Chapter 12 3. The East Asian Model Controversy

The "East Asian Model" is controversial, and here we must first define the concept of the "East Asian Model".The East Asian model I’m talking about here refers to the “four tigers” in Asia (Singapore, South Korea, Taiwan, and Hong Kong) adopting modernization-oriented government intervention under similar historical and cultural (especially Confucian culture) backgrounds to promote An export-oriented economic policy, emphasizing human resource development, implementing a catch-up strategy, and quickly realizing a modernization model, rather than referring to the generalized "East Asian model" including Indonesia, Malaysia, Thailand, etc., because those countries I have also visited them. Although they want to learn from the "Four Tigers", my feeling is that they are far from reaching the modernization level of the "Four Tigers".The "East Asian model" I am talking about also does not include South Korea and Taiwan in the late modernization period (they later switched to the Western democratic model, but this road did not go smoothly).

In the early stages of economic development, the government authorities of South Korea, Singapore, and Taiwan intervened directly in the economy. After the economy took off, they gradually turned to indirect intervention. The role of the Hong Kong government is to formulate economic development strategies, formulate policies for attracting investment, and subsidize public goods. supply, infrastructure, etc.Although the East Asian model has many weaknesses, its overall success is unquestionable, because the "Four Tigers" are the only societies in the postwar world that have reached or approached the level of developed countries starting from the starting point of the third world.

The East Asian model was controversial due to the 1997 Asian financial crisis, which caused huge losses to countries such as Thailand, South Korea, Indonesia, the Philippines, and Malaysia.Malaysian Prime Minister Mahathir once said that overnight, our development efforts over the past 20 years were in vain.In the analysis of the causes of the Asian financial crisis, American scholars and many domestic scholars have focused on "crony capitalism", which means that an important feature of the East Asian model is that the government dominates the economy, causing interest groups and Politicians colluded, resulting in credit inflation, lack of power supervision, and corrupt money and power transactions, which eventually became a bubble economy.There are many similar problems in China, and we need to pay attention to them and solve them, and we must pay special attention to the system to solve them. Don't wait until they are too late to solve them. It will be too late.

But here is a distinction: First, among the above-mentioned countries, except South Korea, other countries do not belong to the East Asian model I am talking about. They are trying to learn from the East Asian model, but they are far from achieving a qualitative leap.The forward-looking, coherent, and scientific nature of government intervention in these countries is far inferior to that of the "four tigers". Later, they blindly followed the United States to pursue financial liberalization, coupled with factors such as the elite economy, and became the hardest hit areas of the Asian financial crisis.Second, many scholars in East Asia believe that the main cause of the Asian financial crisis is "casino capitalism", which means that the international financial market lacks supervision, and financial speculators without any moral constraints make waves and make a fortune. There are many elements of corruption in the process itself.I think the combination of "crony capitalism" and "casino capitalism" (the premature opening of the capital markets of East Asian countries and regions, the premature liberalization of the financial sector, and the lack of supervision of the international financial system) has caused this crisis. crisis.Flies don't bite eggs without seams, and both the flies and the seams on the eggs are the cause of the crisis.While condemning and guarding against "crony capitalism", we should promote the reform of the international financial system and curb "casino capitalism", otherwise there will be major problems in the international economy. The financial tsunami triggered by the US subprime mortgage crisis in 2008, which severely damaged the US itself and harmed the whole world, is an example.

Amartya Sen, an Indian Nobel laureate in economics, once said after the Asian financial crisis in 1997 that the crisis "is a series of punishments for the implementation of an undemocratic political system." How can we explain that the financial tsunami, which is countless times worse than the Asian financial crisis, happened in a "model democracy" like the United States?In order to prove that the Western model is a universal value, Amartya Sen also boldly compared Botswana and Singapore, arguing that the East Asian model with a strong government in developing countries is no better than the Western democratic model.In his article "Democratic Values ​​Are Universal", he said: "Botswana has the best economic growth record in Africa and one of the best economic growth records in the world. An 'desert oasis' of democracy on the African continent; if high economic growth in Singapore or China is to be taken as 'smoking gun' evidence that authoritarian systems are better at promoting economic growth, then we cannot avoid The opposite conclusion was drawn in the case of Botswana."

Amartya Sen was wrong.The author has been to Singapore and Botswana. The two countries are very different.Although Botswana has adopted a Western democratic system, there have been no major disturbances, and its mineral resources are 10,000 times more than that of Singapore. However, Botswana is far from the goal of modernization, and 47% of its people still live below the poverty line.The failure of Botswana's public health policy has led to the spread of AIDS. The average life expectancy was once lower than 40 years old, and now it is only in its 50s.On the Human Development Index of the United Nations Development Program in 2011, Singapore ranked 26th and Botswana ranked 118th.I really don't know how Nobel laureate Amartya Sen could make such a common sense mistake.This also warns us that we must believe in "seeking truth from facts" and not be confused by some theoretical authorities. I have not carefully studied Amartya Sen's economic theory, but his research on democracy does have many loopholes and cannot withstand scrutiny .

In the East Asian and Chinese model, Hong Kong, Singapore, China, or those societies that did not adopt Western democracies successfully resisted the Asian financial crisis.Taiwan began to move towards "democratization" in the mid-1980s, but the Kuomintang team was still in power during the financial crisis in 1997.Su Qi, the former chairman of the Taiwan Mainland Affairs Council, once told me that in the civil service system of the Kuomintang in Taiwan, so far no official above the minister level has been corrupt, and the party system has since become corrupt.In other words, Taiwan successfully weathered the Asian financial crisis under a competent civilian elite government.If it were replaced by the DPP government that later engaged in populism, it would be difficult to say whether it would be able to withstand such a crisis with six "Executive Premiers" in eight years.

Another country that has democratized the West is South Korea.South Korea's "crony capitalism" can indeed be traced back to the 1960s. At that time, South Korean banks became the shadow of the government's economic policies, and financial institutions followed the wishes of government officials to lend to large companies with close ties to the government. But in my opinion, South Korea The indiscriminate release of bank funds seems to be in direct proportion to the democratization that began in 1987. With the democratization of South Korea came the rapid rise of economic nationalism. The government blindly expanded investment in South Korean enterprises. Rising nationalist sentiment across the world, politicians preoccupied with partisanship, and economic regulation woefully out of control have made South Korea one of the biggest victims of the financial crisis.

But despite being severely affected by the Asian financial crisis, South Korea had achieved a qualitative leap in economics before the financial crisis, you only need to compare South Korea and Tanzania: 50 years ago, Tanzania's per capita income was higher than South Korea, but now how? Comparable?The difference between the two countries is that South Korea has achieved a qualitative leap in economic and social development through the East Asian model, while Tanzania is still an extremely backward developing country. The Chinese model has much in common with the East Asian model. First, China also has a strong, modernization-oriented government.This government has the ability to gather the consensus of the whole people on the realization of modernization, ensure political and macroeconomic stability, and carry out large-scale reform and opening up in this environment.

Secondly, China has also adopted an export-oriented policy for quite a long time, actively participating in globalization and international competition, and thus greatly improving China's overall economic level and comprehensive competitiveness. Of course, the export-oriented policy also has its own price. .China also has a huge domestic market that is incomparable to the "Four Tigers", making the Chinese economy an important locomotive that drives the Asia-Pacific economy and even the world economy.Third, China also has a high savings rate and a high investment rate. Fourth, China also attaches great importance to education and human resource development.

Fifth, China has also realized some deep-seated changes in its industrial structure: from a traditional agricultural economy to an industrial economy, a commercial economy, and a service economy. However, the Chinese model also has its own very unique aspects. This uniqueness comes from China’s unique national conditions: (1) China has a vast territory and a large population, but its overall education level is still lower than that of the four tigers; At the same time, it is necessary to complete the transition from a planned economy to a market economy; (3) China has a long history of turmoil.It can be said that the challenges faced by China's modernization are a hundred times greater than those faced by the "four tigers" at that time. Because of this, China's achievements over the past 30 years have not come easily, and the success of the Chinese model is naturally particularly eye-catching.