A look at the Asian Economic Crisis of 1997-1998
Contrast this with Russia. Arriving in Moscow most people quickly become acquainted with the anarchic "Anything goes" culture. People have an innate ability to fast-talk their way around any situation, or often find that a bribe will bend the rules; the militsia (police) are well-known intimidators, beaters and bribe-takers; and the Moscow clubs where drunk women disrobe alongside male strippers are notorious.
There are many differences between these two countries, but one thing is the same. Both economies, and hence, both peoples, have been experiencing the effects of ‘global economic crisis’.
Although the build-up to the fall of the South Korean won in late 1997 was gradual, the fall and its consequences—especially the I.M.F. bailout—still came as a deep shock to the people. Their tiger economy had become a cub, with the uncertain process of growth once more ahead. A catch-cry of the government had been ‘Globalisation!’ Now they had it.
When the Russian ruble devalued in August 1998, the collapse had been imminent. And yet, it also came as a shock. Since 1991 the ex-communist country had experienced extensive changes, including their entrance into the world of western capitalism. The bear was well-used to hardship, but wasn’t so sure what this new version of hardship meant.
Defining the current global economic situation
English is the language of capitalism. As newspapers churn out headlines of ‘crisis’ and ‘global recession’, it is cogent to examine these words, selected from an Oxford Dictionary.
crisis: a decisive moment, a time of danger or great difficulty, the turning point, especially of a disease.
In Chinese, the ideogram for crisis has two sides: danger, and opportunity.
The news media tend to concentrate on the dangers and difficulties, talking about recovering, not mentioning disease.
recession: a temporary decline in economic activity or prosperity, a receding or withdrawal from a place or point. Re can also mean ‘once more, afresh, new’.
The media generally concentrates on temporary, linked with going down.
As well, much reporting focuses on currency rates, stock shares and economic systems, rather than on people.
For example, The Economist of October 10, 1998 called for the improvement of Asian economies through small steps. It seems like a good suggestion, yet their small steps—fixing Japan’s banking system or restructuring the domestic debt of Thailand, South Korea and Indonesia—are still big steps, and deal with system, rather than with immediate human needs. That Russia’s debt is being restructured meant little to a Russian pensioner needing to buy food, especially if her life-savings was just seized by the government, to be paid back in November at a rate far below market value.
Indeed Russia seems hedged in by negative definitions: difficulty, danger, and decline could have described the situation of this country—and its overwhelming poverty—before the ruble fell. Particularly in this century, ‘system,’ in the form of communism, has created huge cost on a human level.
But if we consider positive definitions, such as turning point, decision, opportunity, and go afresh, then this difference in attitude is, to a large extent, illustrated by the response of South Korea to crisis.
Similarities between a tiger and a bear
Though these two countries are vastly different in culture and history, the people’s responses to devaluation had similarities. The responses of the two leaders, though, were quite different.
Home currency vs. US Dollar: Manipulation of currencies against the US Dollar maintained an artificial prosperity. With devaluation, there was a rush on hard currency, pushing the dollar higher, the home currencies lower.
Commercial culture: Spend, be happy, don’t worry. Commercial culture has become strong in both countries. In Russia people joked that one measure of success of the reforms since 1991 was the introduction of Snickers bars.
Media and reporting denial: Early on the English-language Korea Times quoted housewives predicting the fast return to strength of the won, but under-reported the numerous suicides of ruined small-business owners. The editor of the English-language Moscow Times, in the week prior to devaluation, predicted there was no way the ruble would devalue.
It was as if the need for reassurance pushed away common sense. But both newspapers provided much useful and sensible comment once the realities of the situation were accepted.
Two versions of response
Kim Dae Jung and Boris Yeltsin: Yeltsin’s power goes back to the Communist era. His physical, mental and spiritual health is failing just when decisive, articulate, intelligent leadership is crucial. Prior to ruble devaluation he denied it would happen. When it happened, he sacked his innovative prime minister, Sergei Kiriyenko, to satisfy the powerful oligarchs, returning many old-rule politicians to power.
In contrast, Kim Dae Jung was outside the halls of power for years, and during his time in political exile, taught himself English by reading newspapers. His narrow election victory in 1997 was almost concurrent with the won devaluation. He immediately began working with the outgoing president and others, seeking possible solutions, and challenged chaebol leaders to come to account.
Home Grown or Imports: Part of South Korean strength is their manufacturing base combined with a high tax on imported goods: part of Russia’s weakness is their weak manufacturing base and reliance on imported goods, especially food. After devaluation South Korean food prices remained stable, while Russian food prices escalated, with many foreign goods undelivered to wholesalers who couldn’t pay the higher prices.
Korean spirit and Russian soul: When the crisis hit, South Koreans responded with unified spirit to assist their country: they felt, and were called upon to take, responsibility. The high number of suicides was part of this, due to the culture of loss of face. One woman killed herself because she felt she had failed her son, no longer being able to support his education in the USA. On the other hand, many of the chaebol leaders, with plenty of off-shore funds, were reluctant to sacrifice or cooperate with economic reforms.
Newspapers and workplaces were full of calls for austerity and the necessity for the people of the nation to band together and economise. Response was so enthusiastic that new calls were made reminding people to buy things, so the economy would function. People queued up to donate gold, thus assisting the economy. One expatriate Korean businessman donated a huge sum of money to help his homeland.
Some say the Russian soul is both romantic and intellectual: people love to discuss, but fail to act. Indeed, with devaluation, many educated people were confused and felt unable to effect change, including taking to the streets, unless it was to the market, bank or currency-exchange office. But faced with an unstable, corrupt power elite making arbitrary decisions, this is not surprising.
Occupation and Occupier; Fighting and suffering: Korea has long been the victim of occupation—most recently for 35 years by Japan—and is both bitter and driven about it, determined to promote and preserve their national culture and identity. Russia has been an uncompromising occupier, and still clings to its diminished empire. It also has a long history of internal occupation by ineffective or dictatorial leaders, such as Stalin, who inflict huge damage on the country.
Koreans fight, while Russians continue to suffer. Koreans feel responsibility, feel they can and must do something, embodied in a sign reading "I.M.F.ighting!", while Russians make jokes that it is their fate to suffer and endure, powerless to alter their unwieldy and corrupt system or to overthrow their leaders.
Both peoples have had to accept the state of their economies. They are discovering what it means to join the global culture and the global economy. The economic crises of the countries shared many common features both before and after devaluation, but as their differing responses show, a whole contains opposites. Despite the economic situation, the silent but anarchic soul of Russia and the order of the South Korean spirit may offer us windows to a solution.
There are no simple answers, but the small solutions being implemented today may gradually evolve into an intelligent system, bringing us a much needed, positive change. The major benefit of our global economy is that the whole is being considered in relation to the parts. Depending on our response, the global crisis/recession can be a turning point of opportunity, offering us a creative recess from which to go anew.
Sandra Dempster is a writer, actor and film maker, born in New Zealand and recently living in Wroclaw, Poland. When the South Korean won devalued, she was living in Seoul, working as a high school English teacher. When the Russian ruble devalued she was living in Moscow, working as a writer and editor. She has been accused of carrying the "economy-crisis" virus.
Sandra Dempster is a writer, actor and film maker, born in New Zealand and recently living in Wroclaw, Poland. When the South Korean won devalued, she was living in Seoul, working as a high school English teacher. When the Russian ruble devalued she was living in Moscow, working as a writer and editor. She has been accused of carrying the "economy-crisis" virus.