Healthy Middle Class Keys Asian Economic Success

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One of the issues the Occupy Wall Street movement has been keen to address is the distortion of wealth distribution in America. The “99 Percent” is far behind the “1 Percent and seems to fall further back every year.

Those of particular socio-political persuasions see any discussion of this problem as smacking of “socialism,” and speak of a pernicious slide towards a terrifying “redistribution of wealth.” But, as usual in U.S. political dialogue, this is just irrational fear-mongering. It’s also a polarization and gross simplification of a much more subtle issue.

From any perspective — one of genuine concern for the welfare of the majority of the population or even one of pure capitalism — this distortion of wealth is very troubling and problematic. Interestingly, it also helps explain why Asian economies are getting ahead of us.

The Asian success story can really teach us something.

What exactly is this Asian “success?”

It is the ability to move from poor farmer to well-paid professional in a single generation, to raise children who do well in school and are well-mannered and respectful, and to preserve culture and values through the generations while keeping pace with a rapidly changing world.

Of course, the “Asian success story” is in some ways a generalization. I have lived in Asia, and I saw dropouts in Taiwan, and ne’er-do-wells in Japan. Yes, they have spoiled kids, drugs, and prostitution. But it is all a question of degree, with crime rates there being much lower than our own here in the U.S.

The standard of living in Japan is enviably high, and their life expectancy is beyond that of U.S. citizens for both men and women. You can walk the streets in any big city in Taiwan or Japan with no fear whatsoever.

Many have sought the keys to the incredible rise of East Asia. Is it the cheap labor, their apparent disregard for copyright and other rules of “fair play,” their authoritarian way of life, or is it just plain sneakiness? Why is it that countries such as Mainland China, Taiwan, South Korean, and Japan have been so successful?

Reading the media in the U.S., you’d think that their incredible achievements come from some kind of perverse combination of mind-numbing hard work and “inscrutable” deception. But the truth is that the success of places like Taiwan is due to a variety of factors, including sensible development policies on the parts of governments, social cohesion, Confucian rigor, and a good work ethic. And their greatest secret of all is that they not only have a middle class, but they value it.

While in many respects, East Asia seems like a libertarian dream of free enterprise, and a Republican fantasy of conservative family values, the fundamental core behind all the success of countries like Taiwan is a governmental and social system that believes in a middle class. To put it more succinctly: they’re good to one another.

One observes this in subtle but fundamental ways. In Asia, for example, I saw a real love of children. I think we deceive ourselves in the U.S. when we say that we love our children; in actuality, we treat them either as a fertile market for yet more consumer products, or as potential threats to our safety while pondering the use of the death penalty for youthful offenders.

Likewise, we say we value education, yet we tell our children that if their schools need funding they should have bake sales. Do you think that Chinese schools have bake sales to raise money?

In Asia, the government throws its full support behind education and youth development, with full taxpayer support. This is one of the keys to creating a middle class — universal and virtually fully-funded, high quality primary and secondary school education open to everyone.

In places like Taiwan, moreover, the system is national, so there are no areas that have less funding due to a weaker tax base. All schools are funded equally, from the most remote region to the wealthiest part of Taipei. University is also free to those students who work hard — there is virtually no affirmative action, because the assumption is that everyone has had equal opportunity from the get-go, i.e., kindergarten.

Yes, this may sound like socialism, call it what you like, but that doesn’t make it any less true and any less successful.

The funding for Asian schools, moreover, does not come from burdensome income taxes. In fact, income taxes are low, leading to extensive entrepreneurship among the middle class. In Taiwan, one sees thousands of small businesses of all kinds — independent shoe stores, book stores, small manufacturers, restaurants, etc.

At the same time, there is also socialized medicine, which is partially by consumption taxes, just like their education system. The sick are cared for, not pilfered by a medical system that exists first and foremost to maximize annual profits.

When I lived in Taiwan, health insurance — which included access to any doctor I wanted (no referrals necessary), and most medications — cost my family of three just a hundred dollars a month.

Because of the existence of this social “safety net,” self-employed small-business owners — the foundation of much of the Asian economic success story and the rise of their middle class — don’t have to worry about healthcare and education for their families. They can focus on their businesses, and take the risks necessary for success.

In the U.S., the lack of this social safety net is a huge disincentive to the risk-taking needed for entrepreneurship. It is very hard to have a middle class when there is both a tight job market and disincentives to set up one’s own business.

We need to discard our misguided notions about what is behind the success and relative stability of societies like Taiwan and Japan. Asians are not automata, and they don’t “cheat” to beat us in manufacturing and trade any more or less than we do.

Their fundamental secret is a practical approach to life, and a focus on dignity, self-discipline, and especially a flourishing middle class. More often than not the social calculus is even simpler: they’re good to one another.

Benjamin B. Olshin, Ph.D. has worked as a designer, professor of philosophy, and business consultant. He has written and presented on a wide range of subjects, including ancient history, Eastern and Western philosophy, the sociology of technology, and design and culture. He has studied, carried out research, and worked in East Asia, Europe, Africa, Latin America, Canada, and the U.S.  His most recent books are available on Amazon.com. He can be contacted at: olshin@verizon.net.