The Price of Everything - Eduardo Porter [78]
Cultural preferences affect many prices. Prices in Japan are still about 40 percent higher than the average across the industrial nations of the Organization for Economic Cooperation and Development, after accounting for exchange-rate fluctuations. This reflects economic constraints, to some extent. Japan is a small, mountainous country with lots of people, little energy, and scarce arable land. But culture too has a hand in its prices. The high price of food in Japan, for instance, can be attributed mostly to political norms rooted in Japan’s rural past.
In Japan, legislative districts in the countryside are much more sparsely populated than those in cities—giving rural voters more clout. It can take three times as many votes to win a seat in the legislature from an urban district as from one in the countryside. The political might of rural Japanese puts a premium on protecting farmers with tariff barriers against competition from imported agricultural products. The cost is that city dwellers have to pay top yen for their food.
But though economists are wrong to ignore the influence of culture on the prices that steer us this way and that, they are right that this very culture is more of an economic artifact than those who criticize economics’ narrow assumptions would have us believe. Sociologists and anthropologists like to portray culture as an ad hoc complement to our economic motivations. Something that comes from somewhere else, beyond the dimension of costs and benefits. But this representation does little to help understand human behavior. Why does culture exist?
Culture divides the world into two spheres. Outside the boundaries, our inner economic man can run rampant, focusing exclusively on our individual benefit. Inside, within the domain of the clan, we are expected to sacrifice individual urges to a collective need for cohesion. Within the group, taboos and cultural conventions reconfigure the price system, steering individuals’ choices to build trust and solidarity. The dances and ritual songs, the purple hair and the pants at half-mast—these are culture’s borders. They are totems around which to build common purpose, separating the inside from out.
Cultural institutions do not descend fully formed upon societies. They are shaped by the transactions within each and its interactions with the outside environment. Culture’s institutions are determined by the choices the group has taken over the course of its existence. Culture embodies the prices that have determined the communal choices. It is society’s collective price system.
WHERE CULTURE COMES FROM
Trust, for instance, is essential to economic transactions. It encourages trade, and is related to investment in physical and human capital. Researchers have found that trusting people are more optimistic and take lots of risks. Though they are cheated more often, they are essential for economic growth. Untrusting people take fewer risks and miss opportunities for profit. Trusting societies tend to be more stable and prosperous. Sixty-eight percent of Swedes and 59 percent of Finns say that most people can be trusted. In Rwanda and Turkey, only 5 percent agree.
Trust could not have developed in a world exclusively populated by the selfish. It could only emerge within boundaries where norms tempered self-interest in favor of the common good. The boundaries needed to be clear to all.
In the late 1990s I lived in São Paulo, Brazil, where I edited a business magazine. My apartment in the neighborhood of Jardins was near an Orthodox synagogue. Every now and then I would see Orthodox Jewish families out for a stroll. I recall my bewilderment as they walked down the street in the summer heat, decked out in long black overcoats and enormous fur hats that would have served a more useful purpose during a Polish winter.
Only later did I understand the purpose of such incongruous dress: it was a sacrifice. The hot winter coat signaled to every other Hasidic Jew that the wearer was one of