[PROFILE] Amy Chua - Professor and Author
A.B., Harvard, 1984
J.D., Harvard, 1987
Professional Positions Executive Editor, Harvard Law Review
Law Clerk for the Honorable Patricia M. Wald, U.S. Court of Appeals,
D.C. Circuit, 1987-88
Associate, Cleary, Gottlieb, Steen & Hamilton, 1988-93
Associate Professor, Duke, 1994-2001
Visiting Professor, Columbia, 1999
Visiting Professor, Stanford, 2000
Visiting Professor, NYU, 2000
Professor, Yale, 2001-
Amy Chua is a professor at Yale Law School. She lectures frequently
on the effects of globalization to government, business, and
academic groups around the world. She lives in New Haven,
Yale Law School
P.O. Box 208215
New Haven, CT 06520
Prior to joining the Yale Law School faculty in 2001, Professor Chua
practiced law on Wall Street where she worked on international
transactions throughout Asia, Europe, and Latin America. Her recent
book, World on Fire: How Exporting Free Market Democracy Breeds
Ethnic Hatred and Global Instability, made both The New York Times
and Business Week bestseller lists and was selected by The Economist
as one of the Best Books of 2003.
As a speaker, Professor Chua has addressed numerous government and
policymaking institutions, including the World Bank, the Brookings
Institution, the United Nations, and the CIA. She has also lectured
widely outside the United States, including nations like Argentina,
Bolivia, Chile, China, Mexico, Taiwan, Turkey, and South Africa. She
teaches in the areas of contracts, law and development,
international business transactions, and law and globalization.
by Joel Tannenbaum
"Americans don't hate Bill Gates, even though he has owned as much
as 40 percent of the American population put together. They don't
feel cheated or exploited by him, or that he has humiliated
Americans by making billions 'on their soil.' Not so in societies
with a market-dominant minority. In these societies, class and
ethnicity overlap in a particularly dangereous way. The extremely
wealthy stick out -- whether because of their origins, skin color,
religion, language or 'blood ties' -- from the impoverished masses
around them, and they are seen by these majorities as belonging to a
different ethnicity or people -- as 'outsiders' who look different,
speak differently, or as Fiji's nationalist leader George Speight
recently said of his county's market-dominant Indian
minority, 'smell different.'...
"Most Americans -- whether ordinary citizens, commentators on
globalization, or policymakers -- are unaware of this problem. As a
result, we have been confidently exporting free market capitalism to
the rest of the world, oblivious the ethnic hatred and instability
we are systematically helping to breed." (World on Fire, pp. 19-20.)
As the Berlin Wall fell, advocates of free markets and one-size-fits-
all democracy assured us that we were witnessing "the end of
history." Since then, we have seen ethnic cleansing in Rwanda, East
Timor and the former Yugoslavia. We've seen the collapse of the
Southeast Asian "tiger" economies and, more recently, the adoption
of a Napoleonic foreign policy by the United States. Now, in 2004,
these pro-globalization folk are sighing quietly and realizing that
maybe history isn't over quite yet.
This realization has spawned an odd new class of intellectuals: anti-
globalism globalists -- free-market advocates who still shudder at
the horrors of the welfare state, and yet have seen with their own
eyes the catastrophe wrought by economic liberalization everywhere
from Argentina to the former Soviet Union.
Foremost among them is Amy Chua, a Yale Law School professor who
spent much of the 1990s helping Mexico to privatize its
telecommunications systems. In 1994, Chua's aunt, a member of the
Philippines' wealthy and insular Chinese elite, was brutally
murdered by her Filipino chauffeur. Police listed the motive
These experiences and others led her to a critique of globalization
based on a theory of "market-dominant minorities": economically
successful ethnic minorities who become the victims of violent
hatred when the societies they live in are destabilized by the
imposition of market reforms and democratic elections.
Chua's book, World on Fire (Doubleday), is fascinating and
frustrating. Fascinating for the originality of her argument and for
her thumbnail sketches of ethnic conflict on six continents.
Frustrating for the stubborn tenacity with which she clings to the
notion (in spite of every single example she presents) that, as
Margaret Thatcher used to say, "there is no alternative."
Welcome to a Conversation with History. I'm Harry Kreisler of the
Institute of International Studies. Our guest today is Amy Chua, who
is a Professor of Law at Yale University and the author, most
recently, of World on Fire: How Exporting Free Market Democracy
Breeds Ethnic Hatred and Global Instability.
Amy, welcome back to Berkeley.
Thank you very much.
Where were you born and raised?
I was born in Champaign, Illinois, and spent the first eight years
of my life in West Lafayette, Indiana. And then my father -- you can
figure out that he's an academic -- we were at Purdue and then we
moved to Berkeley, California, when I was eight, and I grew up here.
So you went to the public schools in Berkeley?
I went to El Cerrito High School, a public school -- yes, very
Looking back, how do you think your parents shaped your thinking
about the world?
It's complicated. A lot of it was inadvertent. My parents were both
immigrants from the Philippines. They were ethnic Chinese, but they
grew up in the Philippines. And my parents actually eloped to MIT,
so, not the first place --
I hope they took books with them!
-- not the first place I would elope to, but that's where they ended
up. I grew up with my three younger sisters in a fairly typical
Chinese immigrant family. We had to work; we had to work very hard.
My parents were fairly strict and a lot was expected of us, and we
did not enjoy the same freedoms that a lot of our friends did.
I would imagine a real emphasis on education and books?
Yes. Yes, principally education, books, and family. I think that
would be the core.
Where were you educated after El Cerrito High?
I went to Harvard. I applied just to that one place. I was going to
Berkeley, but I went to Harvard. I went to Harvard Law School, as
well, and then practiced on Wall Street for a while, and then
eventually moved my way into academics, and I now teach at Yale.
As an undergraduate in Harvard, you majored in economics, right?
Yes, that's right.
What led you to the law? Why did you decided to go to law school?
Sadly, I think it was really just a default decision. Again, maybe
playing to stereotypes too much, but my parents had high hopes for
me in the sciences. I was actually pre-med, and I chose economics
because it wasn't applied -- I started off in applied math, and
economics was, I thought, at least a soft science; [hoping] that
maybe that would appease my parents. But I enjoyed it very much and
I focused on development while I was at Harvard. I applied to
graduate schools also, but I sort of knew that I wasn't going to be
a scientist, and just took the plunge, and it worked out very well.
What kind of law did you practice, once you started practicing?
Well, here the themes start to come together. I took a lot of
international law courses. You kind of try to escape who you are,
and I've always been interested in developing countries,
international issues, cultural issues, because we were immigrants
and outsiders in this country. My parents grew up in a developing
country, two developing countries -- China and the Philippines.
After graduating, I had clerked for a judge on the U.S. Court of
Appeals for a year, and I wanted to go straight into teaching. She
said, pretty frankly (she was wonderful), "What are you going to
teach? You don't know anything!" She suggested that I get some
And this was ... which judge? Tell us who the judge was.
She is Chief Justice Patricia Wald* of the U.S. Court of Appeals for
the D.C. Circuit. A real role model for me. But I decided to go to
Wall Street. I joined a very large, international corporate
practice, and it worked out really well. I spent four years working
exclusively on international transactions -- some in Europe, some in
Asia, but principally in Latin America. So I saw a whole other set
of developing societies -- not Southeast Asia. Southeast Asia is the
society I'm most familiar with, my own background. But I saw another
very different one, and saw commonalties and differences.
Origins of an Idea
What years were you practicing [international] law?
I graduated from law school in 1987, clerked for a year, so around
1989 to 1994 I was on Wall Street. It was right after the fall of
the Berlin Wall, so [everyone was emphasizing] markets and
privatization as the answer to everything ...
Absolutely, but the "up" side of it. It was all, "Let's put in stock
exchanges around the world, and foreign investment should go
everywhere." I worked -- luckily, a fabulous experience -- I spent
most of those four years working on the privatization of TelMex,
which is Teléfono de Mexico. It was Mexico's national telephone
company, which at that time was government-owned. My law firm
privatized it, selling it, in part, to Southwestern Bell, and in
part to some very wealthy Mexican interests.
What did you learn from that work? Were you surprised by the things
that you ran into, not so much the law, but rather the context
within Mexico in which this privatization was happening?
Lots of things surprised me. I was young and it was very exciting
and glamorous. My firm happened to represent the government of
Mexico, which is unusual. Our clients, the people I dealt with, were
the Finance Minister and the wealthy businesspeople. On the many
trips I made to Mexico, I did notice the unspoken ethnic angle.
Often when people talk about Latin America or Mexico, they
say, "Look, we don't have the same kinds of ethnic divisions or
racial divisions that you have in the United States because
everybody here is mixed. We're all Mexicans. There are no ethnic
divisions." But one thing I noticed was that all the people I worked
with, the finance ministers, certainly all the bankers and the
businesspeople, were white, at least by U.S. standards -- they were
taller, Spanish-blooded, very Europeanized, spoke many languages,
many were educated abroad, very elegant. And the majority of the
people ... I mean most of the people doing the copying, and the
Xeroxing, and the mopping, were very clearly more indigenous-
blooded. They were visibly shorter, darker -- and so that was filed
away [in my mind].
Another thing I noticed is that it was a very euphoric moment. I
remember writing documents: "Privatizing is going to lift the masses
out of poverty. With the proceeds, we're going to build hospitals
and schools; it's a win-win situation." After I left Wall Street and
following what happened, following the newspapers, then I noticed
that privatization isn't a panacea.
I'm ultimately a fan of privatization. I believe that it was a
positive thing for the Mexican economy. But the beneficiaries of
privatization, at least that one, were ... This was the Salinas
[presidential] administration; there was a lot of corruption, and
the beneficiaries were much, much more limited than I initially
optimistically imagined. In fact, the papers just a few years later
said, "Privatization was touted as the solution to poverty. Instead,
it's made thirteen families into multimillionaires and
billionaires." So I think it's a much more complicated story.
What in your background sensitized you to see what you were seeing?
Not everybody in your shoes would have reached these conclusions
necessarily. Some might. You've already told us you majored in
development studies and economics at Harvard, so that must have
played a role.
Right. Well, for better or for worse, I think I've always been a
little bit too conscious of ethnic divisions. My own family, my
parents, grew up in the Philippines, and they are, as I mentioned,
ethnic Chinese. The Chinese in the Philippines are a tiny minority.
They represent about 1 percent of the population, but they control
about 60 percent of the private economy, including the four major
airlines and virtually all the major banks and conglomerates. So,
first of all, it's a taboo topic. It sounds like it can't be true, a
minority controlling 60 percent of the economy, but it is true. It's
well documented. And anybody who works in business and has done work
in Southeast Asia sees this, not just in the Philippines but in
Indonesia, Malaysia, Thailand, Burma. So I was sensitized to the
ethnic dimensions of capitalism.
I didn't grow up in the Philippines, but we visited very often and
it's a strange thing for somebody growing up in the United States. I
went back when I was one, and then when I was eight, and then many
times afterwards. My father's family had a huge hacienda in an all-
Chinese community, and living in the basement were fifteen or twenty
servants, all ethnic Filipino. And that's very typical. They were
wealthy, but not among the wealthiest Chinese. That's a pattern.
So I was ... I think you're right, I never quite thought about it
that way, but I think that I was sensitized to noticing when the
people who are wealthy in that country aren't just wealthy, but also
may have ethnically distinguishing characteristics. I noticed the
parallels: "Oh, the wealthy people here look different." It's
certainly not just biological; I don't even know how much of it is.
Part of it is the clothing, the foreign education, the polished
manners. But there is an ethnic dimension to it. Certainly, many of
the families [of the Mexican ruling class] were from old Spanish
families that never intermarry now these days with the poor
indigenous populations. The Spanish colonizers did freely mix with
and rape the indigenous populations. I noticed the big differences.
In the Philippines, it's the Chinese, the Spanish-elite, and then
it's the huge, roughly 80 million indigenous Filipino majority. And
there are very stark differences. In Latin America, it is much more
of a spectrum. It is different; the skin color, it's not black and
white, but I noticed the parallels as well.
Now we're going to talk about your new book, which I will show,
called World on Fire, which has been very well received, recommended
by The New York Times and The Economist. Before we talk about the
book itself, there's a personal story that was very important for
you, that led you to focus on the problem, relating to your aunt.
Tell us that story.
Okay. In 1994, I had just started teaching in North Carolina. I
received a call from my mother in Berkeley. She told me that my
aunt, my father's twin sister, had been murdered in her home in the
Philippines, in Manila. She'd been killed by her chauffeur.
Obviously, this was a terrible family time for us. We were very
close to my aunt. She was my father's twin.
My aunt, as I mentioned, was a member of the Philippines' extremely
entrepreneurial 1 percent Chinese minority, and her chauffeur was a
member of the indigenous Filipino majority. Everybody was upset, but
I, in particular, was very upset by the criminal investigation,
because we went back and I asked if there had been any developments
in the murder, and my uncle said, "No, the case has been closed. The
suspect ... " And, actually, it wasn't even ... You know, the
maids ... There were two maids who were also complicit -- they
confessed. There was no doubt as to who had done the killing. But
the police said the suspect had disappeared, the maids were let go,
the case was closed.
I asked my uncle, "How can this possibly be?" And he said, "You're
so naïve. This is the Philippines; not the United States." It turns
out he wasn't just being cynical. It's true. My aunt's killing was
part of a much larger pattern in the Philippines. Hundreds of ethnic
Chinese are kidnapped annually, not always killed, but kidnapped all
the time. The police force and the military are principally
Filipino. In fact, they all are; there are no Chinese. They are
sympathetic [to anti-Chinese sentiment], and often they're quoted in
the papers as saying, "Look, the Chinese can afford the ransom. It's
a form of redistribution." I'm not saying they condoned the murder,
but they're sympathetic to the frustration of this very large
majority in the face of a tiny, outsider minority that controls so
much wealth and has all these servants, and seem very arrogant. The
Chinese don't intermarry. They speak a different language.
I decided to open the book with that story because I looked at the
police report, because I was so upset about the case being closed.
The most striking thing was in a section for motive; I expected it
say robbery or something, because jewels were taken. But instead,
there was just one word, and that was "revenge." That startled me
and got me thinking. In a way, that idea has been an organizing
motif for the book. I wanted to be very balanced. It's not blaming
one side or the other, but trying to see the picture from either the
point of view of the person who killed my aunt, without ever
condoning it -- I mean, we're filled with anger still, but at least
seeing what his perspective was -- and then seeing it from the side
of what I call market-dominant minority, this ethnic minority that
does so well in a country economically.
Markets and Democracy
Let's talk about this idea that at one level is so simple and so
obvious that nobody had put it all together with the sweep of both
history and geography that you have done. What do you mean by
an "ethnic-dominant minority"? We touched a little on this already.
But once you have that concept, help us understand what it is and
how it was shaped in your own mind.
The concept I used in the book -- it's a bit of a mouthful -- is a
market-dominant minority. By this term I mean an ethnic minority, or
ethnic minorities, who, along with foreign investors, can be
expected to economically dominate the poor, indigenous majorities
around them, at least in the near to mid-term future. I'm not
talking about ethnic stereotypes -- in the United States, we worry a
lot about ethnic stereotypes. I'm talking about something more
serious, because I'm talking about actual, starkly disproportionate
control of the economy by an ethnic group.
So, first of all, it's not just the Chinese; although the Chinese
are publicly the most well-known market-dominant minority. The
Chinese are 3 percent of the population in Indonesia, a larger
population in Malaysia; they're about 10 percent of the population
in Thailand. But they are extremely economically dominant throughout
Other examples include Indians throughout the countries of East
Africa -- Kenya, Tanzania, Uganda. The Lebanese in the countries of
West Africa, exactly the same position, very small in numbers, 1
percent, 2 percent, and yet they control such a disproportionate
amount of the corporate and commercial sector. Other examples are
Whites in Zimbabwe, Whites in South Africa, Whites in countries like
Bolivia, Ecuador, Guatemala. Although, again, in a more complicated
sense in Latin America. Less well-known examples of African groups
(the Ibo in Nigeria, the Kikuyu in Kenya), the Croatians in the
former Yugoslavia, Jews in post-communist Russia. All of these
groups came under free-market policies, the kind that we were
pushing in the nineties and eighties, to dominate the economies in
which they live to a startling extent.
The thesis is, very simply, that most non-Western countries have
social and ethnic structures totally different from what we have in
the West. In particular, in the numerous non-Western countries that
have a market-dominant ethnic minority, markets and democracy
basically benefit not just different people or different classes,
but different ethnic groups, creating an explosive situation that we
just aren't familiar with here. Markets will tend to leave to the
economic dominance of this small ethnic minority, whether it's the
Indians in Kenya or the Chinese in Indonesia.
At the same time, overnight democracy will empower the poor,
indigenous majority. What happens is that under those circumstances,
democracy doesn't do what we expect it to do -- that is, reinforce
markets. [Instead,] democracy leads to the emergence of manipulative
politicians and demagogues who find that the best way to get votes
is by scapegoating the minorities. They say, "The reason we're all
poor here in Indonesia is because the Chinese are stealing all the
wealth, so let's have Indonesia for Indonesians," or Serbia for
Serbs, or Zimbabwe for Zimbabweans. "Let's take back the economy."
So in this case, markets and democracy are not mutually reinforcing.
Markets benefit one ethnic group, democracy empowers a different
ethnic majority, and the result is a lot of instability.
In a moment we'll talk about how this goes against the conventional
wisdom of American power in the world, or as some are now calling
it, the American empire. But before we do that, I want to get from
you a better sense of why these particular groups tend to benefit
most. What you're suggesting is they were positioned before
globalization hit in a powerful way of the nineties. There are
different reasons, different explanations for that, right?
That's the most important part of it, that there are different
reasons for the market dominance of different groups. This is why I
think these topics shouldn't be taboo. Often, it seems it's so
difficult to talk about ethnic minorities who disproportionately do
well economically. But the reason it shouldn't be taboo is because
by market dominance, I'm not talking about any kind of inherent,
So, there are different answers. Some groups achieve market
dominance because of colonial oppression or apartheid. So, for
example, Whites in South Africa: if a small minority, like the
Whites in South Africa, Zimbabwe, and Namibia, uses military power
in a police state to relegate the majority to inferior education and
apartheid conditions for a hundred years, then that minority is
going to be a market-dominant minority. When foreign investors come,
they're going to want to work with this minority that has all the
capital. It has all the experience, the education. But that's not
necessarily because of any entrepreneurialism. It's because of
colonial policies, or divide-and-conquer policies, so minorities
become market-dominant for reasons having nothing to do with
The harder cases to explain are the non-colonizer minorities like
the Indians in East Africa, or the Lebanese in the Caribbean or West
Africa, the Jews in many parts of the world, and the Chinese in many
parts of the world. These are groups that often came to their new
countries with nothing. They were immigrants. The Indians, brought
to East Africa to work on the railroad, had nothing but a shirt on
their back. And, yet, these groups in one or two generations came to
dominate even the professions, or more, in particular, the private
economy, the commercial sector -- retail, wholesale, corporations.
I don't answer this question in my book. I think it's a combination
of reasons. I don't know if you want to call it culture/family
networks; I think the way networks in all these groups work is very
striking. It's clearly part of what explains their economic success.
One case that intrigued me was the case of the oligarchs in post-
communist Russia. In that case, six of the seven oligarchs turn out
to be Jewish. But in a way, it's a product of their having been
excluded before, under the communist system.
Talk a little about that.
Well, that's one of the more controversial cases to write about.
There are so many invidious ethnic stereotypes, and so much anti-
Semitism, so it's a hard topic to discuss. You hear things
like "Jews controlling the United States economy." I actually
researched that and documented that that's false. The U.S. economy
is not controlled by any ethnic minority, whether it's the Koreans
or the Jews. It's just not true, if you look at the ten wealthiest
Americans. Not so in the former Soviet Union. In the anarchic shift
to capitalism in the early nineties, which, by the way, I think was
ill-advised -- it was just a fast transition to cowboy capitalism;
there were no anti-monopoly laws, no anti-insider trading laws --
but the result of that was that seven men, known as the oligarchs,
came to control roughly 60 percent of Russia's incredible natural
resource wealth: oil, nickel, the minerals.
I wasn't the first to document this. It came out in The New York
Times magazine and a book called Sale of the Century, by Chrystia
Freeland. But it was well known in the former Soviet Union. Six out
of these seven men were Jewish, or at least of Jewish background. I
did have a lot of research assistants who delved into this question
of why; they were all students from Russia, many of them Jewish. The
explanations are partly a result of exclusion. Many of these men,
the oligarchs, wanted to go into the Soviet Academy of Sciences, but
were excluded because of anti-Semitic reasons and ended up doing
other things. Lots of them ended up being very active in the black
markets during the Soviet era. Now, black market sounds negative,
but, in fact, everybody loved the black markets during the communist
era. It was the only place that officials and others could get shoes
and consumer products. There were shortages everywhere. The black
market during the Soviet era was essentially the only capitalism
In fact, all of the oligarchs had practice in a private economy, in
markets. Many of them translated those skills very successfully when
suddenly, with perestroika, there was market liberalization. Before
everybody even knew it was going on, they were privatizing, and it
was a complicated process. But for whatever reasons, these men came
to the fore, bought up a lot of the things that were for sale, got
in touch with the foreign investors, and came to control a
disproportionate amount of the economy.
That case fits sadly, very neatly into my thesis because you have
this enormous transfer to markets -- not the kind of markets I think
we should be promoting -- leading to these seven men controlling 60
percent of the natural resources.
But what does democracy do? Sadly, [democracy] and free speech led
to the emergence of anti-Semitic political parties, politicians that
were openly campaigning on, "Let's expel the Jews. Let's take back
their property. The Jews are milking us dry." And that's a pattern
that we saw in Indonesia around the same time; it's very
interesting. Free market policies in the 1980s and 90s in Indonesia
led to a situation where the country's tiny 3 percent Chinese
minority controlled an astounding 70 percent of the private economy.
Democratization in 1998, which was hailed with euphoria in the
United States -- I still remember everybody was so excited about
democracy in Indonesia -- well, tragically, democracy produced a
violent backlash against both the Chinese and against markets.
Politicians in Indonesia fell over themselves campaigning on anti-
Chinese platforms. You know, "Let's take back the economy." And
right now, the Indonesian government has nationalized about $58
billion worth of ethnic Chinese assets. That's part of the reason
that country is in such an economic crises.
Before this democratization occurs in many places, what you get is
an alliance between the economically dominant minority and the
ruling autocrat. You used the common term "crony capitalism."
Right. It's an interesting challenge: if you think of the worst
cases of crony capitalism, you'll be surprised to find that almost
every one involved a market-dominant ethnic minority. It's a very
typical pattern for an indigenous dictator, say, Ferdinand Marcos in
the Philippines. Ferdinand and Imelda were Filipinos, they were
supposed to represent the majority, but instead, they went into a
crony capitalist situation with their country's best entrepreneurs,
who are Chinese. It was this little symbiotic relationship. The
Marcoses said, "We'll let you make money as long as you kick back
bribes and profit to us, and we won't have majority rule." That's
what Suharto did in Indonesia. He had a tiny handful of Chinese
cronies, who made a huge amount of money, and then kicked it back to
him. That's what President Daniel Arap Moi did in Kenya. He had a
very authoritarian little regime propped by a very small handful of
Lebanese businessmen. The tragic thing about this is, it's a bomb
waiting to explode. In Indonesia, you have 3 percent of the
population in cahoots with this hated dictator, while the majority,
the indigenous Indonesians, are just enraged and so resentful, and
they feel that they don't have ownership of their country. These
outsiders are milking it, and there's this horrible dictator.
So when you politically liberalize, you say it's democracy, [but]
it's completely understandable, it's almost rational that they would
vent their anger. This is what happened in Indonesia. Politicians
speak for the people. They say, "It's time to take back our
country." The terrible thing is that it doesn't happen often in a
gradual, stable way. You know, "Let's vote in gradual
redistributable policies." Instead: "Let's loot the country. Let's
take back the stores." That's exactly what happened in 1998 -- 5,000
shops and homes of ethnic Chinese burned and looted on the eve of
democratization; 2,000 people died and 150 Chinese women were gang-
raped. The politicians started to campaign on anti-Chinese
platforms. And the Chinese in Indonesia, the wealthiest, left the
country, taking with them between $40- and $100 billion.
Again, that's the piece that the papers don't talk about. [They
ask], "Why is Indonesia such a breeding ground for terrorists and
extremist groups, and fundamentalist movements?" Well, partly, it's
because you have underemployment or unemployment of roughly 40
million people, and that's because they're sitting on a kind of
nationalized economy. And it happens over and over.
So I'm glad you asked the question, my thesis is not about blame.
I'm not saying that ethnic conflict occurs because of free markets,
or because of democracy, or because of globalization. I'm a very pro-
globalization person, and I'm actually in favor or trying to bring
markets and democracy to other countries around the world. But we
have been exporting the wrong version of free market democracy. If I
were to put the blame, I think it's ... You mentioned the crony-
capitalist situations create these time bombs, so overnight
democratization leads to this explosive venting. I think we need to
pay attention to how we democratize and how we bring markets.
Let's talk about that in a minute and work that out. But one thing I
want to ask you about, which is that you've talked about a structure
that's in place across the board all over the world. Once democracy
comes, political leaders, Milosevic or whoever, have an incentive --
really an incentive structure -- in place to mobilize the masses
against this ethnic minority. We often want to look at these places
and say, "What they've got is evil people," and turn it into a
theological issue, as opposed to an issue of social and political
You're exactly right. I have no question in my mind that some of
them may also be evil. But you're right. Once you start to see the
pattern, you see that is a matter of incentives. Milosevic in the
former Yugoslavia, in Serbia: Americans don't like to admit this,
but he came to power in free and fair elections. He campaigned on an
anti-Croatian, anti-everything-but-Serbia platform -- "Serbia for
Serbs." And the Serbs, in light of all their history, which is very
complex, voted for him. He won on a landslide victory. Now, this is
not just the Serbs. The Croatians did the same thing. They had
demagogues in Croatia, too. Tudjman campaigned on an anti-Serbian
campaign. With Kazakstanis, that political campaign's slogan
was, "Kazaks stand for the Kazaks." And in Rwanda, without
suggesting that this is the only thing (it's not just about
economics at all), but after years of colonialism and divide-and-
conquer policies in Rwanda, the Tutsis were a 14 percent that had
always been favored by the colonizers, and they for years had
dominated the economy. Well, rapid political liberalization, which
the West was pushing, often with the best of intentions, led to the
empowerment of the 80 percent Hutu majority. And, sadly, that
process led ... again, the democratization was all about slogans
for, "Let's take back the country. It's Hutu power time. Let's get
rid of these outsider Tutsis." It was not about economic policies
and building coalitions. It was all about excluding this hated
minority and taking back the country for the indigenous majority --
all very artificial.
You even point out in your book that the argument was weighed not to
close down the Hutu radio stations because it was a matter of free
speech. So what should be a functioning democracy becomes something
else in this context.
Right. It becomes contorted. And that's right -- in the West, we
value our free speech. I'm one of the biggest proponents of free
speech. But in that circumstance, where you had ... again, if it's a
question of blame, you have to point it to, partly, the colonizers.
Right? The Belgians played divide-and-conquer. They favored the
Tutsis. They were the overseers for the 80 percent Hutus.
So you have all these terrible historical dynamics all bottled up.
And then suddenly it's, "We want to bring democracy and elections,
and free speech." And yes, the radio stations were used by the Hutu
power groups. They used the radio stations to say, "Kill your
neighbors. Kill the Tutsis." And, sadly, that genocide was majority
supported. A majority of the people in Rwanda were Hutus -- that's
80 percent of the population. And as Philip Gourevitch wrote
beautifully and tragically in his book, "Neighbors killed neighbors.
Doctors killed patients." It just degenerated. And part of that was
this sudden political liberalization that the West promoted, with
the best of intentions.
Understanding U.S. Myopia
Your book is beautifully written, very clear. Speaking as a
political scientist, and you being an attorney, both of our
professions are into jargon, and there's none of that in this book.
I was reminded of the Hans Christian Andersen story, The Emperor's
New Clothes, the young boy saying "The emperor has no clothes." This
leads me into this question: Why was this brilliant but simple
argument not more obvious before you laid it out? Why have we -- and
especially the United States -- failed to comprehend that the very
good that we're trying to do is such a volatile mix? Why are we so
bad at seeing what you're talking about?
It's two things: First of all, the topic of ethnic minorities
economically controlling sectors feels taboo to people in the West.
There just seems to be something wrong to talk about that.
It's not PC.
It's not PC, so we steer away from it. Lots of times I'll read about
the same groups I write about and the discussion is just in class
terms. There's a "disproportionate income inequality," but there's
no mention that it's the Chinese that control it all. But the more I
think about this issue, the deeper reason is this: most people in
the United States, including academics, tend to assume that markets
and democracy must naturally go together, that they're mutually
reinforcing. It makes sense if you look at our own society.
Sometimes people in the United States talk about free market
democracy like it's one thing. And it's very important to note that
our social ethnic structure is totally different. We don't have a
market-dominant minority. For that reason, we have a strong ethic of
My thesis is not just about inequality, because in the United States
we have a lot of inequality. You know, there have been periods in
recent history where Bill Gates has owned as much as 40 percent of
the rest of the American population. But Americans don't hate Bill
Gates; they want him to be able to make money.
The reason for this is exactly what I was talking about. Our rich
people are not an ethnic minority. A poor person in Tennessee or
Arkansas can say, "I'm not wealthy, but maybe my son or my daughter
can grow up to be Bill Gates, or Bill Clinton." That's absolutely
not true in countries like Zimbabwe, or Burma, or Indonesia, or
Bolivia, where the majority of the people look around and they
say, "Everybody who's rich belongs to a different ethnic group."
And as a thought experiment -- this is how I start my book -- I
say, "Imagine if Bill Gates and the ten wealthiest people in the
United States were all ... " just pick a minority -- they were all
Arab, or they were all Chinese -- "and picture at the same time that
the [ethnic] majority lived in entrenched poverty and experienced no
upward mobility for generations." That's the dynamic that you have
in most of the developing world. I think it's really hard for people
in the West, particularly Americans, to imagine a system so
different from ours, because we feel like everybody can make it.
It's a very strong ... I don't know if it's a dream or a myth, but
it's partly substantiated that anybody can make it in this country.
There are enough success stories for that to be believed. That's the
reason that there's this assumption that free markets and democracy
go together all the time.
Our own founding fathers were very aware that markets and democracy
might not go together. That's why we didn't have universal suffrage
[at first]. If you go back and look at the Federalist Papers and the
debates around the time -- Adam Smith and David Riccardo, all the
people that we admire -- Thomas Jefferson -- all debating these
things, and they were all saying, "We'd better not let the poor vote
right now, because they don't own property, and they're just going
to vote to confiscate the wealth of the rich." So we, actually, had
property exclusions. We disenfranchised lots of groups. That's
another part of the picture. We forget our own history.
In fact, we built a governmental structure that emphasizes checks
Right. We have very complicated checks and balances, separation of
powers. Democracy in the United States, or anywhere in the West, is
not just overnight majority rule. It's about a lot of other things,
for better or for worse.
You talk about the emphasis on doing things rather quickly; that is,
bringing markets to underdeveloped places and having a timetable
that says, "Let's do it with a big bang." And the same with
democracy. How do you account for that? Is it that we often want to
get out rather quickly? That seems to be the case in Iraq, that we
don't want to give the time for evolution, it's not on the agenda.
That is the key to all of this history you were just talking about.
I think that's right. It goes back to the fall of the Berlin Wall
and the death of communism. The former Soviet Union collapses, and
it seemed clear to a lot of people that communism is dead. We don't
want a dictatorship, so the only thing left is free market
democracy. So in that feeling of euphoria, right after 1989, the
idea was to bring markets and democracy as fast as we could to
everybody, because obviously that's the right thing. People didn't
pay attention to the tension between them, and again, as you say,
democracy and markets is the way we did it in the West.
On the market side, it was just absurd. Dropping -- practically
airlifting! -- stock exchanges into Mozambique and Tanzania, and
Xeroxing our foreign investment laws, and privatizing everything,
very naively ... I mean, I'm actually an optimist, because I think
we did things so badly during that stage that now in the law, in
political science, people are saying, "Along with bringing
privatization and free markets, we need to have anti-fraud laws. We
need anti-insider trading legislation." None of that was thought
about in the initial phases of the free market euphoria.
On the democracy side, I think it's much tougher. I do think there
was the same kind of naiveté, which is, let's just have elections.
That brought Slobodan Milosevic to power. It brought Hugo Chavez to
power in Venezuela; there were free and fair elections, for better
or for worse. I think part of it was naiveté, which is, "elections
have got to be good; majority rule; we need universal suffrage."
Part of it is the other thing you mentioned. When it gets tough
then, often we find ourselves taking things back. We find ourselves
backpedaling. We tell people to have elections, and then we suddenly
realize who might be elected, and then there's a lot of backpedaling
and stalling that, sadly, leads to more resentment against the
United States, because then you get charges of hypocrisy and self-
interest. And there may be some of that; it depends on the case. But
in the United States, we're so isolated. There's a tendency and
arrogance to assume that other countries are just like us, so let's
prescribe what worked for us.
What are the policy implications of your theory? What should the
West should do differently in these places?
Well, again, I'm a big fan of trying to promote markets and
democracy globally. There are others who are not. Americans can be
very fickle. There is a new movement, an anti-democracy movement --
I associate this with Robert Kaplan, whose work I think is very
interesting, and Samuel Huntington -- that says that maybe these
countries aren't ready for democracy; let's put in markets first.
I'm not in that camp. I take it very seriously. I think sometimes,
in some cases, they could be right. But I am not in that camp for
the simple reason that I can't figure out how to ensure that you get
a beneficent dictator.
You can ask for Lee Kuan Yew [of Singapore], and you could get Idi
Amin or Saddam Hussein instead. I think we have to work to bring
markets and democracy, but we've been doing a ridiculous job. There
is no Western nation today with anything close to a laissez-faire
capitalist system, and yet that's what we were doing for the last
twenty years, telling everybody to adopt a raw capitalism with no
safety nets, no redistributive mechanisms.
On the positive side, I think we have to find ways to spread the
benefits of global markets beyond just the small group of market-
dominant minorities and foreign investors. We need to find ways to
redistribute the wealth, whether it's property title and giving poor
people property, land reform .... Redistributive mechanisms are
tough to have if you have so much corruption.
I discuss, not just wildly and enthusiastically, but there
are "affirmative action" policies for the majority. It shouldn't be
called affirmative action, but Malaysia and South Africa are
exploring or have programs to try to spread the wealth to their
majorities. There are a lot of economic costs to that. It's
certainly not that efficient. You're going to lose some growth, but
I think it might be the better way. At least, markets might be
sustainable. It's more stable. So I advocate ways to spread the
wealth, and I also ask for voluntary generosity on the part of the
successful market dominant minorities.
So that they should think about the implications of where they stand
in the system and how they might alter some policies to have
Yes, and also to just realize that their own safety and their own
interests are at stake. A lot of times these market-dominant
minorities, whether you're talking about Chinese in Southeast Asia,
or the Lebanese in West Africa, or the Whites in South Africa, it's
almost a feeling of invincibility. "We're so wealthy, we control
everything." They forget that they're surrounded by a justifiably
frustrated, very poor majority. And so I say, "Look at your own
It costs money to hire bodyguards. All of my own relatives have
bodyguards and barb-wired fences. Why not risk some of the money?
Build a school. Build a hospital. Build infrastructure and try to
fight against the image that you have of being an outsider.
Demagogic politicians manipulate that [image]. They say, "These
groups are outsiders; they're taking away our wealth" -- even if the
groups have been there for four generations. So why not do some
economic good? Show that you're a team player, a part of the country.
I make an analogy in the book to the United States at the global
level. Most of my book is about individual countries, but at the end
of my book I make an analogy -- it's a bit of a jump -- and I
say, "At the global level, at the world level, the United States
itself has come to be perceived as a kind of global market-dominate
minority, wielding widely disproportionate power and economic wealth
relative to our numbers." The numbers are similar: we're just 4
percent of the world's population. We are seen everywhere as the
principal engine and the principal beneficiary of global capitalism.
In part, not totally true, but in part, for our extraordinary market
dominance, we have earned the envy and fear and hatred of much of
the rest of the world. So in the same way, I say it's in the United
States' self-interest to see how we're perceived, and not just to
say "We earned it," which may be true. To say, "Let's try to give
back to the international economy and try to look more like a global
team player." I think it's better for our own interest.
You have put together in a distinctive way ethnicity, democracy, and
capitalism to make a very clear argument about the world and the way
it is that goes against conventional wisdom. What are your thoughts
about that? I mean, it all seems to come together so that you're
able to talk self-confidently about ethnicity in a way that
transcends a PC dialogue, which wouldn't allow you to.
That's interesting. I'm lucky in a strange way. I mean, there are
costs, too; but being an outsider -- a person from a different
background -- has allowed me to see this phenomenon, which is all
about outsiders in these societies. Because I am ethnic Chinese,
maybe it's easier for me to talk about the economic dominance of the
ethnic Chinese in Southeast Asia. Of course, it might be more
difficult for somebody else talking about that. But you're exactly
right, that the conventional wisdom, certainly starting in 1989, was
that markets and democracy are going to work hand-in-hand to bring
peace and prosperity to the whole world, and that in the process,
ethnic hatred and ethnic divisions and religious hatred -- all these
things -- would be washed away.
Thomas Friedman was an eloquent voice propounding this view that
markets are going to turn everybody into consumers and competitors,
and that all this ethnic stuff is just going to be swept away.
Sadly, if you look at the world, if you look at the last fifteen
years since 1989, something very different has happened. Since 1989
we've seen the proliferation of ethnic conflict. We've seen growing
fundamentalism, anti-Americanism, and extremism. We've seen
confiscations, calls everywhere for renationalization, and two
genocides of magnitudes unprecedented since the Nazi Holocaust. So I
think it's clear that something has gone wrong, and that the
relationship between markets, democracy, and ethnic conflict is not
as simple as we'd like to hope.
What would be your advice to students who are intrigued by this set
of problems and have to navigate the issues of modernization, law,
and democracy on the one hand and ethnicity on the other, and move
into the future of putting those together?
The best hope lies in education, both in developing countries and in
the United States. Within the United States, it's so important for
us to be more international. I guess we're privileged to speak only
English and to know only about our country -- not to know what the
difference is between Iraq and Iran [for example] -- I mean, most
people just don't know! It's not a blame issue, but it's partly
because of our geographic isolation, our own history. I think,
first, just knowing more about the rest of the world, about other
cultures and how they differ, is the first step.
Secondly, in thinking about how to bring free markets and
development to the other countries of the world, and how to bring
democracy, tailoring those policies to the local conditions. You
need to figure out other societies, where they came from, what the
people believe in, what they do, how their ethnic divisions work,
which is often very different from our own; then design your
policies around that. Pay attention. I think that's the simple
answer, which is just to realize that not everybody is like the
United States. Whether you study history or sociology, or
anthropology, journalism, there's room for seeing there are other
cultures and other ways and other structures.
Amy, on that positive note, I want to thank you very much for
joining us today and talking about your intellectual odyssey and
your new book.
Thank you so much for having me. It was really a pleasure.
And thank you very much for joining us for this Conversation with
"World On Fire" by Amy Chua
A new book argues that when Third World countries embrace democracy
and free markets too quickly, ethnic hatred and even genocide can
By Michelle Goldberg
Jan. 13, 2003 | The case Amy Chua makes in "World On Fire: How
Exporting Free Market Democracy Breeds Ethnic Hatred and Global
Instability" is so clear and persuasive it almost seems as if it had
been obvious all along. Yet her argument, that rapid switches to
majoritarian rule and free-market democracy in many Third World
countries benefit certain ethnic groups over others and lead to
vicious sectarian strife, is quite new, if occasionally overstated.
Writers such as Robert Kaplan have long argued that the Western
obsession with exporting democracy to countries without the
institutions to support it is naive and often dangerous, fostering
demagogues and communal hatreds. Chua builds on this argument in an
essential way, showing how expanding markets exacerbate the problem
by enriching already-dominant minority groups even as democracy
empowers angry majorities.
"World On Fire" is about a phenomenon Chua calls "market-dominant
minorities," groups like the Chinese in Southeast Asia, Jews in
Russia, whites in Zimbabwe and Indians in East Africa and Fiji.
Market-dominant minorities control hugely disproportionate
percentages of their countries' resources. Filipino Chinese comprise
just 1 to 2 percent of the Philippines' population, but control all
of the country's major supermarkets, fast-food restaurants and large
department stores, and all but one of the nation's banks. A similar
situation obtains in Indonesia. Jews make up a similarly tiny
proportion of Russia's population, but of the seven "oligarchs" who
control virtually all of the country's business, six are Jewish.
Lebanese dominate the economies in Sierra Leone and Gambia, while
Indians dominate the economy in Kenya, along with a smaller,
indigenous minority tribe called the Kikuyu. Similar examples abound
It's enormously touchy to talk about the economic element of
communal violence, especially regarding Jews, since rhetoric about
one ethnic group exploiting another is so often a precursor to
atrocity. But that's exactly why Chua's book feels so urgent. No
matter how politically incorrect it is to talk about, her book makes
clear that minority market domination is a reality in much of the
world, one that's tied up in many ways with smoldering group hatreds
and explosions of mass slaughter, and one that's made worse by
Chua, a professor at Yale Law School, is a careful, precise writer,
and she makes it very clear that she's not blaming prosperous ethnic
groups for violence directed against them, or blaming capitalism
alone for fomenting genocide. It's a point she makes over and over
again. (Her lawyerly penchant for summing up and reiterating her
main arguments far too many times is the book's greatest flaw.)
"The point, rather, is this," she writes. "In the numerous countries
around the world that have pervasive poverty and a market-dominant
minority, democracy and markets -- at least in the form in which
they are currently being promoted -- can proceed only in deep
tension with each other. In such conditions, the combined pursuit of
free markets and democratization has repeatedly catalyzed ethnic
conflict in highly predictable ways. This has been the sobering
lesson of globalization in the last twenty years."
Nevertheless, "World On Fire" is not an anti-globalization screed.
Chua is a former Wall Street lawyer who worked to help developing
countries privatize their resources, and she continues to believe
that, in the long term, markets offer the best hope for developing
countries. Her scathing assessment of the way the West has foisted
liberalization on the rest of the world is driven not by ideology,
but by a careful examination of globalization's unintended
"Back in the early nineties," she writes, "I believed that the
proceeds of privatization, as a World Bank official put it, would go
to roads, 'potable water, sewerage, hospitals, and education to the
poor.' Like many in the 1990s, however, I was viewing emerging
market privatization through a rose-colored lens." Later, she
adds, "Even assuming that free market democracy is the optimal end
point for most non-Western countries, in the short run markets and
democracy are themselves part of the problem."
Explaining why market-dominant minorities exist would probably
require another volume, and Chua makes only a cursory attempt to do
so. In some cases, of course, it's obvious -- the white minority in
South Africa and Zimbabwe accumulated capital and expertise at the
expense of the grotesquely exploited majority, who cannot now catch
up without massive government help. Elsewhere group prosperity is
attributable to superior business networks. Cameroon's Bamileke, for
example, "operate an informal capital market so efficient it
constantly threatens to put government-owned banks out of business,"
Chua writes. The reasons for Jewish economic success are more
mysterious -- especially in Russia, where they've been repeatedly
subjected to vicious pogroms -- and "World On Fire" does little to
illuminate them. Chua is less interested in how minority groups come
to dominate than what happens when they do.
She argues that when economic liberalization and democracy are
rapidly introduced to countries with market-dominant minorities, the
two forces necessarily come into conflict. "Markets concentrate
enormous wealth in the hands of an 'outsider' minority, fomenting
ethnic envy and hatred among often chronically poor majorities," she
writes. "Introducing democracy in these circumstances does not
transform voters into open-minded cocitizens in a national
community. Rather, the competition for votes fosters the emergence
of demagogues who scapegoat the resented minority and foment active
ethnonationalist movements demanding that the country's wealth and
identity be reclaimed by the 'true owners of the nation.'"
In Indonesia, for example, free-market policies undertaken under
Gen. Suharto, the U.S.-backed dictator, vastly enriched the
country's tiny Chinese minority, who in turn supported the
strongman. By 1998, Chua writes, Chinese made up 3 percent of the
population but controlled 70 percent of the private economy. That
was the year democracy protests and riots forced Suharto to resign.
His fall was accompanied by orgies of anti-Chinese violence --
Chinese women began wearing "anti-rape corsets," locked steel
chastity belts. "[T]he prevailing view among the pribumi majority
was that it was 'worthwhile to lose 10 years of growth to get rid of
the Chinese problem once and for all,'" she writes. "Meanwhile, the
U.S. State Department called resoundingly for free markets and
Many other countries share elements of this dynamic, though Chua
sometimes seems to be stretching her thesis in order to fit in as
many places as possible. She's overreaching somewhat when she says,
early on, "markets and democracy were among the causes of both the
Rwandan and Yugoslavian genocides." Clearly democracy was a factor
in both, but the economic factors are much trickier. The gap in
status between minority Tutsis and majority Hutus is indeed
attributable to globalization, but of the old-fashioned, colonial
kind -- Belgian colonizers favored minority Tutsis over majority
Hutus because of what was seen as their Caucasian-like features. And
while Serbian hatred of the Croats was fanned by Croatian economic
dominance, the Bosnians they butchered were as poor as they were.
Chua makes these caveats herself in the relevant chapters, but they
dilute some of the grand claims she lays out in her introduction.
Still, her larger point, that the policies seen as panaceas by the
West can actually make things worse, holds true. Electoral democracy
is often touted as an antidote to the tyranny and tribalism ravaging
much of the globe. "For globalization's enthusiasts, the cure for
group hatred and ethnic violence around the world is
straightforward: more markets and more democracy," Chua writes. She
notes that after Sept. 11, Thomas Friedman wrote of the Middle
East, "Hello? Hello? There's a message here. It's democracy, stupid!
Multi-ethnic, pluralistic, free-market democracy."
This one-size-fits-all prescription for curing the world's ills is
implicated in the Rwandan genocide of 1994. As Chua writes, Hutu
dictator Juvénal Habyarimana, who ruled from 1973 until the early
1990s, may have been corrupt and totalitarian, but he did protect
the Tutsi population. Once he responded to Western -- particularly
French -- calls to adopt multiparty democracy, though, Hutu
supremacy became a potent weapon for Habyarimana's political
enemies. The genocidal Hutu Power movement was buoyed on a
groundswell of popular support. Meanwhile, Chua points out,
the "freedom of the press" encouraged by the West stopped the
government from shutting down the hugely influential, rabidly anti-
Tutsi newspaper Kangura.
"Sudden political liberalization in the 1990s unleashed long-
suppressed ethnic resentments, directly spawning Hutu Power as a
potent political force," Chua writes.
The idea that democracy, America's most cherished value, has
exacerbated the last century's bloodletting is terrible to
contemplate. Yet Chua's book ultimately supplies a tiny measure of
hope. Unlike Kaplan, Chua doesn't believe that enlightened autocracy
is the answer for the developing world. For her, the problem isn't
democracy itself but the speed at which it's implemented. Rushing
it, especially without protections for individual rights or
institutions for upholding the law, can be dangerous.
Kaplan believes that the right kind of despots can sustain a stable
environment for capitalism to flourish, creating the middle-class
institutions necessary to sustain democracy. One of his models is
prosperous, undemocratic Singapore. Chua's analysis, though, shows
us that no amount of economic growth will turn countries that have
market-dominant minorities, like Indonesia, into countries like
Singapore, that don't. Prosperity and stability won't come to those
countries until they find a way to narrow the chasm between rich
minorities and poor majorities.
To that end, Chua argues for sweeping reforms that would give
disenfranchised populations a stake in their nation's resources, as
well as massive affirmative-action policies of the kind being
undertaken in South Africa and, with notable success, in Malaysia.
Such a policy is a huge departure from the free-market evangelism of
people like Thomas Friedman, but one more likely to lead to
prosperous societies that can, eventually, turn into real
Of course, it's not terribly likely that her recommendations are
going to be implemented in most places anytime soon. In the
end, "World On Fire" is valuable less for its prescriptions than for
the perspective it offers on the seemingly incomprehensible violence
shaking the world. With the fall of communism and the emergence of
al-Qaida, it's no longer fashionable to see ethnic conflict in
materialist terms -- the new battles are framed as a clash of
civilizations rather than a scramble for resources. It's a scarier
opposition, because it's so intractably defiant of reason. "World on
Fire" suggests these conflicts might not be so primordial and
irrational after all. It might be cold comfort to realize how
atavistic enmities abroad have been inflamed by our own government's
policies, but at least these policies can, ultimately, still be
TCG National Conference, June 13, 2003
AMY CHUA: It's wonderful to be here this morning. Thank you all for
getting up and coming. I should say that people in my own field,
which is law, tend to talk mostly only to each other, so I find it
truly admirable that theatre leaders, like yourselves, want to
engage in conversations with people from other disciplines and, as
Joan mentioned, that your frame of reference encompasses global as
well as national perspectives. I think that, given where we are in
the world today, this could not be more important. But I am just
delighted and really honored to be part of your conference this
year. I would also like to give a special thanks to the board of
directors and the staff of TCG for inviting me and for organizing
As coached, my plan is to speak for about 30 or 40 minutes and, what
I think I'll do, is I'll just start by presenting the main thesis of
my book, and I'll try to illustrate that thesis with specific
examples from countries all over the world, ranging from Indonesia
to Venezuela to Sierra Leone. I'll then shift my focus to the United
States and say a little bit about how I think we fit into this
picture and, in particular, I'll say something about the
implications of my analysis for the challenge to reconstruct Post-
war Iraq. And then we'll open things up for questions.
So, let me begin by taking you back to 1989: the fall of the Berlin
Wall, the death of communism. As you may remember, a kind of
consensusreally, a triumphal consensusemerged at that time, not
only in the United States, but, to a considerable extent, around the
world. And that consensus was that markets and democracy, working
hand in hand, would transform the world into a community of
modernized, productive, peace-loving nations.
In the process, ethnic hatred, religious zealotry and other backward
aspects of underdevelopment would be swept away. Unfortunately, if
you look at the last 15 years, something very different has
happened. Since 1989, we have seen the proliferation of ethnic
conflict, intensifying nationalism, fundamentalism and anti-
Americanism, confiscations, expulsions, calls for re-nationalization
and two genocides of magnitudes unprecedented since the Nazi
Why? What happened?
Part of the answer, I think, lies in the relationship and,
increasingly, the explosive collision between what I think are the
three most powerful forces operating in the world today: markets,
democracy and ethnic hatred. And the main point I want to make this
morning is that contrary to conventional wisdom is that markets and
democracy, at least in the raw form that they're currently being
promoted, may not be mutually reinforcing in the developing world.
On the contrary, in many non-Western countries, markets and
democracy may be on a collision course.
And the reason for this has to do with a phenomenon that is
absolutely pervasive outside the West, and yet almost never
acknowledgedin fact, viewed as taboo and not politically cor<br/><br/>(Message over 64 KB, truncated)