Monday, March 23, 2009

The South Korean Example

While the left's concern for the poor is admirable, it's analysis of wealth and poverty are deeply flawed. These flaws are most readily seen in the Dependency Theory, which is frequently used by the left to explain the wealth and poverty of nations. As you'll surely recognize, the same general concepts resonate throughout leftist explanations of poverty within the United States.

This theory is based on the concepts that:

1. Poverty is imposed on third world nations by wealthy nations. Poor nations (and individuals) are victims, accordingly issues like a nation's detrimental economic choices and cultural factors are rarely, if ever discussed.

2. "Imperialist nations" such as the United States enrich themselves by usurping the natural resources of poorer nations and forcing them to buy their manufactured goods. Economic factors like productivity, human capital, economy of scale, monetary policy etc, are rarely discussed.

3. Wealth is a zero sum game - increases in the wealth of one nation equals a decrease of wealth in another nation. Trade between nations rarely if ever augment the wealth of both parties.

4. Only through greater state control of the economy and shield themselves from the global market can raise themselves from poverty.

The best argument against the Dependency Theory is the nation of South Korea.

In the early 1950's, South Korea was one of the poorest nations on the earth. Every measure of wealth and welfare were perilously low. Poverty and illiteracy were widespread and industry was virtually non-existent. Needless to say, South Korea carried one of the highest per capita debts of the world. And for many years South Korea languished in military dictatorships.

Through a combination of wise economic policies and cultural factors, South Korea surged ahead economically becoming a dynamic, innovative, export-oriented 1st world nation.

Between 1962 - 2008, South Korea's GDP grew from $3.3 billion GDP ($87 per capita) to
$371.8 billion ($27,100 per capita). During this time the poverty rate plummeted and the distribution of wealth greatly improved. And quite significantly, South Korea transformed itself from a nation that was billions of dollars in debt to the United States to a nation that loaned billions and billions of dollars to the United States.

To adequately explore the factors that brought about the "Miracle on the Han River" would require volumes of writing. But, at the risk of oversimplification, we can briefly sum them up as South Korea's focus on: education, innovative, competitiveness, modernization and market reform. And we cannot deny vital cultural factors, like an unparallelled sense of hard work, discipline, entrepreneurial zeal and a critical openness to other cultures. And conversely, nations that pursued socialist measures based on the dependency theory world view stagnated or even regressed. The best example being neighboring North Korea that vigorously pursued a policy of juche - economic self dependence.

The example of South Korea explodes most of the notions of the dependency theory. Nothing is fixed, the world is in flux. Nations and individuals are not helpless victims permanently trapped in poverty; those who choose wise economic and cultural paths can and do rise up economically. And Great nations, like the United States, that pursue unwise economic and cultural paths will decline. Just as the embrace of economic and social freedom allowed the United States to achieve unparalleled prosperity, so shall its abandonment herald our decline. And as more Americans embrace a philosophy based on coveting the wealth of others, rather than creating their own, so shall we decline. On a closing note of irony - it can even be said that South Korea is surpassing us in the export of Judeo-Christian culture; it now sends out more Christian missionaries than the United States and plays a large role in supporting western classical music! So we can only hope that South Korea will send us some prayers, as well as well as a few hundred billion dollars, so we can keep on funding all this great change!

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