A difference a leader makes

Three foreign diplomat discussants listen to Bernard Rowan from the Chicago State University during the third session of the conference on the Korea development model held at the Korea Chamber of Commerce and Industry, Thursday. From left are Shahidul Islam, Bangladeshi ambassador to Korea, Marcela Lopez Bravo, Peruvian ambassador to Korea, Ngovi Kitau, Kenyan ambassador to Korea, Ahn Choong-yong, a professor of Chung-Ang University and Rowan. / Korea Times photo by Shim Hyun-chul

By Michael Breen

It is hard to appreciate, as Korea prepares to bid to host another Olympics and marshals its ideas for the advanced nation debate as chair of the G20, that this country was once dirt poor.

But, when the current President, Lee Myung-bak, was a boy, the annual per capita gross national product was just $80. That put Koreans behind Pakistanis and level with the people of Sudan and Haiti. People still lived, begged and died on the streets.

In assessing what brought the national economy from then to now in a generation, it is customary to talk in terms of policies, industries, and investment decisions. The implication of such analysis is that development is not that hard, just a matter of picking the right policy from the handbook and dangling the right carrot and applying the stick when necessary to get things done.

But, as the carrot and stick comment suggests, leadership, economics and administration are human endeavors, arts, not sciences. The human will to change is the exception, and the tendency to copy others, revere elders and remain the same, even if it means staying backward and poor, is the norm. In fact, it is so much the exception that when successful and rapid development takes place, as it did in Korea after centuries of poverty, we conceive of it as a miracle. So, who were the Korean miracle-makers of 50-60 years ago and what motivated them to turn their country into the powerhouse it is today?

The Leader

Without Park Chung-hee, the army general who seized power in May 1961, Korea may today be limping along like Burma or The Philippines. Park was an extraordinary character, an “economic warrior,” in the words of the author Mark Clifford, in Troubled Tiger, his book on Korean development:

Clifford wrote: “Park was a nation-builder with few peers in the modern world. None of the better-known national architects of the twentieth century ― Ataturk, Nasser, or Lenin ― have built a more durable and prosperous country than Park. From the May 16 coup until his assassination in 1979, Park Chung-hee was the nation’s schoolmaster and its chief economist.”

Like so many success stories of his generation, Park came from a poor peasant family and excelled at school. His father was a Tong-hak rebel who had been amnestied and had become a subsistence farmer. His mother, who was 45 when she conceived, tried to abort him because she did not believe the family could handle another mouth to feed. She drank raw soybean sauce and willow soup to try and poison him, tied a belt around her belly to constrict him, and even jumped off a wall. Such practices were not unusual. Park survived and went on to excel at school. He became a teacher and then decided to join the army. He came top in his class at the Japanese Manchukuo Academy and went to the elite Tokyo Military Academy. After graduation in 1944, he was commissioned a lieutenant in the Manchukuo army.

This Japanese experience is the key to understanding Park’s future role as the maker of the Korean economic miracle. Not only was he exposed to Japanese planning, but he absorbed the uplifting ethic of placing the interests of the group and nation before those of family and individual. . In the Japanese army, Park was exposed to the mixture of rightist military ideas and communist notions of state control prevalent among Japanese officers and saw them in action in the development of Manchuria, where the army worked with Japanese business groups there to build dams, factories and power stations.

“As a group they had scant regard for the intricacies of etiquette, which all too often limited action in Korea,” Clifford writes. “They also placed much less importance on the family and more importance on the organization ― both the nation and the corporation. In this sense they were much less typically Korean than the generations that preceded and followed them. It is hard to over-emphasize their importance in Korean development.”

Despite the Japanese background, Park was not seen as having been a collaborator in his day. (He is now but that is by people who are very distanced from the period of Japanese control of Korea). After his older brother was killed by police in 1946 during a communist-led riot in Taegu, Park threw his lot in with the left, which he considered to be better organized, more patriotic and less corrupt than the right. In 1948, he led a communist cell in the army and was sentenced to death for his role in a revolt of junior officers. The sentence was commuted to fifteen years and he was later pardoned due to his co-operation with investigators. Whatever the nature of this “cooperation,” it committed him to an anti-communist path.

Park was promoted to brigadier-general during the Korean War and major-general in 1958. He disliked the government of President Syngman Rhee, which he felt was corrupt and over-dependent on the United Sates. The Kennedy administration knew enough about Park’s history to worry after his coup that he may have still been a communist. The local press gave him a Russian-sounding nickname, calling him “Parkov,” (enjoying a press freedom that was later curtailed).

“Park Chung-hee was never an ideological communist,” the journalist Cho Gabe-je said in an interview. “But he was an emotional communist because of his mind for independence. He thought that Japanese imperialism had been replaced by American imperialism. He was a very independently-minded and practical person. His basic way of thinking was that you can travel as far as your power allows you. Power is the most important thing, not empty words. He endured the humiliation (of dependency) and wanted to build up Korean power in order that we could be independent from both Japan and the United States.”

His strategy

Park’s vision for Korea was of a country with the industrial base to defend against North Korea without relying on the American support, which he knew would one day disappear. As a nationalist and a soldier schooled by the Japanese, his argument was virtuous self-sacrifice for the nation, and his strategy was to restrict freedoms, such as the right to criticize South Korea (and, in the 1970s, even US policy), that distracted the citizenry from this worthy direction.

While the repressive politics is lamentable, the impressive feature of Korean growth was the pragmatic nature of the strategy taken to meet that objective.

Koreans traditionally had not valued commerce. In old Korea, the study of history, poetry and Confucian ethics was considered more virtuous. More recently, the country was exceedingly poor and its people, from the leaders down, preoccupied with short-term concerns. The bureaucracy and business were also awash with corruption. In addition, the population of the country had gone up by 25 percent before the Korean War as people returned from overseas and escaped the North. Politically, Koreans were very fractious. Uniting in pursuit of a common good was not the norm. Unity tended to be around central figures and often based, as is typical in countries where people have low levels of trust for their fellow citizens, on common factors such as same home towns or schools.

Immediately after taking power, Park launched an anti-corruption campaign, rounding up the rich, centralizing economic planning and generally making it clear who was the boss. Several wealthy businessmen were arrested, but most were let off provided that they set up companies in certain designated industries. Rather than suppress businessmen, as the leftist within him may have wished, Park sought to harness their profit-hunting abilities to the cause of national growth. Thus, as economist Alice Amsden notes, within days of his coup “an alliance had been formed between business and government that laid the basis for subsequent industrialization.” Bankers, however, were not so lucky. Banks were nationalized. Why? So that Park could determine that loans went in the direction he wanted. This was to prove a key factor in the country’s centrally planned growth.

In 1962, Park launched his first five-year plan. No-one was impressed. Burma and the Philippines were seen as the promising Asian economies of the day. The prevailing forecast for Korea was gloom. During that first five years, annual GNP growth averaged 8.3 percent, exceeding the planners’ own forecasts. Exporting was the priority and would become a patriotic duty. The mantra of growth soon became “export-good, import-bad.” Companies were given export targets by bureaucrats. Firms that fulfilled gained preferential credits, tax benefits, and the grateful support of bureaucrats, who were being held responsible by the all-powerful Blue House for the results. Firms that failed to meet their targets could get into trouble and even find themselves under orders to be taken over. During the second plan annual GNP growth averaged 11.4 percent.

The Seoul-Busan Expressway is a good example of the resistance that Park found and the bull-headedness he employed to achieve the results he was convinced were necessary. It is hard to appreciate, when you’re driving along this permanently 424-km busy motorway, that most sensible people in 1968, when it was built, saw it as a complete waste of money. Busan was the port nearest to Japan and key to future trade. The modern road was to strike diagonally across the length of the country, linking the south-eastern port with the industrial Seoul-Inchon region in the north-west. The World Bank had advised against it. The National Assembly had refused to approve it, thinking Park was going to bankrupt the country. Park ignored them. There is a story that after a few months work, the cement ran out. “I don’t care,” Park is alleged to have said. “Finish it anyway.” It was done. Within three years, 80 percent of the country’s vehicles would be using the expressway and the area it serviced would be producing almost 70 percent of GNP.

If the story of Korea’s remarkably rapid emergence out of poverty in one generation is recalled in centuries ahead and reduced to a biblical-length verse or two, this slightly apocryphal episode may do. It tells of a particular miracle that characterized the bigger miracle of growth. Like the biblical loaves and fishes, the cement was there somewhere. The miracle was that people were persuaded to produce it.

As mentioned, Park started to develop the country’s industry to provide the means for long-term defense against North Korea and to end the dependence on the United States. As part of this strategy, and under some U.S. prodding, he had signed diplomatic relations with Japan, earning a useful $500 million in grants and loans, but offending the sensibilities of many Koreans, for whom the memories of occupation were still fresh. Students had protested so strongly that it almost brought the government down. Park saw that he needed good economic growth not just to build his nation, but to legitimize his regime. Projects such as the expressway served that purpose.

In the early 1970s, Park launched a major drive to build up heavy and chemical industries. Around the same time, he also started the Saemaul (New Village) Movement, which through a combination of self-help projects and government funding, sought to raise living standards in the countryside so that the provinces did not lag behind. It began with a cement surplus in 1970. Park ordered that every village be given 335 free bags. The following year, villages which were deemed to have used them well (about half), were given another five hundred bags and a ton of steel. Park wrote out an 11-point memo containing such wisdom as, “Projects forced upon villagers by the government are doomed to fail,” which became the basis for the Saemaul Movement which later spread to cities. Although a self-help movement, Saemaul appeared to Park’s critics to be highly ideological.

Few believed the development would last. The North Koreans denied it was happening and, to convince themselves, stopped releasing their economic statistics in 1965 when it appeared that the South was overtaking them. An incident in the early 1970s illustrates the North’s disbelief. During the first ever North-South talks in Seoul, the southern delegation head was Lee Bum-suk (later, as foreign minister, was killed in the North Kroean bomb attack on the Cabinet in Burma in 1983). He was in a car coming from the border point of Panmunjom with the head of the North Korean delegation. They drove into Seoul, and the North Korean got his first look at the city, which had been rebuilt since the war and was bursting with construction and traffic, in total contrast to the bombed-out Korean War pictures and streets of beggars, prostitutes and American GIs of North Korean propaganda. “We’re not stupid, you know,” the North Korean reportedly said. “It’s obvious you’ve ordered all the cars in the country to be brought into Seoul to fool us.” Lee replied with a straight face: “Well, you’ve rumbled that one. But that was the easy part. The hard bit was moving in all the buildings.”

Aides to the leader

Of course, Park could not act alone. To implement his plans, Park made a conscious decision to avoid development via hundreds of small and medium enterprises. He considered this approach in Taiwan, under the Nationalist dictator Chiang Kai-shek, to be wrong for Korea. He relied instead on a coterie of like-minded souls, such as Park Tae-joon, a military man who became the founder of POSCO. In his book, Clifford points out that Park and his fellow soldiers and other elite aides who were educated by the Japanese represented a rare generation. Unlike their elders or those who would come after them, educated in independent South Korea, Park and his people truly believe in sacrifice of self to the point of austerity for the country.

He also identified a small group of business figures who appealed to him. For example, Chung Ju-yung, the nation-building founder of the Hyundai Group, and Kim Woo-choong, the founder of the Daewoo Group. These men were legends to their workers ― Daewoo Kim, for example, was a fifteen-hours-a-day, seven-days-a-week man for three decades and is said to have taken his first day off work in 1990, at age 54, after his son was killed in a car crash. Once trusted by Park, they were nudged into new directions ― from shirt-making to shipbuilding ― and given the cash they needed to expand. Businesses that failed, either commercially or politically ― because Park didn’t like their owners ― were handed over to them. Banks were ordered to lend to them. As these big trees grew, others withered in their shade, as a Korean saying goes. It was unfair, brutal even. But this team built a nation.