The Invisible Hand and the Middle East

 

I wish Adam Smith were mandatory reading for politicians. In fact, I have a whole reading list that the tribe ought to be made to study.

 

The Economist is, beyond any serious question, the finest news magazine in the English-speaking world.  (I have favorite opinion magazines, too.  And, for many reasons, I’m passionately fond of the Wall Street Journal.  But for genuinely global news coverage that focuses on substantive matters and devotes little if any space to the Kardashians, Justin Bieber, or “America’s Love Affair with the Corn Dog,” the Economist is unsurpassed.)

 

The most recent issue doesn’t disappoint.  (The Economist never really does disappoint — except in its tendency to make wrong-headed political endorsements, as in the case of one Barack Obama, who is said to be currently serving as president of the United States.)  Among many interesting and informative articles, there’s a short little piece about an effort to build a high-tech park near the Israeli Arab city of Nazareth — an area that I visit regularly and with which I’m reasonably familiar — and the political obstacles that it has faced but may now have overcome.  The Israeli entrepreneur who is backing the project is trying to integrate Arab computer science graduates into the booming Israeli high tech economy, which is overwhelmingly dominated by Jews.  It’s in his financial interest to do so, of course, but it’s also in their financial interest that he succeed.

 

And I think it’s in Israel’s, the Middle East’s, and the world’s interest.  I find the story exciting, because my dream solution for the Arab/Israeli conflict is far more economic than political.  Politics is a blunt instrument, and political measures tend to be zero-sum games.  Leaving aside oppressive police states and dictatorships, this is true even within democracies, where, for example, 50.1% of the population can, and too often does, use more or less legitimate electoral and legislative processes to pick the pockets of the other 49.9%.  But, in a rising economy, everybody (or almost everybody) can prosper and feel invested.

 

Some years ago, my wife and I were standing in line to check into the Conrad Hotel in Cairo.  As I watched the young men and women behind the country switch, seemingly without effort, from Arabic to English to French as they served the hotel’s customers, I thought to myself that this was the thing that would perhaps most help to dry up support for radical Islamism in the region:  People who are fully integrated into the global economy and who are profiting from it have very little incentive to blow it up.

 

I entertain no illusion that violent extremism would disappear entirely were the region to prosper.  Ayman al-Zawahiri was a successful physician before he became a terrorist.  ‘Usama b. Ladin was a multimillionaire.  The 9-11 hijackers led comfortable middle- to upper-middle-class lives.  But it would drain many of the swamps that produce discontent among Muslim youth.  Families whose kids are now being radicalized in backwards madrasas in Pakistan and Afghanistan might see their future very differently if they knew that learning computer programming and English and mathematics could open the doors for them to unprecedented prosperity.

 

Unfortunately, in the wake of the fall of Hosni Mubarak and the rise of Mr. Morsi and the Muslim Brotherhood, tourism in Egypt has plummeted.  Many of those young men and women at the Conrad, and many others like them across the Egyptian hospitality industry and beyond, are probably out of work now.  Not for economic reasons, but because of the intrusion of politics.

 

Some years ago, we stayed in a hotel in Nazareth that was (I think) owned by Arabs but jointly managed by Jews and Palestinians.  (I couldn’t always tell them apart, and so, frustrated by receiving a shalom back when I had offered a salaam, and a salaam when, the next time, I offered a shalom, I simply said Hello whenever I dealt with the staff.)  What struck me there — as I had been struck many years earlier while my family and I were living in BYU’s Jerusalem Center for Near Eastern Studies — was how well the Jewish and Arab staff worked together.  There wasn’t a whiff of politics, so far as I could see.

 

“There are few ways in which a man can be more innocently employed,” said the great English writer, lexicographer, and wit Samuel Johnson, “than in getting money.”  (See James Boswell’s 1791 classic The Life of Samuel Johnson.)  Why is this so?  The answer is given by another immortal author of the eighteenth century, the Scotsman Adam Smith.  (Full disclosure:  A portrait bust of Adam Smith hangs on the wall above my desk in my office at home.)

 

“It is not from the benevolence of the butcher, the brewer, or the baker that we can expect our dinner,” Smith wrote in his 1776 treatise on The Wealth of Nations, “but from their regard to their own interest.”

 

This is the genius of uncoerced exchanges of goods and services in a free economy.  Suppose that Ms. X goes into the bakery owned by Mr. Y.  She wants three dozen of his excellent dinner rolls.  Ideally, she would like to get them for free.  But Mr. Y doesn’t work in his bakery sixty hours a week in order to perform charitable service for upper middle class families.  Even if, for some mysterious reason, he would like to do so, he could never afford it.  He has a wife and children to support.  In fact, it would be wonderful from his perspective if he could keep his dinner rolls and get Ms. X’s fifteen dollars for nothing.  In the end, though, she decides that she wants three dozen dinner rolls more than she wants fifteen dollars, and he decides that he wants fifteen dollars more than he wants three dozen dinner rolls.  So they freely exchange money for rolls and rolls for money, and both feel that they’ve done well by the bargain.  No tanks, bombs, or Kalashnikovs were involved.  No parliamentary debates, no street demonstrations, no police.  Just freedom.  And Ms. X doesn’t care that Mr. Y is a Jewish Democrat.  Nor does he care that she’s a black Republican.  Moreover, he has several assistants in his bakery.  They do excellent work, and he doesn’t care that one is gay, one is Hispanic, and the other is a Baha’i.  They value his pay more than their time and energy, he values their time and energy more than the money he pays them, and everybody profits.  In peace.

 

As Adam Smith famously says about the merchant or salesman in a free economy,  “he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.”  (Adam Smith, The Wealth of Nations IV.ii [paragraph 9])

 

This is a very different vision from that of government and politics, which, though indispensable, ought to be minimized.  The vision of the Nebuchadnezzars, the Caesars, and the Napoleons of history hasn’t been to produce and to serve and thus to grow rich through voluntary exchanges that benefit both parties, but to steal and to pillage, and to leave behind hundreds of thousands and even millions of the dead, the maimed, the widowed, and the orphaned.  There is little if any room in the non-coercive free-market vision for an Israeli government that refuses building permits to qualified Palestinian applicants for years and years while granting such permits within a week or two to no-more-qualified Jewish applicants.  There is no room in it for driving Arabs from the orange groves that their families have cultivated for generations, nor for driving Jews into the sea.

 

A vocal critic of mine who seldom misses an opportunity to misunderstand and misrepresent me noticed a comment that I made a week or so ago in which I mocked the apparent faith of some that politicians and government bureaucrats are necessarily more pristine of character and motive than are businessmen.  In response, he derided me for believing that businessmen are intrinsically purer and better than government bureaucrats and politicians.  But, of course, I had said — and I believe — nothing of the sort.  In this fallen world, people are flawed.  Both private businessmen and “public servants.”  Too many are driven by lust, greed, and ambition to dishonesty, theft, and cruelty.  The beauty of voluntary exchanges in a free economy — I’m not talking about mob bosses and protection money, crony capitalism, police breaking up labor unions at the behest of fat cat capitalists, criminal syndicates and drug cartels, or state-supported monopolies — is that it takes even the bent material of human nature, with all its laziness, selfishness, and greed, and channels it, imperfectly but far better and more reliably than any other system devised by mortals, into productive efforts that benefit society generally.

 

The Middle East would be vastly improved by much more business and far less politics.

 

 Posted from Park City, Utah.

 

 

 

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  • http://www.facebook.com/guy.briggs Guy Briggs

    “… I watched the young men and women behind the country switch, seemingly without effort, from Arabic to English to French …”

    Q: What do you call a person who speaks more than 2 languages?
    A: Multi-lingual

    Q: What do you call a person who speaks exactly two languages?
    A: Bi-lingual

    Q: What to you call a person who speaks only one language?
    A: American!

  • JeanPing

    Your column here reminds me of something I saw a couple of years ago–a theory that Bollywood movies are an excellent tool for drying up radical Islam, since they feature Muslim actors a lot of the time, have stories that Middle Easterners/South Asians identify with, and generally show Muslims being economically successful and happy and getting along with other religions. I happen to love Bollywood movies (Veer-Zaara is my favorite, you should see it if you haven’t) and so would love to think that it’s a positive force in the world. Any thoughts?

    • DanielPeterson

      I have no idea, and can’t really think of any way of testing the proposition that extreme Islamist violence would be higher in the absence of Bollywood movies. It’s possible, I suppose.

  • Travis

    Great post. A portrait bust of Samuel Johnson hangs in my study!

  • Ryan

    Economics, possibly, but perhaps even more effective at bringing Jews and Muslims together would be a common enemy.

    I think that perhaps we should also consider employing global-scale covert asymmetrical psy-ops tactics targeted at confusing the Jews and Muslims’ sense of their own cultural history. It seems (to me at least) that the one characteristic extremists can be counted on to consistently have is a remarkably fleeting grasp of reality and basic facts. It shouldn’t be hard to blur their minds.

    • DanielPeterson

      That might work too, my dear Screwtape.

      • Ryan

        (nevermind)


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