Examining the "Authoritarian Advantage" in Southeast Asian Development in the Wake of the Asian Economic Failures

Stephen D. Wrage ,
U.S. Naval Academy

International Studies Association

Precis: Many scholars have argued that authoritarian regimes possess an advantage over more democratic ones in launching and promoting economic development. The benefit and indeed the existence of this putative "authoritarian advantage" began to be doubted by scholars in the mid 90s, and the ongoing Asian economic crisis provides more evidence for doubt. This paper assesses the state of the argument and considers new evidence from the crisis. It finds significant reason to abandon the notion of an "authoritarian advantage," particularly because authoritarian states have shown themselves poor at providing accountability and transparency in financial affairs.

In the 1960s, 70s and 80s, the governments of Indonesia, Singapore, Malaysia and other industrializing counties of Southeast Asia defended the strict controls they imposed on their societies, declaring that these authoritarian measures were essential aids to development. They banned independent labor unions, interest groups and professional organizations, controlled the press, expelled, imprisoned or otherwise silenced political adversaries, arranged electoral processes to create single-party-dominant states and rendered their judiciaries compliant to political authorities. ₁

Admirers of the "Asian Way"

Some scholars endorsed many of these measures as useful and productive, hypothesizing that there exists an "authoritarian advantage," particularly in the early stages of economic development. Samuel Huntington argued in Political Order in Changing Societies (Yale University Press, 1968) that authoritarian ₂ regimes are more capable of rational, consistent, and responsible decision making than democratic ones, and that a participatory democracy affords special interest groups the power to block, delay or hinder changes that might be beneficial to the economic growth of the entire society. In addition, democratic regimes face more political constraints than authoritarian ones in imposing taxes or extracting high levels of savings through such devices as compulsory pension plans. ₃

Robert Wade presented much the same point of view in Governing the Market: The Theory and the Role of Government in East Asian Industrialization, (Princeton University Press, 1990). He argued on the basis of a detailed study of Taiwan that the government was successful in producing growth in part because it did not face pressure to preserve jobs in failing industries and so was not significantly opposed either by labor unions or by uncompetitive industrialists. ₄

Atul Kohli, in an essay titled "Democracy and Development," went so far as to posit a "cruel choice" between development and democracy, suggesting that in a democracy popular demands for redistribution of wealth or for the establishment of a welfare state will hobble the process of rapid development. ₅

In the early 1990s, the argument came to enjoy the status of conventional wisdom. Pinochet's economic reform in Chile was thought to prove the superiority of authoritarian methods, and it became a cliche that in Russia Gorbachev got things wrong by carrying out political liberalization before economic reform, while in China, Deng Xiaoping did things right by delaying political liberalization until economic reform had been completed.

A 1993 World Bank study with the enthusiastic title, The East Asian Miracle ₆ , implicitly endorsed the methods of the Asian authoritarians, and there followed a spate of books by admiring popularizers, some of whom identified a unique "Asian Way" which was described as "untrammeled by excessive concern with individual rights." ₇

Lee Kuan Yew in Singapore and Mohammad Mahathir in Malaysia were quick to exploit such arguments to provide a scholarly justification for the imposition and continuation of authoritarian controls. They and their publicists built on the notion of an "Asian Way," and elaborated a theory of "Asian Values" of consensus, duty, obedience and community which they contrasted with the decadent, selfish Western values of excessive individualism.

Their campaign drew on Asian nationalism, and there was a good deal of it in The Asia That Can Say No by Mohammad Mahathir and Ishihara Shintaro. ₈ There was also plenty of aggressively self-justifying rhetoric in the writings of Lee's Permanent Secretary for Foreign Affairs, Kishore Mahbubani, which included the titles, "The Dangers of Decadence: What the Rest Can Teach the West," "The West and the Rest," "The United States: Go East Young Man," and "Live and Let Live: Allow Asians to Choose Their Own Course." ₉

Lee announced that a new school of thought in political philosophy had been founded and labeled it the "Singapore School." Its tenets were based on nationalism, Asian exceptionalism, repudiation of Western decadence and embrace of "Asian Values." ₁₀

In the late 1980s, talk of an Asian Way was bound to be convincing to many. ₁₁ Japan's economy was booming, Korea was thriving, Southeast Asia was about to enter a fourth decade of steady, strong growth, and China was opening to trade. At the same time, the U.S. was staggering under debt, sluggish growth, and the savings and loan debacle. Western free market theory looked shaky, and Naohiro Amaya, the top Japanese trade official, was quoted as saying in 1988:

"How can you go hunting without a target? When you go hunting, you have to shoot at a target. But your neoclassical school of economics says you can fire in all directions at once and the 'market' will insure you hit the target. Well, we don't accept that line of reasoning, and our economic model will probably be stronger in the future, and have a greater demonstration effect for developing countries, than either the American model, which has become weak and less relevant, or the Soviet central-command model." ₁₂

In the 1990s, arguments such as these, reinforced by the examples of rapid growth in Singapore, Malaysia, and Indonesia, caught the attention of such regimes as Burma's State Law and Order Restoration Council [SLORC], Vietnam's communist party and, most importantly, China's ruling elite -- all regimes eager to learn how to sustain a single party state yet gain prosperity.

Beginning to Doubt the "Asian Way"

By the mid 1990s, scholarship was at last taking a more careful look at what had become an over-politicized debate. In 1995 Minxin Pei pointed out that the authoritarian advantage imputed to the governments of Singapore, Malaysia, and Indonesia had never been demonstrated, only claimed. He surveyed a number of Asian states and found that "the success of economic reform in East Asia happened in spite of rather than because of the predominance of autocratic regimes." ₁₃ He showed that authoritarian governments have been much less important than "entrepreneurial societies... and the twin transnational networks of the dominant ethnic-Chinese business communities and giant Japanese corporations that have invested heavily in East Asia." Other important factors had been overlooked, he argued, including access to western markets, borrowing of designs and manufacturing methods, and a free trade regime in which to operate.

Jose Maria Maravall raised the point that authoritarians may disadvantage themselves by their repressiveness. By suppressing the various institutions of civil society, they may cut themselves off from crucial sources of information they need to make good economic decisions:

"[T]his points to the basic problem with the pro-authoritarian thesis. In general, authoritarian regimes have more limited incentives and more limited access to information than democratic regimes.... Because [authoritarian regimes] are less dependent on popular support and do not have to concern themselves with electoral cycles, they have a greater capacity to implement policies that may be unpopular. Of course, if the reform process is to be successful, these policies have to be the right ones, and unless dictators are themselves enlightened, their decisions may be the right ones only if the rulers are responsive to enlightened outside pressures...." ₁₄

Other scholars attacked the notion of an authoritarian advantage in a third way, arguing that economic development must involve bargaining between various groups in a country, communicating needs, making competing demands, and sharing costs and benefits. Authoritarian regimes, they point out, are bad at giving different elements of society a voice. (Indeed, they are best at taking care that certain elements are denied a voice.) They do poorly at bringing different groups together in an open forum, and they fail to create, or they actively suppress, the institutions of civil society that provide the setting for such exchanges to occur:

"[B]road constituencies of understanding and support must be cultivated, crafted and mobilized.... It is this kind of consensus-building, of gradual thrashing out and knitting together of interests, issue by issue, that democracy does best, and this may be why democracy is generally a more effective and reliable means for deepening, consolidating, and sustaining economic reform over the long run." ₁₅

The most profound scholarly attack on authoritarian authorship of an Asian "miracle" came from Paul Krugman, an economist at MIT. He argued that there had been no "miracle," only solid and predictable growth of the sort that will occur whenever an economy combines high investment rates, rapidly improving education and training for the work force and "the mobilization of large numbers of underemployed peasants into the modern sector." In an article titled "The Myth of Asia's Miracle," and in various succeeding articles, ₁₆ he held that Asia was not exceptional, that there was no unique "Asian Way," that authoritarianism was no asset for growth and that Asia's growth was bound to slow: "[I]nvestment cannot continually rise as a share of GDP, people can only spend so many years in school and a rapidly developing country eventually runs out of peasants." ₁₇

In his 1994 article, he compared many Asian economies to the economy of the Soviet Union in the 1950s. At that time the Soviet Union's growth rate was triple the that of U.S., and Paul Samuelson, the Nobel Prize winning economist, studied the numbers and predicted that Soviet living standards would surpass American by 1990. That did not happen, Krugman argued, because Soviet growth was "input-driven," achieved by ever-increasing amounts of labor and capital. For that reason it was not sustainable growth, because it did not feature increased efficiency in the employment of those inputs.

Similarly, he maintained, the growth of economies like Singapore's and Malaysia's was input-driven, and would be bound to slow when the rate of increase in inputs slowed. Krugman and others found that the growth in the efficiency with which inputs had been employed in Singapore over the last twenty years was actually negative. ₁₈ Authoritarian governments, he concluded, whether Soviet or Singaporean, are good at mobilizing resources, but not at employing them efficiently, and this puts limits on their prospects for continued growth.

New Evidence Out of the Asian Crisis

Doubting voices like these were not much heard in the mid 90s as Asian economies continued to rise. There was some reason to suspect, after Japan's real estate and stock market collapses in 1991, that soaring asset values could not continue indefinitely. There was good reason to fear that bureaucracies in Asia, as everywhere else in the world, might prove resistant to change and slow to react in time of crisis, as in fact Japan's bureaucracy has proven in the years since the asset inflation bubble there burst. There was serious reason to wonder how political succession issues in Indonesia would be resolved, but as long as growth rates continued, doubters were ignored.

The precedent of crises elsewhere might also have raised concerns about Asia, but did only in a few. The crisis in Asia quickly dwarfed in size and significance the Latin American debt crisis of the 1980s and the Mexican debt crisis of 1994. It has also proven far more contagious, in part because Japan, whose economy equals two-thirds of the total Asian economy, has responded much more slowly, less certainly, and less comprehensively than Mexico. (Mexico suffered its failure three years after Japan, but has already rebounded.)

The Asian crisis may not yet have run its course. If it has, it is reasonable to expect that recovery to pre-crisis levels will require two to three years. ₁₉ South Korea would appear to have stabilized, but Indonesia is still spiraling, ₂₀ and there remains the grave possibility that China's property values, currency, and banking system may collapse.

The Asian collapse began in Thailand in June. Although it has been a rolling crisis, striking hardest in Thailand, South Korea, Malaysia, and Indonesia in turn, events in Thailand are sufficiently typical and indicative to be worth looking at closely by means of this account from the London Financial Times:

"On June 25, 1997 Asia's economic miracle came to an end. That was the day Thanong Bidaya, named Thailand's finance minister five days earlier, first managed to discover the true state of his country's foreign exchange reserves and the problems with its financial system.... Thailand's reported foreign reserves of over $30 billion were a myth -- in fact they had dwindled to $1.4 billion, equal to just two days of imports.

The account highlights the point that the true state of national finances had been concealed, and that even the new head of the Thai central bank was unaware that foreign exchange reserves were less than one twentieth of their announced size until he launched an unusual inquiry. The public was not aware; the markets were not informed. In such a setting, it was impossible to make sound financial decisions, yet the Thai case proved in subsequent months to be a pattern through much of Asia.

As stated above, Huntington's case for an authoritarian advantage stressed the ability of officials in such a system to make rational, responsible decisions, unimpaired by democratic pressures. Rational decisions are impossible in a setting marked by official distortions and deceptions. Recent failures in Asia would turn his point on its head: in the absence of democratic pressures, particularly in the absence of public accountability, good decisions cannot be made. Shielded from public scrutiny, officials will feel great temptation to hide shortfalls, conceal failures, favor industries in which they or their family have an interest, and divert public monies to sectors, corporations, or individuals they prefer.

Habits of confidence in supposedly corruption-free governments had substituted for practices of accountability and institutions for transparency. In the absence of sunshine, rot had set in. ₂₁ The pattern was repeated in Japan, ₂₂ Korea, Malaysia, and Indonesia when it was discovered that national accounts were less sound than had been claimed. Banks and corporations that had been represented by the government as on sound financial foundations had for years been quietly shored up by the government, or had evaded weakly enforced disclosure laws, sometimes by practices that involved bribery and lying. ₂₃

The account from the Financial Times continues:

"On top of that, the central bank... had lent over $8 billion to struggling financial institutions. Finance One, the country's largest finance company, had alone received over $1.3 billion... in the first quarter of 1997. This lending had effectively drained seven years' worth of the Thai government's fiscal surpluses; the central bank was printing money to make up for the rest...."

The Financial Times account records that $8 billion had been disbursed to struggling finance firms. As summarized above, Wade's case for an authoritarian advantage holds that such governments will not be pressured to keep failing firms open. Again, evidence from Asia turns this point around. This is exactly what the governments in the stricken economies of Japan, Korea, Malaysia and Indonesia have done.

In Malaysia, for example, Prime Minister Mahathir has pumped billions in public funds into grandiose projects to build the world's tallest building or to create a city-size high-technology cyber-corridor. He has been loathe to let such over-blown publicly-financed projects go under and has stuck with them far longer than would be rational from a financial standpoint. This is because, contrary to Wade's contention, he has let political considerations condition his financial choices. He needs such symbols to attest to the success of his regime. Having rigged elections and driven out rivals for years, he cannot plausibly pretend to electoral legitimacy. Instead he rules with what might be called "performance legitimacy," earning the willingness of the people to accept his rule by the economic success he can deliver. These symbols of success are his sources of legitimacy, but now that they have had to be abandoned, they become symbols of his failure to deliver wealth and undermine his claim to a right to rule.

The Financial Times account concludes:

"No formal announcement was made. Instead, influential brokers and privileged journalists were quietly told that... [the central bank] would not, as it had promised in a press release exactly one month earlier, buy new shares in Finance One.

"Finance One would shut down two days later, along with fifteen other cash-strapped finance companies. Five days after that, July 2, Thailand was forced to free its currency from its longstanding peg to the U.S. dollar, plunging East Asia into the financial turmoil that continues to this day." ₂₄

No public announcement of the crisis conditions. Instead, a few brokers and privileged journalists were informed. Very important knowledge was withheld from the markets for a crucial time and false and contrived impressions were perpetuated. This practice has been repeated throughout the crisis in other countries of the region. In China, even outside of crisis times, doubt surrounds all official statistics.

Huntington argued the leader in an authoritarian state could act free of pressure from special interests, but in fact we see secrecy and protection being offered to the elites in Thailand and elsewhere. Elites are favored in this fashion throughout the region, even in Singapore, which has a reputation for low levels of corruption. Lee Kuan Yew has made it clear that secret sweetheart deals on condominium prices for him and his family are common practice. When a covert deal that cut the price to him and to his son by over $100,000 was revealed, he declared in a several-hour-long harangue to his parliament that he is given special prices on many things as a matter of course. This may not be a justification, but it at least confirms that the practice is endemic.

The events of the past eight months in Asia do not confirm Kohli's dictum regarding a "cruel choice." It is not the case that a society must choose between democracy and little economic success or authoritarianism and greater wealth. In fact, the most authoritarian regimes are having to impose the harshest measures on their societies while the more democratic regimes are finding they have an exceptional resource in the form of popular support and a readiness to sacrifice. In South Korea large numbers of people have donated wedding rings and other heirlooms to public funds in order the help the nation through this "IMF year." Newly inaugurated President Kim Dae Jung finds he has the support of labor unions as he enforces austerity and blocks pay raises. He has enjoyed the patience of parliament and the forbearance of the business elite as he breaks up the chaebol. By comparison, the Suharto regime in Indonesia has faced widespread public anger ₂₅ and President Mahathir of Malaysia has been ridiculed for his attempts to blame the financial disaster on foreign plotters. ₂₆

Conclusion

The events of the Asian financial crisis show that it makes more sense to speak of an authoritarian disadvantage. So far it has been the authoritarians who have been hardest hit and to date have proven slowest to recover.

Set aside the costs authoritarians impose in liberties denied. The real problem with the authoritarians' prescriptions is that they are bad for business. Authoritarian regimes do not inspire sustainable, rapid growth. In a propitious free trade environment with ample technology to borrow and huge investment from the twin transnational networks Pei described, it is quite possible to achieve high rates of growth from a low initial level. This can be done without the dubious benefits of authoritarianism.

At a later stage in development, as Maravall, Plattner and Diamond argued, the process of growth is likely to proceed more successfully in a more democratic environment. Information crucial for decision making will be more available to policy makers in an open society and debates essential for distributing the benefits of growth will take place more freely and with less contentiousness in a democratic setting.

The events of recent months offer new points to be made in the case against authoritarianism. They have shown that authoritarian regimes are unlikely to provide the kind of accountability and transparency that is essential if distorted market information, secret subsidies, juggled accounts, sweetheart deals and outright corruption are to be avoided.

Rational, responsible decision making has proven very difficult in the authoritarian settings of much of Asia; instead, irresponsible policy, distortions and corruption have been widely evident. Accountability is achieved most successfully in societies where the regimes are responsible to the people and to a free press. Absent those, corruption of all kinds takes root.

It may be that the current suffering of those stricken by the Asian crisis will be redeemed in part in progress towards ending some of the practices once disguised in the attractive term, the "Asian Model." If that is too much to hope for, perhaps at least these recent events may lay to rest talk about an "authoritarian advantage."

Endnotes

Note 1: The literature on Southeast Asian authoritarianism is large. On Indonesia, see Adam Schwarz. (1994) A Nation in Waiting: Indonesia in the 1990s. Boulder: Westview Press. On Singapore, see Christopher Lingle. (1996) Singapore's Authoritarian Capitalism. Fairfax, VA: Locke Institute. On the region, see D.A. Bell, D. Brown, Kanishka Jayasuriya and D.M. Jones. (1995) Toward Illiberal Democracy in Pacific Asia. London: St Martin's Press. Back.

Note 2: "Authoritarian" may be simply defined as preferring obedience to authority over individual liberty. The three governments most studied in this paper, Singapore, Indonesia and Malaysia are decidedly authoritarian, though they prefer the contradictory title, "authoritarian democracy." Freedom House in its annual Freedom in the World survey for 1997 listed Singapore and Malaysia "partly free" and Indonesia "not free." The U.S. State Department Country Reports on Human Rights Practices for 1997 lists serious and systematic abridgements of basic freedoms in all three countries. Back.

Note 3: Huntington, Samuel. (1968) Political Order in Changing Societies. New Haven: Yale University Press. Back.

Note 4: Wade, Robert. (1990) Governing the Market: The Theory and the Role of Government in East Asian Industrialization. Princeton: Princeton University Press. Back.

Note 5: Atul Kohli. (1986) "Democracy and Development." In Development Strategies Reconsidered, edited by John P. Lewis and Valeriana Kallab. Washington: Overseas Development Council. Back.

Note 6: World Bank. (1993) The East Asian Miracle: Economic Growth and Public Policy. Oxford: Oxford University Press. This study was requested and partially funded by Japan in hope that it would provide a legitimating endorsement of Japanese and Asian practice. Back.

Note 7: See Naisbitt, John. (1995) Megatrends Asia: The Eight Asian Megatrends that are Changing the World. London: Nicholas Brealey; Abegglen, J. (1994) Sea Change: Pacific Asia as the New World Industrial Center. New York: Free Press; Borthwick, M. et. al. (1992) Pacific Century: The Emergence of Modern Pacific Asia. Boulder: Westview Press; Fingleton, E. (1995) Blindside: Why Japan is Still on Track to Overtake the U.S. by the Year 2000. Boston: Houghton Mifflin; Winchester, S. (1991) Pacific Rising: The Emergence of a New World Culture. New York: Prentice Hall. Back.

Note 8: Mahathir, Mohammad and Ishihara Shintaro. (1995) The Asia That Can Say No. New York: Kondansha International. Back.

Note 9: Mahbubani, Kishore. ""The Dangers of Decadence: What the Rest Can Teach the West," Foreign Affairs (1992, Vol. 72, No. 4) "The West and the Rest," The National Interest (Summer 1992) "The United States: Go East Young Man," Washington Quarterly (1994, Vol. 17, No. 2) and "Live and Let Live: Allow Asians to Choose Their Own Course," Far Eastern Economic Review (17 June 1994.) Back.

Note 10: Quotations from the Singapore School give a flavor of its thought:

"I do not believe that democracy necessarily leads to development. I believe that what a country needs to develop is discipline more than democracy. The exuberance of democracy leads to indiscipline and disorderly conduct which are inimical to development"

Lee Kuan Yew, Senior Minister of Singapore, quoted in the London Economist, 27 August 1994, p 15

"The West suffers from massive social decay.... But instead of traveling overseas with humility, Americans confidently preach the virtues of unfettered individual freedom blithely ignoring the visible social consequences."

Kishore Mahbubani, Permanent Secretary of Foreign Affairs in Singapore, quoted in Owen Harries, "The Next Cold War?: The National Review, 1 August 1994, p 36.

"This proselytizing for democracy veiled only slightly the objective of eliminating competition before it begins. They would like the East Asian democracies to be weak and unstable like theirs, or worse. Maybe there is no grand conspiracy by the West to undermine all the East Asian economies. But conspiracy is not necessary. It is sufficient for everyone to see the danger threatening them for them to act in concert."

Mahathir Mohammad, Prime Minister of Malaysia, speaking in Beijing in May 1994, quoted in Owen Harries, p36. Back.

Note 11: It is important to distinguish between the out-and-out authoritarianism of the Malaysians, Singaporeans, and Indonesians and the heavy government intervention model of the Japanese, though Lee and Mahathir often blurred the distinction as a way of depicting dictatorship as merely "the Asian Way." In Singapore and Malaysia there was censorship, political imprisonment and a compliant judiciary. In Japan and Korea, by contrast, there was "Japan-style capitalism" under a single-party-dominant state with a powerful bureaucracy intervening heavily and frequently in the economy. Close ties between industrial planning ministries and huge inter-linked conglomerates, plus export assistance for business abroad and protection for businesses at home, assured the government's role would be determinative. Japan provided much better protection for individual rights than did Singapore, Malaysia, or Indonesia, as well as a much freer press, a much less compliant judiciary and a much more fully developed civil society. Korea was until the early 1990s as authoritarian in most respects as Malaysia or Singapore. At the far authoritarian extreme from Japan there was Indonesia with little civil liberty and a deeply corrupt, family-dominated and crony-led economy. Back.

Note 12: Quoted in Nicholas D. Kristof, "Crisis Pushing Asian Capitalism Closer to U.S. Style Free Market" New York Times, 17 January 1998. Back.

Note 13: Pei, Minxin. (1995) "The Puzzle of East Asian Exceptionalism" in Diamond and Plattner, eds. Economic Reform and Democracy. Baltimore: Johns Hopkins University Press. Back.

Note 14: Maravall, Jose Maria. (1995) in Diamond and Plattner, eds. Economic Reform and Democracy. Baltimore: Johns Hopkins University Press. Back.

Note 15: Plattner and Diamond, "Introduction." in Diamond and Plattner, eds. Economic Reform and Democracy. Baltimore: Johns Hopkins University Press. Back.

Note 16: Krugman, Paul. (1994) "The Myth of Asia's Miracle." Foreign Affairs (Vol. 73, No. 6.); (1997) "Bahtulism: Who Poisoned Asia's Currency Markets?" Slate Magazine (14 August 1997); (1997) "Asia's Miracle is Alive and Well?: Wrong, It Never Existed" Time Magazine (Vol. 150, No. 13); (1998) "Asia: What Went Wrong." Fortune (2 March 1998.) Back.

Note 17: Krugman, Paul. (1998) "Asia's Miracle is Alive and Well?: Wrong, It Never Existed." Time Magazine (Vol. 150, No. 13.) Back.

Note 18: See Young, Alwyn. (1994) "Lessons from the East Asian NIE's: A Contrarian View" in European Economic Review (Vol 38.) Also see Lau, L. and J-I Kim. (1994) "The Sources of Growth of the East Asian Newly Industrialized Countries" in Journal of the Japanese and International Economies. Back.

Note 19: This was the estimate of C. Fred Bergsten of The Brookings Institution in an oral presentation at the U.S. Institute of Peace on 23 February 1998. Back.

Note 20: Worrisome developments in Indonesia include the following: President Suharto, aged 76, has granted himself a seventh fire-year term; he has resisted the prescriptions of the IMF, first appearing to break up the monopolies in wood of his friend, Bob Hasan and in cloves or his son, Tommy, then reconstituting them along with many others; he has appointed his daughter, Tutut, to a major cabinet post and filled his new cabinet with other nepotistic appointments; he has declared that the IMF prescriptions violate Article 33 of the Constitution which states that the economy must be "a cooperative effort, founded on the basis of family spirit"; students and workers have staged large protest rallies and the army and police have been stretched thin in controlling the demonstrations. Back.

Note 21: "[L]ack of transparency is a common obstacle in economies that have deep traditions of bureaucratized regulations within a hierarchical political system." Lingle, Christopher. (1997) The Rise and Decline of the Asian Century. Barcelona: Editions Sirocco. Back.

Note 22: Last week's New York Times reported on its front page that a director of Japan's central bank was arrested for supplying secret information to smaller banks. Mr. Yoshizawa, director of the capital markets division of the Bank of Japan, was accused of selling Sanwa Bank and he Industrial Bank of Japan advance information on the central bank's market operations. New York times, 12 march 1998. Back.

Note 23: In Japan, held by Transparency International to be far the least corrupt of the governments listed in this paragraph, corruption scandals have brought down two ruling coalitions. In Korea, similar scandals brought long prison terms for two former heads of state, Chun Doo Hwan and Roh Tae Woo, along with convictions for bribery for nine leaders of the thirty largest conglomerates in Korea. (Transparency International is a nongovernmental organization that collects poll data on official corruption.) Back.

Note 24: Bardacke, Ted. (1998) "Asia in Crisis: The Day the Miracle Came to an End" in London Financial Times (12 January 1998.) Back.

Note 25: The Indonesian government has had to direct its employees to change out of their uniforms before going out on the streets. This was because people identifiable as government employees have been attacked by crowds angry over food shrotages. Back.

Note 26: President Mahathir attempted to blame the fall in the value of the ringgit on "criminals and morons" and a Jewish conspiracy. This led to dozens of postings on the Internet of Mahathir's top ten lists of conspirators. Back.