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The Economics of Racial Stereotypes

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During World War II, Australian soldiers were told they had nothing to fear from Japanese soldiers. They were short, wore glasses and their rifles fired puny bullets that would bounce off a strapping young Aussie lad. No worries. Should fix them up before tea then you can go and fight some real soldiers like the Germans once you’ve done with the Japs.

Unfortunately, it didn’t turn out that way. The Japanese stormed across South East Asia and took Singapore with embarrassing ease. Thousands of Australian soldiers were taken prisoner there. Many didn’t survive that ordeal. The Japanese had their eyes on Australia and landed in Northern New Guinea, a mere island away from Queensland, and proceeded to show the Australians how to fight in jungles. Despite being labelled ‘cowards’ by the US General Douglas McArthur (who was leading from the front in Melbourne) the Australians managed to stop and forced the Japanese to retreat on the Kokoda track. They did this without any on-the-ground assistance from its allies, Great Britain or the US. The Australians found, at high cost, that they didn’t need to travel to North Africa or Europe to fight ‘real soldiers’.

What does this have to do with economics you may ask? Plenty. Counter-productive racial stereotypes leads to a huge misallocation of resources. In the case of the Japanese, it lead to thousands of Australians dying because the military and political elite didn’t treat the Japanese as a serious threat. In today’s world, it leads to smart, capable young people being discriminated because their first name is ‘Muhammad’ or ‘Xiao’. It got to the point where a Muslim woman changed her first and family name to a ‘Gabriella Hannah’. This type of discrimination contributes to differing unemployment rates between recent migrants (7%) compared to Australians (5.4%) in November 2013. Note, recent migrants include those from English-speaking countries so the unemployment rate hides considerable variation depending on country of origin. For example, recent migrants from North Africa and the Middle East have an unemployment rate of over 20% whereas those from North-West Europe had an unemployment rate of 0.9%.

Even white people aren’t exempt from racial stereotypes. Government backbencher George Christensen slammed #illridewithyou as portraying white Australians as Muslim-hating thugs who travel on public transport. Unfortunately, Mr Christensen omitted the economic impact of such a stereotype for Australians of Anglo-Saxon heritage which diminished the public policy value of his Twitter posts in my eyes.

By now, you are probably aware of the Sydney Cafe Siege. As I followed the events, I despaired that the Muslim Australian community would face another round of racial attacks on our streets and our public transport. Seems like I wasn’t the only one if #illridewithyou was anything to go by. Maybe I am one of those people who thought less of white Australians. But after I saw #illridewithyou, I knew I was wrong to hold such stereotypes. Stereotypes are erroneous assumptions. And wrong assumptions makes an ass out of u and me. Maybe we would all be better off if we parked our prejudices at the border.

Have a good Christmas and a Happy New Year!


  1. Is this not extremist views of nationalists often punted during times of economic hardship to gain support? For instance, there is a strong anti-semitic ideology peaking its ugly head in eastern Germany, Western Russia, etc. This is an ancient ideology going back at least 500 years which lead the Jews to migrate to Poland in the first place.

    If I’m not mistaken, until the 1960’s the Aborigine’s came under the Flora and Fauna Act and were classified as animals? Race seems to a be the Australian problem just like South Africa. I find these people view the economy as a finite phenomena. For instance the thinking will go something like this: “there are only so many jobs and those foreigners are taking them…” However the US has taught us that the more participatory the economy, the larger it grows as does employment.

    In South Africa, we’re observing a strong polarisation on racial boundaries, particularly by nationalists of both white and black ethnic backgrounds. This rhetoric is subterfuge trying to hide the mismanagement of state owned enterprises, a high budget deficit and general widespread corruption.

    Robert Mugabe used the same tactic in Zimbabwe to hide the poor financial mismanagement and the plundering of states resources. The subterfuge there was an anti-colonial “revolution” with a land-grab policy but the economy was already in decline. Colonisation was, and still is, an issue in the psyche of Zimbabweans.

    The point is that once you can no longer hide your misdeeds, you have to resort to more draconian measures to maintain the illusion.

    Are the Australian race issues rather not a good indicator of real or “on the ground” conditions of the economy in Australia?

    • arthurchha says:

      Hi Anthony, thanks for putting the effort and passion into your comment. I agree politicians use racial stereotypes for political gain. It is also so much easier to frame your arguments in a zero sum way. The argument I want to put forward, is that with a little bit of research and thinking, we can quickly dispel these stereotypes with facts. So, the common accusation that migrants are stealing jobs. It may be true but it looks like in Australia’s case, it is migrants from the North-West of Europe (probably the UK) who are doing well in the job market whereas migrants from North Africa and the Middle East are doing poorly. However, I don’t agree that politicians pull out racial scapegoating when the economy is doing poorly. Australia has been doing pretty well in the last two decades but it was during this time when the Cronulla race riots happened and when a xenophobic party (briefly) captured some popular support. Also, there is a general unease with people from China coming into Australia and buying up houses. In all countries, democratic or not, there will always be racism. It is how a society manages its racist elements that is important. In the case of Australia, if the study I cited is any guide, Australian businesses as well as politicians have a long way to go.

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