Wake Up, America!

Microcosm: The Quantum Revolution in Economics and Technology

by George Gilder
Simon and Schuster, 426 pp., $19.95

Fear of Falling: The Inner Life of the Middle Class

by Barbara Ehrenreich
Pantheon, 292 pp., $18.95

Economists don’t like to talk about the effects of culture or of ethics on economic development, since these are such subjective and imprecise matters. But most people, including economists off-duty, assume that there is a connection between the kinds of everyday behavior a society encourages and its stability and prosperity.

In nearly every discussion about Europe’s future, for instance, all sides take it for granted that a reunited Germany would be truly powerful. This has to do only partly with measurable factors like investment rates or manufacturing productivity. It also reflects widespread awe, or dread, of Germany’s record of organizing human energy. For a variety of reasons having to do with national history and personal status, jobs in the government bureaucracy are among the most desirable in Korea, Japan, Singapore, and other East Asian societies with Confucian influence. Ambitious young graduates compete for positions with the Japanese Ministry of Finance or the Korean Economic Planning Board the way ambitious young Americans compete for jobs at what we drolly call “investment” banks. (This spring, 36,000 American graduating college students applied for eight positions at Wasserstein and Perella, the mergers-and-acquisition house that was spun off from First Boston. The obituaries for the Eighties may be a bit premature.)

The ability to attract talent gives these Asian governments more legitimacy—and more competence—in dealing with businesses than the US government can bring to bear, and it has helped to build more successful economies than those in the Philippines or Latin America, where government power has largely been a route to personal wealth. In a forthcoming book called Tropical Gangsters,1 the economist Robert Klitgaard wryly describes his two years of work as an adviser to the government of Equatorial Guinea, a tiny enclave on the west coast of Africa that has become one of the most hopeless economies on earth. Taken one by one, many of the ministers he dealt with were both honest and competent, Klitgaard says; but their country’s history, and their degrading relationships with international aid organizations tempted nearly all of them to act in their own interests first. In Japan, those who have sacrificed their own interests for the nation’s welfare have been seen as cultural heroes; whereas in the Philippines they have been easy prey for the likes of the Marcoses.

It’s easy to make too much of cultural influences on economics—and whatever group is on top at a given moment tends to make too much of them, by moralizing about the reasons for its own success. Until the last decade or two, Westerners observing Asia have usually concluded that its culture could never be adapted to modern industrial capitalism. Confucianism, the Japanese willingness to sublimate individual interests to the group, and other traits that are now cited in the West to explain East Asia’s boom were used earlier in this century to prove that Asia would never catch up. (“My impression as to your cheap labor was soon disillusioned when I saw your people at work,” an…

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