Stephen King: If the West denies chances to emerging countries, it will only end in tears
Monday 21 January 2008
A couple of weeks ago, I was in New York with my family. In between the various shopping expeditions (de rigueur for British holidaymakers in cheap-dollar Manhattan), I took my children to the Lower East Side to visit the Tenement Museum. Located on Orchard Street, the museum is, as you might expect, no more than a small building containing an assortment of tiny apartments. Each has been designed to reflect the lives of families who lived there in various years between the tenements' construction in the 1860s and their later closure – reflecting tougher (more humane?) building regulations – in the 1930s.
On our tour, we heard about the Levines (from Poland) and the Rogarshevskys (from Lithuania) and, more generally, about the changing ethnic mix of the Lower East Side in the late 19th Century. In the 1860s, the most common voices were German. Through the 1880s and 1890s, with the onset of Pogroms in Russia against the Jews, Yiddish accents became commonplace. For a while, Italians also made the Lower East Side their home. Many immigrants came directly to the Lower East Side from Ellis Island, the first stopping point for those hoping to embrace the American Dream (or, more likely, for those hoping to escape the foreign nightmare). More recently, the area has taken on a Chinese and Latin tone.
Because each tenement is set up to reflect a specific family's experience at a certain point in time, there's a strong sense within the building of the impact of economic and technological development on people's lives. In the late 19th Century, families relied on nothing more than kerosene lighting. In the early years of the 20th Century, gas lighting provided a substantial leap forward. Later on, of course, gas was supplanted by electricity.
The most notable feature of the tenements, though, was the remarkably cramp-ed conditions. Sanitation was rudimentary, as you might expect. Many of the – tiny – rooms were windowless. And, in the early years, many families worked from home, sleeping in shifts in the single bedroom. The Lower East Side was the home of the American garment trade. Before the advent of factories, living rooms were turned into tiny workplaces. Hot water provided by the single stove was used both to heat up the irons for pressing clothes and to boil nappies.
Illness was rife. The cramped conditions led to all kinds of lung disease, including tuberculosis (which, depressingly, was known in the late 19th Century as the "Jewish disease") and byssinosis (as a result of textile dust inhalation). When factories did eventually open, and workers were able to escape their tenements, the conditions within the factories were often terrible. In the most infamous case, a fire in the Triangle Shirtwaist Factory in 1911 led to the deaths of 146 women who had been locked in by their bosses (to ensure no rest for the innocent). As Thomas Hobbes might have put it, life was nasty and brutish and, for those unlucky women, also very short.
Nevertheless, without the pioneering immigrants from Europe and elsewhere in the late 19th Century, it's difficult to believe that the United States would have become the economic super-power it is today. In many cases, the immigrants were fleeing even harsher conditions "back home", whether the original home was Germany, Ireland, Italy, Russia, Poland or the Baltic states. They may have lived in squalor but at least some had economic opportunity and, to an extent, were accepted regardless of their ethnic background (blacks, of course, were not so lucky, and in the Southern States, continued to be treated appallingly throughout much of the 20th Century).
For those who squirm at the thought of economic growth, who worry about the costs of progress and who suggest that we're better off going back to the "simple life", a visit to the Tenement Museum is more than worthwhile. Standing still economic-ally may be an option for some of us, but it is not an option for the world as a whole. The vast majority of people still live in cond-itions which would be immediately recognisable to the Levines and Rogarshevskys, were they alive today. Income levels in the rich West may be very high by past standards but, for much of the world, the tenement experience is all-too-real.
The Tenement Museum reveals a brutal truth. People in the industrialised nations may, for the most part, be well off, but their wealth depends, in part, on the sacrifices made by their forebears. In the late 19th Century, people worked hard (and were too often exploited) in the hope that their children and grandchildren would stand a chance of escaping the poverty that, for many in society, was an unpleasant and lifelong reality.
Those immigrants who came to America via Ellis Island were given a chance. We shouldn't deny others the same opportunity. Amer-icans and Europeans now talk about the Chinese threat, or the Indian challenge. Surely, though, the Chinese and Indians are entitled to the same aspirations as the Levines and Rogarshevksys. Having lived in poverty through the generations, they now have the opportunity to escape. Who are we to deny them, their children and their grandchildren, this opportunity?
Yet we try in so many ways. The rich West worries about "unfair competition". It fears the theft of intellectual property (even though, in the 19th Century, such activities were commonplace among the industrialising nations). It worries about the impact of rapid Chinese and Indian growth on the environment (even though the world's biggest polluter by far is the United States). It frets about emerging market ownership of Western assets through the proliferation of sovereign wealth funds (even though Western companies have been busily buying up emerging market assets for decades). It tries to clamp down on immigration (oblivious to the manifest long-term benefits).
And, in the middle of building a rich man's fort-ress, we deny opportunities to those who want to dream. This, though, is potentially a fatal mistake. Three or four hundred years ago, Europeans began to unearth a remarkable secret. Scientific progress, widespread knowledge and persistent innovation allowed everyone's living standards to rise, through ever-increasing productivity. Until then, economic progress was based on the "robbing Peter to pay Paul" principle. One person's gains were, on this view, another person's losses. Continuous, and bloody, wars were the result.
Productivity is the magical elixir which, in turn, leads to economic emancipation. I've no doubt that the Levines and Rogarshevskys worked very hard but, for them, the economic benefits were limited: they didn't have access to the technologies that, nowadays, we take for granted. The same is true, though, for people in many other parts of the world today. But they can at least dream. Turn off the productivity and growth taps and you immediately have a recipe for conflict and strife as the haves and have-nots become hard-wired for generations to come.
With the US staring recession in the face, with the UK in danger of heading the same way and with eurozone policymakers finally recognising that the bigger threat is not inflation but an absence of growth, the West-ern world's problems should not be used as an excuse to deny others their economic opportunities. To do so would be a selfish act of economic nationalism. History suggests that such an approach will only end in tears. Yet tears may eventually be shed if the protectionist barriers do go up.
Stephen King is managing director of economics at HSBC
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