7/23/11

Park Chung-hee: Dictator or benevolent autocrat? (The Korea Herald, July 20, 2011)


The Korea Herald published my analysis of Willam Easterly's paper "Benevolent Autocrats." Check it out at the CFE Website. Easterly questions if "benevolent autocrats" really deserve credit for high economic growth.

The Idiots' Collective calls it "a must-read" piece.

I agree.



[Casey Lartigue, Jr.] Park Chung-hee: Dictator or benevolent autocrat?

It ain’t necessarily so. That’s what New York University economics professor William Easterly essentially says about crediting “benevolent autocrats” like South Korea’s Park Chung-hee for high growth rates.

In “Benevolent Autocrats,” a provocative working paper posted in May, Easterly 1) argues that economists should be skeptical of the “benevolent autocrat” theory; (2) questions whether benevolent autocrats truly deserve credit for growth; (3) and concedes he is making a losing argument because cognitive biases lead many to believe in benevolent autocrats regardless of the evidence.

After reviewing research, analysis and commentary from scholars and commentators supporting the benevolent autocrat theory, Easterly notes that it is true that nine of the 10 developing countries (e.g., Taiwan, South Korea, Singapore, Hong Kong) that have achieved high economic growth in the past few decades have been led by autocrats (Japan is the one democratic exception). We must be slow to draw conclusions, however. There are 89 countries that he labels as autocratic, meaning that only 10 percent of developing autocratic countries have experienced high growth since 1960. This is a classic case of the “Law of Small Numbers” theory (people will quickly draw conclusions based on a small sample or data point).

There are leaders like Park who apparently can steer the economy toward growth, but there are just as many lunatic leaders like Kim Jong-Il in North Korea, Robert Mugabe in Zimbabwe or Samora Machel in Mozambique driving their economies into the ditch. It may be that both groups are outliers because 70 autocrat countries experienced neither high growth nor failure.

Easterly then pushes the argument over benevolent autocrats into even more controversial territory: Do benevolent autocrats truly deserve credit for economic growth? Benevolent autocrats are not unconstrained and are just one of the major players in a developing economy with many situational factors. Benevolent autocrats still must answer to the “selectorate” or elite in the country that has the power to remove an autocrat. Benevolent autocrats can’t completely ignore foreign powers that may allow some bloodshed but not outright tyranny. In short, autocrats don’t rule at will.

For all of their alleged expertise at guiding the economy, Easterly notes that growth rates swing more wildly under autocrats than democrats, and often without radical changes in policy. Growth continues either immediately or within a short time after an autocrat dies suddenly or is assassinated, and that’s without a successor waiting-in-the-wings (in South Korea’s case, after a short dip, the economy took off after Chun Doo-hwan replaced Park). There are many things going on in a country, from mass movements from the rural to city areas or perhaps the ending of tyranny or civil war. Yet, the “benevolent autocrat” theory highlights one guy when the results are good and blames many factors when there is failure.

While Chang Ha-Joon of Cambridge University highlights Park Chung-hee building up industry and focusing on exports, Kim Chung-Ho, my boss at the Center for Free Enterprise, notes that Park liberalized the economy, established private property rights for citizens, and cut tariffs below previous levels. Park certainly didn’t liberalize to an extent that a free market supporter would want, but considered within the scope of Korean history, it was economically liberating for every day Koreans.

Easterly concedes that the benevolent autocrat belief will remain popular, for a host of reasons. Intellectuals ranging from George Bernard Shaw (swooning for the USSR in the 1930s) to Thomas Friedman (praising China’s one-party state recently) have long fawned over dictators, autocrats and one-party states, mainly because despots have the power to force their ideas on others. Media tend to over-report the success stories of autocratic countries. For example, an analysis of New York Times articles from 1960 to 2008 found that the newspaper was eight times more likely to report on success stories (41,952) of autocracies compared to failures (5,705).

Easterly cites cognitive biases (i.e., our willingness to believe something despite a lack of evidence) such as “Leadership Attribution” theory (Hollywood giving the audience a hero to identify with, sports fans blaming or praising a coach for the team’s record, and voters blaming politicians for things clearly out of an anyone’s control). Easterly could have also mentioned Koreans in the past blaming kings for droughts, or in more modern times, South Koreans blaming a series of catastrophes in the mid-1990s on then-president Kim Young-sam being “bad luck.”

So what’s the answer: Are “benevolent autocrats” responsible for high growth? Is a dictator who liberalizes the economy but maintains control over the voting booth a good or bad guy? Does increased growth eventually lead to democratic reform?

The debate over benevolent autocrats is sure to continue, especially as Easterly continues to post additions to his working paper, but one thing is clear: For all of his alleged accomplishments in creating the “Miracle on the Han,” the 50th anniversary of Park seizing power on May 16, 1961, recently passed with less fanfare than would be expected for the alleged architect of South Korea’s economic renaissance.

By Casey Lartigue, Jr.

Casey Lartigue, Jr. is director of international relations at the Center for Free Enterprise in Seoul. (http://eng.cfe.org).

 

7/22/11

Korea's kings and queens in government even control the temperature


Korea Herald columnist Kim Seong-kon argues in favor of the incorporation of Seoul National University. One of the reasons he notes is too much government control now, including, even the temperatures in government-related institutions.

He writes:
26 degrees, by government mandate.
"Personally, I support the incorporation of Seoul National University. Currently, SNU faculty members are tied up with all sorts of bureaucratic procedures and government red tape that seriously hamper their research activities. For example, government regulations stipulate that all rooms shall be set at 26 degrees Celsius in government-related institutions."

I don`t have a problem with the government controlling the temperature in government-related institutions.

I do have a problem with government control of temperatures in private homes and businesses. If I want a sauna in my home, that`s my business. Or, on the contrary, if I want it so cold that I have icicles hanging from the ceiling, that is also my business, as long as I pay for it.

But there seems to be disagreement over whether or not there is a regulation on the temperature.
Korea Times: "Because of the government regulations on the air-conditioning temperature to be set no lower than 26 degrees, the department store feels even hotter and more cramped."

Joonangilbo quoting Kwon Oh-jung, an official from the Ministry of Knowledge Economy:
"Kwon said the government will continue to advise the service sector, which includes department stores and banks, to voluntarily keep indoor air-conditioning to no lower than 26 degrees Celsius. It will also ask restaurants, supermarkets and airports to set their air conditioners no lower than 25 degrees Celsius."
Kwon uses soft words: "Advise." "Voluntary." "Will ask."

But wait, Kwon kept talking:
"The government will regulate the use of air-conditioning in large buildings that consume more than 2,000 tons of oil equivalent (TOE) of energy during peak hours, and if they are found to be in violation of the measure, they will face a fine of up to 3 million won ($2,769)."
So it is voluntary, except when it isn`t.

Naturally, businesses preferred to pay the fine. As in so many cases, business does well in Korea despite the government, not because of it, paying fines to various government offices in order to remain and business. As is often the case, people do to themselves under democracy what would have outraged them under a king or dictatorship.

7/5/11

CFE forum on Korea-EU FTA (Korea Herald)

Public forum on FTA on Thursday
2011-07-05 19:21

A conference on economic opportunities and challenges arising from the Korea-EU FTA which came into effect on July 1 will take place in Seoul on Thursday.

The conference, taking place at the Koreana Hotel from 2 p.m., will also examine the current economic crisis in Europe and economic development in Korea.

The event is being jointly hosted by the Center for Free Enterprise, a Seoul-based free market think-tank, and the Friedrich Naumann Foundation for Liberty, a German foundation for the promotion of individual freedom which has offices around the world including in Seoul.

“We picked the date hoping National Assembly members wouldn’t find a way to delay the agreement going into effect. So this is really timely because we are holding this less than a week after the agreement went into effect,” said Casey Lartigue Jr., manager of international relations at the CFE.

Speakers at the conference titled “Economic Freedom and the Wealth of Nations” will include independent political and economic consultant Stefan Melnik, Barbara Kolm of the F.A. v. Hayek Institute and Choeng In-kyo of Inha University in Incheon.

Lartigue said the conference was free and open to the public but recommended that those interested RSVP in advance.

“We are always trying to remind the public about the benefits of free enterprise, trade, voluntary exchanges. Agree or disagree, we are happy to present our analysis to the public,” Lartigue said.

Those interested in attending can visit www.cfe.org (Korean) or http://eng.cfe.org (English) to register, or call (02) 3774-5000 (Korean) or (02) 3774-5056 (English).

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Korea Herald link,