Dilemma over DJnomics
During two years of political exile in the United States, opposition leader Kim Dae-jung spent the 1983-1984 academic year as a visiting fellow at Harvard University's Center for International Affairs.
He wrote a book about mass-participatory economy, which encapsulated his vision for the Korean economy. The book was published in 1985 and modified several times. It now goes by the name, ``DJnomics,'' and features his vision for Korea's road to becoming a world economic power.
In his book, he advocates economic democracy, which must guarantee the self-regulation of business activities with government's maximum restraint from intervening in the business arena. He backs the idea of maintaining absolute neutrality in management-labor relations. He also supports the independence of the central bank and liberalization of the nation's financial industry by relinquishing the nasty habit of government control and interference.
Kim also backs the idea of realizing a just and fair distribution of wealth and income and protection of the long-neglected small and medium- sized businesses and agriculture.
He proposes enacting new laws guaranteeing the complete independence of the Bank of Korea, carrying out a comprehensive reform of the tax system and abolishing all regulations and laws that obstruct free market competition.
He criticizes the Park Chung-hee and the Chun Doo-hwan regimes for implementing undemocratic policies. Although economic growth is possible, Kim says, a wide gap between rich and poor, disparities among geographic regions, gaps between urban and rural sectors and critical imbalances between big businesses and smaller firms are all halting progress. He says these were the inevitable results of dictatorial development programs.
Most importantly, he says only a clean and honest government can really exercise strong leadership in managing Korea's troubled economy.
At the time of formulating his economic philosophy at Harvard, Kim could not have imagined that Korea would be exposed to a currency crisis 13 years later. As soon as he became the first Korean president to realize a power transfer from the ruling party to the opposition in 50 years, Kim rolled up his sleeves to save the country from bankruptcy.
His administration had no choice but to ``nationalize'' major Seoul-based banks that were teetering on the brink of bankruptcy and to shut down insolvent financial companies. He adopted a foreign investment promotion policy aimed at attracting foreign capital to Korea.
All foreign investment ceilings on the stock and bond markets were bulldozed away. The sensitive real estate market was fully opened to non- Koreans. He engineered the breaking-up of interlocked subsidiaries of major conglomerates. Western-style corporate governance and management systems, as well as transparency of management, were adopted.
Privatization of state-run companies was pursued. Namely, he broke the decades-old economic development model, cutting ties with business-politics collusion.
In a nutshell, the Kim Dae-jung administration has engineered the Anglo- Saxonization of the Korean economy, in a drastic departure from the Japanese development model. …