One of Britain’s exam boards was attacked last year for a question in a GCSE religious studies examination: ‘Explain briefly why some people are prejudiced against Jews.’
Is this really a theological question? Or does it belong in biology? Or psychology? Or economics?
The Canadian evolutionary psychologist Steven Pinker in The Blank Slate devotes a few pages to the issue of prejudice, including not only anti-Semitism but also hostility towards trading groups and intermediaries everywhere: from Chinese shopkeepers in Malaysia to Armenians, the Gujaratis and Chettiars in India and Korean store-owners in the United States.
Pinker partly attributes this to what economists call ‘the physical fallacy’. We have evolved an innate sense of value that makes us far more content when we pay money for physical goods than for services or intangible benefits. Regardless of the usefulness or advantages these services bring, we are much more begrudging of money we spend (and hence of the money other people make) on intangible things than we are when we pay people for, say, manufactured goods or agricultural produce.
Shopkeepers and merchants may add great economic value — through transportation and storage and scale — but it is not value you can touch. The same goes for lawyers, bankers, landlords and so forth. Hence, if any group prospers through creating intangible value (sometimes because they are forbidden from owning land), it is easy to portray their wealth as parasitic — which is exactly what Nazi propagandists did.
We may not currently be planning a Kristallnacht against Tesco, but this innate bias seems no less potent in other decisions we make. We tolerate subsidies to farmers in a way we would never accept if they were paid, say, to mobile phone network operators.
The almost limitless appeal of economically inert forms of investment, such as art, gold and property, is probably attributable to this fallacy.
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