CUTTING ROOM: Careering Korea; Jail the Cronies or Bail 'Em out? - Asia's Post-Crash Dilemma; Whoa! There, Thai-Ger; Hands off the MPC's Mervyn King ... Evan Davis at Large

Article excerpt

This is Asia month for me, when I make an annual pilgrimage there to track its progress on successive anniversaries of the 1997 Asia economic crash.

This year I visited South Korea for the first time, and it exceeded my expectations. Korea is the newest member of the developed world, the 13th-largest economy on the planet. From an annual income equivalent to Zambia in 1970, downtown Seoul now looks as wealthy as many European cities.

It's not hard to find Koreans who are concerned at the pace of change.

After all, it took centuries for the rich world to become the rich world - Korea has done it in a matter of decades.

It's a fascinating social experiment - a country where the younger generation are growing up in conditions completely different from those of their parents. What effect will it have on their work ethic? Will success go to their heads?

It reminds me of a story about JD Rockefeller buying shirts. The oil magnate blanched at the price of the top-range shirts, and opted for some cheaper ones.

'But your sons always go for the expensive ones,' the tailor said, hoping to persuade him to trade up.

'Yes, but the difference between me and them,' Rockefeller replied, 'is that they have a rich father.'

From Korea to Thailand ... which is also recovering, although not as quickly.

One economist told me this is because Thailand, unlike South Korea, has yet to put anyone in jail for the cronyism and corruption that led to the bubble and crash in the first place.

I've wondered why putting people in jail could help a recovery. Perhaps the answer is this: a prerequisite to putting a crash behind you is that the banks are re-capitalised and the non-performing loans that inevitably follow the crash are eradicated. This allows new lending to occur and the economy to get going again.

The problem is that governments have to clear some of those debts, and the public are justifiably angry at the idea of bailing out institutions that are themselves to blame for the crisis. Maybe it's only by locking up the perpetrators of irresponsible lending that public support can be secured. …


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