Gary North's REALITY CHECK
Issue 395 November 12, 2004
THE SUBGROUPS WITH THE MONEY
You have heard this phrase: "He can buy from a [ ], sell
to a [ ], and make a profit.
Fill in the blanks.
I mean it. Fill in the blanks. I'm going to make a point.
Don't peek at the answer. I'm going to make a point.
Are you done yet? Are the blanks filled in?
Here are the most likely choices:
Jew
Scot
Dutchman
Armenian
Why? What do these seemingly disparate groups have in
common, other than money?
Let's begin with the least known group.
THE ARMENIANS
In 1962, I had a Jewish roommate, Roger Hartman. I didn't
know much about Judaism back then. Roger had grown up in the
area around Fresno, California -- not exactly a cosmopolitan
region. His family had later moved to San Francisco, as I
recall. He told me why: "When the Armenians moved in, the Jews
moved out." I don't know if he really meant this specifically
about his own family, but the phrase was obviously common among
Jews in the area. Armenians are highly competitive in commerce.
They are famous as rug merchants, but their skills go way beyond
importing rugs.
I knew less about Armenians in 1962 than I do now. I'm now
married to one. But I never did forget Roger's comment. There
was, and is, a large Armenian population in the Fresno area. The
most famous Armenian-American author, William Saroyan, was born
in Fresno in 1908. My father-in-law grew up in Kingsburg, not
far from Fresno.
Side note: Armenians are easily identified by their names --
more easily than any other national group. Their names usually
end in -ian or -yan. My father-in-law was an exception:
Rushdoony, not Rushdoonian. He told me why. His family had
roots back to royalty in Armenia. When the Turks conquered the
country nine centuries ago, they forced a name change on
everyone, so that they could be easily identified. They added
the -ian sound. My father-in-law's family escaped the
restriction because of the family's royal lineage. Anyway,
that's what he told me. As someone who read a book a day for 60
years, he knew about such things.
The Armenians are the entrepreneurs of Western Asia. This
has been true for centuries. I found it interesting that in the
old "Upstairs, Downstairs" series, when the script writers wanted
to portray a rich, aggressive, unscrupulous, social-climbing
businessman, they chose an Armenian. It may have been too
politically incorrect to select a Jew, but the decision was
nevertheless believable. The character was looked down on by the
upper crust. They referred to him as a Jew, he said. This upset
him; he was proud of his Armenian heritage.
In the Soviet Union, Armenians were called the Christian
Jews. There was considerable hostility and discrimination in
Moscow against members of both groups. But, like Jews, Armenians
climbed their way to the top of the Communist Party's hierarchy.
Anastas Mikoyan was the most prominent of them. He was the
Commissar of Food Supply and then Minister of Trade under Stalin.
He was elected president in 1964, a ceremonial post. He
survived. He never missed a trick. He introduced Eskimo Pie
into the USSR -- one of the more productive things ever done by a
senior Soviet bureaucrat. His brother Artem designed the MiG jet
fighters. Under Gorbachev, Abel Aganbegyan served as senior
economic advisor. Yet Armenia was the smallest of the Soviet
republics, both in population and geography.
There is another shared feature with Jews. In 1915, the
Turks committed the first genocide of the twentieth century.
They killed about a million Armenians. This policy was
systematic. Most people have never heard of this event. (On the
persecution, see the great but little-known 1963 movie by Elia
Kazan, "America, America.")
Because World War I was going on, the Armenian genocide
received little publicity. It was concealed because the Germans
and the Turks were allies. Word did not get out, except for
survivors' accounts. War news dominated the Western press.
Also, Turkey was crucial internationally because Turks controlled
the Dardanelles, the narrow access to the Black Sea. The Turks
could seal off access from the Russian Navy's only warm water
port. British foreign policy had long been favorable to the
Turks because of this geography: the balance of power. So, there
was no outcry from the West after the War, despite Turkey's
former alliance with the Germans. The lesson was not lost on
Hitler, who wrote:
I have issued the command -- and I'll have anybody who
utters but one word of criticism executed by a firing
squad -- that our war aim does not consist in reaching
certain lines, but in the physical destruction of the
enemy. Accordingly, I have placed my death-head
formations in readiness -- for the present only in the
East -- with orders to them to send to death
mercilessly and without compassion, men, women, and
children of Polish derivation and language. Only thus
shall we gain the living space (Lebensraum) which we
need. Who, after all, speaks today of the annihilation
of the Armenians? (http://snipurl.com/ajfb)
The famous British historian Arnold Toynbee did much of the
research on the Armenian genocide for Lord Bryce's 1916
collection of survivors' accounts. My wife's grandfather, who
had a photographic memory, has two articles in the book. It was
an official publication of the British government, but it had no
political effect.
THE DUTCH
When we think of the Dutch, we think of "Dutch Treat." This
term applies to dates in which the woman pays her share of the
evening's expenses. Whether the practice originated in Dutch-
American circles, I do not know, but the phrase has stuck.
The Dutch are frugal. They are legendary for this
frugality. They are good farmers, especially dairymen. They are
not equally famous in commerce, although there are highly
successful Dutch-affiliated companies. The Herman Miller Company
is dominant in business chair manufacture. The Dutch are
regional: Grand Rapids, Michigan, is an urban enclave.
In the seventeenth century, the Dutch rivaled the British
in world trade, yet their country was tiny, dug out of the sea by
means of dikes and windmills. They had money, and they had great
artists. They were also ruthless colonialists in Indonesia.
They took no guff. They fought a naval war with Cromwell's
England: two Calvinist powers going at each other with fleets.
The war continued under Charles II. New Amsterdam became New
York City in 1664.
It is one of those historical anomalies that they arrived,
seemingly out of nowhere, in the early seventeenth century. They
were masters of commerce. Their central bank actually preceded
the Bank of England (1694). They had a well organized stock
exchange. They also had help from Jews, who had been kicked out
of Spain by Queen Isabella in 1492, and had fled to Antwerp and
Amsterdam, where there was greater religious liberty for them.
The Dutch reputation for frugality as consumers is an
extension of their former reputation as hard-bargaining traders.
The same legendary frugality is associated with the Scots.
THE SCOTS
In the eighteenth century, the Scots replaced the Dutch as
the world's traders. While the English gained this reputation,
the Scots had the edge. Union with England came in 1707. From
then on, the Scots took advantage of the British colonial empire.
Again, like the Dutch a century earlier, they came out of
nowhere. In 1650, Scotland was poor, a backwater of Europe. By
1750, the Scots dominated trade and philosophy. David Hume, Lord
Kames, Adam Smith were Scots. By 1850, Scots around the world
dominated invention and entrepreneurship. From James Watt to
Andrew Carnegie, the Scots pioneered manufacturing and mass
production. Arthur Herman's book, "How the Scots Invented the
Modern World" (2001), tells this remarkable story.
By 1950, the Scots were still influential as individuals,
but not as a self-conscious, well-connected group. Ronald Reagan
was one of them, and he attended a traditional Presbyterian
Church, as a good lowland Scotsman should. But we do not think
of Reagan as a Scot. While Sean Connery represents them, they
are not organized sufficiently to be represented.
THE JEWS
Like the Dutch in 1600 and the Scots in 1700, Jews in 1900
came out of nowhere -- or its cultural equivalents, Russia and
Eastern Europe -- to dominate the movie industry and radio in the
first half of the century, and the economy in the second half.
The Rothschilds made their fortune under Napoleon, and other
banking houses of the late nineteenth century were Jewish-owned.
But the Morgan network was dominant in America in 1890, not
Jewish investment banks. The Rockefellers became competitors by
1910. Kuhn Loeb was not in this league. The only Jewish-owned
commercial bank of any consequence in New York City was the Bank
of the United States, which went bankrupt in the Great Depression
when the gentile bankers who ran the Federal Reserve System
refused to bail it out. The other big banks were protected.
Jews are not legendary as tight-fisted consumers. They are
not Scots or Dutchmen. Jewish extravagance has in fact elicited
envy in Europe, especially before and after World War I. Two
phrases tell the story:
"He Jewed me down."
"A Jewish brother-in-law deal."
Both phrases reflect retailing. "He Jewed me down" is the
complaint of a gentile wholesaler trying to sell to a Jewish
retailer. "A Jewish brother-in-law deal" reflects the consumer's
quest for a discount. Thus, we return to the original phrase: "A
Jew can buy from a [ ] and sell to a [ ], and make a
profit."
If someone said, "He Jewed me up," it would sound strange.
That would be the complaint of a consumer against a retailer who
charged too much. But Jews are not famous for charging too much.
They are famous for the Jewish brother-in-law deal.
Here, we see the entrepreneurial flair at work: "Buy low,
sell higher, but lower than the competition." Recently, I bought
a new Sony digital voice recorder from Abe's of Maine. The
shipping box had a New York City return address. Now, Abe may be
a clever gentile cashing in on a group reputation, but when it's
Abe's of Maine, the public gets the idea that wherever you go,
you can get a Jewish brother-in-law deal. Except in Fresno.
Jews are prominent in academia, law, and medicine. This has
long been the case in medicine. Jews for centuries served as
physicians for Christian and Muslim rulers. "My son, the doctor"
was basic to Jewish family advancement and even survival.
Similarly, when the Czar opened up residence in Moscow to members
of the state's symphony orchestra, Jewish children all over
Russia were seen carrying violins. A violin was the ticket out
of the ghetto.
Jews are famous for comedy. This is an odd fact about
modern Jews. Humor was frowned on in Orthodox Jewish circles for
many centuries. ("Orthodox" was a pejorative term applied to
Talmudic Jews by liberal and secular Jews in the early nineteenth
century. A Talmudic rabbi and scholar, Samson R. Hirsch, decided
to accept the term and run with it in the mid-nineteenth
century.) Yet by the days of vaudeville, Jews were prominent
comedians. The most famous Russian comic in America, Yakov
Smirnoff, is a Jew. But he did not know he was Jewish until his
parents told him, when he was 13, in 1964. They were afraid of
persecution. ("What a rotten country!") They emigrated in 1977.
Somehow, in less than half a century, Jews became professional
comics. I have never seen a book on how and why this happened.
It was as if Jews have a humor gene that had to be suppressed by
the rabbis, and when the rabbis' influence waned, Jews started
making people laugh.
By the way, in the collection called The World's Shortest
Books, "Famous Jewish Farmers" has to be included, right next to
"Famous Gentile Violinists."
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WHAT'S THE CONNECTION?
Half a century earlier in each case, it would have been
impossible to predict the group's imminent dominance.
All four groups have this in common: a strong sense of the
covenant. The covenant is an Old Testament idea: Abraham's
covenant with God, marked by circumcision. Membership in the
religious community is basic to the survival of the group.
Family and cultural ties are common to most groups,
especially prior to the Industrial Revolution. But the covenant
ideal meant that God had singled out a group to represent Him,
and that He promises to make it prosper if members obey Him.
Leviticus 26 and Deuteronomy 28 are the central passages.
The lowland Scots after 1550 were Presbyterian Calvinists if
they were anything. This meant the doctrine of predestination
and also a vision of world expansion, a theology called
postmillennialism. But it took 150 years for this outlook to
produce the Scottish transformation. Why so long? I have no
idea. Herman's book begins in 1697, which is too late to answer
the question.
The Dutch did not call themselves Presbyterians, but the
church structure and the theologies are so similar that it takes
a specialist to distinguish them. In the seventeenth century,
there were more Dutch postmillennialists than there are today
(i.e., more than none).
Both theologies rested on the idea of God's covenant, which
encompasses family, church, and state. Both theologies produced
an outlook of "them vs. us, and we can beat them."
One of the best short books on business leadership is Max
DuPree's "Leadership is an Art" (1989). DuPree ran the Herman
Miller Company for many years. His father founded it. DuPree
actually uses the word "covenant" to describe the business's key
factor. He does not mean contract. While I think the use of
"covenant" is misused here, because covenants in the Bible relate
to family, church, and state, his main point is correct:
contracts are not enough.
Covenantal relationships enable participation to be
practiced and inclusive groups to be formed. The
differences between covenants and contracts appear in
detail in "Intimacy" (p. 25).
The Armenians are not covenant theologians. Their tradition
is that of Eastern Orthodoxy -- more mystical than judicial.
Armenia was the first nation to adopt Christianity, in either 301
or 303. They were a warrior people for a long time, standing in
the gap in 451 A.D. to repel the Persians. The battle of Avarier
is not as famous as an anti-Persian battle in the way that
Thermopylae is, but it was important. They were invaded again
and again, and they lived for 900 years under the Turks, except
for the thirteenth century under the Mongols. (My father-in-law
told me that his father told him that in the margin of the
community's heirloom Bible, there was a notation: "Today, the
Mongols passed through.") Persecution held them together. They
have had a sense of religious solidarity, and this persisted even
after they arrived in Protestant-secular America.
Their economic success is more difficult to explain than the
success of the other three groups. This may be for lack of
interest on the part of historians and economists: fewer books on
them.
The Jews were traders for centuries. Religious ties made
possible a network of international communications and
transactions. They also had their own courts and legal
precedents, called "responsa." Owning land was difficult except
in separate communities. Capital in diamonds or gold was
portable, unlike land.
The Dutch had to learn other European languages in order to
trade. They also became skilled sailors. The country is tiny.
It has few natural resources. If they wanted to prosper, they
had to trade. They did. But they had a sense of destiny about
them, which led them to fight the Spanish in the late sixteenth
century, gaining independence in the early seventeenth. In 1689,
after their defeat by the British Navy, one of their rulers,
William III, became the king of England. "If you can't beat 'em,
join 'em." His wife inherited England for him. Maybe this was
the original Dutch Treat.
There is another factor: separation. This means cultural
separation, but it can also mean confessional. In America, the
Dutch still set up parent-run private schools that are formally
Calvinistic. When I lived in the border town of Lynden,
Washington, in 1976, there were more children enrolled in the
Christian schools than in the public schools. The Dutch pay for
their cultural and confessional separation. Theology was
sufficiently well defined that, at the border on Sunday morning,
you would see Dutch-American Calvinists heading to Canada to
worship, and Dutch-Canadian Calvinists heading for the U.S. They
were polite, hard-working, well-fed people on both sides of the
border. And on both sides, we "gentiles" labeled their
mentality: "If you aren't Dutch, you aren't much." On neither
side was it wise to mow your lawn on Sunday. On the American
side, only one gas station was open for business, on a rotating
basis with the competition, to serve the needs of gentile
tourists.
CONFIDENCE ABOUT THE FUTURE
Members of all four groups have seen themselves as hand-
picked by God to dominate trade. They have regarded themselves
as possessing an advantage over everyone else, either in brains,
trade, or the ability to prosper under the radar. This outlook
came earliest to Jews, then the Armenians, then the Dutch, then
the Scots. Their sense of group solidarity was not unique, but
their sense of participation in a covenant that promises economic
success has been unique.
The Dutch and the Scots have lost their sense of inevitable
covenantal victory, but not their sense of frugality. They have
transferred to thrift what they once attributed to God's
covenant. Adam Smith wrote "Wealth of Nations" (1776) as a
manifesto of this theological shift.
Innovation, uncertainty, cost-cutting, new markets, profit
and loss: here is the program of personal success for the
entrepreneur. When you belong to a group that will help you when
you fall, which will provide start-up capital to get you going,
you have an advantage. The Koreans have this outlook and group
support in the United States. The Koreans, more than any Asian
immigrant group, are Christians: specifically, Presbyterians. It
is interesting that the dairy farming Dutch in Southern
California have sold their land to developers, who in turn sold
new homes to the Korean children of the family-run, drive-through
dairy stores of 1960. The Dutch then moved to Lynden. That
relocation process has been going on for three decades.
Without confidence in the future, the entrepreneur cannot
function. He becomes at best an investor in bonds or other
fixed-income ventures. He accepts statistically insurable risk
in place of unpredictable uncertainty. He becomes frugal,
advancing himself by means of the steady excess of income over
outflow. He does not change society through innovation.
CONCLUSION
If you can buy from a [ ], sell to a [ ], and make
a profit, your future is secure. Most people can't.
As the free market erodes family ties, group solidarity, and
persecution, members of many groups can get in on the cornucopia.
It is clear that the Japanese have a similar mindset as the four
groups, but without the doctrine of the covenant. The Chinese
are now adopting it. The freedom to compete breaks down the
barriers to entry. But, as the free market moves westward, those
who belong to subgroups that have the same outlook as the Big
Four enjoy an initial advantage. Group solidarity fades in the
face of open competition, but this takes time. When an innovator
has confidence in the future, which includes confidence in the
safety net of his family or his confessional group, he has an
advantage: less fear of failure.
Faith is then transferred to the free market itself. In
Europe and America, faith in the twentieth century was
transferred from the free market to the welfare state. The
reverse process is true in Asia. This is why Asia now has an
advantage over the West: social and racial solidarity coupled
with increasing faith in the free market and declining faith in
the state, whether Communist or Fabian socialist.
In the interim period, in between the coming of the free
market and the erosion of social and racial solidarity,
confidence is on the side of the family-based small enterprise.
Asia is booming because of this. China seems to have the unique
combination. We shall see what happens when the boom turns into
recession after China's central bank stops creating fiat money
like a drunken (non-Dutch) sailor.
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