Booknotes

AMY CHUA, AUTHOR, "WORLD ON FIRE": Well, the book is about -- most Americans tend to assume that markets and democracy naturally go together. And the thesis of the book is that in countries with what I call a market-dominant minority, markets and democracy are not mutually reinforcing because markets and democracy basically benefit different ethnic groups.

So take Indonesia as an illustration. Free market policies in the 1980s and 1990s led to a situation in which the country`s tiny, 3 percent Chinese minority controlled an astounding 70 percent of the country`s private economy. The introduction of democracy in 1998 produced a violent backlash. Five thousand homes and shops of ethnic Chinese were looted and burned. Two thousand people died. A hundred and fifty Chinese women were raped. The wealthiest Chinese left the country, along with some $40 billion to $100 billion of ethnic Chinese-controlled capital, plunging the country into a crisis from which it has not recovered.

So in countries with a market-dominant minority -- and Indonesia is just one of many examples -- markets and democracy benefit not just different people or different classes but actually different ethnic groups. Markets make the resented minority richer and richer, while democracy increases the political power of the poor, frustrated, indigenous majority. And the result is almost invariably tremendous instability and very often violence.

CHUA: Well, I tend to put "indigenous" in quotes because it`s a perception. I mean, there is, for example, the -- indigenous Indonesians are the pribumi majority, who felt that they were there first and that the ethnic Chinese are outsiders or invaders. Now, I put "indigenous" in quotes because many of the Indonesian Chinese have lived there for four generations. The same with Zimbabwe. I mean, the indigenous black majority is indigenous in a real sense, but many of the white Zimbabweans have lived there for, again, four generations.

CHUA: Yes.

CHUA: Yes.

CHUA: Well, actually, everybody from west Africa is familiar with this, so it`s interesting that many Americans, including myself, was not aware of this. The west African countries -- for example, Nigeria -- there are many local indigenous, disproportionately successful African ethnic groups, also. For example, the Ibu in Nigeria. But most saliently, most -- almost in virtually every west African country, there is a very small population of Lebanese, ethnic Lebanese, again, who came over sometimes two or three generations ago, and they are essentially the driving force and the link to global capitalism.

They -- you know, foreign investors do all the deals with them, and they are extremely disproportionately wealthy. They typically -- in Sierra Leone, that I discuss at great length, until the rebels took over, they basically -- the Lebanese minority essentially controlled the diamond industry, which was -- and that`s often true. Market-dominant minorities tend to control the most -- the country`s most valuable natural resources, which is another -- the crown jewels, which is another reason that they -- their dominance provokes such hatred and resentment.

CHUA: Yes.

CHUA: Well, in general, I ask the question -- I talk about countries outside the United States, and one thing I say is that the United States does not have a market-dominant minority at the national level. Whatever one occasionally hears about Koreans or Jews, the United States economy is not controlled by any ethnic minority. And I actually document that. If you look at the 10 wealthiest Americans, Bill Gates and the other nine...

CHUA: Yes, the family -- none of them belong to any identifiable ethnic group. However, I then get more specific, and I say that, actually, if you look at particular regions or areas in the United States, you do see echoes of the same phenomenon. And yes, in Los Angeles and many of our inner cities, Korean-Americans are essentially a market-dominant ethnic minority vis-a-vis the much poorer and much more populous African-American majorities around them. And it`s actually very similar because the -- there`s a sense of them being newcomers and outsiders that have come in to take away something that`s not rightfully theirs because they are relative newcomers. And the Los Angeles riots that I discuss and the more recent instance in Brooklyn are very familiar. They follow a very similar pattern where the poorer majorities of these neighborhoods are actually kind of whipped up and stirred into anger by demagogues, I mean, often politicians who play on ethnic hatred for their own -- for their own advantage.

CHUA: My publisher!

(LAUGHTER)

CHUA: Not my idea. Not my idea. As an academic, I don`t think I would have such a stark title. My own title -- I can`t even remember what it was, but it was long and boring.

CHUA: I think it`s because my work originally started off as, you know, academic articles. Even my mother couldn`t understand them. And I think they probably wanted to make people more aware that it`s not -- that I`m not writing about distant phenomena but about events that really affect them, including -- I write about September 11 also and the -- and the implications of all this for America and...

CHUA: Well, that`s something I`m actually proud of. I think that -- I think that a lot of people are very bored of the debate about globalization. It`s sort of going nowhere, and people are tired of it. And I don`t even think it`s make sense to talk about the right and the left when it comes to globalization. So I think that both globalization`s critics and globalization`s enthusiasts overlook -- both make mistakes. They both overlook the ethnic dimensions of free market democracy. So I feel that my book is non-partisan, or at least along traditional lines, and you know, neither left nor right, in any meaningful way.

And it`s about a phenomenon -- the idea of a market-dominant ethnic minority is -- for not entirely bad reasons, I think it`s one that is almost taboo in U.S. society -- you know, the idea of writing about an ethnic minority who would tend, under free market conditions, to dominate economically the indigenous majority around them. So I think it`s a -- it`s a topic that`s not been addressed by either side. So you know, it`s not political that way.

By the way, I don`t -- I don`t think it should be taboo because the idea of a market-dominant minority is not to be equated with inherent entrepreneurialism. I mean, I write about market-dominant minorities who owe their market dominance to colonialism or apartheid, like the whites in South Africa -- has -- there, the fact that they are, you know, a very small portion of the population, 14 percent, and have historically controlled all of the best land and all of the major conglomerates, you know, owes principally to the fact that they didn`t let the majority vote or live in humane conditions for over a century.

CHUA: I am a professor at the Yale Law School.

CHUA: I -- yes, actually. I went to law school. I passed the bar, and I practiced for four years on Wall Street, at a major international law firm.

CHUA: I am -- well, I`m ethnic Chinese. I was born in Champagne, Illinois. My parents were both born in China, but they left China with their families for the Philippines when they were young children. And most of my relatives are still in the Philippines.

CHUA: For economic reasons, around 1936, `37. They were from a poor province, Bafuquien (ph) -- Fujian province. It`s no longer so poor. But many people from that province at that time left. They took a boat, and they headed straight and either -- and many of them went to the Philippines.

CHUA: Well, it was -- my parents actually eloped to MIT in 1961. I was born in 1962.

CHUA: My father`s also an academic. He -- they came over for advanced degrees at MIT, and then my father went to complete his Ph.D. at the University of Illinois, and my parents now live in Berkeley, California.

CHUA: My father is a -- well, they`re probably watching this show. They are -- my parents -- my father is a professor at Berkeley. He teaches chaos theory and travels a lot.

CHUA: Yes.

CHUA: It`s -- well, he`s an electrical engineer, but he works a lot in computers and mathematics and -- I probably shouldn`t try to explain what chaos theory is!

(LAUGHTER)

CHUA: I lived for just a few years. Then I spent eight years in Indiana, where my father taught at Perdue. So my three sisters and I lived in Indiana for eight years, and then we moved to Berkeley, California.

CHUA: Eight years. Or seven years.

CHUA: And then my father received an offer to go to Berkeley, so we then moved to Berkeley, California, where I spent another eight years.

CHUA: No. That`s where my parents wanted me to go, but I went to Harvard.

CHUA: Harvard.

CHUA: Well, which part of it, going -- leaving the family for...

CHUA: I think...

CHUA: Well, we always worked hard. We always worked hard.

CHUA: Three younger sisters. I think -- in some ways, I think my immediate family my immediate family is probably a fairly typical immigrant story. My parents came over -- my father was from a very wealthy family, but he left all that. And my mother was not. She was from a poor intellectual family. So when they came over to the United States, they were penniless. They really had no money, no -- no heat in Boston. So it was just very natural. We all -- you know, we had to work hard, and we were all good students.

CHUA: One is a lawyer in D.C. Another is an M.D./Ph.D., or actually, a post-doc at Harvard. She`s a doctor and -- and a scientist. And my youngest sister lives with my parents, and she is 10 years younger than I am. She has Down syndrome, and she`s the family favorite.

CHUA: I -- I actually never imagined that it would be this kind of book. I started off just as an academic, writing academic law review articles about the relationship between market reforms, democratic reforms and ethnic conflict. So I produced three law review articles, and then I thought that I would perhaps put it together. And many people suggested that I do so, so I put together a proposal originally for Oxford University Press. And you know, it had -- the proposal was, you know, 3,000 pages long and had 2,000 footnotes!

And through a series of coincidences -- a friend suggested that perhaps I should have an agent look at it. And -- and I have a great agent. And they suggested that -- well, actually, it was interesting. I -- they -- my agent kept asking me, Is there anything personal in this? And this is only a year-and-a-half ago, before I started writing the book. And I -- answering honestly at the time, I said no. I -- no, there is nothing personal in this, because I think, for me, the whole academic project has been precisely to depersonalize everything. I`m writing about complicated and controversial subjects, so for every fact, I drop a footnote and substantiate it with empirical evidence. And the last thing I wanted is for it to be subjective and personal.

But as I`ve thought about it, the book has obviously changed -- I -- as probably for every author. It`s -- of course, it`s about what I know and my own background, in a sense.

CHUA: Yes.

CHUA: In 1994 -- this is -- I had just started as an academic at -- as a professor at Duke, and I had started to write about these issues already, but I received a phone call from my mother. I was at Duke and she was in California. And she told me that my aunt, my father`s twin sister, Leona -- his name is Leon -- had been murdered in the Philippines. She was killed by her chauffeur. And my aunt and my whole family in the Philippines are part of the very, very economically dominant and entrepreneurial 1 percent Chinese minority in the Philippines. And her chauffeur was part of the largely impoverished, much more populous ethnic Filipino majority. And so my mother told me about that.

CHUA: She lived in -- by herself in a beautiful home in Manila. Many of my relatives still live in Manila.

CHUA: Well, there was actually no dispute. Two maids immediately confessed that they had actually been accomplices. I mean, they -- it was premeditated, and a few minutes before the murder, they testified that he was sharpening the knife. And after the murder, he reported to them that their employer was dead. And the police were notified and sort of the usual things happened, but the murderer was never apprehended, and both of the maids were released. And part of this has to do with the fact that, first of all, kidnapping of ethnic Chinese in the Philippines is extremely common -- extremely common. And very rarely are the -- the suspects apprehended. And part of this is I think because of the intense resentment against the ethnic Chinese and the fact that the police and the security forces are largely -- well, are all ethnic Filipino, and they`re not that motivated. In some ways, I think there`s a lot of sympathy not necessarily for the murderer but for the circumstances that would lead people to do such things.

CHUA: Yes.

CHUA: No.

CHUA: I have the police report.

CHUA: The -- well, it was interesting. The chauffeur apparently took some -- some jewels, some money, but very stark for me -- and this is probably why I open the book with this. I looked at the police report. I was very frustrated both with my family members in the Philippines and the police that nothing was happening. And I asked my uncle, you know, were there any developments in the murder case, and -- and the answer was no. This is -- it`s been closed. This is -- when I asked why, he said this is -- this is the Philippines. It`s not America.

So I actually got copies of the police report. And interestingly, under "motive," there was essentially just one word, and it was "revenge," which was striking for me because it could have been robbery, it could have been something else, but...

CHUA: ... it was really just -- well, that`s an interesting question. I think revenge for -- my own view is it`s a combination -- revenge for feelings of humiliation and powerlessness. My -- many of the Chinese Filipino families have many servants, and it`s a very lopsided situation. The businesses are virtually all dominated by ethnic Chinese, along with a very small sort of Spanish aristocratic class. All of the peasants in the Philippines are Filipino. All of -- all of the maids and the servants and the chauffeurs are Filipino. And when foreign investors come to do investment deals, they deal with the Chinese.

So I think it`s -- well, revenge is a theme of the book, I think. It`s -- it`s an act of revenge rooted in tremendous feelings of anger and envy and grievance and humiliation.

CHUA: Yes. That`s right.

CHUA: Yes.

CHUA: Well, this is a tricky question that I -- that is not the main focus of the book, but many people ask me this. First -- first of all, they`re -- it`s very complex, and I definitely do not think it is a genetic reason or necessarily even a cultural reason. Groups can be market-dominant in one context and not in another. For example, the Chinese in China were market-dormant for, you know, many generations under communist China.

As to why the Chinese are so -- the Chinese minorities of all Southeast Asia -- I mean, even right now, Burma, Malaysia, Thailand -- I think part of it has to do with the immigrant origins, you know, that instilled a sense of hard work. Part of it has to do with family and I guess cultural considerations. But in addition -- one thing I try to bring out in the book -- a lot of it is -- part of it is also favoritism. So it`s kind of circular because you have this entrepreneurial group that starts off and has disproportionate entrepreneurial skills, and often -- in the case of Ferdinand Marcos -- an indigenous leader will actually go into cahoots with this market-dominant minority and then engage in a symbiotic relationship, where, you know, I`ll protect you, I`ll give you these government franchises and licenses, you make a lot of money and you kick it back to me.

So I guess the answer is that part of it is through -- part of the reason for the extraordinary market dominance of the children is entrepreneurialism, hard work. And I don`t know the reasons for that. But at the same time, in some cases, also it`s the legacy of colonialism and crony capitalism.

CHUA: That`s correct.

CHUA: Malaysia is much smaller than Indonesia. I can`t remember. I think it`s about...

CHUA: That`s right. That`s right.

CHUA: The -- one important factor is religion. The Malays -- Malay majority in Malaysia and the Indonesian majority in Indonesia are principally Muslim and the Chinese are not. And so one professor friend of mind from Singapore was just joking, but he said it`s the pork factor, that you know, Muslims don`t eat pork and Chinese eat pork all the time, and therefore it`s impossible to get along. And I -- that`s -- he was just being facetious, but I think that religion certainly has played a role.

And an interesting counter-example is Thailand, where -- this is the Southeast Asian country where there has been the most assimilation and even intermarriage. And I think that most agree that one of the factors is the fact that the Thai are Buddhist and not Muslim, and this has made assimilation between the ethnic Thais and the Chinese easier.

CHUA: Yes.

CHUA: I -- yes, I saw my aunt on many occasions in the Philippines, and I don`t know if I met this chauffeur. I think not, but I -- I`ve often wondered that. I`ve met many chauffeurs. I`ve often -- I`ve often wondered if I had.

CHUA: Yes.

CHUA: Yes.

CHUA: Well, I -- I start off with an anecdote. I was -- I was actually visiting at another university. And I have a colleague or a friend who was writing about the Russian privatization process. He and some co-authors had been very involved, actually important advisers to the government, and he was finishing up an article describing the fiasco of the Russian privatization process, describing how the lack of kind of careful planning and kind of laws against, you know, anti-competitive behavior, laws against insider trading, how this had led to the looting and chaos that ensued in Russia.

But something about his article struck me, so I went and asked my friend. I said, Is it possible that these seven oligarchs and many of the principal players in the privatization process -- is it possible that they were Jewish? And his reaction was to immediately say, No, no. I don`t think so. And I then said, But it`s interesting. If you look at their names -- and he snapped back, You can`t tell anything from names. And I was taken aback, and I felt bad. But then, actually, just a few months later, two -- well, one book came out, Chrystia Freeland`s book, "The Sale of the Century," in which she documented through first-hand interviews the profiles of the seven oligarchs. And in fact, it turns out that six of the seven people most commonly called the oligarchs, who had came to control, you know, most of Russia`s natural resources during the `90s, were, in fact, Jewish.

CHUA: Well, this is the term that they use in Russia for this small group of people who controlled most of the natural resources, and then through their economic power, also exerted enormous political influence -- for example, to use one of their words, guaranteeing Yeltsin`s reelection by -- they also controlled the media, and so they poured huge amounts of money into Yeltsin`s campaign and were rewarded for that.

CHUA: Yes.

CHUA: Yes.

CHUA: Yes.

CHUA: Well, this is tricky. I mean, some of the oligarchs now -- you know, they actually -- their role models are the Carnegies. They say that, you know, We used to be robber barons, but now it`s time for us to -- a few of them have actually turned to philanthropy, and I think that`s a great thing. It`s a complicated question, whether -- what the state of their democratic institutions are right now. Wealth is still very disproportionately concentrated in the hands of a relatively small number, and...

CHUA: Yes, I -- at least sort of in the late `90s, I would say that these six or seven oligarchs controlled I think 50 to 60 percent of the natural resource wealth. I think I`m getting those numbers right. And if you look at "Fortune" or "Forbes," the list of the wealthiest people in the world, you`ll see that, you know, that includes three or four of these Jewish oligarchs. And -- but as to the state of democracy, I think it`s -- it`s not -- you know, there are different analyses about what Putin is doing right now.

CHUA: There was tremendous anti-Semitism, just this -- free speech and kind of instant democratization led to lots of things, lots of positive things, but they also led to just a burst of demagogic behavior and, you know, the Communist Party leaders explicitly spewing anti-Semitism, campaigning on anti-Semitic platforms. There`s a new party that has just come into existence that is explicitly organized around taking back the wealth from the -- the, you know, greedy Jewish oligarchs. So I think that`s one very negative side of the transition.

CHUA: Yes, two daughters. Well, the background to this is I was -- I taught a law and development seminar a few years ago -- actually, three or four years ago. And I had an excellent student from Bolivia. I did not know at the time that he was from the elite classes. It makes perfect sense now, if you think about it.

CHUA: His -- well, I call him Augusto Delgado (ph) in my book.

CHUA: No. No. He`s -- he`s related to many of the presidents, actually, and I gave him that option. But he raised his hand in my seminar and said -- he basically -- he was a fantastic student, and I loved him, but he basically challenged me.

He said, You know, Professor Chua, my country is a direct counter-example to your thesis. All these bad things don`t happen when you have markets and democracy and a market-dominant minority. In my country, we -- it`s a very similar situation to the one you describe in Zimbabwe or Indonesia. We have a very small light-skinned minority. About 3 percent of the population control virtually everything. They control the economy, politics, culture, all the natural resources and are the foreign investors` partners. And then we have 65 percent of the population, a majority, are impoverished, in many cases illiterate Imara and Quechua Amerindians.

But what he said was, In my country, you would never have an ethnically based populist movement. You would never have an ethno-nationalist movement, where people -- politicians were campaigning on anti-white campaigns. And I asked him why, and he said, Because ethnicity has no mobilizing power in my country. It has to do -- he was very smart and very self-conscious. He said, It has to do with a bad history of racism, but most Indians or Amerindians in my country would rather identify themselves as peasants than Indios because that`s a derogatory term.

So the story is that two years later -- this is just actually in 2001 -- he e-mailed me from La Paz, where he was a very successful lawyer and political commentator, and he wrote to essentially take back his words. And he said, you know, This is really the time to visit. It`s amazing. Things are -- it`s globalization, and it`s having extraordinary effects on my country. And for the first time in recent history, an Imara leader is actually generating support among the indigenous populations on an explicitly racist or ethnically Indian-based identity platform, so saying whites should get out, whites should leave the country, the land belongs to the Imaras and the Quechuas.

So -- and it was very stark. And it was also, I think, a direct example of the collision between free market policies that benefited the people like my student and that well-educated, cosmopolitan elite group, and then globalization and democratization that not only empowers the majority but also, you know, things spread. There had been an Indian movement in Ecuador, and through cell phones and the radio and the television, these kinds of ethnic anger can spread, too, along with capitalism and democracy. So I visited La Paz shortly after that e-mail just to see, just to kind of see for myself.

CHUA: At the time - well now they`re ten and six. At the time...

CHUA: Sophia and Louisa or Lulu.

CHUA: They really hated it. They - well La Paz was fine. La Paz was fine. It was beautiful.

CHUA: Yes. As soon as we got there the warnings were all right. Everybody got headaches. The altitude, it`s stunningly beautiful because the city just rises out of a crater. I`ve never seen anything like it.

But it is very, very high, a lot of radiation, and we all felt enervated, no energy and they felt the same way. Everybody had headaches.

But then after La Paz where we were treated beautifully, we met these exquisitely well educated and thoughtful members of the universities. I gave some lectures and that was very enjoyable but then we set out for the rest of Bolivia on our own and underestimated, I think it`s fair to say the level of underdevelopment in that country, and we were stranded for days in places with no heat and no sewage.

And, at one point we had to drive through a river to get to the airport, quite a raging river so they weren`t - they - it was interesting for them to see.

CHUA: He`s also a professor at Yale.

CHUA: Yes.

CHUA: I teach international business transactions and a class called contracts and then a seminar that changes. Currently it`s called Globalization and Law. Sometimes it`s called Markets, Democracy, and Ethnic Conflict.

It`s where I really get to know and learn from students who are from many different countries and many of my stories and much of my information actually comes from students from different countries.

CHUA: May Lan (ph) is a - well it`s not her real name but it`s a friend of mine who is from mainland China, grew up and just left mainland China to marry a native New Yorker, and I - she and I were at a Manhattan dinner party and shortly after September 11th, and this was - well her presence created a huge argument that was very striking for me, so I report it in one of my chapters.

But she asserted with great confidence that 99 percent of the people in China approved of and were happy about the September 11th attacks and this prompted a furious outcry among the American guests. I mean one guest, I guess, properly asked 99 percent? I mean what kind of pollster produced that statistic? That seems not quite right.

And her response, was you know let`s not get hung up on numbers. Face it, Americans are hated all over the world and deal with it, and then this conversation deteriorated.

CHUA: Yes.

CHUA: Well, market dominant minorities - first of all, in the book, most of the book the market dominant minorities I write about are within individual nations. So, you know, the whites in Zimbabwe or Namibia or whites in Brazil or the Croatians in the former Yugoslavia, now the impact of them it`s interesting. Again, there`s a lot of subtleties there.

Market dominant minorities are often the principal engines of economic growth in a country. This is certainly true of the Chinese in Southeast Asia. So, their economic impact in some ways has been tremendous. They`ve generated tremendous economic growth over the years.

On the other hand, their presence is a source of enormous instability, especially when you combine it with rapid democratization because the situation of having a small - a situation of where the rich people are not just rich but they are viewed as ethnic outsiders fueling the nation`s wealth.

It`s just incredibly destabilizing, so I actually think that market dominant minorities are, I say that they`re the Achilles heel of free market democracy in the non Western world.

Now, to go back to your question about the United States, that`s by analogy whereas in most of the book I write about individual countries. I suggest by analogy that at the global level you see a very similar phenomenon.

Basically, the United States has become the world market dominant minority and the analogy has its limits. I mean obviously Americans are not an ethnic group. We`re a melting pot and nor is there democracy at the global level.

On the other hand, you see very - you see just the same kinds of dynamics. I mean the Americans are four percent of the world`s total population and yet we wield, just like the Chinese in Indonesia or the Lebanese in West Africa, we wield just astonishingly disproportionate economic power relative to our numbers.

And from China to the Middle East to France, we are perceived, I think correctly, as the principal engines and principal beneficiaries of global capitalism. You know we dominate global markets in every respect, technological, financial, cultural.

And I think for this, for our extraordinary market dominance and our seeming global invincibility, we have earned the envy and fear and deep resentment of much of the rest of the world.

CHUA: Yes. I put that in because maybe not now but at various points in recent history Bill Gates has, you know, controlled as much as 40 percent of the rest of the American population put together, and what`s very interesting there is that Americans don`t hate Bill Gates and they never wanted to lynch him or confiscate his assets.

In fact, when the government went after him, I think a poll that I report suggested that many Americans just wanted him to be left alone so he could go and make money. And what`s interesting is that that`s a very - that`s because the United States does not have a market dominant minority.

I think it would be very different, and I actually propose this as a thought experiment, for Americans to imagine what it would be like if Bill Gates and, you know, the ten other wealthiest Americans were all, you know, pick an ethnic group, Arab or Chinese or Indian.

And then further imagine that there were - that the rest of the population, the majority, you know, lived in entrenched poverty and had experienced no upward mobility for generations.

I think that`s the basic dynamic that characterizes much of the developing world. I mean we have rags to riches stories here. If you ask some - a poor person in Arkansas why they`re Republican or like Bill Gates and their answers they think that their son could be Bill Clinton or Bill Gates, and that`s just not the case in countries where the rich people - where all the wealthy people belong to a different ethnic group, a small ethnic minority.

CHUA: That`s right.

CHUA: Well, in Southeast Asia that`s exactly what the Chinese have done.

CHUA: So yes. The Chinese were immigrants there and pretty much became very dominant.

CHUA: Well, interestingly there are - the Asian communities are fascinating. There is, for example, a very small but very successful Japanese minority in Peru. Now, they`re not market dominant because I use a very strong definition. They don`t control the economy but they are disproportionately successful.

CHUA: I think not, although again I think I understand your question. I think the United States is very unique in our - the myth or the dream of upward mobility or rags to riches. It`s something that is, I think, very unique, in some ways idiosyncratic to the United States.

I mean even our relatively prosperous western European allies that myth of rags to riches or the dream of rags to riches is - doesn`t have - is no so robust. I think people in the United States really believe in it or a disproportionate number of Americans really believe in it and I think that`s because of our history and reality in some sense.

CHUA: Right. Right. Yes, so at the world level you see what is going on sort of analogous to what`s happening within nations, and that is that global markets have done a lot of good.

I mean I`m very in favor of global capitalism. I think in some ways that some form of market generated growth is the only hope for developing countries.

But at the same time that you see an explosion of growth and what you also see is enormous inequalities of wealth and this does have to do with the phenomenon of market dominant minorities.

Sometimes all boats are lifted. In other words, everybody in the nation gets wealthy or I think a lot of the globalization debate kind of gets stuck in that. But all of the trickle evidence that I have carefully looked at from the World Bank and elsewhere show that in many cases global markets do lift all boats.

But the phenomenon of market dominant minorities becomes very important here because it`s perception that`s important and, you know, if people watching their televisions and looking around them see that it seems like the only, the sudden new crop of billionaires all seem to be Lebanese or white or ethnic Chinese, they don`t rejoice in World Bank surveys that show that their per capita income has increased by two cents a day so it`s a double edged sword.

CHUA: Well, I actually - I`m a great admirer of Thomas Friedman, certainly.

CHUA: Yes. I certainly read his columns and I think he`s just a very thoughtful and erudite person especially when it comes to the Middle East. I do disagree with some of his recommendations. On the other hand, I think that he has changed his views after September 11th so that our views are much closer.

CHUA: Well, I think that in his book "The Lexis and the Olive Tree" he presented a picture in which markets and democracy working hand in hand would transform the world into, you know, peace loving prosperous nations and filled with kind of happy co-citizens, and then in the process, not even subtext but quite explicitly ethnic conflict and religious extremism would be swept away.

And, I think if you look at the history of the world in the last 20 years just the opposite has happened. After the fall of the Berlin Wall, we have seen, you know, alongside the spread of markets and democracy we`ve seen increasing ethnic conflict, the rise of militant Islam, confiscations, calls for re-nationalization, and two genocides of magnitudes unprecedented since the Nazi holocaust.

So, and I think that, I argue that it`s because whenever a market dominant minority is present markets and democracy are not usually reinforcing but on a collision course.

CHUA: Yes.

CHUA: Yes.

CHUA: I think that one of the great challenges going forward is to find ways to spread the benefits of global markets to more than just a handful of market dominant minorities, you know one percent here, two percent here, and their foreign investor partners.

CHUA: Well, I actually propose - I don`t think there are any easy solutions but I do think, you know, again in some ways learning from the example of the United States, I think the idea of stake holding. People rebel against markets and vote in anti-market leaders when they feel that they have no stake in the market. They feel like, you know, free markets benefit a different ethnic group or foreign investors. There`s nothing in it.

CHUA: Like Venezuela, so the majority in free and fair elections vote in an anti-market, anti-U.S. leader whose policies of nationalization and extremism, you know, would just stun Americans. People can`t understand how anyone could vote for that.

But he campaigned, Hugo Chavez a former paratrooper, leapt to power in Venezuela doing exactly what I predict which is targeting the market dominant minority in his country, basically the 20 percent mantuanos (ph) or the kind of "white." That`s in quotations because this is a very artificial term for people of European features and European pretentions.

But he targeted these oil controlling oligarchs he called them and he campaigned on a pro-poor, pro-parto platform. Parto is the term for the brown-skinned 80 percent majority that lives beneath the poverty line and he said, you know, described Cuba as the sea of happiness.

He attacked the United States. He attacked the oligarchs as squealing pigs and degenerates and they voted for him and it was very ethnic. It was explicitly ethnic. He called himself the Indian from Barinis (ph).

You know his biographer focused on his Chinese-looking eyes and thick lips and people said we want to vote for somebody who looks like us, who`s one of us, and the results I think have been disastrous.

CHUA: No. I`ve been in many arguments about this. It`s obviously, especially after - this was shortly after September 11th and emotions run very high and she I think represented the position of many people of the developing world, which is while not, certainly not necessarily condoning the attack, she was nonetheless very sympathetic towards the terrorists and understanding of their motives for doing such a thing.

And that particular conversation just degenerated into charges of hypocrisy against the United States and followed by, you know, on the part of the American guests the usual well who, you know, what country isn`t self interested? Who, which country has done more for the rest of the world than the United States?

CHUA: I haven`t calculated the costs and benefits but I think that yes, I think that the United States has done an enormous amount of good and that`s one of sort of the tragedies or the difficulties about market dominant minorities.

This is the same thing with the Chinese in Indonesia. They, the three percent population there in the `80s were really responsible for jumpstarting that economy and they`ve generated a huge amount of growth and yet the perception among the majority was that they were siphoning off the wealth of the nation and they were actually hated and scapegoated. I think there was a parallel there.

CHUA: Right. These are not my views.

CHUA: I detail in the book, I think that when speaking about anti-Americanism it`s important to be very careful. You know the world is not a monolithic place and there are many different forms of anti-Americanism.

So, I`ve written about, you know, there`s what I call friendly anti-Americanism, and I describe the reactions to the United States in countries like Canada or Great Britain or Australia and this in some ways is just kind of playful resentment. I think that`s where the vapidly materialistic quote comes from. And then, I also discuss anti-Americanism in Europe which is, I think, increasingly intense.

CHUA: Well, this falls into the category of friendly anti-Americanism actually. After, you know, I had a lot of research assistants kind of trying to assess the situation and I think a lot of the Americans were surprised.

Again, these are not people who necessarily condone the attacks but somehow understood it and again, you know, the perception even in countries like Australia or Great Britain is that the United States as the sole super power is just too powerful and displays a lack of concern for other countries.

CHUA: I think there was actually a number that have closed but yes that`s the statistic as of recently.

CHUA: Well, I think, I actually think that statistic shows the love/hate relationship that is characteristic of many market dominant - the reactions toward many market dominant minorities.

You know on the one hand while people are criticizing the United States, many people from the developing world are just desperate to come here. In fact, a friend of mine put it recently that the view of Americans held by many poor people in the developing world is basically Americans get out and take me with you, and I think that`s - you know that`s part of what`s happening.

Now, in France it`s a little bit different. I think that the French elites are concerned that American culture is having a disproportionate influence in France.

CHUA: Presently no. Presently no. Like the United States at the national level none of the advanced Western European countries or, for that matter, and I think this is very interesting, any of the East Asian tigers, none of these countries have a market dominant minority.

So, in some ways I think that`s sort of very telling that countries with a market dominant minority have it much harder, that the tension between markets and democracy, which can be overcome in other contexts where ethnicity is not a factor becomes catalyzed in countries where the rich are viewed as ethnic outsiders.

CHUA: Right.

CHUA: Well, the Middle East is a very - is a tricky region and so much else is going on there. I mean obviously there are religious factors, questions of colonialism and neo-colonialism and land claims.

So, I am just observing one pattern among many, one dynamic and that is that sort of again at the regional level, actually within the individual Arab states there are no market dominant minorities, so again those are countries without market dominant minorities.

But at the regional level it`s also very stark that Israeli Jews are kind of a regional market dominant minority. They are just a tiny - again, 5.2 million compared to over 221 million, and Israel is viewed as almost like a western enclave.

I think I have the statistics in there. The per capita income I believe is $17,000 compared to I think $7,000 in Saudi Arabia and maybe $600 in Egypt, maybe $300 in Yemen. So, it`s extremely - I`m not - I wasn`t aware of this until recently that the - I wasn`t aware of the enormous economic disparity in that region.

CHUA: Well, again, this is a huge topic and others more expert have written about it. I mean there`s a lot going on there with foreign policy and oil and corrupt, repressive regimes.

One thing that I think is happening is that the leaders in many of the Arab states to deflect criticism away from themselves are deliberately fomenting and, you know, they`re deliberately fomenting anti-Israeli and anti-American sentiments precisely to kind of target the criticism elsewhere.

And, throughout the Middle East, the Israeli Jews are viewed - a very common way of describing them is as a western colonizing force. They`re actually often described as the last wave of western colonization and then backed by the United States.

CHUA: Well, these are more products of globalization and...

CHUA: Well, I think that people have a distorted view of the United States because what do they see? What is the United States for the rest of the world? They see our president. They see our super models. They see our multinationals and that`s the slice of America that they see.

So it`s, you know, on the one hand Hollywood creates this image of glamour, this idea that everybody here lives these lives of indolence and luxury when, in fact, you know many Americans are not like that and work very hard. And so, I do think there`s - that`s part of the feelings of envy and desire that global markets perpetuate.

CHUA: Yes. This is one of the misunderstandings that I frequently get about my book. People ask me why I`m, you know, against anti-globalization and the answer is definitely not. I`m very much in favor of globalization. I don`t know, I think it would be futile to be against it.

And they also ask whether I`m anti-markets or anti-democracy and I am very much in favor of promoting markets and democracy globally, both of them. But there are many different versions of free market democracy and I think that we are exporting the wrong version.

In fact, I think we`re basically - we`ve been for the last 20 years promoting a caricature of free market democracy. So, on the market side there is no western nation today that has anything close to a laissez-faire system.

I mean we have progression taxation and antitrust laws and Social Security, but for the last 20 years we`ve, you know, been urging poor countries to adopt a kind of bare knuckled version of capitalism that Europe and the U.S. abandoned long ago.

And it`s the same with democracy. You know for the last 20 years the American U.S. government has been urging the poor countries of the world to hold elections, to implement immediate universal suffrage but yes in our own history was one in which we disenfranchised the poor for generations and more importantly, and I think that`s out of the question, you know property exclusions and the suffrage, I`m not in favor of that.

But I think more importantly, democracy in the west means much more than just unrestrained majority rule, which I think is what we`ve been promoting. I think democracy is also about constitutionalism and minority protections and property protections, human rights. I think a lot more thought is needed than just shipping out ballot boxes for elections which, you know, brought people like Milosevic to power.

CHUA: Thank you for having me.