🏡 Colonialism isn't why Israel is rich and it's neighbors aren't
Blaming colonialism is an 'attractive idea to those who want to absolve Middle Eastern political, religious, and economic leaders from contributing to economic stagnation.'
Quote of the Issue
“Despite our cultural gloom, we do get the occasional glimpse of what an Up Wing, techno-solutionist culture might look like through art that optimistically imagines what direction artificial intelligence, genetic editing, and a burgeoning new age of space flight might take humanity. There’s more out there than just Star Trek, though not much.” - James Pethokoukis, The Conservative Futurist: How to Create the Sci-Fi World We Were Promised
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My new book The Conservative Futurist: How To Create the Sci-Fi World We Were Promised
The Essay
Colonialism isn't why Israel is rich and it's neighbors aren't
Israel has the world’s 34th highest per capita GDP (adjusted for purchasing power parity) at around $36,000. (It’s also home to some significant technology companies and has about many “unicorn” startups as larger OECD economies such as Canada and Germany.) Israel is a Western country combining liberal democracy and market capitalism that just happens to be located smack dab in the Middle East.
It’s neighbors aren’t doing nearly as well. They’re all way down the income list with Iran at $20,000, Egypt and Jordan at around $13,000, and Syria at $3,000. As Jared Chapman University economic historian Jared Rubin has pointed out:
By almost any available metric, there is a wide gap between the economic and political fortunes of the Middle East and the West. Even after accounting for oil wealth, which benefits only a small portion of Middle Easterners, Westerners are on average about six times wealthier. They can also expect to live, on average, eight additional years and have nearly twice the education. One cause — and consequence — of Middle Eastern economic retardation is poor governance and violence. The average Middle Easterner lives in a much more fragile and autocratic state and is subject to much more civil and ethnic violence than the average Westerner.
Economic freedom tells the tale, not colonialism
If you look at the region based on the Fraser Institute index of economic freedom — which measures the freedom to make economic decisions, personal choice, voluntary exchange, freedom to enter markets and compete, and security of the person and privately-owned property — you can really see Israel as the lone representative of those democratic capitalist Western values and the prosperity they generate.
One reason a poll that finds that a quarter of Americans aged 18 to 24 think Israel should be “ended and given to Hamas and the Palestinians” is so bizarre — and repugnant — is that Israel is the only country in the region that most of them would ever want to live in. The above map alone should dispel the notion that “colonialism” is to blame here.
As Azeem Ibrahim of the US Army War College has succinctly put it, “Is it Zionists and Crusaders who plunder the wealth of Muslim countries? Perhaps that was once the case, in the heyday of Western colonial expansion in the Middle East. But that was well over half a century ago. The world has moved on. And now those countries are plundered by their own political and military leaders.”
And Rubin on this same topic:
Another explanation, more prevalent in the popular press than in academia, is that Western colonialism is the cause of Middle Eastern economic stagnation and political violence. In this view, the nineteenth- and twentieth-century plundering of North Africa and the Middle East by European powers inhibited the region's economic development. The most popular variant of this argument is that the carving up of the Middle East under the Sykes-Picot Agreement of 1916 without regard to tribal, eth-nic, or religious identities set the stage for internal conflicts from which the region has yet to escape. This is an attractive idea to those who want to absolve Middle Eastern political, religious, and economic leaders from contributing to economic stagnation. While it is certainly true that the European powers did not have the best interests of Middle Easterners at heart — and that many aspects of twentieth-century Middle Eastern political economy have colonial roots — it is hard to see how colonialism is the root source of Middle Eastern problems. Such explanations raise a more important question than they answer: Why were Western European powers able to colonize the Middle East in the first place? Colonization cannot be the root cause of economic differences, but instead must be an outcome of other, more historically distant economic or political causes.
On that last point, here’s a great point from American sociologist, political scientist, and historian Jack Goldstone of George Mason Univeristy (as quoted in Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre McCloskey: "It was not colonialism and conquest that made possible the rise of the West, but the reverse — it it was the rise of the West (in terms of technology) and the [comparative] decline of the rest that made possible the full extension of European power across the globe."
Why did the Middle East and the West diverge?
There’s a deep question here that takes a step back from current events even as its answer should help inform analysis of them, a question that Rubin attempts to answer in his 2017 book, Rulers, Religion, and Riches: Why the West Got Rich and the Middle East Did Not Middle East Did Not. Unsurprisingly, perhaps, Rubin places religion as the heart of his explanation, but perhaps not in the way one might imagine. His analysis is more about interest group politics than religious doctrine. He argues that a key reason why the economic histories of Western Europe and the Middle East diverged, creating the massive modern gap, lies in the different roles religion played in the politics in the two regions.
In the Middle East, Islam was closely tied to empire and effective at legitimizing rulers, Rubin explains. This aided early development by facilitating trade networks and unified legal systems. But the dominance of Islam also meant religious authorities had significant political influence. As conditions changed, they resisted policies that would have furthered economic dynamism, like allowing printing presses or interest-bearing finance.
The Middle East failed to industrialize because its rulers continued using religious legitimacy rather than relying on economic elites and excluded progressive voices from politics.
In contrast, according to Rubin, Christianity was less able to legitimate secular rule over the longer run. After the Reformation, Western European rulers relied more on parliaments and economic elites for legitimacy. These groups supported growth-enhancing policies like secure property rights and impartial legal systems because they served their economic interests. This partly explains why Protestant England and Holland industrialized first. Even Catholic countries like Spain fell behind their Protestant neighbors despite an earlier lead. The Middle East failed to industrialize because its rulers continued using religious legitimacy rather than relying on economic elites and excluded progressive voices from politics.
The example of the printing press is illustrative here. Rubin:
Islam was born in the seventh-century Arabian Peninsula, and it formed as the early Islamic empires were rapidly expanding. Many aspects of Islamic doctrine were a response to this environment, including doctrine supporting a ruler's right to rule as long as he acted "Islamic Christianity, on the other hand, was born in the Roman Empire, with its previously established, well-functioning legal and political institutions. Early Christianity never formulated a corpus of legal or political theory that came close to rivaling that of early Islam for the simple reason that early Christian thinkers did not need to do so. … This is not to say that religious legitimacy was unimportant in European history, it merely entails that Islam was more conducive to legitimizing rule than Christianity was. … [The] framework therefore predicts all else being equal, religious authorities should have had a greater seat at the bargaining table in the Middle East than in Western Europe. … The framework sheds light on a historical puzzle: while the printing press spread rapidly in Western Europe after its invention by Johannes Gutenberg in 1450, the Ottomans prohibited its use for almost 250 years. The argument for the different reactions to the press is straightforward. The printing press threatened the Ottoman religious establishment's monopoly on the transmission of knowledge — a key source of their influence in society — and they therefore had incentive to encourage the sultan to prohibit it. The sultan obliged because religious authorities were important legitimizing agents, and permitting the press would have undermined them. Meanwhile, Christian religious leaders were in no position to ask rulers to block the press, and it consequently spread rapidly throughout Europe.
Relatedly, it’s hardly controversial that religion has an impact on economic growth. From a super-interesting new paper, “Religion and Growth” by Rubin and several colleagues:
We use the elements of a macroeconomic production function—physical capital, human capital, labor, and technology—together with standard growth models to frame the role of religion in economic growth. Unifying a growing literature, we argue that religion can enhance or impinge upon economic growth through all four elements because it shapes individual preferences, societal norms, and institutions. Religion affects physical capital accumulation by influencing thrift and financial development. It affects human capital through both religious and secular education. It affects population and labor by influencing work effort, fertility, and the demographic transition. And it affects total factor productivity by constraining or unleashing technological change and through rituals, legal institutions, political economy, and conflict.
Again, a fascinating bit of research. For instance, one finding highlighted is that political and economic factors often underlie religious persecutions in history. Rulers would use religious legitimacy to maintain power, so they may persecute religious minorities in unstable times to improve their religious credentials. Persecution of scapegoats like Jews or "witches" arises when crops fail or the economy struggles. Belief in witchcraft, it turns out, is associated with less innovation, social capital, and economic development.
Bottom line: I don’t have a five-point plan for achieving peace in the Middle East. However, I do understand some of the fundamental reasons why countries prosper economically. The countries in the Middle East that are currently not prospering can look to Israel as an example to see those reasons in action.
Micro Reads
▶ Schumer says ‘only real answer’ on AI is congressional action - Cristiano Lima, WaPo |
▶ Rishi Sunak says he will ‘not rush to regulate’ AI - Anna Gross, FT |
▶ Biden Moves to Embrace AI as National Security Tool in Executive Order - John D. McKinnon, Sabrina Siddiqui, and Dustin Volz, WSJ |
▶ Schumer’s Artificial Consensus - James Freeman, WSJ |
▶ Exclusive: Ilya Sutskever, OpenAI’s chief scientist, on his hopes and fears for the future of AI - Will Douglas Heaven, MIT Technology Review |
▶ UK Financial Watchdog Eyes Using AI to Monitor Bank Transactions - Aisha Gani, Bloomberg |
▶ Hollywood Actors Fighting Over ‘Basic Principles’ of AI Replicas - Nate Lanxon and Jackie Davalos, Bloomberg |
▶ Why I let an AI chatbot train on my book - Bryan Walsh, Vox |
▶ Amazon Beefs Up Bottom Line as AI Battle Shapes Up - Dan Gallagher, WSJ |
▶ Citi Used Generative AI to Read 1,089 Pages of New Capital Rules - Katherine Doherty, Bloomberg |
▶ Good robots must not be made to learn from bad human habits - Gillian Tett, FT |
▶ GM’s Cruise Halts Self-Driving Operations Across the US After Regulator Safety Fears - Aarian Marshall, WIRED |
▶ Space rocks and asteroid dust are pricey, but one substance is worth ‘a billion billion dollars’ - The Conversation, StudyFinds |
▶ If alien life is artificially intelligent, it may be stranger than we can imagine - Martin Rees, BBC |
▶ Space Junk Is Polluting Earth’s Stratosphere with Vaporized Metal - Leonard David and Lee Billings, Scientific American |
▶ Number of dementia cases by 2040 could be shockingly higher than estimates predicted - StudyFinds |
▶ The Inefficient Technological Revolution - Janine Berg, SSRN |
▶ Time to get serious about the dangers of quantum computing - John Thornhill, FT |
▶ A year later, Musk's X is tilting right. And sinking. - Will Oremus, Elizabeth Dwoskin, Sarah Ellison, and Jeremy B. Merrill, WaPo |
▶ Three people were gene-edited in an effort to cure their HIV. The result is unknown. - Antonio Regalado, MIT Technology Review |
▶ Japanese research is no longer world class — here’s why - Anna Ikarashi, Nature |
▶ Why Antidepressants Take So Long to Work - Max G. Levy, WIRED |
▶High Hopes for Short Corn- Erik Stokstad, Science |
About 15 years ago, I was at a large American university to give a lecture/talk I wish I could remember which one -- I gave the talk many places that year. At any rate, I was assigned the wrong room, and the place began to fill with the class that was scheduled there, which was a 3rd year undergraduate economics class. So the person I was presenting with went to find out where we were really supposed to be while I stayed there to collect the people who were also lost, and looking for our talk.
It was clear that the last people to use the whiteboards in this classroom were doing some sort of introduction to science course, and they had written: The Law of Conservation of Energy: Energy can neither be created nor destroyed; rather, it can only be transformed from one form to another. So I decided to ask the economics students something. "That's physical science. Is there a similar law about wealth in Economics? What say you to "Wealth can neither be created nor destroyed; rather, it can only be transformed or transferred from one form to another?" -- true or false?. To my horror, about a third of the people in the room thought it was true. I said, well, if I burnt down this building right now, would I be destroying wealth? No, they said, the insurance would just transfer the wealth to the university. I thought to myself, you people are going to have one hard time making good economic policy if a third of your colleagues don't understand this very basic economic fact, and confuse wealth creation and destruction with accounting.
That goes for pretty much all Western nations as well. Nations do not get rich by exploiting poor nations. They get rich by creating wealth.