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Chua shows how in non-Western countries around the globe, free markets have concentrated starkly disproportionate wealth in the hands of a resented ethnic minority. These “market-dominant minorities” – Chinese in Southeast Asia, Croatians in the former Yugoslavia, whites in Latin America and South Africa, Indians in East Africa, Lebanese in West Africa, Jews in post-communist Russia – become objects of violent hatred. At the same time, democracy empowers the impoverished majority, unleashing ethnic demagoguery, confiscation, and sometimes genocidal revenge. She also argues that the United States has become the world’s most visible market-dominant minority, a fact that helps explain the rising tide of anti-Americanism around the world. Chua is a friend of globalization, but she urges us to find ways to spread its benefits and curb its most destructive aspects.
Rubies and Rice Paddies
Chinese Minority Dominance in Southeast Asia
In Burma,* tattoos are traditionally used to protect against snakebite. In 1930 and again in 1938, enraged Burmans applied these tattoos to achieve invulnerability against bullets and then proceeded to slaughter Indians in an orgy of violence. Even monks were said to have participated. At the time, Indians, along with British colonialists, were a starkly economically dominant ethnic minority in Burma and the object of mass antipathy. Killing Indians was an act simultaneously of revenge and nationalist pride among a long-downtrodden people. As a contemporary observer put it, "The average Burman on the street felt that at least once he had proved his superiority over the Indian."
Today there is only a small community of Indians left in Burma. Hundreds of thousands fled in the sixties, in response to another wave of ethnic violence. But a new market-dominant minority has taken their place, far wealthier than the Indians ever were.
Markets, Junta Style, and the Chinese Takeover
Burma has one of the most repugnant military governments in the world--the State Law and Order Restoration Council, or SLORC,** which seized power in September 1988 after gunning down thousands of unarmed demonstrators. SLORC held multiparty elections in 1990, but then refused to honor the landslide victory of 1991 Nobel Peace laureate Aung San Suu Kyi, placing her instead under house arrest and earning the widespread hatred of the Burmese people.
From its inception, SLORC has been aggressively pro-market. Reversing three decades of disastrous, socialist central planning, SLORC in 1989 launched "the Burmese way to capitalism." Apart from enriching corrupt SLORC generals, who are all ethnic Burmans, the ensuing decade of marketization brought virtually no benefits to the indigenous population, the vast majority of whom still engage in traditional agriculture. One group, however, has benefited tremendously.
Since Burma's shift to a market-oriented, open-door economy, both Rangoon, the modern capital, and Mandalay, the ancient City of Gems and royal seat of the last two Burmese kings, have been taken over by ethnic Chinese. Some of these Chinese are from families that have lived in Burma for generations. Like the Indians but to a lesser extent, the Chinese were disproportionately wealthy during the colonial period (1886-1948), which was characterized by essentially laissez-faire policies superimposed on Burma's traditional rural economy. Although much of their wealth was confiscated during the socialist era (1962-88), the Chinese remained active in Burma's black markets and, in a few cases, opium trafficking.
In Burma's new market economy, the Sino-Burmese minority have been transformed almost overnight into a garishly prosperous business community. In addition, tens of thousands of poor but entrepreneurial immigrants from China, sweeping down from nearby Yunnan, have bought up the identity papers of dead Burmans for as little as three hundred dollars, becoming Burmese nationals overnight. Today, ethnic Chinese Burmese--looking uncomfortable in longyis, the traditional Burmese unisex sarongs--own nearly all of Mandalay's shops, hotels, restaurants, and prime commercial and residential real estate. The same is more or less true in Rangoon. Only a tiny, dying handful of Burman-owned establishments (mainly printing houses and cheroot factories) are left, dwarfed by the Chinese-built and Chinese-owned high-rise buildings around them.
Typical of Southeast Asia, the Chinese dominate Burmese commerce at every level of society. Massive joint ventures--such as the Shangri-La Hotel deal between Lo Hsing-han, the Sino-Burmese chairman of the Asia World conglomerate, and Sino-Malaysian tycoon Robert Kuok--have turned Mandalay and Rangoon into booming hubs for mainland Chinese and Southeast Asian Chinese business networks. (Non-Burmese Chinese investors are easy to spot. They're the ones not in longyis but in cowboy boots and sunglasses, walking around with bottles of Johnny Walker Red.) At the humbler end of the spectrum, Chinese hawkers make an excellent living selling cheap bicycle tires from China--often more than thirty thousand tires a month--for rickshaws in Burma. Nor is Chinese dominance only an urban phenomenon. After two years of severe flooding in southern China, large numbers of Chinese farmers--over a million, some estimate--poured into northern Burma. These new Burmese "citizens" now grow rice on the cleared hill country they have taken over. Entire Chinese villages have sprung up in this way.
With the United States boycotting Burma on human rights grounds, globalization for Burma has had a disproportionately Chinese face, although the presence of French and German foreign investors can be felt as well. "Name a large infrastructure project anywhere in Myanmar these days and there is a strong possibility it will be in the hands of Chinese contractors," observed The Economist a few years ago. "Chinese engineers are working on improvements to the highway from Mandalay to Yangon. Chinese companies are developing the railway line from Mandalay to Myitkyina, near the Chinese border, and the line from Mandalay to the capital. With the help of chain gangs from Myanmar's prisons, they are also building a line from Ye to Tavoy in Myanmar's far south-east. . . . Against international competition, Chinese contractors have won the contract to build a big bridge across the Chindwin river. Other Chinese ventures range from a new international airport for Mandalay to housing for the armed forces and 30 irrigation dams. It was the Chinese, in association with Siemens, who last year installed a ground satellite station serving the capital."
The Chinese in Burma dominate not only legitimate trade and business but also more sordid black market activities. Indeed, the line between licit and illicit commercial activity in Burma, as in many developing countries, is often vague. Some of the country's most influential businessmen are former--possibly current--drug kingpins. "Drug traffickers who once spent their days leading mule trains down jungle paths are now leading lights in Burma's new market economy," lamented former U.S. secretary of state Madeline Albright a few years ago.
Burma-born, ethnic Chinese tycoon Lo Hsing-han, for example, was an infamous opium warlord in the 1960s, thought to be responsible for much of the heroin that wound up in American veins. According to Burma scholar Bertil Lintner, Lo started off in his native Kokang Province as a lieutenant to the pistol-toting lesbian opium queen, Olive Yang. In 1989, Lo cut a deal with SLORC, persuading fellow ethnic warlords to accept a cease-fire with the junta in exchange for valuable timber and mineral concessions. Today, Lo's "Asia World" commercial empire includes a container shipping business, Rangoon port buildings, and tollbooths on the resurfaced Burma Road. Lo insists that he is now a legitimate businessman. "Since the market economy appeared in Myanmar," he explains, "it is easier to earn money trading vehicles on the Chinese border."6 Whether or not Lo is clean--and most Western officials believe otherwise--Burma's "Chinese underworld" remains as dominant in drug traffic and money laundering as Chinese merchants are in Mandalay's booming, lawful markets.
Chinese Plutocrats, Burman Misery
Ever since SLORC embraced markets, Burma has been hemorrhaging natural resources, especially teak, jade, and rubies. Apart from SLORC generals, the beneficiaries have been almost exclusively ethnic Chinese and a handful of hill tribe smugglers.
Burma's forests hold more than 70 percent of the world's teak. The Burmese teak is a magnificent tree, sometimes reaching 150 feet, with opposing egg-shaped leaves and clusters of white flowers. Its timber is dark, heavy, oily, of unusual strength and durability. Long the wood of Burmese royalty, immortalized by Rudyard Kipling ("Elephints a-pilin' teak / In the sludgy, squdgy creek, / Where the silence 'ung that 'eavy you was 'arf afraid to speak! / On the road to Mandalay . . . "), teak today is America's wood of choice for boat decking and salad bowls.
For over a decade now, Burma's hill tribes, particularly the Shan, have been selling enormous quantities of teak to Chinese buyers at fire-sale prices. Technically these sales are contraband, violating SLORC's official monopoly on timber exports. In reality, SLORC generals struck a deal with hill tribe insurgents a decade ago, granting them economic freedom in exchange for a cease-fire. As a result, since 1989, convoys of trucks loaded with teak logs--sometimes over ten feet in diameter, from trees hundreds of years old--travel daily, snaking along the mountainous old Burma Road across the border into China's Yunnan Province.
Meanwhile, SLORC's official timber policy has been aggressive globally-oriented marketization under government concessions. Insisting that teak logging will facilitate Burma's economic development, SLORC has invited the full support of the private sector in promoting "forestry" (i.e., deforestation), even exempting forestry exports from commercial tax. Along with European and Chinese foreign investors, most of SLORC's business partners are Sino-Burmese tycoons who have close ties to Thai Chinese logging companies. Leading industrialist "May Flower" Kyaw Win, born to a poor Chinese family in the Northern Shan State, is a prominent example. Since moving into the timber business in 1990, Kyaw Win--also the managing director of Yangon Airlines and often spotted with top-ranking generals--has become one of the wealthiest men in Burma.
By contrast, ethnic Burmans have profited almost not at all from the country's market-driven deforestation. Shan tribespeople continue to earn money smuggling teak to Yunnan, but adding insult to injury, the Shan, along with the paid-off Burmese border officials, spend their proceeds almost entirely on coveted consumer goods imported from China and sold by Burmese Chinese. As a result the Chinese end up with both the teak and the money, while the Shan and the Burmans are left with cheap Chinese-made ghetto blasters, Michael Jackson T-shirts, sports shoes, condoms, and beer.
In addition to teak, Burma is famous for her gems: pigeon-blood rubies, ultramarine sapphires, and imperial jade. Prior to 1989, under Burmese-style socialist rule, only the state was permitted to engage in gem mining and gem sales. Thus in the 1980s, when a private miner discovered, and then sold on the black market, a raw ruby weighing an incredible 469.5 carats, he was promptly arrested and imprisoned. SLORC recaptured the ruby in 1990 and proudly proclaimed it the property of the state. Christened Na Wa Ta, or the "SLORC ruby," its picture was displayed across the country in the state-owned Working People's Daily. (Around the same time, the government also announced the discovery of two raw sapphires, one weighing 979 carats, the other around 1,300 carats.) During the socialist period, when all industry was nationalized, the Burmese government sold gems to foreign companies by holding annual "gem emporiums." Private gem sales were conducted underground by hundreds of traders operating largely out of Mandalay's 34th and 35th Street black markets.
In a watershed pro-market reversal, the Burmese government in the early nineties privatized much of its gem industry. Since 1995, private mining concessions have been sold on the basis of competitive bidding, costing as much as $83,000 per acre for virgin gem mines. Once again, virtually all the concessionaires have been Sino-Burmese businessmen. One Chinese-owned jewelry company reportedly controls 100 gem mines and produces over 2,000 kilograms of raw rubies a year. Lo Hsing-han's visible holdings, valued at an estimated $600 million, include valuable ruby concessions as well as "a mining stake in the northern 'jade rush' town of Phakent--said to harbor a 300-ton jade boulder, buried so deep in the jungle it can't be moved." Lo's Asia World conglomerate is now the most popular partner for foreigners investing in Burma. Along with private mining, SLORC also legalized private gem sales. Today, Burma's gem industry is dominated by thriving Burmese Chinese at every level, from the financiers to the concession operators to the owners of scores of new jewelry shops that sprang up all over Mandalay and Rangoon. Needless to say, SLORC officials are also handsomely paid off at every level.
It is an understatement to say that, in terms of financial and human capital, the vast majority of indigenous Burmans, roughly 69 percent of the population, cannot compete with the country's 5 percent Chinese minority. Three-quarters of the Burmans live in extreme rural poverty, typically engaging in paddy production or subsistence farming. Despite land reforms during the socialist era, an estimated 40 percent of Burman peasants are landless. For rural Burmans, saving money is virtually impossible; anything earned is spent just to stay alive. As a result, most Burmans have little or no capital and have not profited from economic liberalization.
Lack of financial capital is not the only problem. Since abandoning socialism in 1988, SLORC has slashed real spending on health and education. According to United Nations agencies, nearly 40 percent of Burmese children never enroll in school and up to 75 percent drop out before the fifth grade. Moreover, because of the ruling junta's paranoia about student-led civil unrest, Burma's universities were closed for three-and-a-half years, until July 2000. Human capital levels among indigenous Burmans are thus abysmal. All these factors, along with possible cultural obstacles--some have suggested that there is a native prejudice against "greedy" profit-seeking--make it extremely difficult for Burmans to compete in a market economy.
In urban areas, Burmans may actually have suffered from marketization. Most of the native residents of Mandalay were historically artisans, who made their living weaving tapestry, carving gold leaf, crafting furniture, or polishing precious stones. In recent years, low wages in these traditional industries relative to the skyrocketing prices of consumer goods have pushed the standard of living of thousands below subsistence. Meanwhile, since 1989, the price of rice in Mandalay has been rising steadily--at one point, over 1,000 percent in seven years--with no end in sight. For many Burmans, whose average per capita income is only around $300 a year, this translates into something close to starvation.
Further, as ethnic Chinese developers in the nineties snapped up all the prime real estate in Mandalay--making fast fortunes as property values doubled and tripled in the chaotic new markets--indigenous Burmese Mandalayans were pushed farther and farther away from their native homes. (In 1990, SLORC had already forcibly relocated dissidents and Mandalayan monks.) Today, thousands of poor, displaced Burmans live in satellite shantytowns on the outskirts of Mandalay, within eyeshot of the gaudy, fenced-off mansions of the SLORC generals, many of whom are openly parasitic on Chinese businessmen.
Free markets are supposed to lift all boats, and indeed often do. But this is distinctly not the perception of Burma's roughly 30 million ethnic Burman majority. In their view, markets and economic liberalization have led to the domination and looting of their country by a relative handful of "outsiders," chiefly ethnic Chinese, in symbiotic alliance with SLORC. Mandalay's central business district is now filled with Chinese signs and Chinese music pouring out of Chinese shops. Burmese-made products have been almost entirely displaced by cheaper Chinese imports. Chinese restaurants serving grilled meat and fish overflow with loud Mandarin-speakers. "To go to Mandalay," snaps a character in a local cartoon strip, "you need to master Chinese conversation." When the sun sets, Mandalay's new money heads to Chinese-owned karaoke bars, where young Chinese hostesses sing along to the latest songs from laser discs made in Hong Kong. On weekends, wealthy Chinese relax in the mountaintop resort of Maymyo, where they have bought up as vacation homes the grand Victorian houses left behind by British colonialists.
|Introduction: Globalization and Ethnic Hatred||1|
|Pt. 1||The Economic Impact of Globalization|
|1||Rubies and Rice Paddies: Chinese Minority Dominance in Southeast Asia||23|
|2||Llama Fetuses, Latifundia, and La Blue Chip Numero Uno: "White" Wealth in Latin America||49|
|3||The Seventh Oligarch: The Jewish Billionaires of Post-Communist Russia||77|
|4||The "Ibo of Cameroon": Market-Dominant Minorities in Africa||95|
|Pt. 2||The Political Consequences of Globalization|
|5||Backlash against Markets: Ethnically Targeted Seizures and Nationalizations||127|
|6||Backlash against Democracy: Crony Capitalism and Minority Rule||147|
|7||Backlash against Market-Dominant Minorities: Expulsions and Genocide||163|
|8||Mixing Blood: Assimilation, Globalization, and the Case of Thailand||177|
|Pt. 3||Ethnonationalism and the West|
|9||The Underside of Western Free Market Democracy: From Jim Crow to the Holocaust||189|
|10||The Middle Eastern Cauldron: Israeli Jews as a Regional Market-Dominant Minority||211|
|11||Why They Hate Us: America as a Global Market-Dominant Minority||229|
|12||The Future of Free Market Democracy||259|
Posted May 1, 2009
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Chua is a Professor at Yale Law School. In Part 1 she describes globalisation's economic impact, in Part 2 its political consequences, and in Part 3 she warns that the USA should not export laissez-faire capitalism or overnight democracy. She claims that the three most powerful forces in the world are markets, democracy and ethnic hatred.
She reminds us that the theory was that free-market democracy would change the world, making it peaceful and prosperous. She points out that in many places markets have concentrated huge wealth into the hands of ethnic minorities - the Chinese in South-East Asia, Jews in Russia, whites in South Africa and Latin America, Israel in the Middle East and the USA in the world. She says that markets and democracy benefit different 'groups', so that 'free market democracy' is an unstable, toxic combination.
Global integration and market policies have raised average incomes - but only by making the extremely rich even richer. In a population of 100,000, if the richest thousand people each get a million pounds more, and the other 99,000 lose £10,000 each, total incomes will rise by £10,000,000 and the average by £100.
Her opposition to democracy becomes clearer as she goes on. She smears nationalisation as racist 'ethnically targeted confiscation'. She calls the Vietnamese government Hitlerian for confiscating the property of Chinese entrepreneurs in South Vietnam, yet admits that it did the same to 'their Vietnamese counterparts'. She claims that nationalisation 'damaged the economic growth of Asia, Africa and Latin America' and is just an 'expression . of popular frustration and vengeance'. She smears as autocratic and racist Hugo Chavez, 'whose nationalisation and other anti-market policies seem to Westerners utterly irrational'.
She concludes, "It is dangerous to see democracy as a panacea", but she never warns against seeing markets as a panacea. She urges, "the best hope for democratic capitalism in the non-Western world lies with market-dominant minorities." So for democracy's sake, she backs minorities against majorities. She warns of a backlash 'against democracy by forces favourable to the market-dominant minority' - she appears to be part of this backlash.
1 out of 1 people found this review helpful.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted December 11, 2009
"World on Fire" is one of the most useful and interesting books I have read in a while. It provides information on who "market dominant minorities" in various corners of the world are and how they managed to get this dominance. As a global investor, I have found that it is extremely important to understand origins of top managers' power within companies, and how these managers and their companies fit in the power structures of their countries. This understanding is especially important in emerging markets, which often have under-developed legislative protection of investor interests.
Another important feature of the book is that it gives many vivid examples of ethnically targeted seizures and nationalizations in emerging markets. If you hear that a government of an emerging market country starts a propaganda campaign against a certain ethnic group, it might be time for selling shares of companies that this group controls, and potentially liquidating all investment positions in this country. Amy Chua has conducted excellent research and provided information that otherwise would have taken readers years to gather. Thank you!
Posted June 5, 2007
I am a Chinese-Filipinos myself, I completely disagree what the author is claiming regarding this book, its full of racism against Filipinos. I noticed her hatred towards Filipinos and her 'Chinese superiority mentality', she keep insisting that Chinese-Filipinos control economy of the Philippines, and they are this bad that only Filipinos works for Chinese and no Chinese works for Filipinos., which is not true. Many young Chinese-Filipinos work for entirely Filipino companies after graduating from college. Aside from that, she keeps emphasizing how Chinese amass wealth, how they collaborated with Marcos, and even said 'upon learning that Marcos wished only to re-distrubute wealth to themselves and not to the poor, the Chinese rejoiced and stock prices steadily climbed up'. She have same mentality as those exceptional few wealthy Chinese-Filipinos who look down at Filipinos, but she is insisting that all Chinese-Filipinos are like that, she is emphasizing this just to justify her point of view regarding ethnic hatred. This kind of mentality really exist among tsinoys, but they are only few, she did not deny the fact that her family is part of those few individuals. Like what she said about the comment of her uncle when asked about the Payatas tragedy, her uncle was annoyed why everyone is discussing that, for that, I find her family cruel, everyone is sad about Payatas tragedy, even the Chinese-Filipino community donated much money and goods and helped in relief operations, she did not mention at all any contributions of Chinese-Filipino to the Philippines, the operation barrio schools, the volunteer fire fighters, the free medical clinic, the various educational foundations, charity organizations like Tzu Chi, Chi Liam Tong etc. She also mentioned about the safety deposit boxes of her family full of gold bars, the diamond collections of her aunt who was killed. It can easily be seen that her family is the typical target of crimminals because they dont know how to hide their wealth and treated their servants and employees badly. She mentioned that her aunt once told her in front of their maid that Filipinos are lazy and unintelligent. So after reading the book, I dont feel pity for her aunt's death. In fact, what the police blotter wrote might be true, the motive of the crime is 'revenge' not robbery, in which Amy Chua find it weird. She can't understand why the chauffeur of her aunt want to revenge her, because in her view, servants must only obey what the lords told them to do. In conclusion, this book is not worth reading, because many of the facts stated in the book was based on personal feelings and did not have documentary evidence.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted December 15, 2009
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