Economics and Culture

Victor Davis Hanson writes Culture Still Matters in The National Review 5/31/12.

Excerpt:

But government-driven efforts to change national behavior often ignore stubborn cultural differences that reflect centuries of complex history as well as ancient habits and adaptations to geography and climate. Greeks can no more easily give up siestas than the Swiss can mandate two-hour afternoon naps. If tax cheating is a national pastime in Palermo, by comparison it is difficult along the Rhine.

Do average passersby throw down or pick up litter? After a minor fender-bender, do drivers politely exchange information, or do they scream and yell with wild gesticulations? Is honking constant or sporadic? Are crosswalks sacrosanct? Do restaurant dinners usually start or wind down at 9 P.M.? Can you drink tap water, or should you avoid it? Do you mostly pay what the price tag says, or are you expected to pay in untaxed cash and then haggle over the unstated cost? Are construction sites clearly marked and fenced to protect pedestrians, or do you risk walking into an open pit or getting stabbed by exposed rebar?

To put these crude stereotypes more abstractly, is civil society mostly moderate, predicated on the rule of law, and meritocratic — or is it characterized by self-indulgence, cynicism, and tribalism?

We in the post-modern, politically correct West publicly pontificate that all cultures are just different and that to assume otherwise is pop generalization, but we privately assume that you would prefer your bank account to be in Frankfurt rather than Athens, or the tumor in your brain to be removed in London rather than Lisbon.

HKO comments:

Economics focuses on incentives, but cultural preferences and habit also impact the traction that specific incentives will develop.  Charles Murray recent work, Coming Apart, addresses this same issue – but within our own culture.

We are reluctant to address culture as an explanation of productivity and wealth because we fear it will indicate intolerance or ethnocentric bias. But in reality, as Hanson so appropriately noted, we decide frequently where we live or who we transact with based on cultural preference.

If culture affects economics more than economics affects culture then economic remedies will not likely succeed.  However, if we allow poor economic policies to contribute to the degradation of our culture,we will find it very difficult to correct the undesirable effects with mere economic solutions.