[DeCal] Divergence in Institutions (South Korea)

Divergence in Institutions (South Korea)

Next week's readings are posted here:

In particular, we will be examining why and how the southern half of the Korean peninsula came to be a fairly wealthy, middle income country with democratic institutions." While we had initially planned for me to give this presentation solo (I saved this topic so that I could do the research), additional students that were either absent or unable to join the groups early on will be added to this group as well.

Straight from the syllabus:

Why is it that the southern half of the Korean peninsula came to be a fairly wealthy, middle income country with democratic institutions? How did this process happen? After all, Korea was for thousands of years a centralized bureaucratic monarchy (and then ruled by centralized bureaucratic colonial government) with no history of democracy? The presentation will heavily emphasize the development of economic institutions first that began in the early seventies. Policies conducive to sustained economic growth over the long run that took advantage of favorable endowments unique to South Korea (access to the U.S. market, U.S. oil regime) led to prosperity in the South. Democratic institutions also took hold, but took much longer with South Korea holding her first free and fair elections in 1987) (Syllabus).

An updated syllabus that shows the agenda in particular for the next three weeks is also available here.

Required Reading:

The Role of Foreign Aid in Development: South Korea and the Philippines. Washington, D.C.: Congressional Budget Office, 1997. p.ix - 24, 43

Supplemental Reading:

Getting Interventions Right: How South Korea and Taiwan Grew Rich

Dani Rodrik, Gene Grossman and Victor Norman

Economic Policy, Vol. 10, No. 20 (Apr., 1995), pp. 55-107

U.S. Library of Congress – Country Study: South Korea.

Chapter 4 (only the part under Political Dynamics)

Attendance Policy:

After consultation among the facilitators, we feel it would be prudent to excuse the first two weeks of absences, considering the large number of students that did enroll after class first began two weeks before the add/drop deadline passed.

Grading Policy:

Presentations will be given a score on a sliding scale from one to four. All students will receive the same group for each presentation. The reason we decided to go with this system is that there are a lot of other DeCals, especially for 2-units, where the facilitators just lecture for an hour or so and expect the students in class to come up with a 7 or 8 page term paper or a midterm or a final. Well, the purpose of a paper is no different than that of a presentation except that the findings on the part of those presenting can be shared with the entire class, whereas a paper is not as easily shareable. Similarly, a mid-term or final examination is more of a test to see if students have learned anything. It is along these lines in how we view group presentations - an opportunity for each and every student in the class to be able to research and contribute to the discussion of the entire class.

While, groups one and two only have had an opportunity to prepare one week in advance, the same is not true of that of other groups. So, from this point on, we will be expecting all material to be cited from all students giving presentations (Primary citations found on Wikipedia are ok, but presentations that sound like they are reading from the Wikipedia are not). Once again, the goal of presentations is to further a point and not to recite history for history's sake (or to take somebody else's interpretation for granted). Furthermore, presentations are expected to last from fourty-five minutes to one-hour.

The Power of Words and of Democracy, Japan, and Sarah Palin

I remember a few years back during the Good Ol' Days we had ... a George W. Bush as president of the White House. I didn't really appreciate what people meant when they believed the United States was the country most dangerous to world security and stability at that point in time yet. (See my post America the Dangerous). By the way, just as in the post below, please send me corrections. I would hate to think that I would be propagating something untrue.

Ahh. Those were the good ol' days. The U.S. economy was booming (after a sharp, but short-lived contraction after 9-11). Well, the U.S. President at the time, George W. Bush was in Japan for a summit with then Japanese Prime Minister Koizumi (I guess those were the good ol' times for Japan too... at least on a relative basis, considering the past twenty years now).

Oh, and on a side note, for those thinking the decline of the LDP and the recent dissolution of the Diet in Japan after the humilitating defeat of the ruling LDP in recent elections in Tokyo is the start of a new multiparty democratic regime in Japan.

Think Again.

Compare how Shinjiro Koizumi (former Japanese Prime Minister Junichiro Koizumi's son has been "annointed" to succeed his father). This is straight from the Japan Times (Kim Jong Un is the son of Kim Jong Il reported to succeed his father once he returns to Mount Paekdu as the next ruler of the North Korean regime) :

"And, as Aera pointed out, the strategy for making sure Koizumi Junior gets the seat is strikingly similar to the one currently being carried out in North Korea. Even if Shinjiro is Koizumi's second son and not his third, he's 28 years old, the same age as Jong Un and Hidetada when they were picked for their jobs" ("My son, I give you power over the people" : Japan Times).

Anyways, well, when George W. Bush was in Japan, he did something amazing; he confused the word "devaluation" with "deflation." You see, Japan had been experiencing problems of falling prices -- deflation, for a very long time and it was the biggest issue in Japan at that time. So, if he were to meet the Japanese Prime Minister, it would be quite natural to talk about U.S. backing for Koizumi's strategy to flight deflation.

But, during the press conference after the summit:

"A remark by US President George W Bush about "devaluation" in Japan has caused confusion in the currency markets. The yen fell as some traders interpreted the comment as meaning the US favoured a devaluation of the Japanese currency" ("Bush gaffe hits yen" : BBC)

His exact words were:

"He [Japanese Prime Minister Junichiro Koizumi] said I want to make it very clear to you exactly what I intend to do and he talked about non-performing loans, the devaluation issue and regulatory reform and he placed equal emphasis on all three" (Feb. 18, 2002).

The problem, you see, though, is that there was no devaluation issue at the time (Where, the U.S. would tacitlty approve a Japanese policy of trying to rid deflation by the Japanese Central Bank lowering the value of the Yen versus the Dollar -- in effect, exporting Japan's economic problems, which of course, the U.S. was not in favor of).

Ironically, that is exactly what the U.S. seems to be doing. But, more on this perhaps some time in the future since I just started studying this (it's basically what the second half of the course I am taking about is: EC321: Money and Banking), so in all fairness I don't really have an informed opinion.

But, on paper though, the U.S. enjoys an Exorbitant Privilege as the U.S. enjoys the ability to issue debt in her own currency (dollars) andat lower comparative interest rates (for example, treasury bills are considered safe debt to own) so depreciation is much more beneficial to the U.S. than say it would have been for Japan (but on a personal level, I think Japan should be commended for not depreciating her currency during this time when competitors in China and particularly South Korea went through a period of protracted depreciation, either explicitly (Korea) or implicitly (Japan)).

Of course, the fact that he "misspoke" cost like I believe a sharp drop in the value of the Yen, but the fact that one wrong word by this President led to billions of losses (or gains) by investors who were taking George W. Bush's words seriously is/was a pretty scary thought -- Thank God that there is no chance of a Palin adminsitration:

"This bombshell was unexpected, and makes it highly unlikely that she will ever be president" ("The passing of Palin" : Economist)

Anyways, when I first read that I just couldn't believe it. How on Earth could this not have gotten more media coverage? No, not with respect to Sarah Palin. That's more like (How on Earth could she have gotten so much media coverage?) But, more interestingly, here's this word that when spoken recklessly and carelessly by one person it has the power to affect all those that take him/her seriously -- especially if we are speaking of billions, well trillions, of yen.