Jews, Scots, Armenians, Dutch by Gary North

You have heard this phrase: "He can buy from a [ ], sell to a [ ], and make a profit."

Here are the most likely choices:

Jew
Scot
Dutchman
Armenian

Why? What do these seemingly disparate groups have in common, other than money?

Let’s begin with the least known group.

THE ARMENIANS

In 1962, I had a Jewish roommate, Roger Hartman. I didn’t know much about Judaism back then. Roger had grown up in the area around Fresno, California – not exactly a cosmopolitan region. His family had later moved to San Francisco, as I recall. He told me why: "When the Armenians moved in, the Jews moved out." I don’t know if he really meant this specifically about his own family, but the phrase was obviously common among Jews in the area. Armenians are highly competitive in commerce. They are famous as rug merchants, but their skills go way beyond importing rugs.

I knew less about Armenians in 1962 than I do now. I’m now married to one. But I never did forget Roger’s comment. There was, and is, a large Armenian population in the Fresno area. The most famous Armenian-American author, William Saroyan, was born in Fresno in 1908. My father-in-law grew up in Kingsburg, not far from Fresno.

Side note: Armenians are easily identified by their names – more easily than any other national group. Their names usually end in -ian or -yan. My father-in-law was an exception: Rushdoony, not Rushdoonian. He told me why. His family had roots back to royalty in Armenia. When the Turks conquered the country nine centuries ago, they forced a name change on everyone, so that they could be easily identified. They added the -ian sound. My father-in-law’s family escaped the restriction because of the family’s royal lineage. Anyway, that’s what he told me. As someone who read a book a day for 60 years, he knew about such things.

The Armenians are the entrepreneurs of Western Asia. This has been true for centuries. I found it interesting that in the old "Upstairs, Downstairs" series, when the script writers wanted to portray a rich, aggressive, unscrupulous, social-climbing businessman, they chose an Armenian. It may have been too politically incorrect to select a Jew, but the decision was nevertheless believable. The character was looked down on by the upper crust. They referred to him as a Jew, he said. This upset him; he was proud of his Armenian heritage.

In the Soviet Union, Armenians were called the Christian Jews. There was considerable hostility and discrimination in Moscow against members of both groups. But, like Jews, Armenians climbed their way to the top of the Communist Party’s hierarchy. Anastas Mikoyan was the most prominent of them. He was the Commissar of Food Supply and then Minister of Trade under Stalin. He was elected president in 1964, a ceremonial post. He survived. He never missed a trick. He introduced Eskimo Pie into the USSR – one of the more productive things ever done by a senior Soviet bureaucrat. His brother Artem designed the MiG jet fighters. Under Gorbachev, Abel Aganbegyan served as senior economic advisor. Yet Armenia was the smallest of the Soviet republics, both in population and geography.

There is another shared feature with Jews. In 1915, the Turks committed the first genocide of the twentieth century. They killed about a million Armenians. This policy was systematic. Most people have never heard of this event. (On the persecution, see the great but little-known 1963 movie by Elia Kazan, America, America.)

Because World War I was going on, the Armenian genocide received little publicity. It was concealed because the Germans and the Turks were allies. Word did not get out, except for survivors’ accounts. War news dominated the Western press. Also, Turkey was crucial internationally because Turks controlled the Dardanelles, the narrow access to the Black Sea. The Turks could seal off access from the Russian Navy’s only warm water port. British foreign policy had long been favorable to the Turks because of this geography: the balance of power. So, there was no outcry from the West after the War, despite Turkey’s former alliance with the Germans.

The famous British historian Arnold Toynbee did much of the research on the Armenian genocide for Lord Bryce’s 1916 collection of survivors’ accounts. My wife’s grandfather, who had a photographic memory, has two articles in the book. It was an official publication of the British government, but it had no political effect.

THE DUTCH

When we think of the Dutch, we think of "Dutch Treat." This term applies to dates in which the woman pays her share of the evening’s expenses. Whether the practice originated in Dutch-American circles, I do not know, but the phrase has stuck.

The Dutch are frugal. They are legendary for this frugality. They are good farmers, especially dairymen. They are not equally famous in commerce, although there are highly successful Dutch-affiliated companies. The Herman Miller Company is dominant in business chair manufacture. The Dutch are regional: Grand Rapids, Michigan, is an urban enclave.

In the seventeenth century, the Dutch rivaled the British in world trade, yet their country was tiny, dug out of the sea by means of dikes and windmills. They had money, and they had great artists. They were also ruthless colonialists in Indonesia. They took no guff. They fought a naval war with Cromwell’s England: two Calvinist powers going at each other with fleets. The war continued under Charles II. New Amsterdam became New York City in 1664.

It is one of those historical anomalies that they arrived, seemingly out of nowhere, in the early seventeenth century. They were masters of commerce. Their central bank actually preceded the Bank of England (1696). They had a well organized stock exchange. They also had help from Jews, who had been kicked out of Spain by Queen Isabella in 1492, and had fled to Antwerp and Amsterdam, where there was greater religious liberty for them.

The Dutch reputation for frugality as consumers is an extension of their former reputation as hard-bargaining traders. The same legendary frugality is associated with the Scots.

THE SCOTS

In the eighteenth century, the Scots replaced the Dutch as the world’s traders. While the English gained this reputation, the Scots had the edge. Union with England came in 1707. From then on, the Scots took advantage of the British colonial empire. Again, like the Dutch a century earlier, they came out of nowhere. In 1650, Scotland was poor, a backwater of Europe. By 1750, the Scots dominated trade and philosophy. David Hume, Lord Kames, Adam Smith were Scots. By 1850, Scots around the world dominated invention and entrepreneurship. From James Watt to Andrew Carnegie, the Scots pioneered manufacturing and mass production. Arthur Herman’s book, How the Scots Invented the Modern World (2001), tells this remarkable story.

By 1950, the Scots were still influential as individuals, but not as a self-conscious, well-connected group. Ronald Reagan was one of them, and he attended a traditional Presbyterian Church, as a good lowland Scotsman should. But we do not think of Reagan as a Scot. While Sean Connery represents them, they are not organized sufficiently to be represented.

THE JEWS

Like the Dutch in 1600 and the Scots in 1700, Jews in 1900 came out of nowhere – or its cultural equivalents, Russia and Eastern Europe – to dominate the movie industry and radio in the first half of the century, and the economy in the second half.

The Rothschilds made their fortune under Napoleon, and other banking houses of the late nineteenth century were Jewish-owned. But the Morgan network was dominant in America in 1890, not Jewish investment banks. The Rockefellers became competitors by 1910. Kuhn Loeb was not in this league. The only Jewish-owned commercial bank of any consequence in New York City was the Bank of the United States, which went bankrupt in the Great Depression when the gentile bankers who ran the Federal Reserve System refused to bail it out. The other big banks were protected.

Jews are not legendary as tight-fisted consumers. They are not Scots or Dutchmen. Jewish extravagance has in fact elicited envy in Europe, especially before and after World War I. Two phrases tell the story:

"He Jewed me down."

"A Jewish brother-in-law deal."

Both phrases reflect retailing. "He Jewed me down" is the complaint of a gentile wholesaler trying to sell to a Jewish retailer. "A Jewish brother-in-law deal" reflects the consumer’s quest for a discount. Thus, we return to the original phrase: "A Jew can buy from a [ ] and sell to a [ ], and make a profit."

If someone said, "He Jewed me up," it would sound strange. That would be the complaint of a consumer against a retailer who charged too much. But Jews are not famous for charging too much. They are famous for the Jewish brother-in-law deal.

Here, we see the entrepreneurial flair at work: "Buy low, sell higher, but lower than the competition." Recently, I bought a new Sony digital voice recorder from Abe’s of Maine. The shipping box had a New York City return address. Now, Abe may be a clever gentile cashing in on a group reputation, but when it’s Abe’s of Maine, the public gets the idea that wherever you go, you can get a Jewish brother-in-law deal. Except in Fresno.

Jews are prominent in academia, law, and medicine. This has long been the case in medicine. Jews for centuries served as physicians for Christian and Muslim rulers. "My son, the doctor" was basic to Jewish family advancement and even survival. Similarly, when the Czar opened up residence in Moscow to members of the state’s symphony orchestra, Jewish children all over Russia were seen carrying violins. A violin was the ticket out of the ghetto.

Jews are famous for comedy. This is an odd fact about modern Jews. Humor was frowned on in Orthodox Jewish circles for many centuries. ("Orthodox" was a pejorative term applied to Talmudic Jews by liberal and secular Jews in the early nineteenth century. A Talmudic rabbi and scholar, Samson R. Hirsch, decided to accept the term and run with it in the mid-nineteenth century.) Yet by the days of vaudeville, Jews were prominent comedians. The most famous Russian comic in America, Yakov Smirnoff, is a Jew. But he did not know he was Jewish until his parents told him, when he was 13, in 1964. They were afraid of persecution. ("What a rotten country!") They emigrated in 1977. Somehow, in less than half a century, Jews became professional comics. I have never seen a book on how and why this happened. It was as if Jews have a humor gene that had to be suppressed by the rabbis, and when the rabbis’ influence waned, Jews started making people laugh.

By the way, in the collection called The World’s Shortest Books, Famous Jewish Farmers has to be included, right next to Famous Gentile Violinists.

WHAT’S THE CONNECTION?

Half a century earlier in each case, it would have been impossible to predict the group’s imminent dominance.

All four groups have this in common: a strong sense of the covenant. The covenant is an Old Testament idea: Abraham’s covenant with God, marked by circumcision. Membership in the religious community is basic to the survival of the group.

Family and cultural ties are common to most groups, especially prior to the Industrial Revolution. But the covenant ideal meant that God had singled out a group to represent Him, and that He promises to make it prosper if members obey Him. Leviticus 26 and Deuteronomy 28 are the central passages.

The lowland Scots after 1550 were Presbyterian Calvinists if they were anything. This meant the doctrine of predestination and also a vision of world expansion, a theology called postmillennialism. But it took 150 years for this outlook to produce the Scottish transformation. Why so long? I have no idea. Herman’s book begins in 1697, which is too late to answer the question.

The Dutch did not call themselves Presbyterians, but the church structure and the theologies are so similar that it takes a specialist to distinguish them. In the seventeenth century, there were more Dutch postmillennialists than there are today (i.e., more than none).

Both theologies rested on the idea of God’s covenant, which encompasses family, church, and state. Both theologies produced an outlook of "them vs. us, and we can beat them."

One of the best short books on business leadership is Max DuPree’s Leadership is an Art (1989). DuPree ran the Herman Miller Company for many years. His father founded it. DuPree actually uses the word "covenant" to describe the business’s key factor. He does not mean contract. While I think the use of "covenant" is misused here, because covenants in the Bible relate to family, church, and state, his main point is correct: contracts are not enough.

Covenantal relationships enable participation to be practiced and inclusive groups to be formed. The differences between covenants and contracts appear in detail in "Intimacy" (p. 25).

The Armenians are not covenant theologians. Armenia was the first nation to adopt Christianity, in either 301 or 303. They were a warrior people for a long time, standing in the gap in 451 A.D. to repel the Persians. The battle of Avarier is not as famous as an anti-Persian battle in the way that Thermopylae is, but it was important. They were invaded again and again, and they lived for 900 years under the Turks, except for the thirteenth century under the Mongols. (My father-in-law told me that his father told him that in the margin of the community’s heirloom Bible, there was a notation: "Today, the Mongols passed through.") Persecution held them together. They have had a sense of religious solidarity, and this persisted even after they arrived in Protestant-secular America.

Their economic success is more difficult to explain than the success of the other three groups. This may be for lack of interest on the part of historians and economists: fewer books on them.

The Jews were traders for centuries. Religious ties made possible a network of international communications and transactions. They also had their own courts and legal precedents, called "responsa." Owning land was difficult except in separate communities. Capital in diamonds or gold was portable, unlike land.

The Dutch had to learn other European languages in order to trade. They also became skilled sailors. The country is tiny. It has few natural resources. If they wanted to prosper, they had to trade. They did. But they had a sense of destiny about them, which led them to fight the Spanish in the late sixteenth century, gaining independence in the early seventeenth. In 1689, after their defeat by the British Navy, one of their rulers, William III, became the king of England. "If you can’t beat ’em, join ’em." His wife inherited England for him. Maybe this was the original Dutch Treat.

There is another factor: separation. This means cultural separation, but it can also mean confessional. In America, the Dutch still set up parent-run private schools that are formally Calvinistic. When I lived in the border town of Lynden, Washington, in 1976, there were more children enrolled in the Christian schools than in the public schools. The Dutch pay for their cultural and confessional separation. Theology was sufficiently well defined that, at the border on Sunday morning, you would see Dutch-American Calvinists heading to Canada to worship, and Dutch-Canadian Calvinists heading for the U.S. They were polite, hard-working, well-fed people on both sides of the border. And on both sides, we "gentiles" labeled their mentality: "If you aren’t Dutch, you aren’t much." On neither side was it wise to mow your lawn on Sunday. On the American side, only one gas station was open for business on Sunday, on a rotating basis with the competition, to serve the needs of gentile tourists.

CONFIDENCE ABOUT THE FUTURE

Members of all four groups have seen themselves as hand-picked by God to dominate trade. They have regarded themselves as possessing an advantage over everyone else, either in brains, trade, or the ability to prosper under the radar. This outlook came earliest to Jews, then the Armenians, then the Dutch, then the Scots. Their sense of group solidarity was not unique, but their sense of participation in a covenant that promises economic success has been unique.

The Dutch and the Scots have lost their sense of inevitable covenantal victory, but not their sense of frugality. They have transferred to thrift what they once attributed to God’s covenant. Adam Smith wrote Wealth of Nations (1776) as a manifesto of this theological shift.

Innovation, uncertainty, cost-cutting, new markets, profit and loss: here is the program of personal success for the entrepreneur. When you belong to a group that will help you when you fall, which will provide start-up capital to get you going, you have an advantage. The Koreans have this outlook and group support in the United States. The Koreans, more than any Asian immigrant group, are Christians: specifically, Presbyterians. It is interesting that the dairy farming Dutch in Southern California have sold their land to developers, who in turn sold new homes to the Korean children of the family-run, drive-through dairy stores of 1960. The Dutch then moved to Lynden. That relocation process has been going on for three decades.

Without confidence in the future, the entrepreneur cannot function. He becomes at best an investor in bonds or other fixed-income ventures. He accepts statistically insurable risk in place of unpredictable uncertainty. He becomes frugal, advancing himself by means of the steady excess of income over outflow. He does not change society through innovation.

CONCLUSION

If you can buy from a [ ], sell to a [ ], and make a profit, your future is secure. Most people can’t.

As the free market erodes family ties, group solidarity, and persecution, members of many groups can get in on the cornucopia. It is clear that the Japanese have a similar mindset as the four groups, but without the doctrine of the covenant. The Chinese are now adopting it. The freedom to compete breaks down the barriers to entry. But, as the free market moves westward, those who belong to subgroups that have the same outlook as the Big Four enjoy an initial advantage. Group solidarity fades in the face of open competition, but this takes time. When an innovator has confidence in the future, which includes confidence in the safety net of his family or his confessional group, he has an advantage: less fear of failure.

Faith is then transferred to the free market itself. In Europe and America, faith in the twentieth century was transferred from the free market to the welfare state. The reverse process is true in Asia. This is why Asia now has an advantage over the West: social and racial solidarity coupled with increasing faith in the free market and declining faith in the state, whether Communist or Fabian socialist.

In the interim period, in between the coming of the free market and the erosion of social and racial solidarity, confidence is on the side of the family-based small enterprise. Asia is booming because of this. China seems to have the unique combination. We shall see what happens when the boom turns into recession after China’s central bank stops creating fiat money like a drunken (non-Dutch) sailor.