What problem . Well the book is about most americans tend to assume that markets and deo assume that markets and democracy naturally go together. And the thesis of the book is that in countries with what i call a marketdominant minority, markets and democracy are not mutually reinforcing because markets and democracy basically benefit different ethnic groups. So take indonesia as an illustration. Free market policies in the 1980s and 1990s led to a situation in which the country`s tiny, 3 percent chinese minority controlled an astounding 70 percent of the country`s private economy. The introduction of democracy in 1998 produced a violent backlash. Five thousand homes and shops of Ethnic Chinese were looted and burned. Two thousand people died. A hundred and fifty Chinese Women were raped. The wealthiest chinese left the country, along with some 40 billion to 100 billion of Ethnic Chinesecontrolled capital, plunging the country into a crisis from which it has not recovered. So in countries with a marketdominant minority and indonesia is just one of many examples markets and democracy benefit not just different people or different classes but actually different ethnic groups. Markets make the resented minority richer and richer, while democracy increases the political power of the poor, frustrated, indigenous majority. And the result is almost invariably tremendous instability and very often violence. Cspan define the term indigenous. Guest well, i tend to put indigenous in quotes because it`s a perception. I mean, there is, for example, the indigenous indonesians are the pribumi majority, who felt that they were there first and that the Ethnic Chinese are outsiders or invaders. Now, i put indigenous in quotes because many of the indonesian chinese have lived there for four generations. The same with zimbabwe. I mean, the indigenous black majority is indigenous in a real sense, but many of the white zimbabweans have lived there for, again, four generations. Cspan let me go back to your term because it comes up throughout the entire book marketdominant minorities. Guest yes. Cspan one of the ones that surprised me was the lebanese in west africa. Guest yes. Cspan explain that. Guest well, actually everybody from west africa is familiar with this, so it`s interesting that Many Americans, including myself, was not aware of this. The west african countries for example, nigeria there are many local indigenous, disproportionately successful african ethnic groups, also. For example, the ibu in nigeria. But most saliently, most almost in virtually every west african country, there is a very small population of lebanese ethnic lebanese, again, who came over sometimes two or three generations ago, and they are essentially the driving force and the link to global capitalism. They you know, Foreign Investors do all the deals with them, and they are extremely disproportionately wealthy. They typically in sierra leone, that i discuss at great length, until the rebels took over, they basically the lebanese minority essentially controlled the diamond industry, which was and that`s often true. Marketdominant minorities tend to control the most the country`s most valuable Natural Resources, which is another the crown jewels, which is another reason that they their dominance provokes such hatred and resentment. Cspan you came local with your discussion about koreans in los angeles. Guest yes. Cspan explain the marketdominant minority in los angeles being koreans. Guest well, in general, i ask the question i talk about countries outside the United States, and one thing i say is that the United States does not have a marketdominant minority at the National Level. Whatever one occasionally hears about koreans or jews, the United States economy is not controlled by any ethnic minority. And i actually document that. If you look at the 10 wealthiest americans, bill gates and the other nine. Cspan and the waltons. [laughter] guest yes, the family none of them belong to any identifiable ethnic group. However, i then get more specific, and i say that actually, if you look at particular regions or areas in the United States, you do see echoes of the same phenomenon. And yes, in los angeles and many of our inner cities, koreanamericans are essentially a marketdominant ethnic minority visavis the much poorer and much more populous africanamerican majorities around them. And it`s actually very similar because the there`s a sense of them being newcomers and outsiders that have come in to take away something that`s not rightfully theirs because they are relative newcomers. And the los angeles riots that i discuss and the more recent instance in brooklyn are very familiar. They follow a very similar pattern where the poorer majorities of these neighborhoods are actually kind of whipped up and stirred into anger by demagogues, i mean, often politicians who play on ethnic hatred for their own for their own advantage. Cspan where did you get the title, world on fire . Guest my publisher [laughter] cspan not your idea. Guest not my idea. Not my idea. As an academic, i don`t think i would have such a stark title. My own title i can`t even remember what it was, but it was long and boring. Cspan why did they pick this . Do you have any idea . Guest i think it`s because my work originally started off as, you know, academic articles. Even my mother couldn`t understand them. And i think they probably wanted to make people more aware that it`s not that i`m not writing about distant phenomena but about events that really affect them, including i write about september 11 also and the and the implications of all this for america and. Cspan your book is endorsed by a wild spectrum here of people including Strobe Talbott and tom sowell. How do you get you know that`s a divergent Ideologue Group there, from one side to the other. Guest well, that`s something i`m actually proud of. I think that i think that a lot of people are very bored of the debate about globalization. It`s sort of going nowhere, and people are tired of it. And i don`t even think it`s make sense to talk about the right and the left when it comes to globalization. So i think that both globalization`s critics and globalization`s enthusiasts overlook both make mistakes. They both overlook the ethnic dimensions of free market democracy. So i feel that my book is nonpartisan, or at least along traditional lines, and you know, neither left nor right, in any meaningful way. And it`s about a phenomenon the idea of a marketdominant ethnic minority is for not entirely bad reasons, i think it`s one that is almost taboo in u. S. Society you know, the idea of writing about an ethnic minority who would tend, under free market conditions, to dominate economically the indigenous majority around them. So i think it`s a it`s a topic that`s not been addressed by either side. So you know, it`s not political that way. By the way, i don`t i don`t think it should be taboo because the idea of a marketdominant minority is not to be equated with inherent entrepreneurialism. I mean, i write about marketdominant minorities who owe their market dominance to colonialism or apartheid, like the whites in south africa has there, the fact that they are, you know, a very small portion of the population, 14 percent, and have historically controlled all of the best land and all of the major conglomerates, you know, owes principally to the fact that they didn`t let the majority vote or live in humane conditions for over a century. Cspan what do you do for a living fulltime . Guest i am a professor at the yale law school. Cspan are you a lawyer . Guest i yes, actually. I went to law school. I passed the bar, and i practiced for four years on wall street, at a Major International law firm. Cspan where are you from originally . Guest i am well, i`m Ethnic Chinese. I was born in champagne, illinois. My parents were both born in china, but they left china with their families for the philippines when they were young children. And most of my relatives are still in the philippines. Cspan why did they leave china for the philippines . Guest for economic reasons around 1936, `37. They were from a poor province bafuquien ph Fujian Province. It`s no longer so poor. But many people from that province at that time left. They took a boat, and they headed straight and either and many of them went to the philippines. Cspan what years did they come over here . Guest well, it was my parents actually eloped to mit in 1961. I was born in 1962. Cspan and why champagne, illinois . Guest my father`s also an academic. He they came over for advanced degrees at mit, and then my father went to complete his ph. D. At the university of illinois, and my parents now live in berkeley, california. Cspan what are they doing now . Guest my father is a well, they`re probably watching this show. They are my parents my father is a professor at berkeley. He teaches chaos theory and travels a lot. Cspan chaos theory . Guest yes. Cspan what`s that . Guest it`s well, he`s an electrical engineer, but he works a lot in computers and mathematics and i probably shouldn`t try to explain what chaos theory is [laughter] cspan so you grew up how many years did you live in champagne . Guest i lived for just a few years. Then i spent eight years in indiana, where my father taught at perdue. So my Three Sisters and i lived in indiana for eight years, and then we moved to berkeley, california. Cspan that`s my home town, as it turns out. It was just i didn`t know that you were from lafayette. So how long did you life in lafayette . Guest eight years. Or seven years. Cspan and then what . Guest and then my father received an offer to go to berkeley, so we then moved to berkeley, california, where i spent another eight years. Cspan did you go to uc berkeley . Guest no. That`s where my parents wanted me to go, but i went to harvard. Cspan where`d you get your law degree . Guest harvard. Cspan what was that like . Guest well, which part of it, going leaving the family for. Cspan . Your parents started out in Fujian Province in china, and you end up at one of the top universities in the United States, both undergraduate and a law degree. Hard . Guest i think. Cspan come easy to you . Guest well, we always worked hard. We always worked hard. Cspan how many are there in the family . Guest three younger sisters. I think in some ways, i think my immediate family my immediate family is probably a fairly typical immigrant story. My parents came over my father was from a very wealthy family, but he left all that. And my mother was not. She was from a poor intellectual family. So when they came over to the United States, they were penniless. They really had no money, no no heat in boston. So it was just very natural. We all you know, we had to work hard, and we were all good students. Cspan i can`t leave it without asking this subject without asking about your Three Sisters. What are they doing . Guest one is a lawyer in d. C. Another is an m. D. ph. D. , or actually, a postdoc at harvard. She`s a doctor and and a scientist. And my youngest sister lives with my parents, and she is 10 years younger than i am. She has down syndrome, and she`s the family favorite. Cspan all right, back to the book for a moment. World on fire the idea for this came when . When did you you know, you were talking about writing the articles, but when did you know you had a book . And this was doubleday bought this. Guest i i actually never imagined that it would be this kind of book. I started off just as an academic, writing academic law review articles about the relationship between market reforms, democratic reforms and ethnic conflict. So i produced three law review articles, and then i thought that i would perhaps put it together. And many people suggested that i do so, so i put together a proposal originally for Oxford University press. And you know, it had the proposal was, you know, 3,000 pages long and had 2,000 footnotes and through a series of coincidences a friend suggested that perhaps i should have an agent look at it. And and i have a great agent. And they suggested that well, actually, it was interesting. I they my agent kept asking me, is there anything personal in this . And this is only a yearandahalf ago, before i started writing the book. And i answering honestly at the time, i said no. I no, there is nothing personal in this, because i think, for me, the whole academic project has been precisely to depersonalize everything. I`m writing about complicated and controversial subjects, so for every fact, i drop a footnote and substantiate it with empirical evidence. And the last thing i wanted is for it to be subjective and personal. But as i`ve thought about it, the book has obviously changed i as probably for every author. It`s of course, it`s about what i know and my own background, in a sense. Cspan you say personal because you lead right off with a story about your aunt leona. Guest yes. Cspan tell us the story. Guest in 1994 this is i had just started as an academic at as a professor at duke, and i had started to write about these issues already, but i received a phone call from my mother. I was at duke and she was in california. And she told me that my aunt, my father`s twin sister, leona his name is leon had been murdered in the philippines. She was killed by her chauffeur. And my aunt and my whole family in the philippines are part of the very, very economically dominant and entrepreneurial 1 percent chinese minority in the philippines. And her chauffeur was part of the largely impoverished, much more populous ethnic filipino majority. And so my mother told me about that. Cspan where did your aunt live . Guest she lived in by herself in a beautiful home in manila. Many of my relatives still live in manila. Cspan and so how did you find out that the chauffeur killed her . And what were the circumstances . Guest well, there was actually no dispute. Two maids immediately confessed that they had actually been accomplices. I mean, they it was premeditated, and a few minutes before the murder, they testified that he was sharpening the knife. And after the murder, he reported to them that their employer was dead. And the police were notified and sort of the usual things happened, but the murderer was never apprehended, and both of the maids were released. And part of this has to do with the fact that, first of all, kidnapping of Ethnic Chinese in the philippines is extremely common extremely common. And very rarely are the the suspects apprehended. And part of this is i think because of the intense resentment against the Ethnic Chinese and the fact that the police and the Security Forces are largely well, are all ethnic filipino, and they`re not that motivated. In some ways, i think there`s a lot of sympathy not necessarily for the murderer but for the circumstances that would lead people to do such things. Cspan you say in the book she was 58 at the time . Guest yes. Cspan and the chauffeur`s never been caught. Guest no. Cspan what. Guest i have the police report. Cspan what was the motive . Guest the well, it was interesting. The chauffeur apparently took some some jewels, some money, but very stark for me and this is probably why i open the book with this. I looked at the police report. I was very frustrated both with my family members in the philippines and the police that nothing was happening. And i asked my uncle, you know were there any developments in the murder case, and and the answer was no. This is it`s been closed. This is when i asked why, he said this is this is the philippines. It`s not america. So i actually got copies of the police report. And interestingly, under motive, there was essentially just one word, and it was revenge, which was striking for me because it could have been robbery, it could have been something else, but. Cspan revenge for what . Guest . It was really just well, that`s an interesting question. I think revenge for my own view is it`s a combination revenge for feelings of humiliation and powerlessness. My many of the chinese filipino families have many servants, and it`s a very lopsided situation. The businesses are virtually all dominated by Ethnic Chinese, along with a very small sort of spanish aristocratic class. All of the peasants in the philippines are filipino. All of all of the maids and the servants and the chauffeurs are filipino. And when Foreign Investors come to do investment deals, they deal with the chinese. So i think it`s well, revenge is a theme of the book, i think. It`s it`s an act of revenge rooted in tremendous feelings of anger and envy and grievance and humiliation. Cspan what, about 60 Million People in the philippines . Guest yes. That`s right. Cspan and 1 percent of them are chinese. Guest yes. Cspan what is it about the chinese that they succeed so well in that country . Guest well, this is a tricky question that i that is not the main focus of the book, but many people ask me this. First first of all, they`re it`s very complex, and i definitely do not think it is a genetic reason or necessarily even a cultural reason. Groups can be marketdominant in one context and not in another. For example, the chinese in china were marketdormant for, you know, many generations under communist china. As to why the chinese are so the chinese minorities of all Southeast Asia i mean, even right now, burma, malaysia thailand i think part of it has to do with the immigrant origins, you know, that instilled a sense of hard work. Part of it has to do with family and i guess cultural considerations. But in addition one thing i try to bring out in the book a lot of it is part of it is also favoritism. So it`s kind of circular because you have this Entrepreneurial Group that starts off and has disproportionate entrepreneurial skills, and often in the case of Ferdinand Marcos an indigenous leader will actually go into cahoots with this marketdominant minority and then engage in a symbiotic relationship, where, you know, i`ll protect you, i`ll give you these government franchises and li