In my column today, I suggest that Mitt Romney, when he addressed supporters in Jerusalem on Monday, should have emphasized the importance of freedom rather than "culture" to explain differences in economic development between similarly situated countries. Last night National Review Online published an essay by Romney (or one of his people) that more or less does that, by subsuming the institutions of a free society under the heading of culture:
One feature of our culture that propels the American economy stands out above all others: freedom. The American economy is fueled by freedom. Free people and their free enterprises are what drive our economic vitality.
The Founding Fathers wrote that we are endowed by our Creator with the freedom to pursue happiness. In the America they designed, we would have economic freedom, just as we would have political and religious freedom. Here, we would not be limited by the circumstance of birth nor directed by the supposedly informed hand of government. We would be free to pursue happiness as we wish. Economic freedom is the only force that has consistently succeeded in lifting people out of poverty. It is the only principle that has ever created sustained prosperity. It is why our economy rose to rival those of the world's leading powers — and has long since surpassed them all.
The linkage between freedom and economic development has a universal applicability. One only has to look at the contrast between East and West Germany, and between North and South Korea for the starkest demonstrations of the meaning of freedom and the absence of freedom.
Israel is also a telling example. Like the United States, the state of Israel has a culture that is based upon individual freedom and the rule of law. It is a democracy that has embraced liberty, both political and economic. This embrace has created conditions that have enabled innovators and entrepreneurs to make the desert bloom. In the face of improbable odds, Israel today is a world leader in fields ranging from medicine to information technology.
I do not see much to disagree with there. But the comparisons between the two Germanies and the two Koreas, like the comparison between Hong KOng and China, are powerful precisely because people in both places share the same ethnic and cultural background, making it clear that political institutions play a crucial role in determining whether a society is poor or prosperous. In the terms used by David Landes, the historian whose work Romney cited on Monday, "culture" includes some of the other factors mentioned in Romney's NRO piece, such as "our work ethic," "our appreciation for education," "our willingness to take risks," and "our commitment to honor and oath," while the political and legal arrangements that make prosperity possible are labeled "institutions." Romney's recent comments about economic development echo his 2011 book No Apology, where he also conflates culture with institutions.
Granted, there is some overlap between these categories; for instance, gender equality, a factor that Landes emphasizes (especially in connection with Muslim countries in the Middle East), has political as well as cultural aspects. Furthermore, culture can shape politics, and vice versa. In his 1998 book The Wealth and Poverty of Nations, Landes cites Russia as an example of the latter:
Seventy-five years of anti-market, antiprofit schooling and insider privilege have planted and frozen anti-entrepreneurial attitudes. Even after the regime has fallen— people fear the uncertainties of the market and yearn for the safe tedium of state employment. Or for equality in poverty.
More generally, living under an oppressive, arbitrary government promotes a kind of learned helplessness that may have lingering economic effects after the dictatorship has fallen.
[Thanks to Threedonia for the tip.]