A 2002 United Nations report written by Arab intellectuals acknowledges the problems the Republican candidate pointed out.

Mitt Romney caused a firestorm last week in Jerusalem by commenting on the cultural dimensions of Israeli economic growth. Palestinian spokesman Saeb Erekat, correctly seeing an implied criticism of Palestinian culture, called Mr. Romney a "racist" and complained that Palestinian economic woes are really caused by the Israeli occupation. Analysts said Mr. Erekat´s reaction was a sign that Mr. Romney has disqualified himself as a broker for peace. The episode reveals as much about the dynamics of the Middle East conflict as about presidential politics.

In making his brief case, Mr. Romney cited two books: "Guns, Germs and Steel," by geographer Jared Diamond, and "The Wealth and Poverty of Nations," by economist David Landes (my father). As in other fields of social "science," economists argue about whether development derives from cultural advantages or from natural ones such as resistance to disease and access to primary resources. Prof. Diamond, whose book focuses on societies´ natural advantages, last week wrote an op-ed in the New York Times emphasizing both culture and nature and trying to draw Prof. Landes in with him.

But Israel (which neither book examined) and the Arab world (which only the Landes book examined) illustrate the primacy of culture as both necessary and sufficient for economic development. Israel, a country with no natural resources, an economic backwater even in the Ottoman Empire, rose to the top of the developed world in a century on culture alone. The Arab nations, on the other hand, illustrate the necessity of a certain kind of culture: Even those with vast petrodollars still have among the least productive economies in the world.

Americans tend to assume that everyone shares their cultural attitudes—that everyone strives to get to "yes," to positive-sum, win- win, voluntary relations; that everyone holds productive work in high respect and prizes the principles of fairness embodied in the meritocratic principle of "equality before the law"; that everyone encourages criticism, treasures intellectual capital, promotes risk- taking, prizes transparency and fosters innovation. With institutions built on such values—with a culture dedicated to making, not taking, money—a society can make use of whatever primary products a land offers.

But there are cultures whose favored mode is not voluntary but coerced and zero-sum relations, where the principle of "rule or be ruled" dominates political and economic life. The elites in such cultures hold hard work in contempt, and they distrust intellectual openness and uncontrolled innovation as subversive. They emphasize rote learning and unquestioning respect for those in authority. Protection rackets rather than law enforcement assure the public order and bleed the economy. Public criticism brings sharp retaliation. Powerful actors acquire wealth by taking, rather than making.

Few cultures on the planet better illustrate the latter traits than the Arab world, a fact outlined in painful detail by a 2002 United Nations report written by Arab intellectuals. As "The Wealth and Poverty of Nations" points out, Arab culture intensifies these problems with its attitude of hyper-jealousy and misogyny toward women, which turns out entitled sons and cloistered daughters.

Even the huge influx of petrodollars did not change the basic contours of Arab economies: Rather than fueling economic development that benefited all, it bloated corrupt and opaque elites. Oil-rich countries like Libya and Iraq have social structures akin to those of oil-bereft Egypt and Syria. Change may occur, but it is hindered by an authoritarian culture that fears it. Such societies impoverish the masses, while elites thrive on their debasement.

Strikingly, Palestinian culture compares favorably with that of other Arabs. Palestinians have higher education, a strong work ethic and successful entrepreneurs. Much of that comes from their close association with the Zionists, who (unlike Western imperialists) settled the land without conquest, by dint of making everyone more prosperous.

From the late 19th century, Arab populations grew and prospered where Jews settled (Tel Aviv, Hebron, Jerusalem) and remained stagnant and poor where they didn´t (Gaza, Nablus, Nazareth). Many Arabs found the presence of Jews a great advantage. Thus the Palestinian diaspora is among the best-educated and most competent in the Arab world—and under Israeli rule (the notorious "occupation") the West Bank was one of the 10 fastest-growing economies in the world in the 1980s.

Other Palestinians, however, found Jewish economic leadership an unbearable blow to their pride. Said one to the British Peel Commission in 1936: "You say we are better off: you say my house has been enriched by the strangers who have entered it. But it is my house, and I did not invite the strangers in, or ask them to enrich it, and I do not care how poor it is if I am only master of it."

Sooner rule in hell than share in heaven. These actors have dominated Palestinian political culture, and terrorized Israeli and Palestinian alike, for generations.

In calling Mr. Romney´s remarks "racist" and blaming Palestinian economic difficulties on Israel´s "occupation," Mr. Erekat illustrated one of David Landes´s major points: Blaming others for one´s own failures prolongs failure. Even though his own government daily chooses a culture of death, not life, Mr. Erekat wants to blame Israel for Palestine´s woes; no admission here that he and his colleagues might have some role in the suffering of their own people.

So when Westerners denounce Mr. Romney for his "gaffe," they actually do a great disservice to the Palestinians. Palestinian entrepreneurs and administrators—the ones who wept when Yasser Arafat rejected Israel´s peace offer at Camp David in 2000—know well the costs to their people´s well-being engendered by their political leaders.

Had Western observers criticized Mr. Erekat for his silly and dishonest response, they might have strengthened those Palestinians who could lead their people to the promised land of independence and prosperity. Instead, they threw the real progressives, the ones who could put an end to the occupation by good faith negotiations, under the bus.

Mr. Landes, a medieval historian at Boston University, is author of "Heaven on Earth" (Oxford University Press, 2011). He blogs at theaugeanstables.com. (Copyright © Dow Jones & Company, Inc.) 08/06/12)