Post <blockquote>Leftists would probably regard me as a down-the-line neoliberal, but I have to say that you're embarrassing yourselves if you think that South Korea's success is a clear example of the success of free-market capitalism. Yes, it demonstrates that a mostly capitalist system is superior to the hellish, statist repression to the North. But South Korea's economic policy during the boom was remarkably interventionist -- if you want a clear example of successful lassiez-faire in the second half of the 20th century, you should be looking at Hong Kong, certainly not Korea. Here are some features of Korean policy under Park Chung Hee: -- Completely repressed financial markets, with the landscape dominated by domestic banks effectively controlled by the government. No serious public equity or bond markets. Massive curbs on foreign capital. Nonconvertible won. Government-directed loans to selected sectors at preferential interest rates accounting for a majority of lending. Big decisions "from the top" to develop in certain sectors -- for instance, the heavy and chemical industry push in the 1970s. -- Barriers to entry that cemented the stature of a few large chaebol, causing them to bloat into absurdly diversified entities controlling a huge chunk of the economy. Incentives to amp up leverage in anticipation of inevitable government rescues. Protective tariffs imposed as rewards for export performance. I'm not saying that these policies were good, but evidently they weren't bad enough to stop Korea from developing at perhaps the fastest rate in world history (up until that time). The problem with cases like this is that there are so many possible contributing factors that it's hard to really say what worked. There's plenty of material for heterodox economists like Ha-Joon Chang to claim that Korea vindicates their view of development, yet also many ways in which Korea's success can be understood in the context of mainstream economics. I tend to come down on the latter side, though some aspects of the Korean experience raise uncomfortable questions.</blockquote>

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