Does Diversity Reduce Freedom or Growth?

The founding father of Singapore, Lee Kuan Yew, credits ‘social discipline’ for the phenomenal economic rise of his country (Sen, 1999). Countries such as Singapore apparently demonstrate that autocratic measures are probably necessary, particularly in culturally fractionalized societies for creating the social stability necessary for economic growth (Colletta et al., 2001). Such thinking informs the so-called “Asian model” (Diamond, 2008).1 Recent studies, particularly in economics, support the logic (Alesina et al., 2006 and Easterly et al., 2006). According to these scholars, the more congruent territorial borders are with nationality, the better the chances for good economic policy to appear endogenously from within these societies because social cohesion determines good institutions and policies for development (Banerjee et al., 2005 and Easterly, 2006b). This paper addresses the question of whether or not social diversity hampers the adoption of sound economic policies, including institutions that promote property rights and the rule of law. We also examine whether democracy conditions diversity’s effect on sound economic management, defined as economic freedom, because the index of economic freedom is strongly associated with higher growth and is endorsed by proponents of the ‘diversity deficit’ argument (Easterly, 2006a).2

…Using several measures of diversity, we find that higher levels of ethno-linguistic and cultural fractionalization are conditioned positively on higher economic growth by an index of economic freedom, which is often heralded as a good measure of sound economic management. High diversity in turn is associated with higher levels of economic freedom. We do not find any evidence to suggest that high diversity hampers change towards greater economic freedom and institutions supporting liberal policies.

Paper here. The data is a panel from 116 countries covering 1980–2012 so this doesn’t rule out a negative long-run effect but it is prima facie evidence that diversity need not reduce freedom or growth.

Comments

I wonder for what types of diversity this would be true ?

There's a guy named Garrett Jones who probably has a thing or two to say on the subject. Too bad Alex doesn't know him.

Garrett Jones once showed that the ethnic Chinese share of five Asian countries was highly positively correlated with a measure of "economic freedom" from the Fraser Institute, a centre-right think-tank. However, he excluded China... !

Exactly: I was writing about the possible effects of migration on institutions, so it was crucial to track countries that had large numbers of Chinese immigrants. Specification is at the heart of good empirical analysis!

Which assumes that Chinese migrants to Thailand across the last 200 years are the same "specification" of person as Chinese migrants today... !

Yeah, paper's behind a paywall, but I'm seeing some major pitfalls.

1) Which way does causality run? The US has a fair bit of diversity, but that's largely because we are rich and people from around the world want to come here. If Sweden remained as poor as Argentina, you can bet they'd be much more homogenous. In contrast countries with a history of tyranny and oppression often drove or exterminated their minorities. There used to be a lot of Yiddish speakers in Central and Eastern Europe. Not so much anymore. In this case wealth and freedom seems to cause diversity not vice versa.

2) I suspect that sampling error biases towards higher measures of diversity in rich country. A country like Switzerland has very effective government, and has accurate censuses of linguistic groups. Moreover the Francophones aren't living in fear that they're going to be massacred by the Romansch speakers. Does anyone have anywhere near an accurate census of the Congo? There's tremendous diversity there, but my guess is it goes into a very simplified, much more homogenous looking, base estimate. Moreover, poor genocidal countries have incentive to underestimate their minority populations who may be auguring for national independence. I'm sure Turkey is undercounting its Kurdish population.

3) Focusing on linguistic diversity ignores a lot of dimensions. Most people would say that Brazil is a much more "diverse" country than Canada. Yet the former is a near linguistic monolith, while the latter has a pretty significant French-speaking population. Again I think this mostly under-counts diversity in poor unfree countries. Countries with a history of oppressive government were more likely to have forced their minority populations to use the dominant language. Enslaved Africans in Brazil were compelled to forger their African mother tongues and speak Portuguese. In contrast French Canadians were treated with relative tolerance and understanding by Anglo Canadians.

4) The ability to indulge in your minority heritage is largely an artifact of living in a rich and developed. Many educated, urban Irelanders are teaching their children Gaelic as a second language. This wasn't as feasible in the past when Ireland was much poorer. Paying for the additional educational cost of a purely non-practical subject is pretty low on the priority list when you're starving.

Excellent points,all.

If you were to measure poor genocidal countries for diversity and growth, you would be ignoring the basic facts of what is primarily going on there. Being poverty stricken and/or genocidal and/or having an oppressive government can stop most constructive things from happening in a country. How can you have constructive things happening when people are inadequately nourished and are not safe from violence? Why even bother to try to measure them in such places?

And I agree that language is not the best measure of diversity.

The paper's behind a paywall, but reading the abstract I note they use some oddly evasive phrases. Specifically, they say:

"We do not find any evidence to suggest that high diversity hampers change towards greater economic freedom and institutions supporting liberal policies."

and

"Our results raise serious doubt about the centrality of social diversity for explaining economic failure . . . "

In other words, diversity doesn't necessarily prevent good policies. But (again without reading the paper) I do find myself wondering if this could be rephrased as:

"We were able to cherry-pick some examples of diverse societies which haven't become trainwrecks. Yet."

// "...they use some oddly evasive phrases.." //

Agree -- that was also my immediate impression.

Seems to be typical academic output of no practical value to its readers.

It has value to readers who have given up hope of ever finding evidence that diversity is inherently valuable, and get giddy when someone says they can't find evidence that diversity is inherently problematic.

"they use some oddly evasive phrases": they use some that I simply don't understand. I do wish they'd written it in English.

“We were able to cherry-pick some examples of diverse societies which haven’t become trainwrecks. Yet.”

I suspect that's more than enough for Alex...

It is 100% consistent with many other papers that show that lack of racial (and other) diversity leads to more socialism and especially more redistribution, because people are more likely to vote for benefits for those who are "like them."

In general, that has been my impression. People who oppose diversity tend to be very much in favor of larger government and welfare for people like themselves.

Certainly that's Trump's personal view. He is a big-government socialist.

Certainly you are kidding, but it's hard to tell on the Internet.

Trump has no consistent political positions.

Interesting theory. It sounds great on its face, but doesn't track with the moods put out by the current political factions.

I'm not sure how you see the word "cherrypick" as appropriate for a dataset of 116 countries over an entire generation.

Do you have some examples in mind of countries which should have made it into their dataset but which were excluded?

These are the phrases we use when we disprove a hypothesis. We simply can't state that absence of evidence is evidence of absence. Those who pursue economics as marketing rather than social science don't bother with this kind of language around hypotheses, but that doesn't mean you should be more likely to believe them!

"we"?

People who write for policy and theory audiences as opposed to just the urinal walls of the internet

The researchers need to cover their behinds in this age where the wrong kind of dissent is punished harshly. James Watson was not immune and Jason Richwine was a good example pour encourager les autres. Putnam and Murray keep their heads down, by going perilously close to heresy and then committing crimestop.

John Derbyshire had a section (on Putnam) in his book on pessimism about this need for scientists to cover themselves (and philosophers as well, as Strauss pointed out, who have had to consider their being a part of society and subject to retribution ever since Socrates drank hemlock):

"The paper is titled “E Pluribus Unum: Diversity and Community in the Twenty-first Century,” and can easily be found on the internet …

That paper has a very curious structure. After a brief (2 pages) introduction, there are three main sections, headed as follows:
The Prospects and Benefits of Immigration and Ethnic Diversity (three pages)
Immigration and Diversity Foster Social Isolation (nineteen pages)
Becoming Comfortable with Diversity (seven pages)

I’ve had some mild amusement here at my desk trying to think up imaginary research papers similarly structured. One for publication in a health journal, perhaps, with three sections titled:
Health benefits of drinking green tea
Green tea causes intestinal cancer
Making the switch to green tea

Social science research in our universities cries out for a modern Jonathan Swift to lampoon its absurdities. [We Are Doomed, p.16.]"

No, the paper's structure is fine. We in the U.S. are going to get more "diversity" (ethnic variety) whether we like it or not. So we need to understand the upsides and downsides, and to turn it to our advantage.

diversity weakens the unity of the populace....the more diverse a nation, the less coherent and focused its public will...thus the electorate is less able to elect and hold accountable politicians that represent the will of the people....thus the big companies are better able to control the government....not all growth is good for the citizenry...this website never dwells on that aspect of growth....consider a goose being fattened so that its liver will be a tasty snack...the goose is tied down and grain is forced down its throat....the goose grows, but is that growth helpful to the goose...no, and soon the goose is butchered and its liver is spread on crackers...

the USA is now so diverse that the people cannot unite against the big corporations ...so now the big corporations and the government and media can do as they please, pretty much...so now they are cramming america full of immigrants in order to force economic growth on us...we are the goose being force-fed immigration in order to obtain economic growth so that corporate profits will grow...and the corporations and plutocrats and their flunkies in the media and academia will snack on us...

Ergo the economic ecosystem of ants or termites, identical components dedicated to identical duties, should be the most successful aggregations of animal life. Maybe they are, as long as the conditions never change substantially.

Big companies have undue influence on government due to concentrated interests, not conformity.

IF a corporation doubles in size, that means jobs.

There is no such thing as bad profit, so long as the profit is aquired legally, ethically, and done by providing a useful service as opposed to jacking up the price in a monopoly market.

Immigration is good to. I find the immgration 'worry' in this country pretty bizzare. The only people really hurt by immgration are those afraid of cultural contanimation, or uneducated people of the majority racial group that perceives competition for their labor. Though frankly, if your an Uneducated white person, whose value is so low, that someone who doesn't even speak english can do your job for less money and perform it at a higher degree of quality, I sort of don't have much sympathy. That's a good thing from a capitalist perspective, because now that they are being priced out of the market, there is incentive to develop skills that soceity actually needs.

Thought experiment for you: imagine 100 million Pakistanis immigrated to the USA tomorrow.

They vote in Sharia law, or something like it, or ban alcohol, or whatever.

Are you now so sure that all immigration is good?

Honestly, its like fire - a tool for good or bad.

Personally, I think immigration should be like a stock portfolio - diverse. I'd also suggest we occasionally have punctuated periods where we take a intermission on immigration (lowering it for a while.)

If you find immigration worry bizarre, you have not made an attempt to understand the best arguments of those who disagree with you. There are many very smart people with serious immigration concerns. Ultimately, the "only people really hurt" by excessive illegal immigration into the U.S. will be everyone in the entire world.

I observe that you did not share any of these "best arguments".

How happy must the people of Venezuela or Zimbabwe be, where government is more powerful than corporations...

This is the flip side of the equally stupid: "You don't like government? Then you should move to Somalia where they don't have one!"

If diversity were so great in itself, the richest part of Europe would be the Balkan Peninsula.

One should note that Norway won the oil economic wealth prize, not the lack of diversity one.

Norway's not been a comparatively poor country at any time in the last century and its per capita product surpassed that of Germany 20 years before the discovery of North Sea oil in 1969. As we speak, Norway's per capita product is 30% higher than Germany's, even though natural resource rents account for only 9% of Norway's domestic product.

And, of course, Norway's unpriced quality of life benefits from not being subject to the Hag Chancellor's Rotherham-every-day-of-the-week. policy

I call major BS on this. Sumner made a similar claim about Saudi Arabia.

http://www.tradingeconomics.com/norway/gdp

If you look at the GDP of Norway over the last 10 years, the correlation with oil price is way bigger than what you would expect from a 9% contribution.

From 2014 to 2015, the Norwegian GDP per capita dropped from $100K to $75K as oil price dropped from $100 to $40 per barrel.

We are roughly speaking of a petroleum revenue velocity of money corresponding to a GDP multiplier of 4. Petroleum revenue drops from 60 billion to 30 billion, GDP drops from 500 to 380 billion, or if crude oil revenue totally disappeared, a linear extrapolation drops GDP to around $250 Billion, or $50K per person, which is inferior even to the USA.

How can an economist with as high reputation as Scott Sumner simply subtract the energy revenue, and assume the rest of the economy would be the same?

http://www.themoneyillusion.com/?p=31908

Don't economists know the difference between a derivative and a partial derivative.

A lot of economists are very popular because they help to spread a certain party line. Accuracy and objectivity are not necessarily needed.

The figure on the share of GDP accounted for by natural resources rents is straight from the World Bank horse's mouth. Comparable figures for Saudi Arabia and other Gulf states are north of 40%. You got a complaint, take it up with them.

Art Deco,

The issue is not the ratio between GDP and natural resources rent. I don't argue against it being 9% of GDP. The issue is the assumption that the rest of the GDP does not depend on the national resources rent, which Sumner made, and you made above. The time series I linked to above implies that Norway's GDP without oil revenue would be about half of its all time high of 520 Billion, implying that while oil currently represents about 9 percent of the GDP, there is a positive GDP multiplier from the natural resources rent.

You're in error. Examine input-output tables if you care to.

Or Switzerland.

The UK would do pretty well, too.

Up until Duncan Sandys and others sought to make it otherwise about 50-odd years ago, Britain's population was Englsh and Celtic, with some Norse heritage. Pretty much what it was in the 11th century. Confessionally, it was protestant, with a modest leavening of Catholics and a small Jewish minority. Pretty much what it was during the late Tudor period (except, of course, Harold MacMillan's government wasn't executing Jesuits).

Sure, but "just English and Celtic" is like "just Vulcans and NFL players".

There are probably more differences between English and Celts than between the several Slavic peoples of the Balkans, sometimes divided by virtually indistinguishable languages ("Serbian" versus "Croatian" versus "Bosnian" versus "Montenegrin" versus "Bunjevac"; "Bulgarian" versus "Macedonian", etc.).

Ergo, what? Bring on the Pakistanis?

+1

Of course, they think southern Europeans are European Enough when it suits their purposes and Not European Enough when it doesn't.

Which they?

If you mean me, I am half Bulgarian and I like the Balkans, but I am all too aware about the fact that it is a cauldron of ancient intractable hatreds.

Except Switzerland is a country whose self-concept gelled in an era predating linguistically delimited nation-states. Switzerland has been distinguished from surrounding countries by it's alpine geography and by institutional forms which were congenial to highlands back in the day.

Something something just-so story about mountains, something something still ok to not like other races.

Seriously, if everyone just had more mountains, the MR commenters wouldn't have to be so racist.

No, stupid. Agrarian systems are influenced by geomorphology and biome, which gives alpine societies distinctive features (for example, a resistance to serfdom).

Related

https://www.washingtonpost.com/national/the-white-flight-of-derek-black/2016/10/15/ed5f906a-8f3b-11e6-a6a3-d50061aa9fae_story.html

Anyone want to cop to being raised in the same bubble?

I wasn't raised in that. But it's a fascinating article. Thanks for citing it. Here it is on a different site that is not behind a paywall.

http://newsthrive.com/the-white-flight-of-derek-black_11250094/

Not everyone arguing against "diversity" is a Stormfront guy, toning it down for the mainstream, but some are, and others have been pulled along without quite getting where it leads.

It is fairly accessible to be a modern cosmopolitan, it doesn't take money or elite education. It just takes an open mind and as friendly attitude. Mass culture delivers diversity to those open to it.

If anyone is arguing that we can't be part of that, where does it come from, where does it lead?

Not everyone arguing for "diversity" is a fascist, but some are

I can see why you had to jump in and oppose that "open mind and as friendly attitude" stuff. It's terrible.

It just takes an open mind and as friendly attitude. Mass culture delivers diversity to those open to it.

I.e. it takes a self derived from contemporary consumer culture and mass entertainment.

Singapore as of 2015 is ethnically 74.3% Han Chinese, 13% Malay, 9% Indian. Singapore has had mass immigration but of a similar ethnic mix.

To compare the diversity and immigration issues of Singapore to say those of Europe or the US is not completely honest. The ethnic Chinese and Indians are known as ideal immigrants and their diversity + immigration stories in Europe + US have been positive. I don't know much about ethnic Malaysians but those aren't known as a problem group.

Ideal is a bit much. Call it successful.

Plenty of ethnic nepotism and cheating that have not yet received the spotlight treatment on account of the more murderous proclivities of other immigrants.

Pure rationalization. Clearly the author wanted to pump up "diversity" and thus did so. It is probable that diversity is not the secret to success and likely that diversity brings more problems than solutions.

He does not claim that diversity is the secret to success. But for your second point, this article suggests that the perspective you promote simply does not stand up to empirical scrutiny.

Of course, if you put a diverse group of people into a mix with a bunch of racists who will underutilize the skills of the diverse group, then no, it will not look good for growth. I'm more inclined to blame racism than diversity per se, but clearly the issues are pretty related .

Makes sense that problems might be more about racism than diversity.

No, Jill. Racism is a spectre you and Nathan have need of for your own self-aggrandizing reasons.

Oh, yeah, I forgot, racism doesn't exist on your planet, Art Deco. Are you on Jupiter or what?

No, Jill, I live here, where there are all manner of inter-group antagonisms. The question at hand is the economic effect of such antagonisms.

"I'm not racist, it's just that they're inferior".

Well in that case diversity is totally fine, all we have to do is completely eliminate racism.

You could start with your own self, but nah that's hard.

No doubt that is why earliest civilizations developed in isolated places like Siberia and places like the Middle East which had the most interaction and diversity lagged far behind. Even After the industrial revolution it iwas the diversity in the US that accounts for its slow growth causing it to be one of the poorest countries on earth.

Yes, I am sure the earliest civilizations had lots and lots of diversity, that's a good point. And as everyone knows, the key to American's success beginning with the industrial revolution has been its imported African population.

I'm not sure that the social aspects of the most primitive proto-civilizations is the correct benchmark for evaluating whether the status quo in the modern age is acceptable or where we should go from there.

Diversity was lower when it took a full day to walk to the next town and most people never got further than a couple/few towns away in their entire lifetime.

Places like cool Siberia tended to have had pretty good basic technology given local resources. No civilization, probably because not really the right plants, which also tended to hit the tropics as well (why agriculture then civ started along mid latitudes).

(Siberia's also tended to be fairly diverse recently in history. Lots of fairly small groups. No big states consolidating too much and putting all under the same faith and language.)

Taking about the US as an example makes me wonder whether it would be useful to include an adjust measure for native diversity vs "pull" diversity that comes from migrants being attracted to a strong economy. You can see where the US as an economy pulls a lot of migrants, and the urban regions that are most prosperous within the US pull more, and so that would give rise to a slight diversity->prosperity correlation, even if the causal sign is somewhat inverted to that. Regions that just happen to have a lot of diversity without having particularly pulled folk from elsewhere via a strong economy (India as a type example) are distinct from this.

I've been told by friends who have visited Singapore that the conspicuous consumption makes Rodeo Drive seem like a flea market. Singapore is an historical aberration, its economic success so tied to China's that broad generalizations about "freedom" and "growth" derived from observations of Singapore are absurd. Singapore knows where its bread is buttered, which explains why its sovereign funds are heavily invested in China, including recent (the past couple of years) investment in a large portfolio of China industrial properties. As labor conditions in China improve and western firms shift production from China to countries with lower labor costs and much harsher labor conditions, like Vietnam, is that a sign of "freedom"? Will the newly-minted millionaires in Vietnam spend their riches in Singapore or will they choose another place for conspicuous consumption?

its economic success so tied to China’s

It is not. The Asian tigers were experiencing hyper-rapid economic growth when Mao was still knocking about.

Hear that, rayward? Singapore's economy has nothing to do with China.

Singapore was used as an example and model, one of the four mini-dragons, by Deng Xiao-Ping to justify speeding up reform of the Chinese economy. If anything the causation runs from Singapore to China.

If you define the US as a diverse nation, and the most diverse of large economically developed nations, you run into a problem.

The economic growth of everyone else is to one degree or another just catching up to the output of the US. Catching up is very important as it lifts hundreds of millions of people out of poverty, but it is still just catching up. Do we have evidence that a more unitary society does a better job actually leading the world in economic development?

China was much less diverse than Europe, India and other power centers but Europe dominated the world's economy and by any measure it was quite diverse. England was also very diverse compared to other European powers and it came to dominate Europe. More mono-cultured entities (Spain, France, Germany even) had brief runs but never really lead the world.

I'd be a bit circumspect about claims for England to be more diverse than other European powers. (Not that I regard your general thesis as likely to be close to correct in any case!).

Perhaps we can recast this with an alternative question. What evidence do we have the a monoculture works well for positive economic growth based on innovation? If you are catching up I can see some advantages to monoculture. Once you 'sell' the culture on some new way of doing things (electricity, fertilizer for farming, private property, private capital that is easy to trade and sell), you can copy the best practice quickly and move on. China, then, might have an edge over India.

But once you get to the top you no longer have anyone to copy from. In that case you're going to have to rely more on innovation to grow. Does a more monolithic culture with less diversity help as much then? I can see good structural reasons why not. Too little diversity, I suspect, leads to a society that spends it's time making a fetish of tiny differences and wastes energy trying to 'hammer down nails that stick out'. In a more diverse society there are multiple 'save spaces' where one can dissent from the monoculture in addition there is no assumption that any particular culture is entitled to remain on top. What works today may be tomorrow's junk so rather than refight the last war effort can be directed towards planning on how to address tomorrow's battles.

How to rigorously test this is a big question, of course.

Yes! The key to future economic growth is safe spaces!

Long run, so far, India doesn't seem to have been more innovative than China for whatever reason.

Talking about "hammering down the nail that sticks out" sounds a bit like the tight vs loose culture construct - https://yannigroth.com/2014/05/24/a-new-cultural-construct-tightness-looseness-of-societies/. That (if it measures anything real at all) doesn't seem to have too much to do with social diversity (unless it does).

With the idea that "there is no assumption that any particular culture is entitled to remain on top", it seems more like historically that's the sort of thing you see in small, peripheral cultures, rather than big established empires that haven't held a strong degree of power. Case in point Japan vs China. Was (and is?) much more easy for Japan to conceptualise a world of shifting dominant cultures and adapt than the Chinese historical narrative of being number one and containing all civilization.

Spain, a mono-cultured entity? It's arguably more diverse than the UK, and definitely a big deal more than Germany. By the time it ruled the world, Spain had only recently been born as the result of the merger of two different kingdoms, one of them having Catalan as a majority language. The central government, through the centuries, pushed for a monolithic notion of the Spanish state, but that hardly represents a diversity that is still observable today, with seveveral different regional languages and sizeable separatist or regionalist movements in several areas. So, while the institutional configuration of the Spanish state (at least until recent times) might seem to give some credence to your thesis, the comparatively fractured social and cultural composition of the country doesn't - at all.

There is certianly no a priori reason to think that "diversity" per se as generally construed - ie racial, sexual or religious "diversity" - is beneficial to economic growth or freedom. Tolerance of "diversity" may indicate structural institutional soundness that would lead to economic growth and increase freedom. And tolerance of "diversity" will certinaly lead to more..."diversity". So the paper may have this all backwards.

Diversity of ideas and the tolerance of those ideas of would seem to be much more important for economic growth than diversity of skin color, sex habits or incantations of mumbo jumbo on Saturdays and Sundays. Does diversity of ideas come with the type of "diversity" construed by progressives. Doubtful. As Edward Albee once noted progressives and the identity oreiented political class are "all different in the same way."

Also it's interesting to note that we don;t see too many studies showing that "inequality" increases with "diversity". It almost surely does.

Edward Abbey!

It's odd that you start by assertion there is no a priori reason to assume 'racial, sexual or religious diversity' would be beneficial to economic growth but then segway into saying 'diversity/tolerance of ideas' would be. Isn't diversity of religion by definition a type of diversity of ideas? Tolerating different religions seems to be required for any society that would presume to have a 'tolerance of ideas'....would it even be possible to have a society with little diversity in religion but a diversity or tolerance for ideas? Perhaps a good sci-fi writer could imagine a future reformed Saudi Arabia that is open to ideas but nonetheless maintains a strict Islamic mono-faith enforced from the top down and bottom up, but I'm skeptical it could happen.

This leads me to wonder if you could get to a true tolerance of ideas oriented society without some measure of ethnic diversity? I suspect that when you get a huge number of people who all look like each other, you get an inclination to group think and a focus of making a fetish out of petty differences. Ethnic diversity might function as a kind of 'shock value' where all individuals are put on immediate alert that everyone does not look like them therefore there's no reason to assume a priori everyone's ideas will be alike too.

Paper: Using several measures of diversity, we find that higher levels of ethno-linguistic and cultural fractionalization are conditioned positively on higher economic growth by an index of economic freedom, which is often heralded as a good measure of sound economic management.

Wouldn't a simple pathway for this be -
1) high diversity nations tend to be poor
2) high diversity nations therefore can assume high growth rates by picking up low hanging fruit
3) high diversity (poor) nations tend to do so and get high growth rates
?

Or am I wrong and poor nations haven't higher rates of growth over the period 1980–2012 (globalization), and more diverse nations don't tend to be poor?

(Inherently too many confounds here. So it's better to look at the immediate, concrete, obvious, unambiguous, qualitative effects of diversity in rich, European ancestry societies - like the Black Lives Mattering of public political life - and not at a cross sectional quantitative and speculative diversity->growth effect. If you're interested in the question of "Should we increase diversity?" or not (as opposed to general academic curiouity).)

You may be onto something. There was another paper that found that homogeneous countries (like Denmark, like South Korea) *that were open* and *that were market oriented* did slightly better than heterogeneous countries (like the USA) that were open* and *that were market oriented*. But the data set was smaller. The fact that 116 countries were picked in this study tells me it's mostly "low hanging fruit picked by Third World countries", not "rich western countries".

Still, the study is not bad and actually arguably a thumb in the eye of Lee Kuan Yew.

I would think that diversity would be bad for growth initially but then good for growth.
Bad for growth initially because it would inhibit a culture of trust and would lead to wasteful fighting over resources. This seems to be why much of Africa is so poor. Different groups fighting over who get to be in charge and direct resources toward their own group.
Good for growth later because it would inhibit the drive toward redistribution by government. This is why the US has outgrown Japan and Northern Europe. Diversity inhibits the voting public from giving too much to the unproductive at the expense of the productive.

If that were true, wouldn't the Right Wing be all for diversity and immigration?

Only if the right wing valued economic growth above all else.

It might also be bad for growth initially if the society is playing catch up to some external leader in economic development. In the early 1900's Japan realized it had fallen behind the west. It decided as a culture it must catch up, including taking on many Western styles and techniques. I could imagine a really diverse culture (such as India) would not have had an easy time. Even if it was clear to nearly all that it had fallen behind, trying to get the entire nation to switch strategies would encounter a lot of entrenched interests and resistance slowing down the process.

But once you achieve the state of the art, you can no longer grow quickly by just forcing your society to adopt other culture's best practices.

Related (forthcoming in Public Finance Review)...with a twist of rent-seeking

http://drive.google.com/file/d/0B7-A8qbBm2SKNG1RWndEZlFRaDQ/view?usp=sharing

Abstract: Diversity is often thought to create conflict and harm economic institutions. We hypothesize, however, that the impact of diversity on economic institutions is conditional on political institutions, and may be negative in some settings but positive in others, due to differences in the nature of rent seeking in different regimes. To test this hypothesis, we estimate the impact of ethnic and linguistic fractionalization on economic freedom, conditional on the level of political rights. We find that the marginal impact of ethnic and linguistic fractionalization on economic freedom is positive in the most democratic nations and that the marginal impact of ethnic fractionalization is negative in the most autocratic nations. Our results suggest that the nature of the relation between diversity and economic institutions may be more complicated than prior literature conveys.

What if the graph of growth vs. diversity is one of those curved upside down U shaped distributions? I.e. what if diversity increases growth up to a certain point. And what if, at that point, the upside down U reaches its peak and starts going downwards? That is, a certain amount of diversity is great for growth, because you get a mixture of ideas and skills from all the new people. But then at some point, a nation is overwhelmed by more immigrants than it can deal with in terms of jobs, ability to reach consensus on national political or economic policies or on the acceptable range of social or cultural customs etc.

Singapore is mostly Chinese with some malays. Labor unions are strictly controlled and run by government since 1960s to prevent communist radicalization. No strikes allowed. Have a very high standard of living and strong US ally. They don't tolerate liberal nonsense.

Singapore is the private equity arm of the East Asian business class. It is comparable to choosing London as as model to follow for nations.

Singapore is a city-state and yes it actually does make sense to compare it to London.

It doesn't make sense to label it as liberal or conservative. It doesn't fit on a neat US left-right spectrum.

I don't see the point in looking for these sorts of correlations (or non-correlations) and then pretending it has relevance to US policy. That said, my prediction for the US is that "more diversity," however defined, may well push the US in a (seemingly) more libertarian direction, but not necessarily in a good way. I would expect to see a withdrawal from the public sphere and a retreat to private spaces. Private schools over public. Private parks and rec centers. Private security, etc.

I think it’s going to add up the freedom, but still you can’t be sure about anything over these things, so that’s why we have be extremely careful. As a Trader, I mostly try to keep my safe side which is pretty straight forward to do with broker like OctaFX which is world class having small spread, high leverage, zero balance protection, swap free account, bonuses and lots of such features, it’s all making easier for me in every think able way!

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