The Politics of Practical Nostalgia

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Byline: George Wehrfritz and Jonathan Adams; With Jaimie Seaton in Bangkok and B. J. Lee in Seoul

Asians are rallying to new leaders promising something the region once took for granted: growth.

Voters in Asia are kicking out incumbents like never before. As maturing economies combine with the global slowdown to put a brake on the pace of development, Asians are electing pragmatic managers-in-chief who promise a return to the good old days of fast growth, job security and social mobility. The first came in South Korea last December, when former Hyundai chairman Lee Myung-bak won election as president vowing to serve as the pro-business CEO of a "Global Korea" and ending the reign of a string of populist liberals. On March 8 in Malaysia, an opposition coalition dealt the ruling party its worse loss in four decades by running on bread-and-butter issues and promising to end a stifling Malay affirmative-action system. Then on March 22, voters in Taiwan tossed out a quixotic nationalist who had undermined Taiwan's key economic advantage--access to mainland China--in favor of Ma Ying-jeou, who promises to improve economic ties with the mainland. In an exclusive interview with NEWSWEEK last week, Ma said he won because voters were tired of "pugnacious nationalism" and because the economic performance of outgoing President Chen Shui-bian had been "so poor, people just felt that enough is enough."

It's a counterrevolution of sorts. Unlike the rabble-rousers, populists and old-guard ideologues they've ousted, Asia's new leaders are mostly common-sense conservatives who preach limited government, free trade and multipronged development strategies that evoke the go-go 1980s--in the hope they can recapture the 8 to 9 percent growth that transformed backwaters like South Korea and Taiwan into modern, high-tech economies. Such pledges have hit home with voters keenly aware that, outside China and India, Asia's growth rates have slowed to an average of about 5 percent in the last decade (compared with 6.5 percent in emerging markets worldwide). "Prodded by a realization that the world is passing them by, voters in the region's laggard economies have either thrown incumbents out or cast protest votes against their governments," writes Ruchir Sharma, head of global emerging markets at Morgan Stanley, in a recent note.

Yet reviving the kind of rapid growth that Asia enjoyed before the 1997 financial crisis may not be possible. These countries, particularly Taiwan and South Korea, may be too mature to expand as fast as developing economies can. Lee, for example, has promised to push South Korea's growth rate back to 7 percent. But with a GDP already at $950 billion, that would require an additional $67 billion in output each year. Ten years ago, the same feat would've required only $25 billion.

East Asia's industrial giants have lost much of their labor-intensive manufacturing to China, and governments are under intense pressure to respond. But the old strategy of export-led expansion--which included keeping currencies artificially cheap and erecting barriers to protect the local market--won't fly anymore. Once upon a time, these states used centralized government to build and defend internationalization, but that is increasingly difficult in a world where vast trade and capital flows are overwhelming national bureaucracies. "All of these leaders have to cope with a new world where they have much less power over their own economies," says Phil Deans, a political economist at Temple University in Tokyo. "You can't be ideological when confronted with globalization, you have to be pragmatic."

That's one trait the new leaders share. Ma joined the ruling Kuomintang shortly before it ended 38 years of military rule in 1987. In 2000, the KMT lost power for the first time to the Taiwan-born Chen, a former human-rights lawyer who obsessively championed Taiwanese identity and implied that Ma and other mainlanders had divided loyalties. …