The difference between Dubai and Iran

I was at a dinner party last night at the home of a Harvard Business School professor.
The gathering was for parents of our children at a local school,most of the conversation was to introduce ourselves and talk about our kids. Near the end of the party several people were gathered, and the conversation was quite curious, so I listened in.

A few people in the conversation were familiar with the Middle East and had visited countries there -- the Harvard professor being the most well-traveled and informed. They were talking about what countries were working and what were not, how the US had already won the war of public opinion through McDonalds before our incursion into Iraq -- which now has made us the bad guy just about everywhere. Nothing that new here.

Then the professor started talking about the small Gulf states, such as Dubai, Yemen, Kuwait and so forth. He commented that they are probably more comfortable with the US than Europe is. Someone asked the obvious question of what he thought was the reason for this. His response was that, historically, these nations had two characteristics. First they were port nations, facilitating trade via the Gulf. As such, their posterity relied on their ability to "work with everyone." So, culturally, they have learned how to be successful as an impartial facilitator of trade. Secondly, the nations were fairly small and could be goverened by the ruling families. I'll call these "trade states."

This stood in stark contrast to countries like Iran, who see themselves exerting their sovereignity as a nation with a distinct identity and will. Iran is not alone in this. Russia, China, US and all of the European states are like this. Several African nations are or are trying to become like this, too. I'll call these "sovereignity states."

The difference between these states and the "trade" states is that the latter are dependent upon the former for existence. They essentially provide a service to the former states, and as such they can survive and thrive with a stability that comes from their successful handling of the trade role.

What makes sovereignity states survive over time is internal growth and stability. Without those, sovereignity states cannot hold together.

What was interesting about the discussion was that, at first, it was thought that capitalism could be the stabilizer in both of these kinds of states. But, capitalism plays a different role in each of these states. In trade states, capitalism is the necessary lingua franca of trade, so it is very natural there. But in sovereignity states, capitalism is not intrinsic -- though it may be the most pragmatic. Worse, though, is that even if capitalism is adopted in such states, it alone does not ensure healthy growth or stability. This is because there is a critical ingredient that must accompany any stable nation.

And that is altruism.

We talked about the studies that have been done around individual benefit maximization versus global benefit maximization, and it is pretty clear that, without the concept of a "common good" that people are at some level willing to sacrifice their own benefit for, there is no way for a society to hold together on its own in such a way that personal liberties can flourish long-term. Instead, power sloshes to a small corner of the country, and dictators have to hold things together.

So, whether we promote democracy or capitalism, countries must develop a spirit of altruism and "common good" to hold together, or we'll just be creating more Iraqs.