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Friday, July 07, 2006

Correlation is Not Causation: Language and Wealth

Another entry for the correlation is not causation files:

Language and wealth, by Richard W. Rahn, Commentary, Washington Times: Does the language you speak or use help influence how wealthy you are? When trying to determine why some countries are wealthier than others, economists rarely, if at all, consider language. However, if you look at the list of wealthiest countries on a per capita income basis, you will notice almost all the top 20 are English-speaking, or use some other Germanic language, with the exception of France, Japan, and Finland (however, most Finns know German and English as well as Swedish, and many Frenchmen know German and/or English).

English is only the primary language for about 5 percent ... of the world's people. ... The number of French and German speakers are each probably less than 3 percent of the world's population. Yet, those who speak English or other Germanic languages account for more than 40 percent of the world GDP, while comprising only about 8 percent of the world's population. ...

Now, back to the basic question: Is there something about the English language itself that helps make one wealthier, and is there something about the Arabic language itself that inhibits economic development'

Several years ago, before his death, the distinguished musician, historian, philosopher and columnist Balint Vazsonyi told me he did not think it was possible for people who did not understand the English language to fully understand the English and American concepts of liberty, freedom and rule of law... Other immigrants to America tell me the experience of living in a free market democratic country is what gives the real meaning to the words. ...

It turns out a body of Arabic scholars determines what words can be used in the Arabic language. ... The French also have the official language police to determine what word can and cannot be used in the French language. The problem is that the actions of the official language bodies tend to lag as new scientific discoveries are made and new technologies and concepts developed, and hence users of these languages are put into a linguistic straitjacket and time warp. There is no such official body for English, thus both foreign words and newly invented words are added to the English vocabulary every day by individuals and organizations across the globe

Years back, when I was involved in the economic transition in Eastern Europe and the former Soviet Union, we had many language problems. For instance, the Russians never had a modern market economy, so that basic financial concepts like 'depreciation' and 'present value' were not understood ... Fortunately, the Russians, being practical, quickly grabbed the English words and concepts for their own use.

It is more difficult to comprehend ideas and concepts if there are no words for them in one's language. Did you know there is no word for 'enterprise' in Arabic? English is becoming the world language by default, precisely because there is no institution that states what English is, thus it is totally open to new ideas, concepts, technologies, etc. (like open source software). ...

Obviously, the rule of law, property rights, trade, tax, monetary and regulatory policies, as well as culture and religion, all influence economic development. But perhaps the economics' profession should look more closely at the role of language in predicting economic success. The words we use may also help determine how wealthy we are.

The free market versus government intervention point the writer wants to make doesn't work. It's pretty funny that he asserts France's economic woes are because they don't have the words to understand concepts like entrepreneur and are incapable of comprehending the rule of law. And it must be nice that nothing wears out in Russia so that it is unnecessary for their language to describe depreciation. I bet the concept that stuff wears out was tough to convey to Russians. Also, my experience is just like his. In classes, the American students just know how to calculate present values as though it were hard wired in their genetic code, you don't even have to explain it. But foreign students just can't seem to grasp it as easily unless, or course, their English is impeccable. What nonsense. It's also funny that he thinks nobody can use a word in France and elsewhere until it's officially approved. If a researcher in France reads a new word in a science journal on the internet, I guess they have to close their brains until the word is approved.

I think it would be safe to say that I'm not convinced by these arguments.

    Posted by on Friday, July 7, 2006 at 12:04 AM in Economics, Politics | Permalink  TrackBack (0)  Comments (74)


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