The corruption culture and the wrong leadership in Korea can lead to the same economic fate as in Japan

Joseph H. Chung (정희수), Ph.D. Professor of Economics, Quebec University in Montreal

Introduction

For last ten years, the world was watching with curiosity, worries and admiration of Shinzo Abe's imposing political performance in Japan and the world.

Now, he is no more. His departure may make some people sad; his death may bring relief for some others; his absence may make some people worried.

The reaction of the people in Japan, Korea, China and in the world may vary great deal depending on the impact of what he was and what he did to different countries and various people.

Therefore, the way the people single out and value the legacy of Shinzo Abe can vary.

As for me, Shinzo Abe left two legacies, Abenomics and remilitarization of Japan. Many ask if these two legacies will survive. My view is that both will survive to make the future of Japan uncertain.

In this paper, I will deal only with Abe's economic legacy. His legacy of Japan's remilitarization will be the object of another paper.

This paper will focus on these issues.

• Nature of the ailment of the Japanese economy

• Corruption of Leadership

• Asset Bubble and Corruption

• Structural Weakness of the Japanese Economy

• Conclusion

1. Nature of the Ailment of Japanese Economy

Before we tackle Abenomics, it seems important to discuss the nature of the Japanese economic problem. The post-war performance of the Japanese economy was the envy of the world. The annual rate of Japanese GDP was 20% in the 1950, 9.2% in the 1960s, 4.5% in the 1970s and 5.0% in the 1980. Then, suddenly, in the 1990s, it had free fall to 1.72%. Since 1990s, the annual rate GDP was about 1%. Often Japan experienced minus growth of its GDP.

The fall of GDP growth of 5.0% in the 1980 to 1.72% in the 1990s was just incredible. How can one explain this? In the 1980s, the Japanese GDP was as much as 40% of the American GDP. This even made Americans alarmed. The Japanese was the number 2 economy in the world.

There can be many factors responsible for this, but, as far as I am concerned, the basic factor is the corruption of the leadership. It is my argument that the mega-inflation of asset price in the 1980s, the 1989 explosion of asset bubble, the failure of coping with the structural problems of the Japanese economy can be the key factors. But, these factors are attributable, in the first place, to the corruption of the leadership.

2. Corruption of Japanese Leadership

The Japanese economic miracle was the product of the Meiji model of tripartite cooperation among politicians, large corporation and bureaucrats. This model was adopted in the 1950s by Kishi Nobuske who became prime minister for the Liberal Democratic Party (LDP) in 1957. This model was known as the "Golden Triangle" model

This model was adopted also by Gen Park Chung-hee in the 1970s for Korea and it was behind the Han River miracle.

The dynamic of this model evolves from cooperation to collusion and finally to the establishment of corruption community. In this community, the core group is the oligarchy composed of large corporation, key political leaders and influential bureaucrats. The roles within the oligarchy vary. The large corporation is to fund the activities of the community and exert influence on key national policies to their advantage. The role of the politicians is to pass laws, regulations and other measures to accommodate the corporations' needs. And, the role of the bureaucrats is to implement these policies.

In the corruption community, we find periphery groups who are linked to the core group and who benefit from the community activities which are often illegal or immoral.

The survival of the corruption community depends on media and the judiciary system. The role of the media is to produce propaganda for the community and hide the illegal and immoral activities. The function of the judiciary system is to punish dissidents on the one hand, and, on the other, overlook the wrong doings of the corruption community members.

The corruption community is a threat to the society, because it works for the promotion of the community's self-interests at the expense of those of the people. The oligarchs seem to think that what is good for them is good for all.

In Japan, the oligarchs are composed of the far-right conservatives led by the Kishi Nobuske-Shinzo Abe line of political and economic forces which have ruled Japan every year, except five years, since 1957, the year when Kishi Nobuske became prime minster for the LDP.

Kishi Nobuske was one of most cruel and racist rulers of Manchuria in the 1930s. He was maternal side grand-father of Shinzo Abe. He was the right hand man of Tojo Hideki during WWII. He was A-class war criminal.

We see below a list of events which indicate the corruption of LDP members.

1948: Takeo Kurusu, former cabinet minister under Prime Minister Hitoshi Ashida (Democratic), was arrested along with other influential politicians for the bribes received from Showa Electric Company.

1962: Fumio Abe, former cabinet minister (LDP), (not related to Shinzo Abe) was arrested for giving secret information concerning the future direction of high way construction to an Iron & Steel Company Abe was treated with a dinner worth USD 6,000. In addition, he received USD 480,000. Abe denied all these and he resigned from his position.

1964: Eisaku Sato, former prime minister (LDP), brother of Kishi Nobuske, was involved in so many scandals that he was called "Black Mist". LDP led by Sato extorted the business for money. The speaker of the Lower House was involved in the scandal of fraudulent bank drafts.

1976: Kakui Tanaka, former prime minster (LDP) was implicated in the scandal surrounding the purchase of airplane built by the American firm, Lockheed. (다음 호에 계속)

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