It seems like your fusion of liberal exceptionalism and elite human capital hierarchy creates dynamic where in many cases, you always have a story for how any outcome validates your worldview. For example, when China succeeds, you say it was their human capital, proving your perspective right. When China fails, it was their authoritarian anti-market system, proving your support of liberal economics & democracy correct. These explanations might be right. But when you shifted away from the right, you cited real world events like China’s covid policies as a major factor. You emphasised that you update your views when events call them into question. Can you think of a comparable case that could validate/disprove your views today? An outcome that your ideological opponents would find plausible/likely, but your perspective would definitively rule out.
The theory that markets are better is clearly falsifiable. We just need there to be an anti-market country which outperforms a pro-market country with similar human capital. It's been tried a hundred times across every continent, but the theory is yet to be falsified.
I figure it would just be examples of places with high amounts of government intervention where the countries aren't poorer than you would expect. For instance if we want to look at non-asian countries, we are ripe with examples from Latin America and Europe and still see planning fail.
Ok, but this isn’t really an answer because Hanania’s opponents aren’t predicting that Venezuela or Brazil will quickly become rich (though their stories as to why are different).
Their theories implicitly do. They are saying that "implement industrial policy -> rich economy". We can point to a bunch of failed efforts there.
Furthermore, actually some specifically predict that. For example Stiglitz in 2006 predicted that the populist redistribution being done Venezuela will bring higher growth:
This stuff is so out there. Literally every complex, capital-intensive physical industry in the history of the human race has been developed with extensive state support. Quick- name 1 time in the history of the civilization that a country has developed a shipbuilding sector without the state paying for & insuring the capital buildout? 6000 years of human history, pick any country, on any continent, ever. It's..... it's literally never happened. 100% of all shipbuilding industries in human history have been initially government financed.
Name 1 aviation sector any country has ever developed without state support. Anywhere. Literally doesn't exist. For an example of successful industrial policy, you could read up on the early history of Boeing- or, the postwar history of Airbus. Completely government financed from the jump https://en.wikipedia.org/wiki/History_of_Airbus
Name 1 time a country has developed a semiconductor industry without state financial backing. Again, has literally never happened ever- the amount of capital needed to get started is too tremendously large. "In 1986, Li Kwoh-ting, representing the Executive Yuan, invited Morris Chang to serve as the president of the Industrial Technology Research Institute (ITRI) and offered him a blank check to build Taiwan's chip industry. At that time, the Taiwanese government wanted to develop its semiconductor industry, but its high investment and high risk nature made it difficult to find investors" https://en.wikipedia.org/wiki/TSMC#History
There are so, so many more examples (the whole defense industry! The whole space industry! Most electronics manufacturing! Most automotive manufacturing!) Believing that super capital-intensive, physical manufacturing industries exist without initial government financing is as delusional as anything the far left or far right believes. Just completely out of touch with objective reality
The state is so large today that it is difficult to find anything it does not touch or support in one way or another. Sure, we can name a bunch of industries that it supported that have grown large, but we can name a bunch of others that were supported in a similar manner yet have shrank or vanished. It is like saying no large corporation can be created without religion, as if you have tens-of-thousands of workers, some are bound to be religious.
That being said, there are counter examples, even today, and clearly a lot more from earlier history:
For example, we have Ryanair, a fully private Irish airline, which has over 600 airliners and a total asset value close to 20 billion USD. It was not state sponsored, and actually (out) competed a bunch of state supported airlines.
Former examples include the British railway industry, which afaik until the first world war was fully privately financed and controlled.
But such is the case of the US petroleum industry. Standard Oil was not government financed but a private corporation.
While I did not personally name the oil sector as one that usually requires a lot of state aid- it is notable that Standard Oil and other early oil companies benefitted from government financing of railroads, land grants, and tariffs to keep out external competitors. Anyways, I remain comfortable in saying that no shipbuilding, aviation manufacturer, aerospace industry, or semiconductor manufacturer has ever existed without some initial state aid
I dispute your claim on Ryanair. The first article you linked mentions "14-15" million USD. That is about 0.1% of the company's 2024 revenue. The second article you referred to does not mention Ryanair at all, it specifically says Ireland supported airports and airport operators which Ryanair is not.
On the other hand, we have articles that describe how Ryanair appeals to European courts as its competitors got bailouts (E.g., Finnair got 1.2 billion, Lufthansa got 9 billion EUR):
"Ryanair has been a vocal opponent of state bailouts for its rivals since national governments began propping up airlines last year....
The airline has filed more than a dozen court appeals against the European Commission’s approvals of bailouts by EU governments, arguing that the aid is providing an unfair advantage over companies that go without the state support....
Ryanair has cut back on staff and flights and is concerned about burning through its cash reserves as the pandemic continues to hammer the travel industry."
> Believing that super capital-intensive, physical manufacturing industries exist without initial government financing is as delusional as anything the far left or far right believes
Point to me where it's written this is what he believes.
They would exist without government support. However government support in one country means capitalists in another country won’t waste time financing it.
In a world where China isn’t war mongering, it would make no sense to waste money in the U.S. on Intel trying to substitute what Taiwan already does.
It would still have been built, but later. Taiwan created its leading processor fabs because the Taiwanese government chose to invest heavily for national economic and strategic reasons, not because market forces naturally favored Taiwan over any other country. Markets do not select countries for nationalistic reasons; governments do. Without that intervention, private capital alone would not have produced the same capacity at the same time
But it would have produced the fabs somewhere, Taiwans leaders where only more competent and saw that they could cut China of from the Semi Conductor market in a timeframe that is too long for the private market to put their stake in and participate in.
GPS satellites would be built as a paid service if the demand for it was strong enough. It would have been built later but it would have been built by a private agents so long as space launch policy would have allowed it. And it was given from the government because the government needed it for their military operations before there was a demand from private citizens to use it, so they had built it before the demand was strong enough
There's a general rule of thumb that transportation infrastructure is nearly always state-subsidized. Though it does seem to be true that the early British railways weren't subsidized.
OTOH, given the nature of transportation, it's nearly impossible to build it without the government at least trimming the rights of existing property-holders. So the state's going to be involved.
I think this is true but is being overtaken by events. When a country's "treasury" was pretty much synonymous with its non-landholding wealth, this was 100% true. Up until the post-WW2 era, it was mostly true. Now, I don't think there is a clear line to be drawn between state subsidy - and that's what it is, subsiding the plant and human capital that's already there - and physical industry. It certainly helps, but I don't think it's a prerequisite.
California's rise to the engine of the US economy was contingent on government defense spending. Whichever state eventually overtakes it, I don't think that will be true.
What do you think about national security justifications for (limited forms of) industrial policy? I take pretty seriously the idea that the US was able to win WW2 because peacetime manufacturing capacity could be quickly retooled for war. Making cars and making tanks aren't *that* different.
So I think it makes sense to want to preserve a manufacturing base, along with supply lines for that base that don't crucially depend on geopolitical rivals, for the sake of being able to build materiel on short notice.
I think making that sort of argument is consistent with accepting the idea that the private sector is generally better at finding efficient uses of capital. We already recognize that the private sector is *not* good at providing non-rivalrous, non-excludable goods, and national defense is a classic example. Once you're OK with a publicly funded military, it doesnt seem like a huge stretch to pay some cost (I'm not pretending it makes us richer) for an industrial policy that protects the ability of that military to get the equipment it needs if we find ourselves at war.
Industrial policy for national security is fine in theory. In practice it usually ends up as an excuse for crank economic ideas to get through. Industrial policy that was about prepping for a war would focus on China alone, but it's clear that Trump just doesn't like trade more generally. He's almost doing an inverse national security policy, letting the AI industry do what it wants while tariffing basic consumer goods.
Yeah I don't mean the above to amount to a defense of Trump's economic policies. I think the best case for tariffs that wouldn't only be on China would be to attach strings to trade with allies, demanding that they also place barriers to Chinese goods; if you have free trade with Canada that supplies crucial parts in your manufacturing supply chain, but Canada gets that stuff from China, then if China cuts off Canada, you're screwed. I've heard Oren Cass make this point and I think it's fair. But I don't think this sort of reasoning is remotely informing the across-the-board, not-manufacturing-focused tariffs we're actually seeing. That is, it's a defense of still much more surgical tariffs than we actually got.
Setting aside Trump, I do mean for the above to amount to a defense of stuff like the CHIPS and Science act, which I think is a pretty clear example of industrial policy.
Where is the line between government backed R&D and subsidized incubation of nascent industries? I don't think central planning works but it's sort of hard to ignore that functioning rockets and ArpaNet (along with a huge variety of other things) were basically invented on the government payroll and then later became massively important to the private sector.
This almost seems more like a kind of venture capitalism but funded by the government. Why can't the government be a venture capitalist along with the other venture capitalists? Any government program or grant that tries something like this and fails gets called waste, but is it intrinsically waste?
Many of the Populist would say much of the service economy is all fluff that doesn't produce anything .In a time of war the economic activity of lawyers or tourism is useless. What matter is artillery production, ship production, South Korea could produce more artillery and Ships than Europe and the US.
Would you apply the same judgment to Biden? He also was concerned about conflict with China but wasn't talking about replacing income tax with tariffs or other such demented things.
If not, I'm not sure that it's only fine in theory or that it inevitably collapses into crank economics.
If anything Trump would seem like the outlier cause no one else with such concerns is behaving this way.
The empirics don't really support the idea that East Asia underperforms. As you said, it's necessary to adjust for purchasing power when assessing living standards and by that metric Taiwan is tied with Holland as the 13th wealthiest nation on the planet according to the IMF. Korea is directly below Canada and the EU and ahead of the UK, Italy, and Israel. Japan in 1990 had a higher GDP per capita than America, but now it's among the lower ones in the OECD due to multidecade stagnation.
Furthermore, most of these countries lacked human capital upon independence. Korea under Japanese rule had some industry, but it was concentrated in the north. Hence, most of the ROK's population lacked the skills and knowledge to work in high-value add industries at that point.
East Asia's economic rise seems mostly pathway dependent. Japan, Korea, Taiwan, and Singapore were able to form developmental states in the context of the Cold War, as the US was more willing to overlook questionable trade practices by its allies because it valued its security interests more. Those countries had a youth bulge, had a window to reconstruct and transform their economies since they were being built from scratch after destruction from war, and faced similar structural pressures that led to the emergence of a particular kind of state (lack of natural resources, security threats, and coalitional politics). Japan has obtained an impressive number of Nobel Prizes, whereas Korea has only three (only one of which is in science). This is probably because Japan had already become an industrialized country by the time Nobel Prizes were being awarded, while Korea didn't until many decades later. Therefore, the capable people in the latter were funneled into industry, whereas those in the former had the luxury to go into the business of knowledge generation. Now Korea's reached the point where it could have more people going into pure science, but its future generations will be too small to produce a lot of Nobel laureates. In the future some people might try to attribute Japan's success at attaining Nobel Prizes and Korea's underperformance to culture or the education system, but it's really just fortuitous. Likewise, developed Asia happened to do the right things at the right time, and now the window's closed, so other countries won't be able to replicate their success and fully converge even those with similar endowments like China.
"Korea is directly below Canada and the EU and ahead of the UK, Italy, and Israel."
That's the entire point of the article! There's no good reason a homogenous country with a 105 IQ, zero crime, no drug abuse problems, and no illegitimacy should be less wealthy than the US, Canada, and EU.
Korea came from nothing, whereas Canada has had decades of cherry picking immigrants thanks to its geography and has abundant natural resources. The US has the world's reserve currency, which artificially boosts its standard of living through favorable loans that boost consumption among other factors. Israel, while having a chunk of underperformers, also has also had access to some of the top minds in the world since its creation.
Using the US as a point of comparison with these other countries (not just Korea) is questionable because of the currency factor. It's sort of like how Norway's oil gives it an artificial economic edge.
Korea only attained first world status in the 90s. Arguably post-communist Europe would be a fairer point of comparison.
Canada's inability to outgrow simple resource extraction is why it's so poor compared to its potential. Its attempt to cherry-pick immigrants to boost GDP has failed for numerous reasons, one of which is its obsession with simple resource extraction. Its internal tariffs and insane trade policy are another yet. If anything Canada is also underperforming versus its human capital... but as long as it remains Canada, that will be the case.
As a student of the economic history of Japan, my view is that, at least for that country's post-war economic growth, this article is wrong on almost all its assertions.
Plus, the articles thesis--that East Asia underperforms-- is inconsistent with the fact that Japan used to overperform, and its underperformance is a recent development
This is a very roundabout argument. North East Asia outperformed South East Asia due to IQ, but IQ is not predictive of why the West outperforms NE Asia (and we should, in fact, adjust its performance downward because of that).
I'm not a Studwell fan, but at least he tries to microfound his model with some interesting data (e.g. agricultural yields). You haven't really convinced me that IQ is a proximate cause of economic development to begin with.
I'm not any sort of economics expert, but isn't the US economy more oriented towards services compared to the economies of East Asia? I believe somewhere around 75-80% of US GDP is derived from services these days, but in China the number is closer to 50%. Conversely, manufacturing share of GDP for China is around 36% but its only about 18% of GDP for the US. I've heard people say that the US has a high GDP in part because we have a lot of lawyers and dog walkers.
That being said, it's obviously not correct to compare average IQ for South Korea vs that of the United States. The US benefits from substantial elite immigration from around the world, not to mention it's had a historically productive 2% Jewish American market dominant minority that supposedly has a much higher average IQ even compared to East Asians. What matter is elite human capital in the right tail, and the US enjoys plenty of that from countries like India and China.
Does your theory of East Asian economic underperformance account for the fact that public infrastructure in East Asian countries blows away that in Western nations? When I was in Tokyo recently I never felt that I was in a poorer country than the US. To the contrary, I felt amazed by their public transit system in comparison to what we have back here in the United States. The country in general just seemed much nicer.
US and Canada have way more natural resources and a much larger capital accumulation. Korea having zero crime is absolutely laughable. Comparing IQ between countries isn't even how IQ works, it's normed on a specific countries test scores. And many of those countries have cram schools, that you would expect to increase scores on some standardized test that might show up international standards that you're confusing with IQ.
Industrial policy was effective at making Korea an industrial powerhouse. Korea remains poorer the EU, and US because of services, and high saving rate. Europe and the US also have more premier brands, which make money from the increased perceived value instead of lower cost. The perceived value is of these brands aren't always real, Tesla and Mercedes Benz is aren't good cars even they are perceived to be. France and Italy exports lots of luxury good which aren't that high quality for is price.
This is not a very convincing takedown, and I am a market liberal who read Studwell in university and had to wrestle with it for a while.
The problem, for both pros and antis, is that the NE Asian model relies on a very small sample size of countries (Japan, Korea, Taiwan, and somewhat China). Studwell sees this as an extension of Western state-led development, but the basics of this occurred further in the past and are less clear.
This makes the theory a very "just-so" explanation that isn't really falsifiable. Many developing countries have become boondoggles pursuing import-substitution, but import-substitution and industrial policy as practiced in those cases are not what Studwell means. Yes, Ethiopia didn't do industrial policy "right", but this is also blatantly clear to anyone who looks at Ethiopian history. It sucked, both liberals and smart(er) protectionists would agree.
IQ seems like an even worse explanation. At least Studwell does what he can to explain the data. North Korea remains horrifically poor due to policy (despite presumably having the same cognitive potential as the South Koreans). Vietnam does very well on PISA tests, but is poorer than even China -- due to policy. Asian countries, in general, seem to do worse than Western countries when adjusting for human capital.
From a development perspective, you do not need a particularly high IQ to make stuff. You just need to copy what other countries are doing and pay your people a lower wage to do it. Not having an average IQ of 105 isn't compelling as a binding constraint.
An example: the Dominican Republic has a higher GDP per capita (PPP) than China, and it is carved from the same island and people as Haiti.
>An example: the Dominican Republic has a higher GDP per capita (PPP) than China, and it is carved from the same island and people as Haiti.
This specific quoted statement isn't really true. DR is demographically much more European than Haiti, even as it's significantly more African than most of the rest of Latin America.
That said, I think the DR *is* a really good argument for the policy-matters side and against the race essentialist side. I would like to see Richard's take on this. By GDP(PPP)/capita it is significantly wealthier than the majority of Latin America, including much whiter countries like Colombia, Brazil, Paraguay, etc., and essentially no major Hispanic country has as high a % of African ancestry. I would say the simple fact is that it has a stable, relatively (to the rest of LatAm, not to the west) well-run liberal democratic government with broadly capitalist economic norms. It's not much more complicated than that. Actually achieving this state of affairs is very difficult, and I would say that the fact that most poor countries cannot manage to maintain such governments is the main reason they stay poor, not anything to do with the specific economic policies pursued by a given administration.
So, it's very difficult to read this paper for our specific question, since the DR is not listed in the tables (it's in the combined 'Countries' dataset) and is not even labeled in most of the scatterplots from what I can see, but in Figure 9 it appears to be placed below nearly all of the Brazilian states on the 'West Eurasian ancestry' axis. The map you showed is just colors which, again, is kind of hard to parse, but it appears to me to show the DR as being less European than nearly all the populous Brazilian states, it;'s much closer to like, Amazonas, which is only 4 million people and would have negligible weight compared to the much more populous and whiter provinces in the east and south.
However, even granting your claim that it's only true about South Brazil, I decided to tackle that as a 'hard case' for my argument here, and honestly I'm pretty surprised how well it turned out. I can only find GDP (PPP) figures for the city of Rio de Janeiro itself, rather than the state, but even this very-European (apparently more European than the broader state), very-wealthy part of Brazil is *still* lower on GDP (PPP)/capita than the DR, which in the study you link is shown as below 50% West Eurasian ancestry in Figure 9 as well as a well below-curve 'cognitive ability' score (of what appears to be maybe 73 by my eye). I actually found this astounding given we are comparing an urban center to an entire country, but given DR has had explosive growth on this metric since 2023 (which was the latest data I found for Rio de Janeiro, so I also used that year for DR) I would bet the gap is even larger today.
So, I think the argument is still pretty convincing that the DR is a strong counterexample to the direct causal relationship between the race-cognition matrix that race-essentialists care about so much and general prosperity. If we are generous, we can place it further back in the causal chain and say well, those race-cognition values are more predictive of which states actually turn out to be stable, well-run, and economically liberal. But I'm not completely convinced that's true, and I think it's very difficult to disentangle these things in the Americas, since there's a lot of confounding going on in the colonial period where the states with the most development and most European-like societies were only ever going to be the ones with large European populations, and colonies where slaves made up the vast majority of the population had entirely different development patterns. What's interesting about the DR to me is it's an example of one of these slave-heavy plantation economies adopting European-style norms and policies *in the modern era* and suddenly becoming extremely successful, as opposed to the other prosperous countries in Latin America which tend to be the ones that have been relatively more prosperous for most of the history of the region. I expect if you could wave a magic wand and give Haiti a strong, stable central government, property rights, and capitalist economic policy, it would experience one of the most rapid economic transformations in the history of the world despite having the 'wrong people' by the measure of Race Substack.
Almost every study of national economies (or policies, or whatever else) is n=1. To have n=5ish (I don't count HK or Macau personally) is actually quite powerful.
It's true that you don't need a high IQ to make stuff. But there is circumstantial evidence that you need a basic floor of IQ to have a country that can make stuff effectively. That is, can it have factories that don't get looted on day one? Can it have industries that are allowed to export without extortion? Can it have a sufficiently future time-oriented population that will show up and sit at a machine and carry out boring, repetitive piece work? Can it have a management class that doesn't just loot the place? Can plant and equipment be maintained? Can shipping take place across reliable roads, rails and ports? The evidence is that this correlates at least partially with IQ. Low IQ countries like Bangladesh seem able to keep the infrastructure in place; lower ones still, in Central Africa, can do none of it.
Not for nothing but North Korea's IQ has almost certainly diverged from that of the South due to decades of malnutrition north of the 38th and years of polished rice and bulgogi to the south.
I think the elite (i.e. 'management') class is actually the most important part of this, and it has more to do with whether there was historical elite stratification and assortative mating than it does with the broader question of Race-and-IQ at the population level. I.e. do you have an elite class with strong internal norms guiding behavior and a reasonable level of cognitive sorting. In Europe and East Asia you have a long history of this. This is also part of why Iran is so surprisingly functional at the level of the state apparatus despite being an insane theocratic basket case that manages to be both Islamist and socialist -- there is a deep history of Persian elite sorting. If you compare the clerics in Iran to ones in random Arabic countries it's hard not to notice that the Persian ones are shockingly erudite in comparison. Ultimately if you create the right incentive structure and have meritocratic leadership you can achieve broad prosperity, though you need to also choose to embrace economic liberalism, globalization, and free-ish trade.
From what I've seen, the genetic selection tech that currently exists adds like 2-3 IQ compared to a natural birth, and that's if you believe the genetic screening boosters, who naturally have an interest in gassing themselves up.
2-3 isn't nothing, but it's not a holy grail worth protecting. Preventing the hoarding of this tech is paramount. Subsidies for it's widespread use, especially among the low intelligence regions is the next most important part.
My big worry is the religious freaks. They already want to ban IVF, so genetic augmentation is held back by trogloditic book worship. I want us to play God, and make even the lowest IQ Sub-Saharan 120 IQ. Those retards would choose for everyone to stay stupid, lest they "play god" 🤮.
The bigger problem than catholics for progress is the reactionary naturalism movements, already seeing the damage they do for AI and synthetic animal proteins
Yes the people that are smart and rich now are going to stop the poor people from making their kids smarter with Genetics. I think that this is going to be suppressed
Neural Networks can design economic policy almost on par with smart humans now, I think that if we genetically engineer babies to have higher intelligence now, Neural Networks are going to be good on a level where those humans capabilities would not be highly valued when they are old enough to work with economic policy in around 2043
What does "genetic reform" actually look like? Maybe it would be good to have a concrete proposal. Right now leftists tend to assume the worst about anyone who talks about the impact of genes. If there was an actual proposal available that seemed fairly benevolent and non-coercive, perhaps that could shift attitudes. "Yes I believe genes are important, but I favor <benevolent and non-coercive proposal>, I'm not a Nazi"
It is not going to happen. If it happens we have to have rules on how you can genetically engineer a kid. For example you should only be allowed to pick embryos or change genes that would create a person with lower agression, and lower polygenic profile for criminal behaviour. If genetically change kids genes there is going to be strict rules and I think that people are mostly going to want to have higher extroversion and conformity and intelligence
It's always weird to me when I see people like you and Scott A cite Kirkegaard without comment. Compared with someone like yourself he seems super racist, with lots of explicit hatred for people of certain ancestries.
Not saying he should be boycotted for being a bad person, that's not how I roll. But I wouldn't trust stuff he writes because of his very evident biases, and if I were quoting him I would double check his numbers first.
I am pretty sure that in terms of living standards Europe and Japan are kind of superior. Nominal GDP figures are mostly a bad comparison and adjusting those figures to international dollars is also not that straight forward. Markets are good too. Human capital I would say is 75% of the story. 25% of the story is industrial policy. Look at Taiwan. A tiny country with an unknown company called TSMC. Product of smart industrial policy. I wouldn’t dismiss smart industrial policy and smart income redistribution. Those can be effective if done well. America runs an economy on cheat mode. No wars since the civil war. A reserve currency since 1945. All those things inflate nominal GDP figures
Though I think the article is generally right, there are a number of points that need improvement.
> For the most part, the countries that started out rich stayed rich, and the countries that started out poor have stayed poor.
Most of that is because the process of economic change is slow. I mean, what was the maximum *annual* economic growth rate of the UK in its long march to world dominance? I pulled out the numbers for GDP-per-capita-at-PPP for 1999 and 2025 for the US, Singapore, Japan, Brazil, Panama, Gabon, Columbia, and Ethiopia. All of them gained relative to the US except Japan. The actual winner was Ethiopia, which went from 0.018 to 0.038 times the US. That is still very poor, but it's gaining at 3% per year against an economy that's growing at least 1% per year. A more typical poor country is Gabon which gained 1.23, about 1% per year.
A substantial part of the difficulty is that countries have to massively restructure their society, the day-to-day habits of the people, etc. etc. etc. That usually takes many generations. One advantage that the east Asian countries seemed to have is governments that could revamp their societies by top-down-command.
> My experience is that if you hint that there might be something genetic going on here, even otherwise measured and intelligent people crawl into the fetal position, and start screeching and ripping out their hair.
Yeah, but even if one fully buys "East Asians have better genes!", if we are talking about periods of more than a century or two, the question doesn't go away, because ultimately your population has the gene pool that the overall environment selects for. It's subject to the same long-term forces (whatever they are) that mold the deep, persistent culture of a country.
One thing that does seem to be distinctive about east Asian countries is that they have an unusually large fraction of rules who are dedicated to achieving state capacity and national greatness, as opposed to the more usual goal of amassing personal power and wealth. And this seems to be an individual trait rather than something that the culture enforces; South Korea was poorer than India at the end of Rhee Syng-man's presidency but Park Chung-Hee made it rich by explicitly copying Japan's development strategies.
> This is strange, as he spends a lot of time arguing that small-scale farming is more efficient than large-scale farming, hence land reform makes sense as a way to increase productivity. But if that’s true, why can’t the market see that? Large landlords would have an incentive to split their land up in a way that would maximize efficiency.
Yes, Studwell is wrong about this. But the purpose of land redistribution isn't to improve the efficiency of farming, but to destroy the political power of the landlord class, because that class has a huge incentive to block the transition from a feudal agrarian system -- which is highly non-market! -- to an industrial one. And the landlord class's goal isn't to maximize their affluence in either the short or long run, but to maintain their position at the top of the class hierarchy. (Wealth isn't zero-sum but status *is*.)
'Human Capital' is doing rather more heavy lifting than it needs to here. One interesting read is Edward Banfield's *The Moral Basis of a Backward Society* (1958). Banfield was studying a small town and municipality in Italy. It was unable to prosper. The problem wasn't that the inhabitants were stupid, or particularly poor, or particularly poorly educated compared with other Italians. Their genetic inheritance wasn't something that was measured, but it is reasonable to assume that it was on par with other Italian municipalities. What was setting them back was their clannishness. This produced the complete and utter inability to trust people outside of your own family group, which meant that the sort of cooperation that is essential to growing prosperity never developed, and never could develop. Everything was turned into a zero-sum game for control of rent-seeking.
So, when you look at the lack of prosperity in Ethiopia, despite buckets and buckets of the "right sort" of industrial policy, you discover that the problem is with the Ethiopians. And while I.Q. may be part of the problem, it is hardly the main one. The man problem is that Ethiopia takes the Italian-Mafioso type clannishness and fully develops it. Loyalty to clan is everything. Trustworthiness and truthfulness -- not so much. And like the Mafiosi, the Ethiopian clan society is purposely violent, which promotes a culture of "what is mine is whatever I can get away with", which leads to the development of more violent people, needed to make sure others don't "get away with" robbing your own clan, and so it goes.
So, clannishness is another dimension that you need to measure when figuring out how prosperous a society ought to be, given its academic success. And when you look you see that on the bottom you have the most clannish societies. And on the top you have societies where people cooperate better. But the 'Protestant religion toolset' seems to have fostered a better sort of trust-ideal -- which was then reflected back into Catholic Europe -- than the Confucian 'build an elite bureaucracy through a merit-based exam' toolset. Even to this day, people in China claim to not trust each other -- but they act more trusting towards each other than the people in many other places.
And over in left field we have India and its caste system -- I don't know nearly enough about it and how it fits on the trust scale for societies.
But Lee Kwan Yew thought that his government had to make Singapore into a high trust place, and many of his early policies were set up to do exactly this -- by forcing people of various ethnic polities to work together, and ruthlessly going after all sorts of corruption wherever he found it, so that people really could see that nobody was getting away with tribal or clannish rent-seeking. Making 'being trustworthy and impervious to corruption' a civic virtue seems to be a very good idea.
25 years ago, Malaysia decided that this trustworthiness, and not just industrial policy was necessary for prosperity and it set up several initiatives to do away with multiculturalism promoted since independence and produce one civic culture for everybody. see: https://en.wikipedia.org/wiki/Bangsa_Malaysia.
This appears to be working out really well both for making it possible for Malaysians to trust one another and give up a certain amount of clannishness and in terms of prosperity.
You ignore a simple explanation for the high PISA test scores of East Asian nations: children in those countries spend way, way more time on schoolwork than children anywhere else in the world. These countries may all be very different, but Chinese, South Korean, Japanese and Taiwanese kids all spend hours and hours a day going to extra evening classes or doing homework at home. This points to a basic cultural similarity between them, which you downplay, and also provides a simple explanation for their high PISA scores that isn't genetic.
There is little evidence that different populations have different average innate intellectual abilities. There is even less evidence that this determines their countries' economic success. You might as well claim that East Asian countries all have a long history of centralised government and examinations, so this explains their success relative to other Asian and African countries. Ultimately, culture and history are perfectly plausible explanations.
Asian immigrants to America are disproportionately drawn from the wealthiest and most educated groups in their home countries (although not all of course).
Maybe. But this spending time with education and 4-hrs homework is just bogus signalling arms race gone amok. It has no value and very much drains life out of life.
Caplan (case against education) delves on this deeper.
Nitpick, but Japan had successful land reform post WW2 under US occupation, which became the paradigm for SK and Taiwan. The Meiji reforms created alienable private ownership but was not particularly redistributive.
The three post WW2 reforms were redistributive but also compatible with market competition thereafter.
Haven't finished the article yet, but I saw this already:
"The East Asian countries and territories are highlighted in the chart above. Chinese and South Korean industrial policy are often held up as major success stories. But both nations are underperformers given the cognitive abilities of their populations. Taiwan and Hong Kong are about where you would expect them to be. The urban centers of Singapore and Macau blow other East Asians out of the water."
China still has a gigantic underperforming redneck hinterland. I don't know with South Korea. I think they are pretty urban, so my best guess is their insane fertility situation is dragging them down.
*Edit*
How obsessive did these places each become about training ludicrous numbers of STEM people? It's hard to industrialize when you have no engineers. I know Deng Xiaopeng was extremely obsessed with this as one of his very first series of reforms. The Meiji Restoration also famously included a massive overhaul of the education system. I really wish there was some kind of "engineers per capita" index you could trace because I bet you would notice trends with that if you could. Did the places with industrial policy that failed or had below expected returns just shovel money around but not invest in education? Even if you have a high IQ from genetics, you are not born knowing how to build bridges. And what exactly is the market incentive to turn a bunch of peasants into engineers? I'm aware of no peasant >> engineer process like that that wasn't state backed. Aspiring "middling sorts" want to educate their kids, obviously, but that's a much slower process than these reforms I've mentioned, and you need to already have some economic success to have an aspiring middling sort in the first place. That economic success is usually predicated on successful trade already existing for a while (usually in market/port towns) or following the success of the first wave of industrialization that can make do with unlettered peasants (like making textiles). China seems to have successfully converted a bunch of peasants into engineers. There doesn't seem to be any other way for them to have produced as many as they have in the amount of time they have.
The big issue is that nobody wants to patiently wait around for markets to do their thing. They want to stop being poor *now* or *soon.*
I'm not sure if I 100% agree with RH here, but he does make some interesting arguments. My guess is that it's probably a bit more complex than what any of us can wrap our minds around. But I do agree that lightly but properly regulated capitalism is probably the most efficent system for a mature economy.
I differ with RH on the human capital question. The idea that East Asian cultures in the long term sense foster traditions associated with intellectualism and lower crime make much more sense to me than the idea that East Asians are mentally genetically superior.
If East Asians are mentally superior then why haven't they figured out that Capitalism is the shit? Isn't such a repeated mistake a sign of doubt about superiority?
Why did 2nd-tier brain violent gun-toting Americans with a penchant for crime figure out the secret sauce for the best economic system first?
If White Americans are genetically nearly equivalent to Western Europeans, then why do we have much higher rates of crime, obesity, addiction, general shittiness - all the while being strangely wealthier on average?
Culture just makes more sense - that is culture in the long term (centuries long) sense.
Deeply-ingrained centuries-old cultural norms. Though I'll allow the idea that perhaps East Asians might have a genetic advantage of less instances of violent mental illnesses that seem to afflict Americans.
But I'll repeat an earlier point: If Asians have genetically superior intellects, then why do so many of them keep choosing communism and other stupid systems? Or if White Americans are so superior, why do we have so many degenerate scumbags among us?
A racial-intellectual pecking order would make sense if Asians ruled the world, which they don't. They just have a culture of complaince that works wonders for their crime rates and social cohesion, but costs them in terms of creativity and individualism.
All that said, I do very much admire Asian cultures. We should learn a lot from them.
Your views seems inflicted by recent bias like 2-3 centuries. Overall, Chinese have always been at the frontier or at the cutting edge of tech. English scholar was curious about it and investigated and posed six questions as to why China was not the site of industrial revolution despite sophisticated cultural and scientific achivement s. These are called Needham's questions or puzzles.
Cultural factors like more need for order, family system, sceptical of innovators, collectivisms and other psych traits would be more prominent then raw IQ.
Even today, I think this is the main difference like which leads to high cultural homogenity - similar shows, same cutie animes, strong social judgements no weird micro culture. This makes the West and especially America push people to their potential.
America is not just Novel laureate, Tech entrepreneur we see, it is also ARNOLD SCHWARENEGGER, SLY , JAMES CAMERON AND TARANTINO AND PTA.
Wow, the western capitalist mind is truly a horrific nauseating thing. Mindblowing that someone from a society with the most disease-ridden, unhealthy, unhappy, medicated, depressed, homeless, overworked and isolated population can be so smug and obnoxious. It wasn't enough to subjugate the world under your inbred and mental disease-induced Capitalist histeria, now you want to sit here and pretend to have the slightest inkling of what the human condition is and can be. Laughable how you want to talk shit about communism and gloat about it's failings, while still punishing a tiny island who kicked your sorry asses out of their country years ago and screaming bloody murder whenever anyone tries anything other than complete subservience to global corporations. Never seen a group of people dismiss so fervently an idea yet also jump to militarily destroy anyone who embraces this "failed" system so quickly. Weird how terrified you guys are of this useless failed ideology.
It seems like your fusion of liberal exceptionalism and elite human capital hierarchy creates dynamic where in many cases, you always have a story for how any outcome validates your worldview. For example, when China succeeds, you say it was their human capital, proving your perspective right. When China fails, it was their authoritarian anti-market system, proving your support of liberal economics & democracy correct. These explanations might be right. But when you shifted away from the right, you cited real world events like China’s covid policies as a major factor. You emphasised that you update your views when events call them into question. Can you think of a comparable case that could validate/disprove your views today? An outcome that your ideological opponents would find plausible/likely, but your perspective would definitively rule out.
The theory that markets are better is clearly falsifiable. We just need there to be an anti-market country which outperforms a pro-market country with similar human capital. It's been tried a hundred times across every continent, but the theory is yet to be falsified.
I figure it would just be examples of places with high amounts of government intervention where the countries aren't poorer than you would expect. For instance if we want to look at non-asian countries, we are ripe with examples from Latin America and Europe and still see planning fail.
Ok, but this isn’t really an answer because Hanania’s opponents aren’t predicting that Venezuela or Brazil will quickly become rich (though their stories as to why are different).
Their theories implicitly do. They are saying that "implement industrial policy -> rich economy". We can point to a bunch of failed efforts there.
Furthermore, actually some specifically predict that. For example Stiglitz in 2006 predicted that the populist redistribution being done Venezuela will bring higher growth:
https://www.city-journal.org/article/continually-mistaken-chronically-admired
They predicted it would help in Malaysia and Ethiopia to cite two examples from this article.
This stuff is so out there. Literally every complex, capital-intensive physical industry in the history of the human race has been developed with extensive state support. Quick- name 1 time in the history of the civilization that a country has developed a shipbuilding sector without the state paying for & insuring the capital buildout? 6000 years of human history, pick any country, on any continent, ever. It's..... it's literally never happened. 100% of all shipbuilding industries in human history have been initially government financed.
Name 1 aviation sector any country has ever developed without state support. Anywhere. Literally doesn't exist. For an example of successful industrial policy, you could read up on the early history of Boeing- or, the postwar history of Airbus. Completely government financed from the jump https://en.wikipedia.org/wiki/History_of_Airbus
Name 1 time a country has developed a semiconductor industry without state financial backing. Again, has literally never happened ever- the amount of capital needed to get started is too tremendously large. "In 1986, Li Kwoh-ting, representing the Executive Yuan, invited Morris Chang to serve as the president of the Industrial Technology Research Institute (ITRI) and offered him a blank check to build Taiwan's chip industry. At that time, the Taiwanese government wanted to develop its semiconductor industry, but its high investment and high risk nature made it difficult to find investors" https://en.wikipedia.org/wiki/TSMC#History
There are so, so many more examples (the whole defense industry! The whole space industry! Most electronics manufacturing! Most automotive manufacturing!) Believing that super capital-intensive, physical manufacturing industries exist without initial government financing is as delusional as anything the far left or far right believes. Just completely out of touch with objective reality
The state is so large today that it is difficult to find anything it does not touch or support in one way or another. Sure, we can name a bunch of industries that it supported that have grown large, but we can name a bunch of others that were supported in a similar manner yet have shrank or vanished. It is like saying no large corporation can be created without religion, as if you have tens-of-thousands of workers, some are bound to be religious.
That being said, there are counter examples, even today, and clearly a lot more from earlier history:
For example, we have Ryanair, a fully private Irish airline, which has over 600 airliners and a total asset value close to 20 billion USD. It was not state sponsored, and actually (out) competed a bunch of state supported airlines.
Former examples include the British railway industry, which afaik until the first world war was fully privately financed and controlled.
But such is the case of the US petroleum industry. Standard Oil was not government financed but a private corporation.
While Ryanair is not a manufacturer and not what I had in mind- since you picked them, the Irish government has been supporting them almost inception. This has been the subject of decades-long ongoing controversy in the EU- see https://aviationweek.com/air-transport/safety-ops-regulation/ryanair-ordered-repay-12m-state-aid Not to mention that the Irish government supported them financially during Covid- I'm assuming that they would have gone bankrupt without the bailout, as airlines usually have pretty tight margins https://www.gov.ie/en/department-of-transport/press-releases/minister-ryan-and-minister-naughton-secure-european-commission-approval-for-26-million-irish-state-aid-scheme-for-airports/
Rails are a great example- yes, British railways have received state aid to such a degree that it literally has its own section on Wiki https://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_1830%E2%80%931922#Government_involvement
While I did not personally name the oil sector as one that usually requires a lot of state aid- it is notable that Standard Oil and other early oil companies benefitted from government financing of railroads, land grants, and tariffs to keep out external competitors. Anyways, I remain comfortable in saying that no shipbuilding, aviation manufacturer, aerospace industry, or semiconductor manufacturer has ever existed without some initial state aid
I dispute your claim on Ryanair. The first article you linked mentions "14-15" million USD. That is about 0.1% of the company's 2024 revenue. The second article you referred to does not mention Ryanair at all, it specifically says Ireland supported airports and airport operators which Ryanair is not.
On the other hand, we have articles that describe how Ryanair appeals to European courts as its competitors got bailouts (E.g., Finnair got 1.2 billion, Lufthansa got 9 billion EUR):
"Ryanair has been a vocal opponent of state bailouts for its rivals since national governments began propping up airlines last year....
The airline has filed more than a dozen court appeals against the European Commission’s approvals of bailouts by EU governments, arguing that the aid is providing an unfair advantage over companies that go without the state support....
Ryanair has cut back on staff and flights and is concerned about burning through its cash reserves as the pandemic continues to hammer the travel industry."
https://www.irishtimes.com/business/transport-and-tourism/ryanair-vows-to-appeal-rulings-on-state-aid-to-airlines-1.4537085
"While I did not personally name the oil sector as one that usually requires a lot of state aid"
I think that is included in this:
"Literally every complex, capital-intensive physical industry in the history of the human race has been developed with extensive state support."
> Believing that super capital-intensive, physical manufacturing industries exist without initial government financing is as delusional as anything the far left or far right believes
Point to me where it's written this is what he believes.
They would exist without government support. However government support in one country means capitalists in another country won’t waste time financing it.
In a world where China isn’t war mongering, it would make no sense to waste money in the U.S. on Intel trying to substitute what Taiwan already does.
>They would exist without government support.
Literally no proof of this.
Who would make GPS satellites without government support.
It would still have been built, but later. Taiwan created its leading processor fabs because the Taiwanese government chose to invest heavily for national economic and strategic reasons, not because market forces naturally favored Taiwan over any other country. Markets do not select countries for nationalistic reasons; governments do. Without that intervention, private capital alone would not have produced the same capacity at the same time
But it would have produced the fabs somewhere, Taiwans leaders where only more competent and saw that they could cut China of from the Semi Conductor market in a timeframe that is too long for the private market to put their stake in and participate in.
GPS satellites would be built as a paid service if the demand for it was strong enough. It would have been built later but it would have been built by a private agents so long as space launch policy would have allowed it. And it was given from the government because the government needed it for their military operations before there was a demand from private citizens to use it, so they had built it before the demand was strong enough
There's a general rule of thumb that transportation infrastructure is nearly always state-subsidized. Though it does seem to be true that the early British railways weren't subsidized.
OTOH, given the nature of transportation, it's nearly impossible to build it without the government at least trimming the rights of existing property-holders. So the state's going to be involved.
I think this is true but is being overtaken by events. When a country's "treasury" was pretty much synonymous with its non-landholding wealth, this was 100% true. Up until the post-WW2 era, it was mostly true. Now, I don't think there is a clear line to be drawn between state subsidy - and that's what it is, subsiding the plant and human capital that's already there - and physical industry. It certainly helps, but I don't think it's a prerequisite.
California's rise to the engine of the US economy was contingent on government defense spending. Whichever state eventually overtakes it, I don't think that will be true.
What do you think about national security justifications for (limited forms of) industrial policy? I take pretty seriously the idea that the US was able to win WW2 because peacetime manufacturing capacity could be quickly retooled for war. Making cars and making tanks aren't *that* different.
So I think it makes sense to want to preserve a manufacturing base, along with supply lines for that base that don't crucially depend on geopolitical rivals, for the sake of being able to build materiel on short notice.
I think making that sort of argument is consistent with accepting the idea that the private sector is generally better at finding efficient uses of capital. We already recognize that the private sector is *not* good at providing non-rivalrous, non-excludable goods, and national defense is a classic example. Once you're OK with a publicly funded military, it doesnt seem like a huge stretch to pay some cost (I'm not pretending it makes us richer) for an industrial policy that protects the ability of that military to get the equipment it needs if we find ourselves at war.
Industrial policy for national security is fine in theory. In practice it usually ends up as an excuse for crank economic ideas to get through. Industrial policy that was about prepping for a war would focus on China alone, but it's clear that Trump just doesn't like trade more generally. He's almost doing an inverse national security policy, letting the AI industry do what it wants while tariffing basic consumer goods.
Yeah I don't mean the above to amount to a defense of Trump's economic policies. I think the best case for tariffs that wouldn't only be on China would be to attach strings to trade with allies, demanding that they also place barriers to Chinese goods; if you have free trade with Canada that supplies crucial parts in your manufacturing supply chain, but Canada gets that stuff from China, then if China cuts off Canada, you're screwed. I've heard Oren Cass make this point and I think it's fair. But I don't think this sort of reasoning is remotely informing the across-the-board, not-manufacturing-focused tariffs we're actually seeing. That is, it's a defense of still much more surgical tariffs than we actually got.
Setting aside Trump, I do mean for the above to amount to a defense of stuff like the CHIPS and Science act, which I think is a pretty clear example of industrial policy.
Where is the line between government backed R&D and subsidized incubation of nascent industries? I don't think central planning works but it's sort of hard to ignore that functioning rockets and ArpaNet (along with a huge variety of other things) were basically invented on the government payroll and then later became massively important to the private sector.
This almost seems more like a kind of venture capitalism but funded by the government. Why can't the government be a venture capitalist along with the other venture capitalists? Any government program or grant that tries something like this and fails gets called waste, but is it intrinsically waste?
Many of the Populist would say much of the service economy is all fluff that doesn't produce anything .In a time of war the economic activity of lawyers or tourism is useless. What matter is artillery production, ship production, South Korea could produce more artillery and Ships than Europe and the US.
Would you apply the same judgment to Biden? He also was concerned about conflict with China but wasn't talking about replacing income tax with tariffs or other such demented things.
If not, I'm not sure that it's only fine in theory or that it inevitably collapses into crank economics.
If anything Trump would seem like the outlier cause no one else with such concerns is behaving this way.
The empirics don't really support the idea that East Asia underperforms. As you said, it's necessary to adjust for purchasing power when assessing living standards and by that metric Taiwan is tied with Holland as the 13th wealthiest nation on the planet according to the IMF. Korea is directly below Canada and the EU and ahead of the UK, Italy, and Israel. Japan in 1990 had a higher GDP per capita than America, but now it's among the lower ones in the OECD due to multidecade stagnation.
Furthermore, most of these countries lacked human capital upon independence. Korea under Japanese rule had some industry, but it was concentrated in the north. Hence, most of the ROK's population lacked the skills and knowledge to work in high-value add industries at that point.
East Asia's economic rise seems mostly pathway dependent. Japan, Korea, Taiwan, and Singapore were able to form developmental states in the context of the Cold War, as the US was more willing to overlook questionable trade practices by its allies because it valued its security interests more. Those countries had a youth bulge, had a window to reconstruct and transform their economies since they were being built from scratch after destruction from war, and faced similar structural pressures that led to the emergence of a particular kind of state (lack of natural resources, security threats, and coalitional politics). Japan has obtained an impressive number of Nobel Prizes, whereas Korea has only three (only one of which is in science). This is probably because Japan had already become an industrialized country by the time Nobel Prizes were being awarded, while Korea didn't until many decades later. Therefore, the capable people in the latter were funneled into industry, whereas those in the former had the luxury to go into the business of knowledge generation. Now Korea's reached the point where it could have more people going into pure science, but its future generations will be too small to produce a lot of Nobel laureates. In the future some people might try to attribute Japan's success at attaining Nobel Prizes and Korea's underperformance to culture or the education system, but it's really just fortuitous. Likewise, developed Asia happened to do the right things at the right time, and now the window's closed, so other countries won't be able to replicate their success and fully converge even those with similar endowments like China.
"Korea is directly below Canada and the EU and ahead of the UK, Italy, and Israel."
That's the entire point of the article! There's no good reason a homogenous country with a 105 IQ, zero crime, no drug abuse problems, and no illegitimacy should be less wealthy than the US, Canada, and EU.
Korea came from nothing, whereas Canada has had decades of cherry picking immigrants thanks to its geography and has abundant natural resources. The US has the world's reserve currency, which artificially boosts its standard of living through favorable loans that boost consumption among other factors. Israel, while having a chunk of underperformers, also has also had access to some of the top minds in the world since its creation.
Using the US as a point of comparison with these other countries (not just Korea) is questionable because of the currency factor. It's sort of like how Norway's oil gives it an artificial economic edge.
Korea only attained first world status in the 90s. Arguably post-communist Europe would be a fairer point of comparison.
Natural resources don't really correlate with growth much outside a very small handful of low-population petrostates.
As well as Australia
Canada's inability to outgrow simple resource extraction is why it's so poor compared to its potential. Its attempt to cherry-pick immigrants to boost GDP has failed for numerous reasons, one of which is its obsession with simple resource extraction. Its internal tariffs and insane trade policy are another yet. If anything Canada is also underperforming versus its human capital... but as long as it remains Canada, that will be the case.
As a student of the economic history of Japan, my view is that, at least for that country's post-war economic growth, this article is wrong on almost all its assertions.
Like what? In which ways?what is your explanation?
Plus, the articles thesis--that East Asia underperforms-- is inconsistent with the fact that Japan used to overperform, and its underperformance is a recent development
This is a very roundabout argument. North East Asia outperformed South East Asia due to IQ, but IQ is not predictive of why the West outperforms NE Asia (and we should, in fact, adjust its performance downward because of that).
I'm not a Studwell fan, but at least he tries to microfound his model with some interesting data (e.g. agricultural yields). You haven't really convinced me that IQ is a proximate cause of economic development to begin with.
No we should consider that there are other factors
I am considering the factors presented and finding them to be inadequate.
I'm not any sort of economics expert, but isn't the US economy more oriented towards services compared to the economies of East Asia? I believe somewhere around 75-80% of US GDP is derived from services these days, but in China the number is closer to 50%. Conversely, manufacturing share of GDP for China is around 36% but its only about 18% of GDP for the US. I've heard people say that the US has a high GDP in part because we have a lot of lawyers and dog walkers.
That being said, it's obviously not correct to compare average IQ for South Korea vs that of the United States. The US benefits from substantial elite immigration from around the world, not to mention it's had a historically productive 2% Jewish American market dominant minority that supposedly has a much higher average IQ even compared to East Asians. What matter is elite human capital in the right tail, and the US enjoys plenty of that from countries like India and China.
Does your theory of East Asian economic underperformance account for the fact that public infrastructure in East Asian countries blows away that in Western nations? When I was in Tokyo recently I never felt that I was in a poorer country than the US. To the contrary, I felt amazed by their public transit system in comparison to what we have back here in the United States. The country in general just seemed much nicer.
US and Canada have way more natural resources and a much larger capital accumulation. Korea having zero crime is absolutely laughable. Comparing IQ between countries isn't even how IQ works, it's normed on a specific countries test scores. And many of those countries have cram schools, that you would expect to increase scores on some standardized test that might show up international standards that you're confusing with IQ.
Industrial policy was effective at making Korea an industrial powerhouse. Korea remains poorer the EU, and US because of services, and high saving rate. Europe and the US also have more premier brands, which make money from the increased perceived value instead of lower cost. The perceived value is of these brands aren't always real, Tesla and Mercedes Benz is aren't good cars even they are perceived to be. France and Italy exports lots of luxury good which aren't that high quality for is price.
A lack of real resources per capita is what Korea is lacking
This is not a very convincing takedown, and I am a market liberal who read Studwell in university and had to wrestle with it for a while.
The problem, for both pros and antis, is that the NE Asian model relies on a very small sample size of countries (Japan, Korea, Taiwan, and somewhat China). Studwell sees this as an extension of Western state-led development, but the basics of this occurred further in the past and are less clear.
This makes the theory a very "just-so" explanation that isn't really falsifiable. Many developing countries have become boondoggles pursuing import-substitution, but import-substitution and industrial policy as practiced in those cases are not what Studwell means. Yes, Ethiopia didn't do industrial policy "right", but this is also blatantly clear to anyone who looks at Ethiopian history. It sucked, both liberals and smart(er) protectionists would agree.
IQ seems like an even worse explanation. At least Studwell does what he can to explain the data. North Korea remains horrifically poor due to policy (despite presumably having the same cognitive potential as the South Koreans). Vietnam does very well on PISA tests, but is poorer than even China -- due to policy. Asian countries, in general, seem to do worse than Western countries when adjusting for human capital.
From a development perspective, you do not need a particularly high IQ to make stuff. You just need to copy what other countries are doing and pay your people a lower wage to do it. Not having an average IQ of 105 isn't compelling as a binding constraint.
An example: the Dominican Republic has a higher GDP per capita (PPP) than China, and it is carved from the same island and people as Haiti.
>An example: the Dominican Republic has a higher GDP per capita (PPP) than China, and it is carved from the same island and people as Haiti.
This specific quoted statement isn't really true. DR is demographically much more European than Haiti, even as it's significantly more African than most of the rest of Latin America.
That said, I think the DR *is* a really good argument for the policy-matters side and against the race essentialist side. I would like to see Richard's take on this. By GDP(PPP)/capita it is significantly wealthier than the majority of Latin America, including much whiter countries like Colombia, Brazil, Paraguay, etc., and essentially no major Hispanic country has as high a % of African ancestry. I would say the simple fact is that it has a stable, relatively (to the rest of LatAm, not to the west) well-run liberal democratic government with broadly capitalist economic norms. It's not much more complicated than that. Actually achieving this state of affairs is very difficult, and I would say that the fact that most poor countries cannot manage to maintain such governments is the main reason they stay poor, not anything to do with the specific economic policies pursued by a given administration.
If by "whiter" you mean more European that's not especially the case except for Southern Brazil(which is also wealthier than Brazil as a whole). Here's a map of estimated admixture from a recent study(https://www.researchgate.net/publication/398386871_Continental_Genetic_Ancestries_as_Predictors_of_Socioeconomic_and_Cognitive_Variation_Across_the_Americas).
https://pbs.twimg.com/media/G7wlyUaXsAAvnmh?format=png&name=4096x4096
So, it's very difficult to read this paper for our specific question, since the DR is not listed in the tables (it's in the combined 'Countries' dataset) and is not even labeled in most of the scatterplots from what I can see, but in Figure 9 it appears to be placed below nearly all of the Brazilian states on the 'West Eurasian ancestry' axis. The map you showed is just colors which, again, is kind of hard to parse, but it appears to me to show the DR as being less European than nearly all the populous Brazilian states, it;'s much closer to like, Amazonas, which is only 4 million people and would have negligible weight compared to the much more populous and whiter provinces in the east and south.
However, even granting your claim that it's only true about South Brazil, I decided to tackle that as a 'hard case' for my argument here, and honestly I'm pretty surprised how well it turned out. I can only find GDP (PPP) figures for the city of Rio de Janeiro itself, rather than the state, but even this very-European (apparently more European than the broader state), very-wealthy part of Brazil is *still* lower on GDP (PPP)/capita than the DR, which in the study you link is shown as below 50% West Eurasian ancestry in Figure 9 as well as a well below-curve 'cognitive ability' score (of what appears to be maybe 73 by my eye). I actually found this astounding given we are comparing an urban center to an entire country, but given DR has had explosive growth on this metric since 2023 (which was the latest data I found for Rio de Janeiro, so I also used that year for DR) I would bet the gap is even larger today.
So, I think the argument is still pretty convincing that the DR is a strong counterexample to the direct causal relationship between the race-cognition matrix that race-essentialists care about so much and general prosperity. If we are generous, we can place it further back in the causal chain and say well, those race-cognition values are more predictive of which states actually turn out to be stable, well-run, and economically liberal. But I'm not completely convinced that's true, and I think it's very difficult to disentangle these things in the Americas, since there's a lot of confounding going on in the colonial period where the states with the most development and most European-like societies were only ever going to be the ones with large European populations, and colonies where slaves made up the vast majority of the population had entirely different development patterns. What's interesting about the DR to me is it's an example of one of these slave-heavy plantation economies adopting European-style norms and policies *in the modern era* and suddenly becoming extremely successful, as opposed to the other prosperous countries in Latin America which tend to be the ones that have been relatively more prosperous for most of the history of the region. I expect if you could wave a magic wand and give Haiti a strong, stable central government, property rights, and capitalist economic policy, it would experience one of the most rapid economic transformations in the history of the world despite having the 'wrong people' by the measure of Race Substack.
Almost every study of national economies (or policies, or whatever else) is n=1. To have n=5ish (I don't count HK or Macau personally) is actually quite powerful.
It's true that you don't need a high IQ to make stuff. But there is circumstantial evidence that you need a basic floor of IQ to have a country that can make stuff effectively. That is, can it have factories that don't get looted on day one? Can it have industries that are allowed to export without extortion? Can it have a sufficiently future time-oriented population that will show up and sit at a machine and carry out boring, repetitive piece work? Can it have a management class that doesn't just loot the place? Can plant and equipment be maintained? Can shipping take place across reliable roads, rails and ports? The evidence is that this correlates at least partially with IQ. Low IQ countries like Bangladesh seem able to keep the infrastructure in place; lower ones still, in Central Africa, can do none of it.
Not for nothing but North Korea's IQ has almost certainly diverged from that of the South due to decades of malnutrition north of the 38th and years of polished rice and bulgogi to the south.
I think the elite (i.e. 'management') class is actually the most important part of this, and it has more to do with whether there was historical elite stratification and assortative mating than it does with the broader question of Race-and-IQ at the population level. I.e. do you have an elite class with strong internal norms guiding behavior and a reasonable level of cognitive sorting. In Europe and East Asia you have a long history of this. This is also part of why Iran is so surprisingly functional at the level of the state apparatus despite being an insane theocratic basket case that manages to be both Islamist and socialist -- there is a deep history of Persian elite sorting. If you compare the clerics in Iran to ones in random Arabic countries it's hard not to notice that the Persian ones are shockingly erudite in comparison. Ultimately if you create the right incentive structure and have meritocratic leadership you can achieve broad prosperity, though you need to also choose to embrace economic liberalism, globalization, and free-ish trade.
HK, Macau, and Singapore are explicitly excluded from Studwellism.
If IQ isn't relevant beyond some minimal floor, this whole admonishment of East Asian economic success makes even less sense.
Africa could absolutely be successful in textiles, etc. if not for the level of violence and state capacity. See: Botswana, Seychelles, Bahamas, etc.
Macau has managed to build such a high GDP per capita entirely by imposing a tax on stupidity.
For this, it has to show for it:
Some admittedly tasty egg custard tarts
A decent skyline
A nice old town
And a TFR of about zero. It'll be a Southeastern Chinese-Filipino mélange within 50 years.
Explain. Or is this a joke about scamming?
A tax on stupidity is another name for gambling.
Genetic reform is the only viable modern leftist position, anything else is either ignorant or malicious
Hell yeah brother, genetic engineering. Transhumanism is the future.
Tech oligarchs like Altman are keeping all the competative genes for themselves, leaving low human capital in perpetual cycle of oppression.
Land reform and capital reform are distractions from the very real genetic reality
I mostly agree.
From what I've seen, the genetic selection tech that currently exists adds like 2-3 IQ compared to a natural birth, and that's if you believe the genetic screening boosters, who naturally have an interest in gassing themselves up.
2-3 isn't nothing, but it's not a holy grail worth protecting. Preventing the hoarding of this tech is paramount. Subsidies for it's widespread use, especially among the low intelligence regions is the next most important part.
My big worry is the religious freaks. They already want to ban IVF, so genetic augmentation is held back by trogloditic book worship. I want us to play God, and make even the lowest IQ Sub-Saharan 120 IQ. Those retards would choose for everyone to stay stupid, lest they "play god" 🤮.
Agree about the current state of the technology.
The bigger problem than catholics for progress is the reactionary naturalism movements, already seeing the damage they do for AI and synthetic animal proteins
Yes the people that are smart and rich now are going to stop the poor people from making their kids smarter with Genetics. I think that this is going to be suppressed
Neural Networks can design economic policy almost on par with smart humans now, I think that if we genetically engineer babies to have higher intelligence now, Neural Networks are going to be good on a level where those humans capabilities would not be highly valued when they are old enough to work with economic policy in around 2043
What does "genetic reform" actually look like? Maybe it would be good to have a concrete proposal. Right now leftists tend to assume the worst about anyone who talks about the impact of genes. If there was an actual proposal available that seemed fairly benevolent and non-coercive, perhaps that could shift attitudes. "Yes I believe genes are important, but I favor <benevolent and non-coercive proposal>, I'm not a Nazi"
They assume the worst because it's usually associated with nationalism, which is why the correct framing is necessary.
Now that even leftists have seen the failure of education for progress, I believe there is a path for something new.
Please DM me when you've written your post on this!
It is not going to happen. If it happens we have to have rules on how you can genetically engineer a kid. For example you should only be allowed to pick embryos or change genes that would create a person with lower agression, and lower polygenic profile for criminal behaviour. If genetically change kids genes there is going to be strict rules and I think that people are mostly going to want to have higher extroversion and conformity and intelligence
It's always weird to me when I see people like you and Scott A cite Kirkegaard without comment. Compared with someone like yourself he seems super racist, with lots of explicit hatred for people of certain ancestries.
Not saying he should be boycotted for being a bad person, that's not how I roll. But I wouldn't trust stuff he writes because of his very evident biases, and if I were quoting him I would double check his numbers first.
Can you give any examples of his "explicit hatred for people of certain ancestries"?
I am pretty sure that in terms of living standards Europe and Japan are kind of superior. Nominal GDP figures are mostly a bad comparison and adjusting those figures to international dollars is also not that straight forward. Markets are good too. Human capital I would say is 75% of the story. 25% of the story is industrial policy. Look at Taiwan. A tiny country with an unknown company called TSMC. Product of smart industrial policy. I wouldn’t dismiss smart industrial policy and smart income redistribution. Those can be effective if done well. America runs an economy on cheat mode. No wars since the civil war. A reserve currency since 1945. All those things inflate nominal GDP figures
Though I think the article is generally right, there are a number of points that need improvement.
> For the most part, the countries that started out rich stayed rich, and the countries that started out poor have stayed poor.
Most of that is because the process of economic change is slow. I mean, what was the maximum *annual* economic growth rate of the UK in its long march to world dominance? I pulled out the numbers for GDP-per-capita-at-PPP for 1999 and 2025 for the US, Singapore, Japan, Brazil, Panama, Gabon, Columbia, and Ethiopia. All of them gained relative to the US except Japan. The actual winner was Ethiopia, which went from 0.018 to 0.038 times the US. That is still very poor, but it's gaining at 3% per year against an economy that's growing at least 1% per year. A more typical poor country is Gabon which gained 1.23, about 1% per year.
A substantial part of the difficulty is that countries have to massively restructure their society, the day-to-day habits of the people, etc. etc. etc. That usually takes many generations. One advantage that the east Asian countries seemed to have is governments that could revamp their societies by top-down-command.
> My experience is that if you hint that there might be something genetic going on here, even otherwise measured and intelligent people crawl into the fetal position, and start screeching and ripping out their hair.
Yeah, but even if one fully buys "East Asians have better genes!", if we are talking about periods of more than a century or two, the question doesn't go away, because ultimately your population has the gene pool that the overall environment selects for. It's subject to the same long-term forces (whatever they are) that mold the deep, persistent culture of a country.
One thing that does seem to be distinctive about east Asian countries is that they have an unusually large fraction of rules who are dedicated to achieving state capacity and national greatness, as opposed to the more usual goal of amassing personal power and wealth. And this seems to be an individual trait rather than something that the culture enforces; South Korea was poorer than India at the end of Rhee Syng-man's presidency but Park Chung-Hee made it rich by explicitly copying Japan's development strategies.
> This is strange, as he spends a lot of time arguing that small-scale farming is more efficient than large-scale farming, hence land reform makes sense as a way to increase productivity. But if that’s true, why can’t the market see that? Large landlords would have an incentive to split their land up in a way that would maximize efficiency.
Yes, Studwell is wrong about this. But the purpose of land redistribution isn't to improve the efficiency of farming, but to destroy the political power of the landlord class, because that class has a huge incentive to block the transition from a feudal agrarian system -- which is highly non-market! -- to an industrial one. And the landlord class's goal isn't to maximize their affluence in either the short or long run, but to maintain their position at the top of the class hierarchy. (Wealth isn't zero-sum but status *is*.)
'Human Capital' is doing rather more heavy lifting than it needs to here. One interesting read is Edward Banfield's *The Moral Basis of a Backward Society* (1958). Banfield was studying a small town and municipality in Italy. It was unable to prosper. The problem wasn't that the inhabitants were stupid, or particularly poor, or particularly poorly educated compared with other Italians. Their genetic inheritance wasn't something that was measured, but it is reasonable to assume that it was on par with other Italian municipalities. What was setting them back was their clannishness. This produced the complete and utter inability to trust people outside of your own family group, which meant that the sort of cooperation that is essential to growing prosperity never developed, and never could develop. Everything was turned into a zero-sum game for control of rent-seeking.
So, when you look at the lack of prosperity in Ethiopia, despite buckets and buckets of the "right sort" of industrial policy, you discover that the problem is with the Ethiopians. And while I.Q. may be part of the problem, it is hardly the main one. The man problem is that Ethiopia takes the Italian-Mafioso type clannishness and fully develops it. Loyalty to clan is everything. Trustworthiness and truthfulness -- not so much. And like the Mafiosi, the Ethiopian clan society is purposely violent, which promotes a culture of "what is mine is whatever I can get away with", which leads to the development of more violent people, needed to make sure others don't "get away with" robbing your own clan, and so it goes.
So, clannishness is another dimension that you need to measure when figuring out how prosperous a society ought to be, given its academic success. And when you look you see that on the bottom you have the most clannish societies. And on the top you have societies where people cooperate better. But the 'Protestant religion toolset' seems to have fostered a better sort of trust-ideal -- which was then reflected back into Catholic Europe -- than the Confucian 'build an elite bureaucracy through a merit-based exam' toolset. Even to this day, people in China claim to not trust each other -- but they act more trusting towards each other than the people in many other places.
And over in left field we have India and its caste system -- I don't know nearly enough about it and how it fits on the trust scale for societies.
But Lee Kwan Yew thought that his government had to make Singapore into a high trust place, and many of his early policies were set up to do exactly this -- by forcing people of various ethnic polities to work together, and ruthlessly going after all sorts of corruption wherever he found it, so that people really could see that nobody was getting away with tribal or clannish rent-seeking. Making 'being trustworthy and impervious to corruption' a civic virtue seems to be a very good idea.
25 years ago, Malaysia decided that this trustworthiness, and not just industrial policy was necessary for prosperity and it set up several initiatives to do away with multiculturalism promoted since independence and produce one civic culture for everybody. see: https://en.wikipedia.org/wiki/Bangsa_Malaysia.
This appears to be working out really well both for making it possible for Malaysians to trust one another and give up a certain amount of clannishness and in terms of prosperity.
see: https://www.macrotrends.net/datasets/global-metrics/countries/mys/malaysia/gdp-gross-domestic-product though, of course, Malaysia was doing a lot of things to promote prosperity, making it hard to point at one and conclude "for sure, this is the one that mattered".
But there is a lot of data supporting the "clannishness kills prosperity" thesis.
You ignore a simple explanation for the high PISA test scores of East Asian nations: children in those countries spend way, way more time on schoolwork than children anywhere else in the world. These countries may all be very different, but Chinese, South Korean, Japanese and Taiwanese kids all spend hours and hours a day going to extra evening classes or doing homework at home. This points to a basic cultural similarity between them, which you downplay, and also provides a simple explanation for their high PISA scores that isn't genetic.
There is little evidence that different populations have different average innate intellectual abilities. There is even less evidence that this determines their countries' economic success. You might as well claim that East Asian countries all have a long history of centralised government and examinations, so this explains their success relative to other Asian and African countries. Ultimately, culture and history are perfectly plausible explanations.
Lol
Adjusted for Race, American kids outperform them in PISA score. Asian koreans are better than their Korean etc etc
Asian immigrants to America are disproportionately drawn from the wealthiest and most educated groups in their home countries (although not all of course).
Maybe. But this spending time with education and 4-hrs homework is just bogus signalling arms race gone amok. It has no value and very much drains life out of life.
Caplan (case against education) delves on this deeper.
Um, I agree and I never said otherwise. I don't think the rest of the world needs to imitate East Asia in this field.
Nitpick, but Japan had successful land reform post WW2 under US occupation, which became the paradigm for SK and Taiwan. The Meiji reforms created alienable private ownership but was not particularly redistributive.
The three post WW2 reforms were redistributive but also compatible with market competition thereafter.
Haven't finished the article yet, but I saw this already:
"The East Asian countries and territories are highlighted in the chart above. Chinese and South Korean industrial policy are often held up as major success stories. But both nations are underperformers given the cognitive abilities of their populations. Taiwan and Hong Kong are about where you would expect them to be. The urban centers of Singapore and Macau blow other East Asians out of the water."
Key word: *urban.*
Relevant: https://www.amazon.com/Invisible-China-Urban-Rural-Divide-Threatens/dp/022673952X
China still has a gigantic underperforming redneck hinterland. I don't know with South Korea. I think they are pretty urban, so my best guess is their insane fertility situation is dragging them down.
*Edit*
How obsessive did these places each become about training ludicrous numbers of STEM people? It's hard to industrialize when you have no engineers. I know Deng Xiaopeng was extremely obsessed with this as one of his very first series of reforms. The Meiji Restoration also famously included a massive overhaul of the education system. I really wish there was some kind of "engineers per capita" index you could trace because I bet you would notice trends with that if you could. Did the places with industrial policy that failed or had below expected returns just shovel money around but not invest in education? Even if you have a high IQ from genetics, you are not born knowing how to build bridges. And what exactly is the market incentive to turn a bunch of peasants into engineers? I'm aware of no peasant >> engineer process like that that wasn't state backed. Aspiring "middling sorts" want to educate their kids, obviously, but that's a much slower process than these reforms I've mentioned, and you need to already have some economic success to have an aspiring middling sort in the first place. That economic success is usually predicated on successful trade already existing for a while (usually in market/port towns) or following the success of the first wave of industrialization that can make do with unlettered peasants (like making textiles). China seems to have successfully converted a bunch of peasants into engineers. There doesn't seem to be any other way for them to have produced as many as they have in the amount of time they have.
The big issue is that nobody wants to patiently wait around for markets to do their thing. They want to stop being poor *now* or *soon.*
I'm not sure if I 100% agree with RH here, but he does make some interesting arguments. My guess is that it's probably a bit more complex than what any of us can wrap our minds around. But I do agree that lightly but properly regulated capitalism is probably the most efficent system for a mature economy.
I differ with RH on the human capital question. The idea that East Asian cultures in the long term sense foster traditions associated with intellectualism and lower crime make much more sense to me than the idea that East Asians are mentally genetically superior.
If East Asians are mentally superior then why haven't they figured out that Capitalism is the shit? Isn't such a repeated mistake a sign of doubt about superiority?
Why did 2nd-tier brain violent gun-toting Americans with a penchant for crime figure out the secret sauce for the best economic system first?
If White Americans are genetically nearly equivalent to Western Europeans, then why do we have much higher rates of crime, obesity, addiction, general shittiness - all the while being strangely wealthier on average?
Culture just makes more sense - that is culture in the long term (centuries long) sense.
East asian have lower crime wherever they go, what you say to that ?
Deeply-ingrained centuries-old cultural norms. Though I'll allow the idea that perhaps East Asians might have a genetic advantage of less instances of violent mental illnesses that seem to afflict Americans.
But I'll repeat an earlier point: If Asians have genetically superior intellects, then why do so many of them keep choosing communism and other stupid systems? Or if White Americans are so superior, why do we have so many degenerate scumbags among us?
A racial-intellectual pecking order would make sense if Asians ruled the world, which they don't. They just have a culture of complaince that works wonders for their crime rates and social cohesion, but costs them in terms of creativity and individualism.
All that said, I do very much admire Asian cultures. We should learn a lot from them.
Your views seems inflicted by recent bias like 2-3 centuries. Overall, Chinese have always been at the frontier or at the cutting edge of tech. English scholar was curious about it and investigated and posed six questions as to why China was not the site of industrial revolution despite sophisticated cultural and scientific achivement s. These are called Needham's questions or puzzles.
Cultural factors like more need for order, family system, sceptical of innovators, collectivisms and other psych traits would be more prominent then raw IQ.
Even today, I think this is the main difference like which leads to high cultural homogenity - similar shows, same cutie animes, strong social judgements no weird micro culture. This makes the West and especially America push people to their potential.
America is not just Novel laureate, Tech entrepreneur we see, it is also ARNOLD SCHWARENEGGER, SLY , JAMES CAMERON AND TARANTINO AND PTA.
What would they do in Japan ?
EAST ASIA HAD NONE OF THAT.
Wow, the western capitalist mind is truly a horrific nauseating thing. Mindblowing that someone from a society with the most disease-ridden, unhealthy, unhappy, medicated, depressed, homeless, overworked and isolated population can be so smug and obnoxious. It wasn't enough to subjugate the world under your inbred and mental disease-induced Capitalist histeria, now you want to sit here and pretend to have the slightest inkling of what the human condition is and can be. Laughable how you want to talk shit about communism and gloat about it's failings, while still punishing a tiny island who kicked your sorry asses out of their country years ago and screaming bloody murder whenever anyone tries anything other than complete subservience to global corporations. Never seen a group of people dismiss so fervently an idea yet also jump to militarily destroy anyone who embraces this "failed" system so quickly. Weird how terrified you guys are of this useless failed ideology.
https://open.substack.com/pub/peterjoseph/p/the-myth-of-market-intelligence?r=74o2l&utm_campaign=post&utm_medium=web