Theories on culture and economic destiny that tread on provocative ground

AROUND the world, historically Confucian and Protestant societies are more hardworking and thrifty than the rest. This increases their economic potential. It explains why Chinese and Japanese migrants prosper wherever they go, even if they face discrimination. It is also why in Malaysia, states with a higher proportion of ethnic Chinese have a higher GDP per capita.

In contrast, no Latin American or African countries are expected to ever become "truly developed", no matter what policies are put in place. This is due to a lack of human values conducive to growth. In particular, African countries will continue to struggle, primarily because they do not possess a strong work ethic - with some African leaders having admitted as much.

You might find these claims refreshing, or reductive and offensive. Either way, they are key assertions made in Values at the Core: How Human Values Contribute to the Rise of Nations, by Tan Chin Hwee and Thomas Grandjean. The authors are energy trading professionals with backgrounds in finance. They have written a book attempting to explain what they describe as "too often neglected by economists": the impact of human values on economic performance and potential.

In brief, the authors argue that there are values conducive for economic development, namely: hard work, thrift, trust towards others, and risk-taking. These values influence the effectiveness of six economic policies they believe have the greatest impact on growth: political stability, free markets, education, low corruption, and fiscal and monetary policies.

In particular, they identify hard work and free markets as likely to be the most conducive to growth. Two clusters of countries are said to have growth-conducive values. First, the Confucian ones: China, Japan, South Korea, Singapore and Vietnam. Second, the Protestants: Germany, the Netherlands, Switzerland, the UK and the Nordics. Countries now mostly populated by historically Protestant migrants - the US, Canada, Australia and New Zealand - are included in the mix.

The authors point out that both groups of countries tend to be more prosperous than the rest, when they adopt market economies and international trade. There are other associations explored, like higher rates of national savings partly attributed to thriftiness; or greater tolerance for higher taxes to reduce inequality, which correlates with levels of social trust. Without examining such relationships, they say, most economic literature is unable to fully explain growth disparities between nations. Economists, they add, tend to overlook differences in values between societies. This could be due to reasons like a Western bias in economic research, and a mistaken assumption that market participants are entirely rational actors.

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There is another plausible explanation which the authors never quite confront. Namely, that these are extremely difficult issues to investigate without descending into gross generalisations, stereotyping, or even outright racism.

Legacy of slavery

Reading the book, I was surprised at how blithely the authors breezed through multiple sensitive topics. One example is slavery. In the chapter "Hard Work", a segment is devoted to the legacy of the slave trade, which the authors say dismantled the incentive for the peoples of African nations to work hard. "Without coercion, the slave would have no reason to do any work," they argue. According to them, this is why Blacks in the US whose ancestors were not slaves, such as most West Indians, tend to be better educated and earn higher income than Blacks with an ancestry of slavery.

I have no doubt that the slave trade ravaged the African continent and peoples, in profound and myriad ways. It would be irresponsible of any reader, however, to conclude from the mere six paragraphs offered that Africans and African Americans remain at a disadvantage today, mainly because they do not work hard enough. There are many factors at play, including racial profiling, incarceration rates, parenting and family structures, education gaps and more. And these factors reinforce one another in ways that are difficult to simplify - in fact, must not be carelessly simplified. This is especially when the allegation concerns a lack of work ethic, which can easily play into racist stereotypes.

Such stereotypes have been perpetuated throughout history with grave consequences. The supposed inferiority - or superiority - of different cultures and ethnicities has been used to justify the attempted conquest, disintegration or even extermination of minority groups. Till today and even in developed societies, some also use this as reason to take a laissez-faire approach to disadvantaged groups, blaming their situation on their ethics and personal choices.

Important caveats

Let me be clear that I do not hold the authors responsible of any malice or disdain towards other races, religions or nationalities. In fact, they make important caveats to their arguments.

First, they caution not to label communities as lazy, or other derogatory terms, for placing less emphasis on hard work. Some societies value materialistic gains less than others. There are also structural reasons why people might not choose to work hard, such as an un-meritocratic or corrupt society, or one without a level playing field.

Second, they acknowledge variations in values and attitudes within ethnicities and nationalities. They grant that it is possible for a society's values and attitudes to shift over time (they say this "seldom" happens and "only very slowly"). For instance, trust levels in Germany had to be rebuilt from a low base throughout the 20th century, after World War II.

Third, they acknowledge that values are not the only factors driving economic outcomes and behaviour. For example, China's high national savings rates are not only due to thrift, but also to its one-child policy. This meant lower household expenditures and a greater need to save for one's own retirement, without relying on one's children.

This is not a book with ill intent, nor should it be dismissed out of hand. I found it interesting and insightful in places, with case studies and trivia from diverse countries - Chile, Peru, Botswana, Senegal, Zimbabwe, Sweden, Finland and others. There are simple explanations of topics that can seem inaccessible, like fiscal and monetary policies. Many readers will find it engaging.

That said, the authors should have taken greater care when venturing into some of the most dangerously fertile grounds for prejudice. They would have done well to address the historical ways in which cultural and ethnic stereotypes have been abused, as well as contemporary scholarship and debate on racial economic disparities - of which there has been plenty.

It is very odd that values are never defined. Nor are some important terms like "hard work" - beyond some broad amalgamation of time spent, effort and productivity. Also, it is a stark omission not to trace how Confucian or Protestant ethics have spread, waned, or evolved over the centuries; especially with accelerated globalisation and migration.

Ideas should be given fair consideration, including provocative ones. But some ideas have both strong potential and a track record of being abused, and provoking deep unhappiness and misunderstanding. Assertions should not be lightly made, nor complexities glossed over. Should you read this book, you are advised to mind the gaps.

• "Values at the Core: How Human Values Contribute to the Rise of Nations" retails at S$29.26.