By Yoon Ja-young
Staff Reporter
President Lee Myung-bak pledged to introduce a small government and big markets. According to the Samsung Economic Research Institute (SERI), successful economic reformers around the world chose small government, helping their countries make a leap forward.
The economic think tank analyzed six economic reformers of our time: Margaret Thatcher of the United Kingdom, Ronald Reagan of the United States, Junichiro Koizumi of Japan, Deng Xiaoping of China, Lee Kuan Yew of Singapore, and Ruud Lubbers of the Netherlands.
These leaders who led economic reform in the late 20th century all had the insight to see the flow of their time and created a new basis for growth and development. They concentrated on ``practicality'' and ``economic development'' instead of ``ideology'' and ``politics'' amid neo liberalism and globalization, the research institute said.
It added that these leaders chose privatization, tax cuts, deregulation and flexible labor markets to overcome the conflict between labor and management, economic recession and ineffectiveness in the public sector.
Margaret Thatcher, for example, seized power when her country was suffering from the so-called ``English Disease'' amid economic recession and nationwide strikes. There seemed to be no cure for stagflation that gripped the country, trapped in a low growth rate of around 2 percent and high inflation above 10 percent.
The `Iron Lady'' knew there was a need for reform and vision, and got the economy through it with a growth oriented-policy and liberalization of the capital market. She pushed for the privatization of public enterprises, diminished the number of government officials and set up principles regarding relations between labor and management. Income tax and corporate tax cuts followed to encourage both workers and investors.
Ronald Reagan also promised small government and tax cuts as his main campaign pledge. The biggest economy in the world was also suffering from stagflation as excessive government intervention weakened productivity, according to the institute.
Reagan cut government spending and minimized intervention, and invigorated the private sector through tax cuts.
It also cited Junichiro Koizumi's privatization of Japan Post as a symbolic event of government reform. His policies focused on trying to hand over economic power from the government to the private sector so Japan could get out of its ``Lost Decade,'' the institute said.
Though a leader of a different social system, Deng Xiaoping finished the ideology conflict, choosing economic development as the top priority for his policymakers.
SERI said these leaders, who successfully led economic reform, were directed toward small government and expansion of market capability.
chizpizza@koreatimes.co.kr
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