by Bakri Musa

Chapter 4: Modern Model States

The Asian Miracle – South Korea

In the 1950’s, the Filipino government was sending community development officers to the Republic of Korea (ROK) to help the Koreans recover from the devastations of war. Today, the two Asian nations could not be more different in the quality of life of their people.

The Economist noted that in 1964 Zambia had a per capita GDP twice that of South Korea, but by 1999 the Korean figures had rocketed to over 27 times that of Zambia’s. South Korea is now among the top twelve trading nations. Its upward trajectory was briefly interrupted by the Asian economic crisis of 1997, but it is now back on track.

No one would have predicted back in the 1950’s that this Asian nation would be a model of success that it is today. Indeed the first half of the last century had not been kind to South Korea. Yet it succeeded, and did so by flouting every conceivable rule of modern developmental economics. It unabashedly adopted central planning, complete with Soviet-style Five Year Plans and with the state assuming a dominant role in business and the economy generally. The state directed major investment decisions and allocated scant resources, including credit. It was not shy in strategically intervening in the economy when it deemed necessary. South Korea’s strategy had been labeled “guided capitalism.”

Politically, for most of the last half of the 20th century, it was ruled by a series of strong and autocratic military leaders. Indeed Korea’s economic development began with its military dictators.

Korea’s military rulers, through discipline, hard work, and commitment to trade, transformed the nation. The generals treated the country like an army at war, with strict regimentation, top down command, and single-minded pursuit. They brooked no insubordination or opposition. The whole nation was conscripted into a war mode to develop the country. This war mentality, partly egged on by the very real communist threat from the north, pervaded every sphere of South Korean thinking and action. Every opposition and obstacle had to be crushed; every resource of the state had to be focused to this overriding goal of economic development.

South Korea’s remarkable economic achievements were not however, accompanied by a comparable social and political development. Nonetheless with it joining the ranks of the developed nations and with the increasing affluence of its citizens, democratic reforms and increased freedom and liberties for her citizens must necessarily ensue. Besides, there is no value or joy in having democratic freedom while the citizens are starving. Look at the Philippines and Haiti. What a mess!

The luxury of choosing one’s leader is just that – a luxury. It is more relevant that the leader, whether anointed, elected, or one who simply grabbed power, be competent and dedicated. As long as a leader is capable, it matters not how he achieved power. The only advantage of representative democracy is that when you are stuck with a bad leader you may have a chance to get rid of him peacefully at the next election, assuming of course that it would be free and fair. The disadvantage is that you cannot blame anyone else for choosing that leader.

Whatever may be said of the South Korean generals, no one would dispute that they were indeed competent economic managers and pursued progressive economic policies. They may not have been enlightened in the views of modern libertarians, but they had achieved their primary goal: to make sure that their people were not starving. Having accomplished that, the South Koreans could now look forward to loftier goals, like greater prosperity and increased freedom.

For a significant part of the 20th Century Korea was a Japanese colony. Japan annexed the country and did all it could to annihilate the Korean culture and identity by absorbing or more correctly, subjugating the Koreans. The teaching of Korean language for example, was prohibited and Koreans were forced to adopt Japanese names. The Korean economy was entirely controlled by the Japanese. Had it not been for Japan’s defeat in World War II, the Koreans would more probably be by now a lost minority ethnic entity in a greater Japan.

The Japanese defeat gave the Koreans their independence. Unfortunately the nation was immediately trapped in the emerging Cold War, with the Americans and the Allies on one hand, and the Chinese and Russians on the other. The Korean War was settled with the present boundary between North and South arbitrarily set along the 38th parallel.

The Korean War and its aftermath took hundreds of thousands of lives and brought untold misery to millions more, borne primarily by the Koreans themselves.

Right from the start South Korea was at a distinct disadvantage compared to North Korea. Most of the industries were in the north, including vital chemical plants to produce fertilizer. Even electricity came from the hydroelectric generators in the north. The railroad in the south too was dependent on coal imported from the north. To compound the challenges, most of the industries had been owned and operated by the Japanese. And with their exodus following World War II, these factories were essentially abandoned.

At the same time South Korea was inundated with refugees from the north and the emigration of Koreans from Japan. Between 1945 and ’46 its population swelled by a whopping 21 percent!

Korea, or at least that part south of the 38th parallel, “elected” Syngman Rhee as its first president in 1948. This Princeton-educated man proved that one can get an Ivy League education and yet remain very much provincial, absorbing none of the refined aspects of American culture. He turned out to be a run-of-the-mill dictator, ostensibly cloaked in the niceties of democracy. Rhee epitomized many Third World leaders, past and present. They may have graduated from top Western universities, but apart from the parchment papers they collected they have learned nothing about what makes the West great. They must have not ventured much beyond the lecture halls and libraries of those august institutions during their student days. They were content being academic “muggers.”

Rhee did learn something about America: how to play on her vulnerabilities and obsessions with its own version of freedom and democracy. He milked America to the maximum such that for most of his tenure, the main if not the only contributor to Korea’s budget was American foreign aid. And the main source of income for Koreans was the spending money of the well-paid American GIs and foreign aid workers stationed in Korea.

Rhee’s corruption and manipulation of the Korean constitution and institutions continued while his nation was spiraling down the abyss. The ending was predictable. In the end he was forced into exile to a comfortable life in Hawaii in 1960, leaving his country in a total mess.

The military, the only disciplined organization left, staged a coup led by General Park Chung Hee in 1961. Park treated the country as a strict sergeant major would an ill-disciplined bunch of peasant youths. He was banking that after such a rigorous training, the youngsters would be so pleased with their new spit and polished look that they would forget the ordeal they went through and be forever grateful to the drill officer. Park was fully aware that he did not have political legitimacy but was counting that with economic success he would win the hearts of his people. Reaching the heart via the stomach, a time-proven strategy!

Park’s first five-year economic plan emphasized industrialization, especially for exports, with heavy state involvement and direction. Despite the well-known natural antipathy the Koreans had for the Japanese, Park, having spent his youth in Japan, did not hesitate in learning from his former colonial master. His strategy was not only to emulate the Japanese but also to better them. Industrial workers were cowered and strikes banned, with the single-minded purpose of beating the Japanese at the industrialization game. Exports were encouraged through various subsidies, tax incentives, preferential access to capital, and generous depletion allowances. Savings were similarly encouraged.

The Koreans were indeed diligent students, copying the Japanese in every way, including producing their own version of the Japanese keirutsu (conglomerates) – the chaebol.

Park was a tough taskmaster but he certainly had vision. He excoriated his people for their poverty and primitive ways and exhorted them to change their ways so that they would be resilient so as not be colonized again. To Park, Korean farmers were a lazy bunch, given to drinking and gambling. (Park’s remarks reminded me of Mahathir’s frequent outbursts on the indolent ways of Malays.) Using nationalistic appeals together with bold economic planning, Park embarked South Korea on an ambitious path of economic development. He built the spanking new Seoul-Pusan expressway not only because it was a much needed infrastructure but also to showcase Korean engineering talent and construction capabilities. He also encouraged and supported South Korean construction companies to secure lucrative contracts abroad, especially in the Middle East.
In contrast to earlier industrialization policies based on import substitution, Park strived for exports. He set and repeatedly raised his targets, all along exhorting his people. He made a giant leap forward with his ambitious Heavy and Chemical Industries (HCI) Plan, again geared primarily for exports.

Nor did Park neglect the countryside. In 1971 he launched a massive rural development scheme, Saemaul Udong (New Village Movement), aimed at improving living standards and income for the villagers. Park also had a more noble but nebulous goal of promoting “spiritual enlightenment.” His rural development plan began in a highly dramatic and very physical way. He ordered the traditional thatched roof of farmers’ dwellings be replaced with modern corrugated metals, and later, concrete tiles. Between 1972-79, nearly two and a half million rural homes sported this new roof. Never mind that these modern materials provided no insulation against the bitter winter cold or searing summer heat. They looked modern compared to the thatched roofs, and that was what Park was trying to achieve. Additionally he ordered village streets and housing facades be straightened. He wanted no untidiness and messiness. Park’s style was more into military barracks: cheap, clean, purposeful, and spartan. He brought a very visible physical change to the countryside.

Rural development did not end with the cosmetic improvement of farmers’ homes. Park brought in electricity, massively subsidized, so peasants could install radios and televisions that would bring them into contact with the modern world. Roads, bridges, and irrigation channels were built, all to modernize the countryside. And with that physical transformation, he hoped to bring about comparable social and pyschological changes in his people.

Like everything else associated with the military mindset, in the end these rural development programs degenerated into means of social control of the population – Park’s “spiritual enlightenment.”

Next: The Asian Miracle – South Korea (Cont’d)