President-conductor of economic orchestra
One of the salient features of Korean politics and governance was the extreme concentration of power in the Blue House. In the decades of the 1960s, 1970s, and 1980s, the gap between the executive branch and the legislative and judiciary branches was huge.
The first president of Korea, Syngman Rhee, was a returned nationalist who had been living in the United States during the colonial period. His presidential mission from 1948 to 1960 was to keep Korea an independent nation free from foreign powers, especially communist foreign powers.
The bloody Korean War had destroyed the country’s infrastructure, forcing Korea to rely on aid from the United States, so that even though the power of the president was strong, the country’s social and economic development was painfully slow.
After presiding at the head of a military government, Park Chung-hee took off his uniform and became president in 1963. At the time of the coup in 1961, Korea’s per capita income was $72, lagging behind North Korea’s.
Park’s authoritarian rule provided political stability ― a case of distasteful means to achieve a worthy end. Park used his military training and discipline as political tools to suppress demonstrations and labor demands, and channel Korea’s energy and resources into industrialization.
How did President Park achieve his economic dream? Rather than consider the question through the lens of economic theory, which I’m not that familiar with, let me offer a more person-centered explanation.
First, President Park was not a greedy man who desired to accumulate wealth. He did not live like the dictator of a banana republic. He did not procure expensive foreign food for his table.
Second, President Park took a hands-on approach to building the economy rather than an executive’s remote-control approach. He commuted from the Blue House to the Economic Planning Board (EPB) almost daily to monitor Korea’s progress in trade, foreign investment, and infrastructure building. He encouraged others to work for his goals.
Third, although the president was not a trained economist, he was a quick study. He took a special interest in global financial institutions like the World Bank and the International Monetary Fund and sent his most brilliant diplomats and cabinet members to persuade such organizations to extend loans to Korea.
Fourth, Park hired the best people he could find. Economists from Sogang University, led by Dr. Nam Duck-woo, along with many other able economists, worked for Park in his cabinet. Later Dr. Nam served as the prime minister. Incidentally, it is highly symbolic that the chairman who will oversee the November 2010 G20 Seoul Summit is Dr. Sagong Il, who served as President Park’s economic advisor.
Fifth, President Park was a smart copycat. He was well acquainted with Japan, which was the most developed nation in Asia, and he decided Korea should adopt the Japanese developmental model.
Sixth and finally, Korea benefited from a favorable international environment. American support for the Park government following the 1961 coup was critical but could not necessarily be taken for granted. US foreign policy valued democracy, individual rights, and constitutional governance by a civilian leadership.
The legacy of Park’s economic achievements has continued under the administrations of succeeding Korean presidents, although each of his successors has had somewhat different priorities.
President/General Chun Doo-hwan, whose reputation was tainted by the Kwangju incident, gave priority to social stability, but he was also willing to take economic tutorial lessons from renowned scholars such as Dr. Kim Jae-ik, who was later killed by a North Korean bomb while serving as the president’s economic advisor on a visit to Rangoon.
Like Park, Chun knew that his best chance of gaining legitimacy was by improving Korea’s economic performance.
Although he was very much a military general in spirit and in brain, he succeeded in turning around Korea’s minus GDP growth economy in the short period from 1980 to 81 to a super-performing economy. By the end of his elected tenure, although he was tempted to prolong his power in the presidential office, he stepped down and threw his weight behind a fellow general, Roh Tae-Woo.
President Roh Tae-woo, President’s Chun’s military and political colleague, presided over the successful 1988 Seoul Olympic Games, which ended with a profit rather than a deficit. He created the image of a democratic president by installing an oblong working table at the Blue House conference room to engage in debates with his brain trust.
President Roh’s successor was Kim Young-sam, Korea’s first civilian president since the military coup. Korea’s new era of democracy had taken root. Unfortunately, President Kim ran into one of the toughest economic challenges to face Korea since the war in the form of the 1997 Asian financial crisis.
Then came President Kim Dae-jung, the well-known democracy crusader, who for that reason was popular in the United States and Japan. He proved to be a good marketer for the Korean economy. His focus was on improving relations with North Korea ― a particularly hard sell. By engaging with the North according to his “Sunshine Policy,” Kim hoped to pave the way for a unified Korea that could peacefully pool its economic resources.
In this sense, he was an economic president. However, in pursuing his North Korea policy he forgot one basic principle: don’t give money to the poor; instead, give them a means to earn their own living. Millions of dollars in cash were sent to the North Korean regime with no strict conditions attached, and the North Korean leaders showed themselves to be the worst kind of corrupt capitalists.
Recent history is more difficult to analyze, so I will be very brief. President Roh Moo-hyun, from Kim Dae-jung’s political party, followed in his predecessor’s footsteps. He continued the Sunshine Policy but also played on anti-US sentiments in certain sectors of the Korean electorate. The North Koreans took advantage of him as well.
On the economic front, Roh started work on a Korea-US free trade agreement, but he alienated the United States, and in the absence of solid progress with North Korea, he alienated his supporters. The current president, Lee Myong-bak, was an experienced and able economic leader long before he became president. Most notably, he was the president of a Hyundai company. Under him, Korea has continued its economic progress.
At the creation of Korea’s post-war economic development, a strong president played a pivotal role as the conductor of the Korean economic orchestra. A half century later, Korea had become a robust economy with a strong private sector and large pool of skilled business leaders. Made-in-Korea goods are well established world-wide.
Whereas government leaders in the early days of the economy needed the authority to allocate resources and guide development, today the country’s leaders need to promote morality and equal economic opportunity to prevent serious distortions in the economy. No economy is safe from such distortions.
President Lee will be Korea’s first G20 summit president. He presides over a society that is democratic and stable and economically sophisticated.