Mitt, More Gaffes Like This, Please

By Jonah Goldberg
Thursday, August 09, 2012

One of the few things Americans on both sides of the partisan divide can agree on is that this election is shaping up to be vexingly petty. The hunt for gaffes -- some real, many imagined -- has taken over. Romney's recent overseas tour, we are told, produced three: an impolitic, if defensible, statement about Britain's preparations for the Olympics; a statement about the importance of culture in economic development; and when an aide to Romney dressed down a reporter with an inflated sense of entitlement.

Not only is that list pathetic in its own right, in the rush to paint Romney's campaign as hapless, the press and partisans glossed over a philosophical insight worthy of a presidential debate.

In a thoughtful discussion about Israeli prosperity, particularly in comparison to neighboring Palestinians, Romney cited the work of Harvard economic historian David Landes, who had concluded after a lifetime of study that culture was the greatest single factor in explaining a society's successes and failures. "Culture makes all the difference," Romney said, paraphrasing Landes. The Palestinian Authority immediately cried "racism," and their complaints were taken as proof that Romney's diplomatic skills are wanting, as if diplomacy is all about telling countries what they want to hear and offending no one. Does anyone honestly believe that the Palestinians -- half ruled by the murderous terrorists of Hamas, half ruled by the kleptocratic thugs of the Palestinian Authority -- lack cultural impediments to peace and prosperity? Really?

Outside the hothouses of the election season and the Israel-Palestinian conflict, virtually no one disputes the importance of culture. If you've only read the Cliffs Notes to Max Weber's foundational "The Protestant Ethic and the Spirit of Capitalism," you'd know this was an utterly defensible, if not wholly uncontroversial, observation.

Though conservatives are more likely to tout this fact than liberals, the truth is virtually every serious liberal believes it to be true to one extent or another. When you hear liberal politicians celebrate diversity as essential to a 21st century economy, they are making a point about culture. When they lament the legacy of slavery and Jim Crow as a partial cause for the various challenges facing the black community, they are making an argument about culture. When they talk about the "culture of corruption" on Wall Street, they're not talking about advances in computerized trading.

In recent years, economists have focused on "intangible capital" -- the wealth of a nation not captured by statistics about such things as industrial production, oil reserves and real estate values.

In 2006, the World Bank issued a study, "Where is the Wealth of Nations?", which found that "natural capital" (croplands, gold deposits, etc.) and "produced capital" (cars, roads, iPads, etc) amount to a small fraction of a nation's wealth.

Researchers concluded that worldwide, "natural capital accounts for 5 percent of total wealth, produced capital for 18 percent and intangible capital 77 percent."

In 2000, the richest country in the world on a per capita basis was Switzerland. But only 1 percent of its riches were attributable to natural resources, making it physically poorer than many Third World countries. All of Switzerland's expensive watches, chocolates and other forms of produced capital added only 15 percent of its wealth. Meanwhile, intangible capital -- its laws, respect for law, industriousness, skills, customs and expectations -- provide 84 percent of Switzerland's wealth.

Think of it this way. We all know the saying about giving a man a fish vs. teaching a man to fish. Well, who's richer? A lazy man who doesn't know how to fish with 10 flounders in his fridge, or a fishless but industrious man who knows how to fish?

Now, just because it is a simple truth that culture is incredibly important -- vital -- to economic success, doesn't mean it's a simple phenomenon. Cultures are complex things. Palestinian culture -- such as Arab culture generally, according to the U.N. Report on Arab development -- has many problems, but the causes and remedies of those problems are worth debating, without tired whining about "racism." Cultures can produce prosperity, but cultural changes, often driven by government, can erode prosperity -- just look at Greece and Spain today.

What is clear is the fact that cultural factors are inextricably tied to a productive society. For instance, researchers show that low-skilled Mexican laborers become 10 to 20 times more productive simply by crossing the border into the U.S.

This could have been the basis for an informative and revealing debate between the two campaigns. President Obama, who (outside of education) emphasizes policies tied to tangible capital, has long inveighed against the culture of what he considers excessive capitalism (in his memoirs he describes working in the private sector as serving "behind enemy lines"). Romney argues that the American tradition of free enterprise needs to be renewed.

Rather than get bogged down in the tired "gaffe" storyline, wouldn't it have been better to have both candidates explore this idea more?