95 percent of our species’ time on Earth. Societies remained kin-based through the agricultural revolution, and through the birth of cities about 6,000 years ago. And it is still true today in most countries. Despite occasional flowerings, there were no enduring WEIRD societies in human history until about two centuries ago. This is maybe one tenth of one percent of human existence, and even then, most societies remain kin-based. Again, it is WEIRD people who are unusual.

What is a kin-based society? In these, business partnerships, social networks, and marriages are confined to networks that rarely stray outside the extended family or clan. People tend to be wary of non-kin, and have a strong in-group-vs.-out-group worldview. People tend to look out for their clan’s collective interest over their individual interest. In kin-based societies, nepotism isn’t frowned upon; it’s the norm. WEIRD Americans today look askance when a president appoints inexperienced family members to be senior advisers. But in most other societies, this would have been acceptable, even normal behavior.

By contrast, WEIRD people are more individualistic and more trusting of outsiders. Kin-based families often arrange marriages for their children. WEIRD people usually marry for love. Kin-based people are expected to enter the family business. This is why so many of us have occupation-based surnames, such as Smith, Baker, or Fisher. WEIRD people usually prefer to choose their own line of work, which is one reason why today’s Smiths, Bakers, and Fishers rarely practice those occupations.

Kin-based people are reluctant to do business with strangers and foreigners. WEIRD people are more open to trade and more trusting of potential business partners they have never met. Nobody is purely meritocratic, but WEIRD people are closer to that ideal than most people.

So now that we know the difference between most people and WEIRD people, what is Henrich’s historical argument about the Catholic church accidentally making today’s WEIRD-ness possible?

The Catholic church blew up traditional kin networks through what Henrich calls its unofficial “Marriage and Family Program (MFP).” In short, the Church prohibited cousin marriages. The incest taboo is a human universal. But its boundaries vary from place to place. The church decided to push them progressively further out over a period of centuries. In many places, it eventually prohibited marriages closer than second and third cousins. In a few places it briefly went as far as eighth cousins.

This was a bigger deal than it sounds. Back in, say, the 12th century, people lived isolated lives. Few people lived in cities. Many people lived their entire lives within a 30-mile radius. They met few, if any, people outside of their extended families. And the wanderers they did meet were often beggars, vagrants, or outlaws. The Church’s MFP forced these isolated people to look outside their villages and kin groups for marriage partners. This forced openness, in the long run, ended up wiring people’s brains differently.

Young people are impressionable. When they are of marriageable age and are forced to meet and interact with strangers, and travel among them, traditional closed-kin psychological barriers gradually break down. They are gradually replaced with growing degrees of WEIRDness. It is a long, gradual process with many degrees. But over centuries, the effects add up.

None of the changes Henrich describes are genetic. None of them are racial, and none of them are peculiar to Europe. The conditions that make individuals WEIRD are cultural, intellectual, and psychological.

Using cousin marriage rates as a stand-in for how strong the Church’s Marriage and Family Program operated in different regions, along with historical records, Henrich finds that the MFP was the single biggest cause of everything from per capita GDP to interest rates to murder rates. Interestingly, regional cousin marriage rates closely track religious divisions and regional church influences. Henrich himself was skeptical about the MFP’s cultural influence, so he checked his results every way he could.

So, while openness is the real engine of WEIRDness, in Europe’s case, Church doctrine was what drove the process of opening up.

The differences between kin-based and WEIRD people show up in psychological tests. The Church’s MFP turns out to have changed people’s personalities and psychological profiles. In my recent review of Virgil Storr and Ginny Choi’s excellent Do Markets Corrupt Our Morals?, I noted their finding that people from market societies play decision-making games differently than do people in non-market societies. Henrich argues that this is because they are psychologically different.

From birth, WEIRD people from market societies have been more exposed to outsiders and more likely to trust them. No wonder they tend to play lab games that way. They tend to be more trusting of other players and more willing to use long-term strategies. People from kin-based societies are more likely to do the equivalent of a dine-and-dash from a restaurant. If the other player is not from their in-group, they feel fewer compunctions about cheating that other player.

Kin-based and WEIRD people even assign blame differently. Most WEIRD people see classroom teachers’ disciplinary tactic of punishing an entire class for one student’s offense to be morally wrong. Kin-based people see this as normal, and are fine with it. They think more in terms of collective responsibility than individual responsibility. In fact, criminal justice systems in many kin-based societies punish whole families for one member’s crime.

There is a reason for this. In most human societies, life was precarious. One bad harvest could mean starvation. Very strong conformity norms were a survival advantage. Collective punishment helps to reinforce conformity norms. Maybe someone does have a new idea for planting a crop differently. But if it fails, the stakes are life and death. It’s probably not worth it. Better to make sure that everyone sticks with what he or she knows works.

When most people’s only experience with foreigners is with either castoffs or invading armies, they probably aren’t going to trust them. They’d probably return the favor when possible. Unlike trade, theft and war are zero-sum interactions. When these are someone’s sole experience with out-groups, they are less likely to trade with foreigners and realize the benefits of division of labor. Safer to do it all yourself.

Henrich has written a provocative book that builds on an already robust literature. Despite its deep historical and psychological content, The WEIRDest People in the World is also highly relevant to modern public policy. The regulations and legislation that groups like CEI deal with on a daily basis do not come from a vacuum. They come from longstanding political institutions. And these system-level institutions in turn come from culture. All three of those levels matter. A reformer who works on only one of them will fail. Henrich has come up with a plausible framework to explain how they interact over the long run, and how they can shift. Where people are relatively WEIRD, people will build relatively market-oriented political institutions—and eventually, policies. Where they are kin-based, they probably won’t.

Without the Church’s unofficial Marriage and Family Plan, European culture likely would have remained insular and kin-based. That tendency still exists, and is expressing itself in the European Union’s trending towards becoming a protectionist trading bloc. Reformers need to push back and remind people that WEIRD-style openness has massive benefits, especially for the poor.

What about the rest of the world? Fortunately, the Church’s MFP is not the one and only way for people to become psychologically WEIRD. Ideas can be imported and exported, same as goods and services. America was a relatively WEIRD society from the start, as was Australia. The Asian tigers such as Japan, Korea, Singapore, and Hong Kong, saw the economic success of WEIRD countries, and followed their example. China is at a weird midway point psychologically, and its institutions are still extractive and kin-based by WEIRD standards. This may limit China’s future growth as a global power.

The point is that setting a good example can do a lot more good than people think. This puts today’s nationalists and economic protectionists in an awkward position. They are not the future. They are throwbacks to an impoverished, unhappy past.

The post-1800 Great Enrichment that billions of people are enjoying today has deep and distant causes operating at multiple levels. Henrich’s thesis of WEIRD psychology, cultural openness, and economic prosperity will have a major impact on future work in geopolitics, economic development, political polling, immigration, and free trade for a long time to come.

Book Review: Tim Mackintosh-Smith – Arabs: A 3,000-Year History of Peoples, Tribes and Empires

Tim Mackintosh-Smith – Arabs: A 3,000-Year History of Peoples, Tribes and Empires

A very good survey history written by an Oxford-educated Brit who has lived in Yemen for much of his adult life. This book is especially interesting when read with Azar Gat’s thesis on nationalism in mind. Gat is worth summarizing to better understand Mackintosh-Smith. Gat views nationalism as both ancient and based on ethnicity. Ethnicity, for Gat, is broader than race or genetics, though it includes both of those things. Ethnicities share, in varying degrees, things like language, culture, religion, dress, dietary customs, and more. The list is long, and it can vary, though language is often the most important. The common thread is that taken together, these cultural markers are strong enough to band people together in an in-group that is easy to distinguish from out-groups.

Ethnicities are similar to the small tribal groups our species has lived in for nearly its entire 200,000-year span, just larger in scale. Nation-states, which are historically a very recent concept—just a few centuries old in most of the world—are an additional step up in scale. They are simply one more way for our evolutionarily-ingrained sense of ethnicity to express itself. A lot of today’s nationalism-related troubles are due to square political pegs not fitting into round cultural or in-group holes, which are always moving around and changing shape anyway.

With Gat’s framework in mind, Mackintosh-Smith’s affectionately argued thesis in this book suddenly makes a lot of sense. To Mackintosh-Smith, Arabs are simultaneously among the world’s most unified and its most fractious peoples. They have the Arabic language in common—Gat’s most important unifying ingredient. People in Morocco, Syria, Iraq, Tajikistan, and as far East as Pakistan can all speak to each other in Arabic and have little trouble understanding each other. But High Arabic is also a bit like Latin was in post-Roman Europe: a formal, stilted lingua franca. Many Arabs speak a different local language at home and in everyday life. So Arabs are at the same time united by language, and not.

Arabs also have Islam in common. But the Sunni-Shia split still has echoes today, and sets Shi’ite Iran apart from most other Arab Islamic countries. Just as Christianity has its million and one different flavors of Catholicism, Protestantism, Evangelicalism, and Orthodoxy, Islam has its different flavors of Sufism, Wahabbism, and on down the line, each with ancient, modern, moderate, and radical versions. So Arabs are at the same time united by Islam, and not.

One thing most Arabs have in common is a nomadic heritage. This has made imposing the new convention of national boundaries very difficult, if not impossible. Not only do some people still move across the new boundaries with some mixture of indifference and impunity, the very notion of national boundaries is a very new concept in Arabs’ 3,000-year history. So Arabs are at the same time united by their nomadic history, and divided by it.

Also in the mix is a cultural divide between the few remaining nomads and the now-majority city dwellers, and there is another ingredient in the unified-but-not mix.

Mackintosh-Smith, though likely unfamiliar with Gat’s work on nationalism, is aware of all those competing dynamics. At each stage of his chronological narrative, most of those facets of Arabic life are there, from the establishment of settled agriculture to pre-Islamic empires, to Muhammad himself and the Ummayad caliphate, its succeeding Abbasid caliphate, its eventual displacement by the Ottomans, and on to today’s independent states, unity and discord are always there in tension with each other. It is a fascinating story.