From the Evil Empire to the Axis of Evil
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lead goose. Now it turned its attentions to the flock following—the Tiger economies—for the second phase of its new dollar order.1 PHASE TWO: SHOOTING ASIAN TIGERS The second phase of breaking up the Japan model involved destroying the east Asian economic sphere, a highly successful model that challenged the American dictates of rugged free-market individualism. The Japanese model, as Washington knew well, was not limited to Japan. In the postwar period it had been nurtured in South Korea, Thailand, Malaysia, Indonesia and other east Asian economies. In the 1980s, these fast-growing economies were labeled the Tiger states. East Asia had been built up during the 1970s and especially the 1980s, by Japanese state development aid, large private investment and MITI support. While this had happened with little fanfare, in effect the booming economies of east Asia in the 1980s owed much to a deliberate regional division of labor, with Japan at the center and Japanese companies outsourcing manufacturing processes to east Asian centers. These were referred to in Asian business circles as the yen bloc countries because of their close ties to Japan’s economy. The Tiger economies were a major embarrassment to the IMF freemarket model. Their very success in blending private enterprise with a strong state economic role was a threat to the IMF free-market agenda. So long as the Tigers appeared to succeed with a model based on a strong state role, the former communist states and others could argue against taking the extreme IMF course. In east Asia during the 1980s, economic growth rates of 7–8 per cent per year, rising social security, universal education and a high worker productivity were all backed by state guidance and planning, albeit in a market economy—an Asian form of benevolent paternalism. Even more than Soviet central planning, the self-sufficient Asian Tiger economies were an obstacle to the global spread of the dollar free-market system being demanded by Washington in the 1990s. Beginning in 1993, at the Asia Pacific Economic Cooperation (APEC) Summit, as Japan’s banks struggled with the collapse of their stock and real-estate markets, Washington officials began to demand that east Asian economies open up their controlled financial markets to free capital flows, in the interest of ‘level playing fields,’ they argued. Previously, the debt-free economies of east Asia had avoided reliance on IMF loans or foreign capital, other than direct investment in manufacturing plants, usually as part of a long-term national goal.
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