Culture Wars/Current Controversies

Diversity and economic freedom: A response to Hanania

Jun 11, 2023

I’m a big fan of Richard Hanania’s writing as he always has something interesting and provocative to say. Last time I critiqued his essay ‘Russia as the “Great Satan” in the Liberal Imagination’. Here I critique his latest article, titled ‘Diversity Really is Our Strength’.

Hanania’s argument is summed up in the article’s subheading: ‘Immigration destroys social cohesion. Good.’ The reason this is good, he argues, is that social cohesion makes people more willing to support redistribution, and redistribution is bad for economic growth. In his view, we shouldn’t be concerned about “how many immigrants are currently coming to the United States, or the characteristics of newcomers”. In fact, “we should be letting a lot more people in”.

Under the heading ‘American Exceptionalism’, Hanania shows a chart of GDP per capita against national IQ, pointing out that “the US is the largest outlier in the positive direction for any large nation”. So in addition to being one of the world’s richest countries, America is even richer than you’d expect based on its average IQ. Hanania goes on to note that most US states (including very diverse ones) are richer than every major country in Europe, as well as Japan and South Korea.

“What’s going on here,” he writes, “is that the US has freer markets than most other advanced countries”. It has “less government spending as a percentage of GDP, a weaker social safety net, and fewer economic regulations”. Why does it have these things? Ethnic diversity – apparently.

This is a version of the argument first made by Alberto Alesina and colleagues in their 2001 paper ‘Why Doesn’t the United States Have a European-Style Welfare State?’ Based on charts like the one below, they observed that “racial cleavages seem to serve as a barrier to redistribution throughout the world”. And regarding the US, they concluded that “the disproportionate representation of ethnic minorities among the poor clearly played a major role in limiting redistribution”.

Chart from ‘Why Doesn’t the United States Have a European-Style Welfare State?’

However, the problem for Hanania is that his version of the argument doesn’t work. He’s suggesting that ethnic diversity not only undermines support for redistribution, but also undermines support for other anti-market policies. Yet there’s little evidence for this.


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