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Affluent Christian Investor | October 22, 2017

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Why Capitalism? Allan Meltzer On Why South Korea Thrives While North Korea Starves

Image: Allan Meltzer's book, Why Capitalism?

Image: Allan Meltzer’s book, Why Capitalism?

A continuation of my interview with Carnegie Mellon Professor, Allan Meltzer about his book Why Capitalism? which is based on his very popular MBA course, Capitalism. He reflects on why students from South Korea are so much more able to understand the benefits of the free-market system. (Audio of the complete interview is here.)

Jerry: “Now this book is, as you said, partly based on a course in which you teach MBA students.”

Allan: “Right, I’m teaching it currently.”

Jerry: “I see. At Carnegie Mellon University, not far from where I am right now. We live in the same town, in the Pittsburgh area, although this will be listened to by people around the world. But I’m kind of curious about what you’ve learned from them. Do MBA students need a course on capitalism? Do they have doubts about the moral superiority of the capitalist system? Have they been bombarded with propaganda before they get to the class? How do MBA students think about capitalism, at least before they get to you?”

Allan: “Let me say first that a modern university of the kind I’m in, that is, a world-class university, has students from all over the world. So I have Russian, Chinese, Korean… from many, many countries. Their experience is very different, so the answer is: Some come in with a predisposition toward capitalism, some come in with a predisposition against it.”

Jerry: “How long have you been teaching the course?”

Allan: “25 years.”

Jerry: “Has there been a change in the trend of the ratio of those students who come in with an attitude predisposed towards or away from capitalism over that 25 years?”

Allan: “Well, it’s hard to answer that directly because the composition of the class has changed enormously. 25 years ago there were probably many fewer women, and many, many fewer foreigners. So, that’s a big change in modern American universities, like Carnegie Mellon or MIT or Stanford.”

Jerry: “Okay, let’s subdivide. White male Americans: Have they changed over the 25 years that you’ve changed this course? Have they changed towards capitalism?”

Allan: “The simple answer is ‘I don’t know’.”

Jerry: “Got it. Do you notice differentiation in terms of country of origin? Are the Koreans more or less friendly towards capitalism than, say, the American students?”

Allan: “Koreans are very market capitalist oriented. That’s one of the reasons why their country, which is strongly capitalistic, has done so well. I mean, they’ve come from being a poor nation to one of the wealthy nations of the world.”

Jerry: “Yes, and with the recent election of Park Geun-Hye, almost a kind of Korean Thatcher-type figure, I think they may do even better in that regard in the future than they’ve done in the past.”

Allan: “And all Koreans have the advantage that they can see how well they have done compared to how well their brothers and sisters in North Korea have done, or really, how poorly they have done. Whereas the people in North Korea are eating tree bark and grass because they don’t have enough food, the people in South Korea are developing, expanding, improving, and raising their living standards. You know, it’s got to be important to you in your thinking if you go to work at something like five times the income that your father went to work at. That’s what happens with the high growth rates that they’ve experienced in countries like Japan and Korea – China, now.”

Jerry: “I see. So, they live in an object lesson and adjacent to the opposite object lesson, so they can see it more clearly maybe than a continental nation like the United States – more clearly than people who dwell in the United States can see it.”

Allan: “Yes. You know, it seems to me rather obvious that when Deng Xiaoping became the Prime Minister of China, he looked around — perhaps he had looked around before — and he saw that the Chinese diaspora all over Southeast Asia was getting rich, while they were still living in poverty and their system had failed.”

Jerry: “That’s a good point, because that Chinese diaspora killed any notion that the Chinese are genetically incapable of being wealth-creators or that their cultural background of Confucianism made them unconducive to wealth-creation. Chinese people were getting rich every place but in China.”

Allan: “Right! In fact, you know, we have the wonderful examples of Singapore, which is heavily Chinese, but also of Korea, of Japan, of Taiwan—“

Jerry: “Which is basically China. The Republic of China.”

Allan: “It’s basically a part of China. And all these people are getting wealthy, and they’re living in poverty. Let that be an object lesson. You don’t need a book to figure that out, you just need a pair of eyes.”

Jerry: “I know we’re talking about your book Why Capitalism? rather than the course on which it’s based, but I’m curious: Other than Koreans, which other national origin category of students seem to be most friendly to a market economy?”

Allan: “Well, the Indonesians are pretty good that way, at least the ones that come. In the Muslim countries the tradition is not capitalist, so for them, that’s a stretch.”

Jerry: “I see. There’s an interesting point made by Robert Kaplan in his book Monsoon, where he says that you really need to talk about two different forms of Islam — that the Islam of North Africa, where basically you have land-based conquest, is not market-friendly; but the Muslims who got on ships and went across the Indian Ocean, the trading Muslims, which is basically where the Indonesians came from and the Malaysians came from, that that’s a much more market-friendly strain of Islam. Any thoughts on that?”

Allan: “I had not heard that. I think that’s an interesting conjecture.”

Jerry: “Yeah, I find it interesting, too—“

Allan: “Because there certainly is a difference between, say, the Middle Eastern attitudes and the attitudes of countries like Malaysia and Indonesia. I think you do see among the young in places like Egypt and Tunisia… I mean, the young man that burned himself and caused, or at least started, the change in Tunisia was trying to make a living and he realized that the rules that they were imposing on him were preventing that. So he saw the advantages of a freer market system.”

Jerry: “That’s interesting. I wasn’t aware of that. That’s fascinating. Now, of course, the people who started these revolutions in the Arab world are not necessarily the people who are finishing them.”

Allan: “That’s true. But Egypt, which is much the key of what we hope to have happen there… Egypt is the sorry mess that it is economically because Mubarak gave control of the economy to the military and they control everything. Although, many of the protestors wanted to break that up, the fact is that the Muslim Brotherhood has continued it and that’s why it’s in trouble.”

Jerry: “It’s such a tragedy. I mean, what you saw with Nasser and Mubarak, and what you saw before that with Saddam and in Syria, the Ba’ath party, you saw what they themselves call Arab Socialism rise and fall. I would hate to see it replaced by Sharia Socialism, which doesn’t give any more economic freedom and takes away even more personal freedom.”

Allan: “Yes. When I look at North Korea, I say, “They call it a communist country but how would you distinguish it from the worst kind of medieval oligarchy with hereditary passage of power from a grandfather to a father to a grandson?” It looks to me like feudalism, the worst kind. That is the most oppressive kind of feudalism. At least in the feudal system, you were a serf but you were able to perhaps survive as a serf. You could be a journeyman. It wasn’t completely rigid and authoritarian, but this is completely rigid and authoritarian and they call it communism.”

Jerry: “I think I read somewhere that serfs on average paid thirty percent of their income to the lord, to the lord of the manor. The road to serfdom, literal serfdom might be better than some of these communist countries.”

Allan: “You at least get to keep seventy percent.”

Jerry: “Yeah, precisely. Instead of giving seventy percent and keeping thirty percent.”


Article originally published on

Jerry Bowyer is a Forbes contributor, contributing editor of, and Senior Fellow in Business Economics at The Center for Cultural Leadership.

Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.

Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.

Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.

Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.

Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.

Jerry lives in Pennsylvania with his wife, Susan, and the youngest five of their seven children.


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