Free markets, democracy, and ethnic hatred:

Poverty, indignity, hopelessness, and grievance feed a profound hatred that has frequently exploded in mass slaughter of economically dominant minorities.

"Markets concentrate wealth, often spectacular wealth, in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority. In these circumstances the pursuit of free market democracy becomes an engine of potentially catastrophic ethnonationalism."

  "Markets and democracy were among the causes" of genocidal violence against market-dominant minorities, Chua asserts.

  "Markets and democracy  may well offer the best long-run economic and political hope for developing and post-Communist societies. In the short run, however, they are part of the problem."

  The three most powerful forces operating in the world today, according to the author, are "markets, democracy, and ethnic hatred." The mix of these forces has loosed a firestorm of hatred amongst repressed impoverished ethnic majorities against the "market-dominant minorities" who lord it over them in their own countries. Poverty, indignity, hopelessness, and grievance feed a profound hatred that has frequently exploded in mass slaughter of economically dominant minorities.
 &
  The Chinese of Southeast Asia, Tutsis in Rwanda, and Israelis in the Near East have been typical targets. Whites are a "market-dominant minority" in South Africa as well as in much of Latin America. Lebanese and Indians are dominant in parts of West and East Africa. The Ibo in Nigeria, Croats in the former Yugoslavia, and Jews in transformation Russia also fit that category.

  "Market-dominant minorities are the Achilles' heel of free market democracy. In societies with a market-dominant ethnic minority, markets and democracy favor not just different people, or different classes, but different ethnic groups. Markets concentrate wealth, often spectacular wealth, in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority. In these circumstances the pursuit of free market democracy becomes an engine of potentially catastrophic ethnonationalism, pitting a frustrated 'indigenous' majority, easily aroused by opportunistic vote-seeking politicians, against a resented, wealthy ethnic minority. This confrontation is playing out in country after country today, from Indonesia to Sierra Leone, from Zimbabwe to Venezuela, from Russia to the Middle East."

  The problems of ethnonationalist backlash and violence are all too real and of obvious importance. Chua performs a major service in highlighting them. Unfortunately, her analysis of the subject is in many ways seriously flawed, as will be pointed out repeatedly below.

"Americans today are everywhere perceived as the world's market-dominant minority, wielding outrageously disproportionate economic power relative to our size and numbers."

  Chua applies her concept more broadly - to regional and global spheres - to Israel in the Middle East and to the U.S. worldwide.

  "Americans today are everywhere perceived as the world's market-dominant minority, wielding outrageously disproportionate economic power relative to our size and numbers. As a result, we have become the object of mass, popular resentment and hatred of the same kind that is directed at so many other market-dominant minorities around the world."

  That the roots of global dislike for Americans or regional hatred in the Middle East for Israelis is connected in any substantial way to their economic success is quite a stretch. Israel would still be hated in the Middle East even if it were impoverished. The international policies of  the U.S. are far more responsible than its prosperity for popular likes and dislikes. All around the world, people in the third world want to come to the United States because they know that people like them are accepted and can make it in the U.S. Indeed, many receive remittances from relatives in the U.S. or in equally wealthy Europe who have done just that.
 &
  Unfortunately, Chua's book is seriously flawed in its persistent exaggeration of the role of free markets and democracy in class, ethnic and racial conflicts. It is ostensibly about the unintended consequences of free market and democratic reforms in many third world and transformation economies.
 &
  However, the author presents a naïve view of democracy and capitalism. Democracy is an ongoing system - not a mere referendum. Free market capitalism is more than a bazaar.
 &
  What this book is really about is the price of failure of such reforms. What it is really about is the dire results that can flow from a failure to establish the institutional framework essential for democracy and capitalism.
 &
  Simplistic efforts at the establishment of free markets and democracy - doomed by the incompetence of the efforts - often play an aggravating role in ethnonationalist backlash. However, in almost every case, there has been a failure to establish the necessary institutions - the political, legal, and financial and commercial institutions - required for successful democratic and capitalist systems. In almost every case, there has been an absence of the legally, economically and politically empowered civil society that is the bedrock of free peoples in free nations. In almost every case, there is a lack of reliable and widely available property rights and access to credit.
 &
  Mercantilist systems dominated by monopoly franchises are NOT "free market" systems. The distinction has been of the essence for competitive market-directed commerce since Adam Smith emphasized it more than two centuries ago. See, Smith, "The Wealth of Nations (I)" and Smith, "The Wealth of Nations (II)" Yet, Chua persistently describes mercantilist and heavily administered systems as "free market" systems.
 &
  Instances where there is "one person, one vote, one time," are NOT democratic systems. A "system" implies a continuous process. Democratic systems include a legally empowered opposition and the periodic possibility of peaceful transfers of power. No democratic election is valid until a subsequent reasonably fair election is held.
 &
  Neither democracy nor capitalist free markets are easy to properly establish or maintain. They are definitely not utopian concepts. Establishment and maintenance is a practical exercise that must fail if pursued in a naïve or ideologically simplistic manner.
 &
  Skepticism about majoritarian excess and political demagoguery are essential for democracy and must be reflected in institutional arrangements.  There is no such thing as "laissez faire" capitalist free markets - and there never has been.

"In the numerous countries around the world that have  pervasive poverty and a market-dominant minority, democracy and markets -- at least in the form in which they are currently being promoted -- can proceed only in deep tension with each other."

  At several points, Chua carefully delimits the scope of her contentions.

  "There are a number of misunderstandings about my thesis that I frequently encounter. I will do my best to dispel some of them here by making clear what I am not arguing. First, this book is not proposing a universal theory applicable to every developing country. There are certain developing countries without market-dominant minorities: China and Argentina are two major examples. Second, I am not arguing that ethnic conflict arises only in the presence of a market-dominant minority. There are countless instances of ethnic hatred directed at economically oppressed groups. Last, I am emphatically not attempting to pin the blame for any particular case of ethnic violence -- whether the mass killings perpetuated by all sides in the former Yugoslavia or the attack on America -- on economic resentment, on markets, on democracy, on globalization, or on any other single cause. Numerous overlapping factors and complex dynamics, such as religion, historical enmities, territorial disputes, or a particular nation's foreign policy, are always in play.
 &
  "The point, rather, is this. In the numerous countries around the world that have  pervasive poverty and a market-dominant minority, democracy and markets -- at least in the form in which they are currently being promoted -- can proceed only in deep tension with each other. In such conditions, the combined pursuit of free markets and democratization has repeatedly catalyzed ethnic conflict in highly predictable ways, with catastrophic consequences, including genocidal violence and the subversion of markets and democracy themselves. This has been the sobering lesson of globalization over the last twenty years."

  Wouldst that Chua had confined this book within these logical limits. Wouldst that she had been content to concentrate just on this very important phenomenon. Unfortunately, throughout the book, she paints with a broad brush - clearly exceeding these limits.
 &
  Like many books of this type - earnestly highlighting some much under appreciated problem - this book tends to be substantially overbroad and overstated. This gives it a lack of coherence. It is she - by the overbroad scope of the mass of the book - who creates the "misunderstandings about [her] thesis."
 &
  The book wanders extensively into the problems of demagoguery and political use of scapegoats in general. Down through the millennia, these have been recognized threats in autocratic and democratic systems alike. The author frequently reaches to make sensational assertions at the expense of accuracy - thereby frequently shedding more heat than light.
 &
  There has never been any shortage of targets for demagogues to aim at - or of scapegoats for political leaders to exploit. Where market dominance is not present, something else will be manufactured.

Americans remain intentionally blind to the number of nations where real democracy would bring anti-market, anti-American leaders to power.

  Democracy permits demagogues to play on ethnonationalist resentments. It gives a voice to the "impoverished, frustrated, excluded masses of the world." Nevertheless, Chua asserts, Americans remain intentionally blind to the number of nations where real democracy would bring anti-market, anti-American leaders to power.
 &
  Market systems in advanced nations always include redistribution programs that take the hard edges off poverty and provide education and infrastructure broadly. Such programs are almost totally absent from modern efforts to establish privatization and market systems in third world and transformation nations. Indeed, these new economic systems seldom include any substantial effort to extend the facilitation of market-directed commerce to the commercial activities of the impoverished majority.
 &

  Moreover, implementation of universal suffrage democracy in developing nations attempts something never achieved in the West.

  "It is striking to note that at no point in history did any Western nation ever implement laissez-faire capitalism and overnight universal suffrage at the same time -- the precise formula of free market democracy currently being pressed on developing countries around the world."

  Chua repeatedly invokes the "laissez faire" propaganda myth. See, "The Laissez Faire Straw Man" segment in "Future Economic Myths." Thus, she totally misrepresents the nature of market-directed capitalist commerce.
 &
  For capitalist free markets to flourish, it has never been enough for governments to simply stand aside. Governments must actively facilitate the commerce of the people, and that commerce must be directed by competitive markets. Government policies that have proven reasonably successful at these tasks have grown in complexity and sophistication throughout the last two centuries. While governments may choose to act or not act with respect to individual policies, no successful capitalist system is - or has ever been - a "laissez faire" system.
 &
  The problem is neither democracy nor markets nor capitalism nor globalization. Indonesians slaughtered Chinese - Indians rose up and slaughtered Englishmen - Amerindians scalped white settlers - prior to 1980 and modern globalization. Jews were being subject to pogroms and the holocaust - tribal minorities were being subjected to periodic slaughter all around the world - throughout the centuries and millennia before 1980.
 &
  The problem is primarily one of government failure - of failure to provide the complex infrastructure needed for broad participation in modern commerce. See, Government Futurecast," Part I, "Economic Virtues of the U.S. Political System" for details about what is required. The problem is primarily one of failure of the wealthy minority in these states to form a concerned and active civil society.
 &
  Democracy, capitalism and globalization are not magic wands. They cannot overcome poor governance and lack of social concern and participation.

  The author's family is a part of the Chinese market-dominant minority in the Philippines - lording it over the disdained Filipinos who are their employees and servants. A much-beloved aunt was murdered by a Filipino servant - a crime the Philippine police did not deign to actively pursue.

  Chua remarks that her family considers the ethnic Filipinos to be stupid and lazy. There are many subject peoples who have been thus viewed. Somehow, however, these people are able to thrive in the U.S. How did travel to the U.S. suddenly make them so smart and diligent?
 &
  As the author points out, the ethnic hatred is primarily the fault of the demagogues who target ethnic minorities and the political leaders who use them as scapegoats. However, it is also the fault of the market-dominant minorities who don't  give a damn for the welfare of their ethnically different countrymen.
 &
  Generally, they consider themselves Chinese who happen to live in Indonesia or the Philippines rather than Indonesians or Filipinos who happen to be from China. Generally, they consider themselves Indians who happen to live in Africa rather than Africans who happen to be from India. There is no broad sense of national responsibility and civic obligation in such wealthy ethnic minorities. Chua, in the conclusion to this book, wisely urges an extensive change in such attitudes.

Markets and democracy are not mutually reinforcing in third world nations that have a market-dominant minority.

Marginal benefits are not enough to assuage resentments of the outsiders who have become increasingly - sometimes fabulously - wealthy in their midst.

    Politically empowering the poor majorities with democracy is not enough, Chua emphasizes. Markets and democracy are not mutually reinforcing in third world nations that have a market-dominant minority. The existence of market-dominant minorities creates problems that must be addressed. Thus, the spread of free markets and democracy together "is a principal, aggravating cause of group hatred and ethnic violence throughout the non-Western world."

  "In absolute terms the majority may or may not be better off -- a dispute that much of the globalization debate fixates on -- but any sense of improvement is overwhelmed by their continuing poverty and the hated minority's extraordinary economic success. More humiliating still, market-dominant minorities, along with their foreign-investor partners, invariably come to control the crown jewels of the economy, often symbolic of the nation's patrimony and identity -- oil in Russia and Venezuela, diamonds in South Africa, silver and tin in Bolivia, jade, teak, and rubies in Burma."

  Chua acknowledges that global capitalism has substantially benefited vast numbers of people who had previously lived in hopeless poverty. It has also marginally benefited billions more. However, marginal benefits are not enough to assuage resentments of the outsiders who have become increasingly - sometimes fabulously - wealthy in their midst.
 &

  New democracies are especially vulnerable to a virulent demagoguery based on ethnic hatred.

• Sometimes, the market-dominant minority succeeds in suppressing the majority. This is the basis for "crony capitalism."
• Sometimes the majority supports demagogic leaders who undermine both markets and democracy. Chua mentions Sierra Leone and Zimbabwe as examples.
• Sometimes, the repressed majority then breaks loose in a fever of slaughter - as in Rwanda.

  The collision between democratic politics and free market requirements is a very real problem. In new and unstable democracies, the system may be dominated from the outset by demagoguery that is frequently lethal to the system. This is a pervasive problem in Africa. For two centuries, it has been a pervasive problem undermining democratic systems in Latin America.
 &
  However, only with democracy do impoverished majorities have any chance to receive such essentials of modern prosperity as education, property rights, access to credit, appropriate physical infrastructure, rule-of-law governance, etc. Equality of access to such factors is clearly essential for modern economic prosperity.
 &
  Why such essential political and economic factors developed in the colonial U.S. and Canada but not in other colonies in the Western Hemisphere or elsewhere has been attributed to many sociological and political factors. However, it is also likely that it is the result of the economics of initial colonial development and a commercial "path dependency" thereafter. Indeed, it may be more the result of economic heritage than political and sociological heritage.
 &
  Where colonial economic development proceeded most profitably on the basis of great land estates or mining franchises worked with slaves or masses of indigenous laborers, the small economic elites monopolized political power. Thus, institutions developed that favored the elites and maintained the gross inequalities into modern times. That this was also the case in the southern colonies/states in the U.S. as late as the 1960s strengthens the argument in favor of commercial path dependency as against just political and sociological factors. Two economists - Stanley L. Engerman and Kenneth L. Sokoloff - skillfully make this argument in "Factor Endowments, Inequality, and Paths of Development Among New World Economies," NBER Working Paper No. 9259, October, 2002.
 &
  The process of establishing democratic market systems in third world nations may be messy - and even involve considerable bloodshed. Democracy isn't easy at best, and there will surely be many failures. However, democracy is probably essential nevertheless if third world peoples are ever to exert sufficient political pressure to induce development of governance that will provide the legal, political and physical infrastructure that facilitates their commerce. No matter how often they fail, efforts at democracy are essential if third world peoples are ever to learn to govern themselves.

  Chua notes that the nationalization of private assets in many third world nations throughout the 20th century had little to do with socialism or Cold War conflict. Repeatedly, it was only the property of market-dominant minorities that were targeted. She provides numerous examples - admittedly including many in systems that could hardly be called free market and/or democratic. Correctly, she notes that ethnic nationalism was a far more powerful force than Marxism in most of these instances.

  "Not all nationalizing leaders were democratically elected - although many were -. But virtually all were supported with wild enthusiasm by the indigenous majority when they expropriated the riches of the market-dominant minority." (Precisely!)

Southeast Asia:

&

Extreme commercial "path dependency" makes it very difficult for indigenous people to even begin to compete and prosper.

"Indigenous Southeast Asians often feel that free markets benefit only 'outsiders' -- ethnic Chinese and foreign investors -- along with a handful of corrupt indigenous politicians in their pockets."

  The majority population thus has no opportunity for economic advancement and escape from their traditional agricultural economy. New Chinese immigrants are flooding across the border from China, and taking over prime farm lands. The economy - both legitimate and illicit - is now entirely dominated by Chinese. Resentment against the Chinese and the ruling junta seethes - in repressed frustration.

  However, Myanmar (Burma) is anything but "democratic" or a capitalist market economy nation. So, why is this example even included in the book?

  Chinese domination of Southeast Asian commerce predates modern market reforms by many centuries. It even predates European colonialism.
 &
  However, globalization has multiplied the opportunities for the commercial classes. Minority Chinese have prospered greatly everywhere, vastly increasing their economic dominance. Chua goes into considerable detail about this. The indigenous majorities have clearly benefited from globalization, but nevertheless remain "shockingly poor." The past prosperity and commercial connections of the market-dominant Chinese and similar market dominant minorities gives them overwhelming advantages. Extreme commercial "path dependency" makes it very difficult for indigenous people to even begin to compete and prosper.

  "In the eyes of Southeast Asia's indigenous majorities, global markets have produced multimillionaires, billionaires, and multibillionaires -- but only among members of another ethnic group. As a result, despite marginal increases in their income, indigenous Southeast Asians often feel that free markets benefit only 'outsiders' -- ethnic Chinese and foreign investors -- along with a handful of corrupt indigenous politicians in their pockets."

  There are other market-dominant minorities in Southeast Asia and India, but none as widespread and successful as the Chinese. Resentment is widespread. Vengeful mob violence is a repetitive theme.

  "[Resentment] is ready at any moment to be catalyzed, whether by another economic downturn, a charismatic hate-monger, or simply a dispute between a Chinese employer and an indigenous laborer. Even during relatively stable periods the Chinese throughout Southeast Asia are repeatedly subjected to kidnapping, vandalism, and violence."

Latin America:

Despite the extensive racial mixing in Latin America - and indeed on the Iberian Peninsular from which the colonists came - the disdain of the "white" elite for the "colored" masses "is a deeply ingrained feature of the history of every modern Latin American nation."

  The indigenous Amerindian populations "are prime targets for charismatic demagogues."

  "Increasingly, indigenous leaders like Mallku [in Bolivia] are offering the region's demoralized majorities a package that is hard to beat: a natural scapegoat - rich, corrupt 'whites' - and a sense of pride, ownership, and identity. Sometimes that identity is 'Aymara' -- the Aymara are a fiercely independent people whose ancestors created architectural marvels many centuries before the Incan conquest; other times, it is 'Quechua,' 'Mayan,' 'Inca,' or just 'indio.'"

  These Amerindians include many who exhibit the economic virtues of frugality and entrepreneurial spirit. They can be seen in great numbers selling their wares in local markets. Yet, they remain impoverished, living generally without heat, clean water or medical care, and no secondary education. They speak only indigenous languages and are completely cut off from the modern sectors of the economy.

  Precisely! A third world bazaar is not the equivalent of capitalist free-market commerce. Only long term investments build prosperity, and these require reasonable safety and a web of abstract paper claims - all dependent on law.

  Unlike the Chinese, the Hispanic elites rarely exhibit entrepreneurial vigor. Spanish heritage includes a disdain for commerce and industry - which is generally left to Jews and Moors. "Whatever the reason, the Spanish and Portuguese colonizers of Latin America were famous for proclaiming their contempt for business and manual labor." However, there have been more enterprising waves of migrants from Northern Europe.
 &
  Since 1980, globalization has indeed opened up more opportunities for all. More Amerindians have prospered. However, indigenous commerce remains relatively stunted, while the elites have prospered greatly. This is the reality in Peru, Bolivia, Guatemala and Ecuador - the only Latin American nations where Amerindians still constitute the majority. Whites - "however artificial the term and however permeable the category may sometimes be -- are a starkly market-dominant minority." Argentina, Uruguay and Chile are clearly white-majority nations.
 &
  Even where Amerindian populations are small, there is a cast system - a "pigmentocracy" - with the lightest skinned peoples at the top. Despite the extensive racial mixing in Latin America - and indeed on the Iberian Peninsular from which the colonists came - the disdain of the "white" elite for the "colored" masses "is a deeply ingrained feature of the history of every modern Latin American nation."
 &

  There is thus "a market-dominant, ethnically distinguishable minority" throughout Latin America. At the top, they have European names and are frequently foreign educated, speaking English and other major European languages besides their native Spanish. Here, as in Asia, corruption and crony capitalism are the rule. Whether "old Spanish" or, in Brazil, "old Portuguese" - whether land owners or entrepreneurial new immigrants from a variety of lands - it's the whites that prosper. Their "capital, education, foreign connections, and conservative social policies" enable them to reap most advantage from economic liberalization, and they are its primary supporters.

  "The presence of commercially dynamic immigrant populations -- not just Jews and Lebanese, but also Germans, Italians, Palestinians - - - and other groups -- is observable in virtually every country in Latin America. These relatively recent arrivals are important in that they have broken up the traditional economic stranglehold of the old, 'Spanish-blooded' landowning oligarchies. But they have not altered the basic pigmentocratic reality of Latin American society."

"Like the indigenous populations of Southeast Asia, the uneducated, disease-ridden, desperately poor but numerically vast Indian- or African-blooded majorities of Latin America experience little or no economic benefit from privatization and global markets while finding themselves suddenly filled with contradictory new materialistic and consumerist desires."

  With the demise of Marxism and the rise of global capitalism and global media and modern telecommunications and democracy, discontent has shifted decisively from a class to an ethnic basis. It is spread throughout Latin America. Bolivia's El Mallku, Venezuela's Hugo Chavez, Mexico's Zapatista leader Subcomandante Marcos, base their power on appeals to the "great number of frustrated, long degraded, dark-skinned masses." Their movements are intensely anti-market and anti-globalization.
 &
  There are major differences between Latin America and Southeast Asia. There is more racial mixing in Latin America, and the economically dominant "whites" also control the political power. Nevertheless, the phenomenon is essentially the same.

  "Like the indigenous populations of Southeast Asia, the uneducated, disease-ridden, desperately poor but numerically vast Indian- or African-blooded majorities of Latin America experience little or no economic benefit from privatization and global markets while finding themselves suddenly filled with contradictory new materialistic and consumerist desires.  Meanwhile, along with their foreign investor partners, a tiny, well-connected, ethnically distinguishable minority dominates virtually every aspect of the modern economy, from export agriculture to wireless telecom, and uses liberalization, privatization, and globalization to increase its advantages."

Russia's Jewish Oligarchs:

&

  President Putin has sent two of the oligarchs into exile and has brought the others to heel. In this, he has been aided by - and has stoked - the latent anti-Semitism widespread in Russia.

  "As recently reported by the National Conference on Soviet Jewry, political anti-Semitism appears to be on the rise in Russia, with prominent politicians, particularly those associated with the Communist Party, employing anti-Semitic rhetoric in parliamentary sessions, on television, in newspapers, and at mass rallies in order to further their own political ambitions.
 &
  "As is sadly so often the case with market-dominant minorities, struggling ordinary Russian Jews, with no political connections or billion-dollar fortunes, bear the brunt of Russian anti-Semitism."

  The wealthy Chinese - with foreign bank accounts and connections - were similarly not the Chinese who bore the brunt of the ethnic riots in Indonesia of a few years ago. The wealthy had departed the scene at the first whiff of trouble.
 &

Africa:

  However, there are also some black market-dominant minorities. The Tutsi of Rwanda, the Kikuyus in Kenya, the Ibos in Nigeria, the Bamiléké of Cameroon, are among them. Chua again provides detail.

  "With varying degrees of intensity, all of these African groups have been the objects of widespread resentment. In Uganda, for example, the politically dominant groups of the north have repeatedly subjected their economically powerful Baganda of the south to bloody purges. In Nigeria in 1966, tens of thousands of Ibo were slaughtered indiscriminately by furious mobs. In Ethiopia, the relatively prosperous Eritreans were recently expelled en masse. In Cameroon, 'la Probleme Bamiléké' has been called 'the most critical source of inter-ethnic tension' in the country today, with hostility seething among Cameroon's two hundred other tribes and even priests lashing out against Bamiléké 'exploitation' of 'the weak and the poor.' Finally, in Rwanda, the genocidal massacre of the Tutsi minority is inextricably connected with their historic economic dominance."

  Again, Chua departs from the boundaries of her thesis for purposes of including some additional sensational content. Clearly, much of this has nothing to do with real democracy or capitalist markets or globalization. Much of it is not even limited to the period after 1980. Even where associated with some semblance of free market democracy, many of these incidents could clearly just as easily have occurred without it. As the author notes, below, the resentments and unequal treatments clearly flow from historic roots prior to 1980 before the current era of globalization. Clearly, the socialist and other administered alternatives to capitalist markets that previously existed, and the various autocratic political systems, did not - and do not - provide an answer.
 &
  Other examples are from failed democracies. As Chua herself notes, "one man, one vote, one time" does not a democracy make. Nor are perhaps most of the economic systems real capitalist free-market systems.
 &
  The author has her hands around very significant problems. If she could free herself from the myth of laissez faire capitalism that she repeatedly invokes, she might be able to deal with the vital distinction between third world bazaars and capitalist free market systems.

Colonial 'divide-and-conquer policies' favored certain groups over others and, in some cases, "may have created 'ethnic identities' and 'ethnic differences' where they previously did not exist."

In places where foreign minorities have been driven out, they take all the human capital needed to run the economy with them.

  The non-indigenous market-dominant minorities in Africa benefit from domestic and international contacts and education and capital that provides them with immense advantages. These advantages frequently have colonial roots. Colonial 'divide-and-conquer policies' favored certain groups over others and, in some cases, "may have created 'ethnic identities' and 'ethnic differences' where they previously did not exist."
 &
  Economic liberalization, free markets and globalization aggravate "ethnic concentrations of wealth, provoking the same dangerous combination of frustration, envy, insecurity, and suppressed anger" seen in other third world regions. When universal suffrage democracy is added to this mix, explosive demagoguery is inevitable.
 &
  In places where foreign minorities have been driven out, they take all the human capital needed to run the economy with them. The result is economic chaos. (See, Paul Theroux, "Dark Star Safari.") All these market-dominant minorities are widely hated, work closely with corrupt regimes, are handy political scapegoats, and are the targets of periodic pogroms.
 &

Backlash:

&

  Some majoritarian governments have rejected market economics and confiscated the wealth of the market-dominant minority. In other places, the market-dominant minority has supported autocratic government that suppresses the majority. In Yugoslavia and Rwanda, majority-supported ethnic violence on a massive scale has been unleashed.

  "As markets enrich the market-dominant minority, democratization increases the political voice and power of the frustrated majority. The competition for votes fosters the emergence of demagogues who scapegoat the resented minority, demanding an end to humiliation, and insisting that the nation's wealth be reclaimed by its 'true owners.'"

  Yet again, the author paints with too broad a brush. The ethnic and religious conflict in the Yugoslav region, for example, has been flaring up periodically for many centuries - long before the 1990s. Only Tito was strong enough to quell it. After his death, it probably would have occurred under any system.

Backlash against markets:

&

A one percent white majority holding almost all the country's best land as a result of the advantages of a colonialist past creates conditions ripe for firebrand politics.

The fall of Communism and the discrediting of Socialism has not prevented a continuous wave of nationalizations and confiscations aimed at the property of market-dominant minorities.

  This is not "anarchy," Chua insists. It is "born of democracy." Mugabe took power after an overwhelming victory in a closely monitored election in 1980, and remains widely popular to this day.

  "Mugabe has behaved as a highly rational vote-seeking politician, and the recent violence and seizures are direct products of the democratic process."

  If Mugabe had somehow disappeared, the conditions in Zimbabwe would just have spawned someone like him. A one percent white majority holding almost all the country's best land as a result of the advantages of a colonialist past creates conditions ripe for firebrand politics.

  Of course, these conditions would now exist with or without markets - with or without a failed effort at the establishment of democracy. Any post-colonial political leader would still have been tempted towards demagoguery to maintain popular support.

  The fall of Communism and the discrediting of Socialism has not prevented a continuous wave of nationalizations and confiscations aimed at the property of market-dominant minorities.

  "Indeed, almost everywhere market-dominant minorities exist, post-1989, democratization has generated a volatile combination of anti-market sentiment and ethnic scapegoating. As a result, in a striking number of countries, even as markets triumphantly swept the world in the 1990s, a backlash of nationalization and confiscation began."

"Stirred to political consciousness by the demagogic Chavez, Venezuela's 80 percent dark-skinned majority, most of whom live below the poverty line, voted for a leader whose nationalization and other anti-market policies seem to Westerners utterly irrational."

• In Indonesia, confiscation of Chinese businesses led to a flight of capital, a dysfunctional economy, a vast increase in unemployment, and pervasive corruption among the government officials charged with managing the assets. Since only the Chinese and other foreign interests have the wherewithal to purchase these assets, as of the writing of the book (copyright 2003), they remained moldering in government hands.

  Indonesia's economy is hardly a "free-market" economy. It is similar to India's "license raj" - mercantilist and hog-tied by government regulations. It is also burdened with a dysfunctional legal system and pervasive corruption ranked among the worst in the world.

• In Russia, marketization and democratization has galvanized the anti-Semitism that has long been a feature of Russian life. Politicians all over Russia - and in the Ukraine, Belarus and the Baltic republics as well - now routinely engage in "anti-Semitic baiting." Putin's efforts to eliminate the political influence of the oligarchs - almost all of whom are Jewish - have been widely popular.
• In Venezuela, democracy and Hugo Chavez have stripped away the myth of classless social unity.

  "Ironically, given Chavez's constant railing against globalization, it was one of globalization's major components -- democracy -- that allowed Chavez to convert generations of bitterness and frustration into a powerful political engine. Stirred to political consciousness by the demagogic Chavez, Venezuela's 80 percent dark-skinned majority, most of whom live below the poverty line, voted for a leader whose nationalization and other anti-market policies seem to Westerners utterly irrational."

  A coup attempt by "the country's wealthy minority" made no effort at inclusiveness, and quickly collapsed.

  Precisely! This is one of the real problems for such third world nations and their market-dominant minorities. However, an effort at inclusiveness would probably have been too-little-too-late even if attempted at that late stage of the game.

Backlash against democracy:

  This often takes the form of "crony capitalism," that creates "corrupt, symbiotic alliances between indigenous leaders and a market-dominant minority." 

  "The indigenous regime protects the market-dominant minority' wealth and businesses. In turn, the World Bank and IMF supply loans. In the short run the result is a boom in foreign investment, economic growth, and riches for the rulers and their cronies. At the same time, however, the country's inner furies begin to boil. Sooner or later -- and it is usually sooner -- the situation explodes."

• In Sierra Leone, the market-dominant Lebanese repressed the indigenous majority until recently when - with help from Libyan president Muammar Qaddafi and Liberian president Charles Taylor - the indigenous majority mounted a vicious rebellion that threw the nation into chaos. The Lebanese had ruled through a classic crony-capitalism system, profiting enormously from commerce - especially in diamonds - and kicking back handsome portions of the profits to a small clique of the ruling indigenous majority elite. Mismanagement of the economy ultimately brought hardships that drove the people to support rebellion. Almost all the Lebanese fled the country.

    "Needless to say, these events cannot be blamed on markets, democracy, or globalization. The reign of terror that destroyed Sierra Leone between 1991 and 1999 was the deliberate handiwork of vicious, self-interested butchers and thieves. Nevertheless, it is a mistake not to see how markets, democracy, and a market-dominant minority interacted to make this scenario possible."

  It is evident from this example that Chua's references to "free markets" is false. Markets dominated by monopoly franchises and characterized by restricted access to property rights and credit are not in any real sense "free market" systems. Competition and equality before the law has been the essence of capitalist market-directed commerce since the days of Adam Smith.
 &
  The fact that third world systems interact with world markets by means of exports and imports and investment flows does not make them "free market" systems any more than such interactions by socialist systems made them "free market" systems. Nor does the involvement of "the IMF and World Bank and Western investors" turn such a system into a 'free market system," although Chua relies frequently on this fact as a makeweight.

• In Indonesia, President Suharto protected the Chinese minority who ran his economy and provided him and his family with substantial revenues in classic crony-capitalism style. He frequently provided monopoly franchises for the most influential. This ultimately exploded in anti-Chinese rioting in 1998 - again after economic mismanagement had greatly deepened the poverty of the indigenous majority.
• In the Philippines, Ferdinand Marcos similarly protected the Chinese minority, freeing them from the restrictions previously imposed upon them in return for substantial revenues in classic crony-capitalism style. Here, too, the most influential were frequently awarded monopoly franchises. When the end came, it was not as violent as in Africa or in Indonesia.
• In Kenya, a similar relationship between the Indian market-dominant minority and Pres. Daniel Arap Moi generates vast hostility among the indigenous majority.

  Revealingly, Chua presents autocratic power grabs in Africa and Latin America as extreme forms of "antidemocratic backlash by market dominant minorities." Her definition of what constitutes democratic free market systems is so broad as to be essentially meaningless.
 &
  Against all odds, reasonably free democratic elections resulting in peaceful transfers of power continue in the Philippines and Indonesia, and many other third world nations. That others are not so fortunate - that efforts at establishing or maintaining democratic systems sometimes fail - is hardly surprising given the inherent difficulties of democratic systems. This is something the author is not unaware of.
 &
  Both Indonesia and the Philippines are again achieving economic growth - but at a pace substantially slowed by their continuing economic and political weaknesses.

"Democracy in Latin America has historically been more formal than actual; elections notwithstanding, party control and political power have nearly always remained in the hands of the European-blooded, educated, cosmopolitan elite."

• In many Latin American states, failure at democracy continues to be a political art form.

  "Democracy in Latin America has historically been more formal than actual; elections notwithstanding, party control and political power have nearly always remained in the hands of the European-blooded, educated, cosmopolitan elite."

  Non-market systems are doomed to economic failure and unending zero-sum game conflicts. Autocracy will generally do nothing more than sit on a continuously boiling pot. The alternative of autocratic capitalist market systems - such as in Singapore, China and initially in Chile, depends crucially on finding autocrats who actually want to encourage widespread prosperity - but such enlightened autocratic leadership is something unfortunately quite rare.
 &
  It is not "free market democracy" that "breeds ethnic hatred and global instability." That problem has existed for millennia. It is one of the major problems that capitalist free markets and democratic systems must grapple with. They are not always successful - but then, all other approaches have been far less successful.

Backlash against market-dominant minorities:

&

  The genocidal slaughter of Tutsis in Rwanda provides another example  for the author. The slaughter was the result of many decades of increasing grievance. However, liberal political reforms loosed the holocaust.

  "Undoubtedly, Belgian racism and favoritism  and decades of corrupt dictatorship laid the groundwork  for the genocide that followed. But the fact remains that a majority of the Rwandan people supported, indeed personally conducted, the unspeakable atrocities committed in 1994. These atrocities were in a terrible sense the expression of 'majority will' in the context of mass poverty, colonial humiliation, demagogic manipulation, and a deeply resented, disproportionately wealthy 'outsider' minority."

  However, with respect to Yugoslavia, Chua readily admits that "it would be absurd to reduce the historical enmity between Croats and Serbs to economics." However, democratic reforms in 1990 permitted demagogic exploitation of these hatreds - in Croatia against Serbs and in Serbia against Croats and Muslims.

  "I am distinctly not arguing that market-dominant minorities are the source of all ethnic conflict or that market-dominant minorities are the only targets of ethnic persecution. On the contrary, in the former Yugoslavia for example, Serbs were also ethnically cleansed from the Krajina region of Croatia, while huge numbers of Albanians were exterminated en masse; neither group was a market-dominant minority."

  In such instances, she is content to highlight the impact of just democracy on these events.

  Why that should even be a part of the book is something she does not explain. Demagoguery and pogroms are not limited to new democracies. Under any system, they are often triggered when economic policy mismanagement causes periods of sharply increased economic hardship.
 &
  In those instances where reform efforts continue to be pursued - and with a few exceptions, only in such instances - there is hope for some progress and eventual prosperity for minorities and majorities alike. Compare the Baltic republics to Belarus - Croatia to Kosovo - Chile to a host of other Latin American examples - the Czech Republic to Ukraine. Hopefully, we will be able ultimately to compare the old Ukraine to the new Ukraine.

The Asian tiger economies:

&

  Similarly, most central European countries have no market-dominant minorities. Whatever their problems, they do not include the problems of market-dominant minorities. Some African states - like Botswana and Sudan - are also beyond the scope of this book. (Sudan is a place of "free market reform?") 

  "The global spread of free market democracy has thus been a principal aggravating cause of ethnic instability and violence throughout the non-Western world."

  This is clearly incorrect. It is precisely the failure to establish capitalist market-directed commerce - with competitive markets and property rights and equality before the law, etc. - that aggravates these tensions. It is precisely the failure of democratic systems that has loosed instability and violence.

Demagoguery in the West:

&

  Chua examines the factors that have permitted free markets and democracy to thrive in the West, and asks if they might be transferable to struggling third world nations. Her answer is that some can, and some can't - and that some should, and some should not.

• Redistributionist "tax-and-transfer" programs have taken the "hard edges" off the worst poverty.
• Voting franchises limited by property and wealth requirements and gender were an initial feature of democratic systems in many modern states.

  "Not only the United States, but all the Western nations had long-standing exclusions from suffrage. However repugnant, these political exclusions were arguably important to Western success in establishing stable free-market democracies."

  By establishing "instantaneous democratization -- essentially overnight elections with universal suffrage" in developing countries - we are asking them to achieve something no advanced nation has achieved.

• The "welfare state" programs vary, but all advanced nations provide a broad array of social benefits.
• Competition laws limit the extent of monopolization and the powers of monopolies that do exist.

  "It is important to recognize, as we export free market democracy to the non-Western world, that many of these stabilizing devices do not exist in the developing world, that some of them are unsavory, and that others are, practically speaking, unreproducible."

  Civil society and the many factors of government economic policy designed to facilitate the peoples commerce are part and parcel of capitalist market-directed commercial systems. These can - and to some substantial degree must - be reproduced in third world nations if they are to ever enjoy successful free market democracy. Fortunately, perfection is not required and, indeed, never achieved. As is being demonstrated in China, a cornucopia of benefits flows from any sustained effort at reform. Chua includes several of these factors in her policy recommendations at the end of the book.

In the U.S., there is opportunity for all. There are property rights and education for all and access to credit that is widespread, and a reliable legal system.

  These types of factors are ignored by those promoting free market democracy in developing nations, Chua emphasizes.

  "In other words, today's universal policy prescription for 'under-development,' shaped and promulgated to a large extent by the United States, essentially amounts to this. Take the rawest form of capitalism, slap it together with the rawest form of democracy, and export the two as a package deal to the poorest, most frustrated, most unstable, and most desperate countries of the world. Add market-dominant minorities to the picture, and the instability inherent in this bareknuckle version of free market democracy is compounded a thousandfold by the manipulable forces of ethnic hatred."

  In this - her main thesis - she is indubitably correct.

  In discussing the class attitudes in the U.S., Chua puts her fingers on an important part of the problem. In the U.S., there is opportunity for all. There are property rights and education for all and access to credit that is widespread, and a reliable legal system.

  Such widespread opportunity is a rare commodity. It is far less present even in the other major European advanced nations. It is certainly not widely present among the struggling third world nations.

  In the U.S., the author states, racism is a factor that "fractured the poor majority."

  Here, Chua obviously goes astray. The "poor" in the U.S. are not a "majority." The U.S. has long been a majority middle class nation. Even the blue collar "working class" has since colonial times been observably better off in the U.S. than in Europe. Communists like Engels wrote despairingly of the loss of "class consciousness" of workers who migrated to the U.S. Family farmers at least owned their own land.
 &
  She omits another major factor. The pervasive influence of a broad "civil society" that is legally, economically and politically empowered and actively concerned with local governance and the welfare of their communities has also since colonial times been a major factor in U.S. political and economic success.
 &
  Yet a third factor is the one raised by Engerman and Sokoloff, supra., at p. 4. The nature of the economic factors found initially in the northern colonies favored small workshops and family farms that attracted "relatively homogeneous populations with relatively equal distributions of human capital and wealth." This led to development of more democratic political and civil institutions and concern for the peoples' commerce on which the governments were dependent for their revenues.

  Chua provides two pertinent examples to demonstrate that Western democratic free market systems have not always been free from the problems of market-dominant minorities.

• After the U.S. Civil War, several southern states and many southern counties had black majorities. By the beginning of the 20th century, this problem had been "solved" by the disenfranchisement of the vast majority of blacks. "The American South during the Jim Crow era is a classic example of a backlash against democracy" by a "market-dominant minority, fearful of confiscation and redistribution."
• After WW-I, Germany hurriedly formed the Weimar Republic with universal suffrage. The economic hardships of the 1920s and 1930s propelled the Nazis to power on the basis of an ethnonationalist message similar to those used by third world demagogues today.

  However, there was no market-dominant minority in Germany. So, why is this example even included?

  Then, she notes that conditions in several cities in the U.S. resemble those in third world nations. Local commerce is dominated by a small minority of Koreans amidst a resentful black majority. There have been periodic race riots in black areas of many major cities.
 &
  What will happen towards the end of the 21st century when the "browning of America" reduces whites to minority status? The American "melting pot" - Chua convincingly explains - with assimilation and intermarriage - should take care of that.
 &

The ugly American:

&

  Nevertheless, Chua spends more pages relating global anti-Americanism to ethnonationalism than for conditions in any particular country.

  "The vicious passionate, often self-contradictory anti-Americanism experienced by so many among the world's poor is strikingly analogous to the resentment directed against market-dominant minorities around the world."

  That success will breed envy in small-minded people is perhaps inevitable. It is something a successful nation like the U.S. has learned to live with without guilt - except in the usual guilt-ridden intellectual circles. The subject is worthy of a book of its own, but why Chua chose to stretch her thesis to include it is a good question.
 &
  Nor is it the "poor," but certain groups in the educated middle class in third world nations that have the time and energy - and various political motivations - to devote to such "passionate anti-Americanism." The people of the much-feared "Arab Street," for example, continue to remain more concerned with their own problems - and more threatened by the loss of Western tourism - than with American prosperity.
 &
  The same demagoguery was used against the U.S. by the Communists during the Cold War, and by the Nazis during WW-II before that. It is inevitable that this strain of propaganda will always be used by the enemies of economic and political freedom. With respect to the Muslim militants, see, "Why Do They Hate Us?"

  A segment relating ethnonationalism to hatred of Israel in the Middle East region receives the second most extensive treatment - although this too has nothing to do with free markets or democracy.

  Here, the author strays from her emphasis on the problems of ethnonationalism with a phenomenon admittedly related more to religious factors. Indeed, it clearly dilutes her thesis that democracy and free markets are an inherent - or even just a major - factor in the problem.

Policy responses:

"Educational reform and equalization of opportunities for the region's poor indigenous-blooded majorities are imperative if global markets are to benefit more than just a handful of cosmopolitan elites."

• Access to quality education for disadvantaged minorities is an essential precondition for enabling them to take advantage of the economic opportunities offered and to participate meaningfully in political activities and civil society.

  "Educational reform and equalization of opportunities for the region's poor indigenous-blooded majorities are imperative if global markets are to benefit more than just a handful of cosmopolitan elites."

• Elimination of the monopoly franchises granted to political favorites is especially essential when the beneficiaries are minorities who gain their influence through corrupt bargains with indigenous leaders.

  As Adam Smith pointed out more than two centuries ago, monopoly franchises are always grossly inefficient and the antithesis of competitive market-directed commerce. Throughout her book, Chua ignores the fact that a market dominated by monopoly franchises is not in any sense a "free market" system.

  However,  such common sense, widely acceptable policies are unlikely to solve the problem. In fact, they have been shown to be inadequate where tried, the author points out. It may take generations for such policies to have an impact. Religious and cultural differences are widely believed to predispose some groups to economic success more than others.

  "Most market-dominant minorities - - - are disproportionately economically successful at every level of society, including small traders, retailers, and shopkeepers with no political connections whatsoever. Further, many market-dominant minorities have been successful notwithstanding long histories of official discrimination against them. This is certainly true of the Chinese in Southeast Asia, Lebanese in West Africa, and Jews almost everywhere."

  Official efforts to generate appropriate cultural change have been singularly unsuccessful. The meager results of a "top down" attempt in Malaysia to encourage indigenous Malays to "model themselves on their more 'hardworking' and commercially 'astute' Chinese counterparts" is provided by Chua as an example of such futility.
 &
  Thus, to address the problems of ethnic resentment and ethnonationalist hatred in underdeveloped and transformation nations, "it will be essential to devise measures and create institutions restraining the worst excesses of markets and democracy -- excesses that in the presence of a market-dominant minority often lead to confiscations, authoritarian backlash, and mass slaughter."
 &

Free market policies:

In many nations, the wealthy bear almost no taxes, and there are few if any programs to alleviate poverty.

"Market dominance is surprisingly intractable, and resistant to government-sponsored 'corrective' ethnic policies. Worse yet, there is always the danger that government affirmative action policies will exacerbate rather than ameliorate ethnic conflict, by entrenching ethnic divisions."

• Graduated tax systems to fund social safety net and regulatory mechanisms. 

  In many nations, the wealthy bear almost no taxes, and there are few if any programs to alleviate poverty.

• Antitrust and financial regulation to assure that markets are competitive and transparent are essential for the proper functioning of market systems.

  If there are no "laissez faire" market systems in the advanced nations, there is a reason. There is much that government has to do to facilitate competitive market-directed commerce.

  Unfortunately, Chua concedes, in many countries where "the state is weak, money is scarce, and corruption pervasive," this is more easily said than done.

• Legally enforceable property rights should be extended to all classes in society as recommended by Hernando de Soto in "The Mystery of Capital."

• The raising and maintenance of equity capital and the development of equity - stock - markets should be encouraged.

  This would reduce dependence on debt capital and thus reduce financial instability. By encouraging dispersed ownership of public corporations, participation in the market economy could be made widely accessible. This would encourage a more open and efficient system which would be less dominated by banks and "crony capitalism."

• Affirmative action programs in favor of "disadvantaged ethnic majorities" may be essential to widely disperse the benefits of the market system and give it the stability of public support.

  American policy makers "have to be careful not to project their own negative feelings about affirmative action or identity politics onto societies where the conditions and demographics are totally different." Chua notes the success of such policies in Quebec in the 1960s, and in Malaysia following race riots in 1969.
 &
  The author concedes that, in Malaysia, these affirmative action policies have tended to favor just a small Malay elite, leaving most indigenous Malays in poverty. However, it created a small but visible Malay economic and professional elite, creating a sense "that a market economy can benefit indigenous Malays." This served the country well during the Asian Contagion crisis, when Malaysia largely escaped ethnic violence and suffered only minimal capital flight.
 &
  However, in the hands of irresponsible or demagogic politicians, affirmative action can easily be expanded into confiscation - chasing away the human and financial capital of the market-dominant minority, and plunging an impoverished nation even deeper into poverty.

  "Market dominance is surprisingly intractable, and resistant to government-sponsored 'corrective' ethnic policies. Worse yet, there is always the danger that government affirmative action policies will exacerbate rather than ameliorate ethnic conflict, by entrenching ethnic divisions."

Democracy:

&

  However, constitutional safeguards - "restraints on the excesses of majority rule" - may be impractical in undeveloped states with deeply flawed institutions. Constitutional checks on majority excess have been easily swept away in such nations as Zimbabwe and Venezuela.
 &
  Practical forms of democracy - such as was established by the skeptical founding fathers of the Constitution of the United States, are essential. What is needed is not simplistic or utopian forms of democracy - such as have suffered inevitable failure throughout the last 2500 years of recorded history.  Ways must be found to "slow down and stabilize the process of democratization."
 &
  Indeed, it may well be that autocratic routes to economic transformation - such as occurred in Chile and is occurring in China - will prove superior to efforts involving the immediate establishment of democratic free-market systems. In any event, the author notes, "we can only 'adjust' and 'restrain' market capitalism and democracy so much before we undermine them altogether."
 &
  This is the essence of Chua's thesis. The societal foundations required for successful democratic political systems and/or competitive free-market economic systems may simply not be in existence in many undeveloped nations.
 &

  In the Middle East, Chua asserts, ways have to be found to enhance the voices of moderation and quell the voices of religious fanaticism before any good can be expected to come from democratic reforms.

  U.S. policy is currently based on exactly the contrary view - that the lack of democratic outlets leaves religious fanaticism as the only outlet for political opposition. The results in Afghanistan and Iraq will test these views.

The role of market-dominant minorities:

Maintaining an insular minority ethnic group unconcerned with the welfare of the majority and spurning association with them is a sure prescription for trouble.

  Chua refrains from casting blame on market-dominant minorities for the ethnonationalist threats that they face. (FUTURECASTS is not so kind.) In any event, however, she notes that they are best positioned to address many of the causes of the problem. They possess the skills and resources needed for economic growth and development. Indeed, frequently, undeveloped systems are almost totally dependent upon them.

• Development of an influential civil society concerned with the economic, legal and political development of the nation as a whole must be begun.

  This includes conforming their own conduct to appropriate social and legal norms. This may not be possible where indigenous autocrats run inherently corrupt systems. The culture of corruption can be pervasive. Practices among the indigenous business community may be even worse, but that will not shield a market-dominant minority from ethnic resentment.
 &
  Individually, businessmen may be helpless to change matters. However, business groups have influential associations. These can expand their functions from facilitating member commerce to providing the core of a civil society dedicated to facilitating the commerce and improving the welfare of the whole population. They can engage in broad charitable efforts to promote the health, education and welfare of the indigenous majority. Chua provides some examples of pertinent policies.
 &
  Multinational corporations, too, have been accepting broader social obligations in the places where they do business. Here, Chua provides both examples and suggestions.

• Engaging in public diplomacy - building "soft power" with various charitable and symbolic acts, can be useful in defusing resentments. See, Nye, "The Paradox of American Power," and, Nye, "Soft Power."
• Ultimately, assimilation is the best answer.

  Maintaining an insular minority ethnic group unconcerned with the welfare of the majority and spurning association with them is a sure prescription for trouble. Chinese and Indians in Malaysia, for example, must be Malays who happen to come from China and India - not Chinese and Indians who happen to live in Malaysia.
 &

Iraq and Indonesia:

  Chua closes with an afterword about Iraq and Indonesia, written in June, 2003.
 &

  However, she considers democracy in Indonesia to be "disastrous."

  Since then, Indonesia has yet again held reasonably fair elections that successfully produced another peaceful transfer of political power - despite a host of economic, political and societal problems that continue to threaten its future. Indeed, it is the pressure of democratic politics that is currently inducing the first faint efforts to grapple with these problems.
 &
  As stated above, democracies have a long history of failure as well as success. Demagoguery has been recognized for at least 2500 years as the primary villain undermining democratic systems. However, it is foolish to underestimate democracy or the desire of peoples to live free.