Small Change at a Huge Cost

 More Equal than Others? Race, Culture, and Equality before the Law

sorry startA referendum is to be held soon on whether the preamble of the Australian Constitution should give special recognition to Australians of Aboriginal and Torres Strait Islander descent. Although the government’s hand-picked Expert Panel on Constitutional Recognition of Indigenous People has, at the time of writing, not come up with a wording for the question, the panel’s composition and the mood of officialdom lead one to expect that the referendum question will be carefully crafted and that much official propaganda will be broadcast to obtain a “Yes” vote.

My lifetime experiences in various countries and my reading of history tell me that the special recognition of a race will lead to no good for the first immigrants to this continent, the Aborigines and much later the Torres Strait Islanders. They have, in the past, suffered from diverse forms of negative discrimination, both private and public. But over recent decades manifold, costly programs of positive discrimination (or affirmative action), mostly public, have been instituted. Singling out one race for preferential treatment has the potential of poisoning any society’s political atmosphere. Judging by the record of the Aboriginal advocacy industry, mere constitutional recognition will soon be used by lobbies and courts to increase material transfer programs and create an increasing plethora of racial preferences. The referendum question should therefore be rejected.

I speak out reluctantly on this issue, for my life experience has taught me that racial matters, which are always highly emotive and controversial, had better not be made the topic of political controversy. The pursuit of racial harmony is best left to private discourse and interaction, since collective, political treatment will almost inevitably be exploited by politicians to garner political support and lobbyists to extract tax funding. Using the race argument in politics tends to produce unforeseen, deleterious consequences, not least for those who are to be given preferential treatment. Even cautious beginnings and proposals for positive discrimination have become disasters.

I. Observing affirmative action

I was probably destined from birth to be alert to the dangers of ethnic politicking. Most of my forebears had lived, at least since the thirteenth century, in German communities in the hills of northern Bohemia. They had prospered in industrial valleys, which produced entrepreneurial dynasties such as the Riedels and Swarovskis in glass and the Porsches in car design. Both my grandfathers were closely associated with these families. Under Habsburg rule, my forebears saw themselves as Austrian Germans, no doubt considering themselves the ethnic top dogs in the multi-ethnic Dual Monarchy.

After the First World War, they found themselves in a new country—Czecho-Slovakia. At the peace talks in Versailles and St Germain, Slovak-born conservative national leader Tomaš Masaryk and Czech national socialist leader Edvard Beneš had promised to create a new Switzerland in the centre of Europe. Instead, they soon led a regime that discriminated against the big German and Hungarian minorities in the new country. In the 1920s, the use of the German language in schools, law courts and public administration was either severely curtailed or prohibited. And the tax burden was shifted disproportionately onto industries owned and run by Germans (26 per cent of the population in the 1921 census). Members of the Czech minority (48 per cent) were greatly favoured by affirmative action in government employment (Franzel, 1958, p. 338). The Germans, the wealthiest and best-educated ethnic group, took these new political developments badly. They began to define themselves as “Sudeten Germans”, and many adopted a posture of passive resistance. Politics in Prague was fragmented among Czechs, Slovaks and Germans.

Even when matters in Czecho-Slovakia improved during the 1920s, most Sudeten Germans applauded their eventual takeover by “Emperor Adolf” in 1938 and the dissolution of the artificial, ethnically divided state one year later. After the defeat of the Third Reich in 1945, long-standing Czech nationalist demands for the ethnic cleansing of what now became a socialist unitary state became a reality: 3.5 million ethnic Germans were expropriated and expelled. More than 700 years of Germans, Jews and Czechs living and prospering together in the former Kingdom of Bohemia came to an abrupt end. Where once some of the most culturally creative, most prosperous Europeans had lived, the land was turned into a poverty-stricken, empty region––all in the name of Pan-Slavism and ethnic purity. This became possible because the genie of racist nationalism had been coaxed out of the bottle by nineteenth-century writers such as Friedrich Hegel (1770–1831), Johann Gottfried Herder (1744–1803), Joseph Arthur Comte de Gobineau (1816–82), Francis Galton (1822–1911), Houston Stewart Chamberlain (1855–1927) and Friedrich Wilhelm Nietzsche (1844–1900), and simple-minded, ruthless politicians, such as Hitler.

My family was doubly lucky in 1945. We were amongst the first Germans to be expelled, before the mass killings of an estimated 270,000 Germans began; and we ended up in the American zone in Bavaria, where the “economic miracle” began earlier than in the other occupation zones. The conservative, Catholic Bavarians were at first stunned by the manners of the urbane, cosmopolitan and energetic “refos”, but—as in postwar Australia—the incumbents soon saw merit in integrating the newcomers, learning new mores and soon also intermarrying. Efforts to create (revanchist) political refugee parties soon fizzled out, as the about 12 million Germans expelled from their homes across eastern Europe engaged in creating a free and prosperous future in the West for themselves. They did so without being officially assisted by positive discrimination, the same laissez-faire policy as was applied in Australia when migrants from Europe were called “New Australians”. Just imagine how the assimilation of the many newcomers would have gone, had the government of the day given them explicit recognition in law or positively discriminated in their favour! Most residents would have turned against the newcomers.

In the late 1940s, my father was able to move our family to Switzerland, where I acquired a lifelong admiration for the Swiss way of dealing with ethnic, linguistic and religious differences. After centuries-long internal conflicts, the Helvetic Federation developed a model based on individual freedom, secure property rights, stable prosperity, pragmatism, as little political debate of ethnic and religious differences as possible, and small, devolved, democratic government.

During my teens, my family moved again to West Germany. I became aware of racial and cultural differences, as several US military officer families, some of them black, lived in our street. Neighbourly relations between Germans and Americans in our street and community were friendly. I learnt about US race conflicts only from the newspapers. Travelling through postwar Europe, I also began to appreciate that not all things German were best, despite what narrow-minded elders kept telling us. The English, French and Spanish were doing many things differently and often better. Their cultures had traits that I began to admire during my impressionable teens. I also travelled through poverty-stricken communist Yugoslavia in the 1950––without an inkling that these people of the same culture and language (though written with different alphabets) and differing religions would one day fight a murderous civil war. I also spent time in Morocco, fascinated by a non-European civilisation, but also learning about the curse of under-development and the merits of Western (Christian) civilisation.

Later, on my first visit to Mexico, I was initially shocked by an official ideology that highlighted the merits of racial mixing: the mestizo culture of Indio and Spanish people and civilisational elements. But I soon discovered that the resulting cultural dynamism produced attractive outcomes. Culture, I realised, was something in ceaseless evolution. Backward-looking conservatives, who tried to freeze traditions and prevent mestizaje, only created political conflict and were bound to lose.

My career as an economist took me to Malaysia in the early 1970s, and into a cauldron of racial politics. The majority (55 per cent) consisted mainly of Malay rural poor, but their elite was in control of government and the military. The British and Chinese were dominant in commerce, industry and urban life. In 1969, religiously fuelled race riots had led to hundreds of deaths, mainly of Chinese citizens. The political elite dramatised the event to gain acceptance for a major program of positive racial discrimination in favour of the Malays.

As soon as I arrived as an economic adviser to the Treasury, I was confronted with the question: “Is redistribution of incomes and wealth, as planned under the New Economic Policy (NEP), feasible?” All my instincts were against political intervention. Let individuals and firms compete. Let free markets decide about the shares of income and wealth. And let’s ignore racial-group statistics. But this attitude was impossible to uphold for a greenhorn Treasury adviser. I soon figured out that only a policy of accelerated economic growth and high employment would give the Malays better economic opportunities and avoid a situation in which redistribution amounted to an absolute reduction of any one racial group’s income. This seemed to me feasible, if better education and training offered the Malays better starting opportunities and if hurdles to rural-urban migration and social mobility were removed. These elements were indeed shaping up to become the essence of the NEP, although some traditionalists tried to promote policies to conserve rural Malay life (Kasper, 1975).

I soon made some discoveries that changed my mind on Malaysia’s affirmative action policies. In reality, Chinese employers just would not hire young Malays, and Chinese businesses were most reluctant to buy from Malay businesses, sometimes on grounds of experience, sometimes for no good reason. Therefore, the imposition of racial quotas in hiring and higher education seemed acceptable to me as circuit breakers and correctives to widespread negative private discrimination.

Working and spending much leisure time with Malays, Chinese and Indians—whom I initially found hard to distinguish from each other—I soon observed the same broad range of variation of individual character that I knew from Europe. There were the energetic, self-reliant workers, the class clowns, the work-shy bellyachers and habitual claimants, the pragmatists, the open-minded, curious observers and so on. Individuals with these attitudes were spread across racial lines. This made Malaysia fascinating. The diversity of people and cultures suggested to me great promise for future development.

I soon read a book, banned in Malaysia at the time, by an Indo-Malay, Dr Mahathir, who seemed to imply that the Malays were somehow inherently inferior when it came to performing in the modern world. From my experiences this seemed completely wrong. Admittedly, many Malays were coming to modern life with traditions and work attitudes that made them less capable of adapting quickly to modern trade and industry; but they were learning, and their children were no less intelligent or motivated to succeed economically than the sons and daughters of Chinese tin miners or towkays.

It was a matter of exposure to the strictures of modernity and slow cultural change till many Malays, too, would acquire what German sociologist Max Weber called the “bourgeois virtues”, for example punctuality, reliability, a habit of weighing rationally the costs and benefits of action (accountability) and openness to dealing with complete strangers. I saw these qualities begin to evolve in the 1970s. Alas, persistent and more and more refined preferential policies also spread mistrust of other races and a claim-seeking mentality. Personal failures were increasingly blamed on racial discrimination and insufficient government support, so that the necessary learning of new attitudes and values was hampered. On the whole, however, the exposure to Chinese and Western neighbours and competitors, openness to the world and the niggling example of neighbouring Singapore prevented a complete lapse into rent-seeking and reliance on hand-outs and political preferences.

The NEP contained elements that facilitated learning processes, but it also came with unintended consequences. Racial quotas in education and employment led many young Malays to opt for easy subjects, such as Islamic studies or sociology. Young Chinese were driven into universities overseas, where they learnt more useful attitudes and skills for succeeding in the modern world. Quotas for company directorships generated a class of well-connected rent-seekers and corrupt opportunists among Malays. A generation and a half later, Malaysia has a more even distribution of incomes and wealth between races, but also more growth-sapping graft, as well as persistent income differences between a new, cross-racial middle class and poor Malays and Indians.

More importantly still, the government’s more and more intense redistributional interventions have created an entrenched lobby for perpetuating these policies, although the harm they do is widely recognised. The current Prime Minister, Najib Razak, who announced plans to do away with preferential racial policies, soon gave up in the face of entrenched interest-group opposition. The legacy of the NEP is likely to prevent Malaysia from realising its widely announced goal of reaching developed-country status within a generation, for the market distortions handicap competitiveness.

The same fatal mechanism has been at work in Fiji since the 1987 military coups. Initially, the recession following the two coups of 1987 led to a disempowerment of the (mainly Indian-led) trade unions and the promotion of export-oriented industries. I was pleased to observe Fijian and Indian mothers, who began to work in the same new garment factories, share their worries about husbands and children—one pathway to racial integration. But over the longer term, the local ethnic Fijian elites accepted the analysis by Dr Mahathir—by then Malaysian Prime Minister—as the solution for the tensions between the more commercially savvy Indian communities and the rural Fijian majority. Instead of fostering an atmosphere of individual responsibility and self-reliance and acceptance of equality before the law, the result has been a rise in Fijian nationalism, renewed military rule and collectivist policies that have done little for the Fijian villagers or the remaining shantytown dwellers of Indian descent. Democracy and freedom have not fared well.

During repeated visits in the 1970s and 1980s, I came across a particularly obnoxious nexus between socialism and racism in Sri Lanka. The socialist Bandaranaike regime had expropriated many landowners and introduced elaborate price controls. It relied on support from Sinhalese nationalists and Buddhist fanatics to remain in power while the country’s economy fell far behind that of Malaysia, despite a better head start on independence. Repeated bouts of economic liberalisation triggered some industrialisation and an easing of tensions between the dominant Sinhalese majority and the sizeable, amorphous Tamil minority. Economic growth favoured racial harmony. But then the electoral cycle brought back ideologically-driven stagnation, which heightened racial tensions, until a ferocious civil war erupted. It cost both sides in the conflict heavily.

Racial policy lurked wherever I travelled. In Norway, I discovered that the Lapps harboured ethnic grievances; in East Germany, the small minority of Sorbs demanded affirmative action; in Egypt it was the Numidians; and everyone became aware of the consequences of racial segregation in the United States and the scandalous apartheid regime in South Africa. In these two latter countries, the maxim of equality of all before the law was long grossly violated, and the violations were often defended with religious arguments. Negative racial discrimination—official and private—often violated equal, secure private property rights, and the economic and social consequences were often costly. I remember the shock I got when I first saw drunken Navajos lying in the dust before supermarkets in Arizona, as well as my amazement—two days later—when I dealt with an affluent Mexican builder, who was a pure-blood Navajo living south of the border where there was no racial preference for, and protection of, native Americans. As my host, he acted unquestioningly as my equal, which of course he was.

Another lasting object lesson for this “pilgrim through the global economy” came my way when an assignment first took me to Brazil. A pitch-black taxi driver, who could not guess my nationality, told me: “Everyone looks like a Brazilian, and that includes you and me.” He was right. Indigenous indios, the descendants of African slaves and Portuguese conquerors, had long been mixed into all shades of the skin-colour palette, and an easy-going public atmosphere furthered low-conflict intercourse between rich and poor, young and old. Another Brazilian told me: “No one who has a loving black grandmother is capable of racial discrimination.”

Admittedly, I saw more poor blacks than poor whites, but that had a lot to do with where people lived. In the industrial, more prosperous south, one meets more light-skinned Brazilians. Yet, one African-looking professor in Rio employed a white butler, and nobody remarked on it. Obviously, a lot of potential racial conflict had long been eliminated by individual action on the mattress. In more recent years, since the end of military dictatorship in 1985, some welfare programs have been put in place, mainly by socialist politicians, to ameliorate the enormous income differentials in Brazil, but none has been conceived with any racial overtones. Incomes and educational opportunities are still very unequal between rich and poor. At least, compulsory primary school attendance is now enforced, and government-run schools insist that all pupils speak proper Portuguese. There is no tolerance of rap slang of the sort that makes many young American blacks unemployable.

When I came to Australia, it took me years till I met an Aborigine. I was shocked to learn how long there had been negative discrimination against Aborigines, for example that they had been denied the right to vote at federal elections before 1967. I also observed how a generation of Aboriginal stockmen and agricultural workers had become expert in relevant skills, but often lacked reliable work attitudes––“going walkabout”. The respect many had gained was undermined by the Whitlam-era policy of “equal pay”, which promptly made many Aboriginal workers in rural industries unemployable, because they were now unable to compensate for their low productivity by accepting a low wage.

A social grievance industry soon sprang up, demanding more handouts, which aggravated the labour market and other social problems of many Aborigines, as we know. I was shocked and ashamed when I first saw Aborigines in Darwin and Halls Creek lying drunk in the street and hungry children rummaging through rubbish bins because their parents and clans neglected them. The facts about how Aboriginal communities live confront us with the shameful failure of official welfare policies. Official policies to help many of them out of poverty, family violence and drug-taking have not been sufficiently effective. They may even have aggravated the problems. The outcomes certainly show that the protection of Aborigines from adjustment to mainstream living—let’s be honest—would be an illusory and futile aspiration.

But there are numerous exceptions. Over time, I discovered that many part-Aborigines live virtually unnoticed in the general community, working in ordinary jobs and enjoying the same sports, hobbies and festivities that all Australians do. Some 350,000 are now living mainstream lives, most of them unnoticed by fellow Australians and the authorities. I recall my visceral pleasure when I saw Torres Strait Islanders celebrate an Oktoberfest in Townsville, one of them even in Bavarian lederhosen! Nor will I ever forget a young man, whom I gave a lift on a drive from Canberra to Sydney. He spoke for an hour about his work as a boilermaker, his pride about the praise from his boss for good work and his young family. At a coffee stop, we came face to face and he burst out: “But I am an Aborigine!” I replied that this was of course obvious, but why did he say “But”? We spent the next two hours together, I telling him of my attitudes to race and he telling me that he and his (Aboriginal) wife had moved out of government-provided housing in Macquarie Fields, because they did not want their children to grow up in an underclass social atmosphere. He was proud to have obtained an apprenticeship and industrial work, which allowed them to move out of a government-provided ghetto “that felt no good”. I admired his resolve to be self-reliant. I wonder how he might vote in the forthcoming referendum.

Australia struck me as a fine country, where everyone enjoyed equal rights. Voluntary assimilation of immigrants proceeded satisfactorily, without minorities being coerced to comply with all norms, but deviations from standard norms of behaviour that affected the majority came with a price, which induced most newcomers to comply with prevalent British mores and standards. There was enough leeway for diversity and experimentation with new, imported ideas, which has made Australian culture so interesting and attractive. Clearly, assimilation with the mainstream did not work in the case of many Aborigines; some of them live lives that make most of us ashamed.

In virtually all of the numerous countries around the globe to which my work and my curiosity took me over the years, I came across some vestige of racial identity, racist opinion and positive or negative discrimination on racial-ethnic grounds. In hardly any place did all people consider themselves racially homogeneous. The more that racial differences became the object of public debate and policy and the more sharply racial differences were defined, the more intractable did these problems become and the less did minorities seem to be satisfied. In the places I have seen, positive racial discrimination has invariably failed to solve the problems of less-well-off groups, indeed has often aggravated their condition. The more societies were focused on the individual and secure individual property rights, the less racial tension there was. In free markets, people of different ethnic background trucked and bartered, and did so with civility because that was the only way to get on with the business.

II. Race and Cultural Evolution

The maxim of equality of all citizens, the rulers as well as the ruled, before the law is one of the key institutions of Western civilisation. After the age of feudal inequities, bondage and religious wars, it took centuries of struggle and intellectual effort in Western Europe for this principle to be accepted and enshrined in the 1776 American and the 1789 French constitutions. The latter singled out this overarching principle alongside liberty and property: Liberté, égalité, propriété. As the French revolution progressed, the blood-thirsty Jacobin left-wingers around Maximilien Robespierre soon substituted the demand for secure individual property with the wishy-washy concept of fraternité, since citizens of property stood in the way of Robespierre’s demand for “the primacy of politics”.

Making equality before the law a key value of high constitutional rank was right in a polity that aspired to attaining internal peace, justice, freedom and prosperity. To find out how often lasting conflicts go back to violations of equality, one only has to look at contemporary conflicts from Palestine and Syria to Africa.

Of course, much of the political game has always been about playing favourites and treating some more equally than others in the hope that the less advantaged group does not discover the distortive intervention. Whereas interactions in a free society are based on voluntary exchanges that are guided by self-interest informed by signals such as prices, political interventions always work with coercion. Some coercive measures are of course tolerated in a civilised society out of loyalty with fellow humans and in the interest of social harmony. But political elites should always be careful not to overplay their reliance on coercion, because this can easily lead to passive resistance, animosity and loss of economic dynamism.

In Australia’s case, it can of course be argued that the mere recognition in the preamble to the Constitution of the two racial groups who arrived prior to European settlement—namely waves of paleolithic Aborigines tens of thousands of years ago, and much more recent neolithic Melanesians to the north of the Cape York Peninsula—does not amount to any political coercion. These are well-known, uncontested facts. Such facts are not normally included in a nation’s constitution, unless the intention is to give the preamble some legal force and to derive policy actions from it. The surreptitious intention of the referendum must be that positive discrimination and redistribution policies are to be given a permanent constitutional foundation. In any case, political opportunists, social activists and do-good courts can be trusted to use even a tiny foothold in the preamble of the Constitution (with some follow-up changes in the body of the Constitution) to enshrine permanent redistribution policies that violate the equality of all before the law.

In present-day Australia, a veritable industry of some 250 mostly tax-funded organisations and agencies is already at work supposedly assisting the Aborigines—with dire overall results. Just go to dysfunctional communities in Halls Creek, Alice Springs or Arnhem Land to convince yourself that well-meaning positive discrimination by the visible hand of government and government-financed NGOs has been as much of a failure as similar programs around the world. Such activities have mainly benefited the agents of redistribution and have had a corrupting influence. Because they have so visibly failed, they have led to direct interventions, which deprive Aborigines of their freedom and self-responsibility.

It is easy, cheap politics to emphasise racial differences and then to promise benevolent positive discrimination in favour of one group of citizens or the other. But this approach is bound to arouse critical sentiments among the majority that harm social harmony and cohesion. Like all preferential political interventions, affirmative actions also create lobbies of preferred citizens, whose spokesmen are rarely satisfied. They would lose their influence and positions were they not demanding more and more preference. Redistribution bureaucracies often make affirmative action their own profitable business. But those who are officially preferred sooner or later suffer the contempt of the majority. The recipients of government favouritism eventually always suffer from political divisiveness. It would be a great pity if the widespread goodwill of Australians towards the Aborigines were destroyed by separating them out in law from the rest of us—a constellation that has so often had dire results in other countries. Let us not forget that the attainment of the Enlightenment ideal of equality of all before the law has been so crucial for justice and social harmony, and why violations of this maxim have led to losses of freedom and social peace.

It must also be realised that visible-hand intervention on behalf of Aborigines is less justified in today’s more openly competitive Australia than it was in an earlier age of more heavy-handed interventionism. Now that, for example, mining firms are competing in world markets, they offer competitive Aboriginal workers and firms new opportunities. Co-operation and exchange in free markets are simply not conducive to negative racial discrimination for the obvious reason that someone who discriminates on racial grounds in hiring, buying inputs or selling products, often forgoes best-possible profits or utility. The white-supremacist factory owner who refuses to hire non-Caucasians will end up with a less skilled, less productive workforce. The consumer who, on racial prejudices, does not shop in Jewish or Chinese businesses is likely to lose out on many good deals. Free markets are therefore colourblind.

The political Left, from the United Nations down to local activists, has of course always rejected this principle and has used material inequalities as an argument for more collective intervention in free exchanges between individuals. Thus, UN-sponsored “First Nations” programs advocate the protection of pre-modern minorities from the strictures of open competition, as if they were a species of animal in danger of extinction. This is often motivated by a romantic desire to preserve more primitive forms of social organisation, but the reality is that no one on earth can be excluded from the costs and benefits of modernity without paying a price. In any event, no Australian Aborigine would like to return to the stone-age lifestyles of 200 years ago and forgo modern amenities in health care, entertainment and food supply. Notions that there should be some kind of apartheid development for some Aborigines must not be tolerated.

An argument for temporary protection to ease a group’s transition to the modern, open society can, however, be made. The transition can be painful. It requires an evolution of personal and social attitudes, values, mores and other internal institutions, which is inevitably slow. Therefore, temporary assistance to “backward” groups may be a way to ease the transition and adjustment of the essential psychological and social-institutional capital. It can also be argued that majority groups that come into contact with less-developed racial groups need time to get used to their presence and to appreciate the distinct contribution that traditional folk can make.

Race is widely considered a personal trait which the individual cannot change. For this reason, any form of racial discrimination is widely—and rightly—considered repugnant. By contrast, cultural traits are widely seen as learnt and hence alterable, so that discrimination between people based on their cultural characteristics is normally tolerated, at least when we make private choices. The assimilation of cultural minorities to the prevailing, dominant culture is therefore often expected. And people who persist with specific cultural traits often have to pay a penalty, suffer ostracism and bear other consequences, even in a pluralist, free society.

The definition of a race may be clear across broad ethnic groups, as defined by ethnographers. Yet racial purity—a concept once considered important—has not survived scrutiny by modern gene research, which shows that most of us carry genetic traits of forebears with different racial backgrounds, and more and more so as mobility increases. The notion prevalent a century ago that there are fairly homogeneous races with the same forebears, speaking the same language, sharing the same history and culture is no longer tenable. If only the differences between immutable, inherent racial characteristics and mutable cultural characteristics were so clear-cut!

In many instances race becomes a matter of personal or societal choice. What is the race of the offspring, say, of a Caucasian mother and a Kenyan father? Why is the current US President celebrated as the first black occupant of the White House? Clearly, he made a racial choice, or others made it for him, to be counted as black. The choice element, and hence the possibility of changing one’s race, appears even greater where persons of, say, one-sixteenth or one-thirty-second Aboriginal descent may be classified in the school records of some Australian states and territories as “ab” or “nonab”. Often, the person who does the classifying will be influenced by material motives, such as additional government subsidies to the school.

Similar opportunistic racial classifications are coming to light regularly in all polities in which positive privileges for “disadvantaged” minority races—preferential access to jobs, education, other government handouts—are on offer. In addition, people often make racial specifics more visible by changing their outer appearance, dress code or names (for example, Muslims sporting beards, wearing specific clothes and converts adopting Muslim names). Preferred individuals often earn the contempt of those who lose life opportunities due to the political preferment of others. The losers are normally among the majority, who perceive such policies and the possibility of subjective racial self-assignment as unjust. They resent the notion of “race by choice”. The alternative of objectively defining a person’s race by, for example, a percentage of ancestry, meets with numerous evidential difficulties and smacks of repugnant Nazi practices that equated humans to breeding stock. (In Nazi Europe, many persons of one-quarter non-Aryan descent were prosecuted.)

Second, the assumption that cultural traits, because learnt, are readily adaptable does not stand up to scrutiny either. An Aborigine, born in a humpy on a riverbank in inland New South Wales, simply does not have the same values, attitudes and habits as the children of a Chinese surgeon or Anglo business executive, even if exposed to the same school education from primary school age. Key cultural characteristics are imbued in early childhood and are very hard to change. Cultural change therefore tends to take generations. This is so in particular when cultural rules, which were adopted to facilitate group interaction, are also imbued with notions of identity, status or religious relevance. The humpy-born youngster may pick up a lot of materially useful attitudes and skills and may be able to make a good career in, say, animal husbandry, and may pass these cultural assets on to children that are able to make it through high school and into urban careers. Mixed-race children may benefit from early-childhood formation that better equips them to succeed in the modern world and may be able to integrate culturally faster than the descendants of persons from “pure” racial backgrounds who live in homogenous, secluded communities. Cultural adjustment therefore tends to be slow and difficult. It would be unjust and unrealistic to expect spontaneous changes of a person’s values, habits and attitudes. Nor is complete cultural integration necessary or desirable, since culture is a pliable, evolving beast; indeed, cultural diversity is often a valuable social asset.

The question of cultural assets or liabilities is further complicated by the usefulness or otherwise of given cultural traits in different environments. Thus, Anglo-Celtic immigrants in nineteenth-century Australia had far inferior cultural and skill capital for surviving in the bush than their Aboriginal contemporaries, vide Burke and Wills. However, the challenge for all Australians now is to thrive in the contemporary, dynamic, open world. In this setting, the skills and mores of traditional hunter-gatherer bands count for little, indeed are often a hindrance to a satisfying life. The descendants of hunter-gatherers are inevitably faced with the tough challenge to adjust or suffer, even if government subsidies and preferments allow them more time to adjust and make that adjustment easier. Elevating certain cultural traits to become immutable, sacrosanct attributes of identity only makes the difficult adjustment task tougher.

What has just been said goes against the intellectual fashion of cultural relativism. Of course, all cultural systems have advantages and disadvantages that are worth studying. But there can be no doubt that not all cultures are of equal value to supporting a peaceful, prosperous modern community. Many traditional cultures condone violence, dishonesty, tribalism and discrimination that are at loggerheads with the strictures of the modern world. The finely balanced set of values and institutions, which has been developed by intellectual effort and trial and error over centuries in Western civilisation, is the very foundation on which our modern living standards are built. This does not preclude the possibility of cultural-system variants to modernity; for example, the system of Confucian institutions is as useful to modernity and material well-being as Western culture. The international competition of different cultural-institutional systems is already beginning to teach us valuable empirical lessons. Thanks to our geographic location, Australians have, for better or worse, a front-row seat to observe the contest. In any event, a culture and a civilisation is never a static phenomenon, but a system of rules that are in continual evolution of feedback between reality and ideas.

In the present debate about amending the preamble to the Constitution, much is made of the belief that the proposal is expected to have bipartisan support from the major political parties and will therefore be accepted. This does not appear to me a foregone conclusion at an age in which party politics has little respect among the citizenry, given broken election promises and allegations of widespread political corruption. Much is also made of the overwhelming approval by the electorate of the 1967 referendum to grant Aborigines equal rights to vote. This decision was not surprising in retrospect, because ordinary Australians have a strong sense of equity and resent discrimination. The 1967 outcome removed an instance of embarrassing negative racial discrimination against some fellow Australians. But the 2014 proposal is fundamentally different: it proposes a constitutional measure of positive discrimination for the present and future descendants of Aborigines and Torres Strait Islanders. Ordinary Australians are likely to sense this difference and realise that they are being asked by the political elites to approve a step towards creating constitutional inequality.

III. Towards Racial Harmony


It is clear to me (i) that the adjustment of many of our Aboriginal fellow citizens to the disciplines and challenges of modern life in the open, competitive economy is tough, but is also inevitable, (ii) that temporary public assistance may ease the transition, which will take a few generations, but that such material assistance must not hinder the necessary institutional evolution, and (iii) that such assistance must be time-limited and gradually decrease over time. Enshrining any reference to the problem in the Constitution, even its preamble, would undermine the need to gradually ease preferential discrimination. As a nation whose institutional order is built on the foundation of equality before the law and whose future in a competitive globalised world will depend on its good, time-tested institutional capital, we must not abandon one of the constitutional cornerstones of our civilisation, equality before the law.

So, what is to be done? I believe that the insights of a 1974 book, A Theory of Racial Harmony by Alvin Rabushka, are still relevant. Rabushka showed that genuinely free, open markets have always been places of unbiased interaction among people of different races. Market competition requires that both sides of the market rival with each other for advantageous contracts with partners on the other side of the market and that they can do so on the basis of secure individual or group property rights. Taboos against rivalry with members of one’s tribe are counterproductive. Even poor suppliers of a good or service have a degree of power when intending buyers rival strongly amongst each other to obtain those goods or services.

Just consider the rivalry among art collectors for the work of Australia’s top Aboriginal artists. Refusal by artists in high demand to sell unless the art of all members of the tribe is bought would damage their potential income opportunities. Likewise, an employer who only hires, say, fellow Chinese staff will find that he excludes himself from the widest possible talent pool and thus risks a loss of income, possibly even bankruptcy in the long run. The long-term benefit of colourblind market interactions on reshaping racial attitudes and eroding prejudices is well known. Strangers who truck and barter with each other become regular, trusted business partners, even if they hail from totally different cultures. They may even form personal friendships and family ties, as they learn to appreciate the mores of the other and as the strange habits of the other become familiar.

The ancient Greeks used the term katalattein for “exchanging information and trading with strangers to eventually turn opponents into friends”. Traders always require peace and abhor racial conflict, because that interferes with their business. Indeed, free markets are often islands where racial tensions are banned. An amazing example for the “peace of the marketplace” occurred during the 1990s Balkans wars. People of all backgrounds, including fighters, kept meeting in marketplaces. They did so without hostility or violence, because that was the only setting in which desirable transactions, in which both sides were interested, could be carried out. Even combatants met with their opposite numbers, often to obtain from them munitions and weapons components, which they needed to kill each other outside the market squares!

Another important intellectual and empirical contribution on race and social harmony has been made by the eminent US economist-sociologist Thomas Sowell, who has dedicated much of his life’s research effort to economic and political issues of race and culture. He showed that the intellectual fashion of the late nineteenth and early twentieth centuries which considered certain races as inherently superior and others as inferior in their abilities to succeed in the modern world, was utterly wrong, not least because cultural features and human capabilities change over time. He also showed that the more recent left-wing explanation for poor economic performance by one race or another is not mainly due to private negative discrimination against that race. No doubt such discrimination exists and may need to be addressed by legislated remedies. But most of the underperformance of certain races in the modern world is a consequence of traditional values, preferences, attitudes and institutions (rules) that are inadequate for the task of succeeding in a modern pluralist society.

Most of these values and institutions are learnt in childhood from family and close friends. Such learning does not readily happen within one generation, but requires gradual inter-generational adaptation of the traditional culture. Exposure to the contemporary socio-economic environment and incentives for adjustment lead to the necessary cultural changes. For example, the Jews who came from Eastern Europe to the United States were initially diagnosed as having abnormally low IQs. But one or two generations later, their descendants were achieving very high IQ scores. The same observation was made in the nineteenth century amongst newly arrived Jews from Eastern Europe in Berlin, Vienna and Prague, as against their children and grandchildren who were strongly represented in the professions and among the commercial high achievers.

The lesson for the Australian race debate is that the advancement of Aborigines and Torres Strait Islanders will take time, but that there is no inherent racial inferiority. Nor is there much chance for the artificial conservation of their culture and an advantage in mollycoddling the relevant groups by open-ended positive discrimination.

My own experience and the lessons of history, as summarised in the literature, suggest that the plight of some of the Aboriginal and part-Aboriginal groups in this country can be ameliorated, (i) by being honest about the need for them to acquire the majority’s fundamental institutions and values without sacrificing their identity, (ii) by designing material assistance programs so that persistent pressures to adjust and integrate are maintained and resistance to cultural adjustment comes with some penalties, (iii) by maintaining a prosperous, free economy which gives Aborigines access to markets where their contribution is valued and where they can develop confidence, (iv) by alerting the Australian majority to the difficult adjustment problems that many Aborigines face and penalising cases of negative discrimination against them, and (v) by standing up to collectivist-socialist utopianism, which implies that the problems can be made to go away by political gestures (such as saying “sorry” and rewriting preambles to constitutions).

Spending political energy and administrative resources on a constitutional amendment is a backward-looking gesture and the result of some guilt and shame among some Australians. What is really needed is a forward-looking, pragmatic engagement. Hard work lies ahead, but the promise is that Australians—who have successfully integrated manifold waves of immigrants into a free and prosperous community—can do the same for future generations of Aborigines and Torres Strait Islanders.

Wolfgang Kasper is a retired political economist, who combined an academic career with advice to governments, banks and industrial enterprises in a variety of countries around the globe.


Australian Human Rights Commission (2014), Constitutional Reform: Fact Sheet—Recognising Aboriginal & Torres Strait Islander People in the Constitution

http://www.humanrights.gov.au/publications/constitutional-reform-fact-sheet-recognising-aboriginal-torres-strait-islander-people, accessed 1 May 2014.

S.N. Eisenstadt (ed.) (2000), Multiple Modernities (New Brunswick, NJ: Transaction Publ.)

E. Franzel (1958), Sudetendeutsche Geschichte (Nürnberg: Adam Kraft Verlag)

L.H. Harrison (1985), Underdevelopment is a State of Mind (Cambridge, MS: Centre for International Affairs, Harvard University)

F.A. Hayek (1960), The Constitution of Liberty (London: Routledge Kegan Paul)

H. Hughes (2007), Lands of Shame: Aboriginal and Torres Strait Islander “Homelands” in Transition (Sydney: Centre for Independent Studies)

J. Jacobs (1992), Systems of Survival, a Dialogue on the Moral Foundations of Commerce and Politics (New York: Random House)

W. Kasper (1975), “A New Strategy for Malaysia’s Economic Development in the 1970?” in D. Lim (ed.), Readings on Malaysian Economic Development (Kuala Lumpur: Oxford University Press); pp. 127-136

W. Kasper (1988), “Immigration, Culture, Nationhood: Into the Next 200 Years”, Quadrant (December) 1988; pp. 52-56.

W. Kasper (2011), The Merits of Western Civilisation (Melbourne: Institute of Public Affairs)

W. Kasper (2013), The Hardware and Software to Overcome a Middle-Income Trap. Policy Ideas No. 8 (Kuala Lumpur: IDEAS—Institute for Democracy and Economic Affairs, Nov. 2013). <http:/ideas.org.my/?p=7345>

B. Maley (2014), “The Aboriginal People, the Constitution and the Future”, Quadrant, (May 2014), pp. 49-55

A.. Rabushka (1974), A Theory of Racial Harmony (Columbia, SC: University of Carolina University Press)

A. Rabushka–K. Shepsle (2009), Politics in Plural Societies: A Theory of Classical Instability (London: Pearson)

T. Sowell (1990), Preferential Policies: An International Perspective (New York: William Morrow).

T. Sowell (1994), Race and Culture (New York: Basic Books)

T. Sowell (2004), Affirmative Action around the World—An Empirical Study (New Haven: Yale University Press)

T. Sowell (2013), Intellectuals and Race (New York: Basic Books)

2 thoughts on “Small Change at a Huge Cost

  • mvgalak@bigpond.com says:

    The tragedy of the so-called Sudeten Germans, who became refugees as a result of WWII is not sufficiently recognised for its cruelty and sheer maliciousness. Sometimes, a personal suffering, however, gives unique insight into the suffering of others. This empathic understanding of an impact of the tidal waves of uncertainty, which create fear and learned helplessness in those , who , by dint of fate or human intent, became the subjects of these calamities, gives such a person an ability to see what others do not – consequences.
    The quintessence of this article – do not create a toxic relationship between different groups living in this country – is worth remembering and following. Thank you, Wolfgang Kasper.

  • acarroll says:

    Thanks for the article Wolfgang.

    It sounds to me that you’re arguing for homo economicus — that model human being who will be produced by making everywhere “diverse” and subsequently homogenised (i.e. NO diversity anywhere any more) at which point the population may downward converge to a McDonald’s culture, a root-less malaise of easy to manipulate workers and consumers.

    That model is great if you’re of the oligarchs: a class that can keep its high-IQ community isolated from all this while at the same time (hopefully!) having easy to control under classes.

    Culture and Nations as modelled by the humanities are largely social constructs. This position is endemic and as you’ve stated is ripe for Marxist inversions, e.g. Population ABC are economically under developed in region or country XYZ because of racism or repression by ethnic group 123 — they’be be just like us if they were all born into our society, only with a different shade of skin colour.

    But this is position is under increasing scrutiny as the biological realities of human group evolution is gradually coming to light (though not in the mainstream) and it’s showing significant (statistical) differences between human populations in the areas of physical performance (this is the most clearly obvious) but also in the controversial areas like cognitive ability, propensity for anti-social behaviour, mental disease, degree of collectivism vs individualism. As all human populations in pre-historic times were somewhat in-bred or geographically isolated environments, the cultures that evolved reflect evolutionary survival strategies in those regions.

    Let’s assume for a minute that Nations represent clusters of genes that survive by a genetic group strategy, and as such these groups, originating in isolated geographic environments, form subspecies. (You could argue that even within a geographic region that religions may cause genetic isolation of gene clusters when applied over many generations).

    Government advocacy/incentivisation of/for mixing nations in a state from disparate geographic regions into a mestizo population (and no doubt penalties for non-conformance) just so that their subjects are easier to control, in the extreme sounds like a totalitarian eugenics program where the outcome is human domestication.

    In my opinion there has been too much advocating for the subversion of humans’ biological nature. Social “scientists” and commentators consistently express shock and moral outrage when they hear about ethnic conflict and cleansing. I believe they may be looking at the world through a (Eurocentric) dogmatic moral/political model that is dissonant with reality (analogous to the debate around climate science).

    If you haven’t already, I believe you would find Frank Salter’s work challenging and enlightening.

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