Book Review: 'The Miracle' by Michael Schuman
The Epic Story Of Asia's Quest For Wealth
By Michael Schuman
HarperBusiness. 422 pp. $29.99
What makes an economy tick? What makes it grow?
In 1890, Japan's average income was only somewhat higher than Mexico's and lower than Argentina's. Yet a century later -- despite the devastation left by World War II -- Japan's average income was nearly three times as great as Mexico's, more than twice as great as Argentina's and only modestly lower than that of the United States. From the late 19th century to the end of the 20th, Japan's economy managed to grow twice as fast as Britain's. How does a nation do that?
Japan is not alone. In the early 1960s, South Korea was poorer than Liberia; 35 years later it was a member of the club of rich industrial nations, the Organization for Economic Cooperation and Development. Why did one nation transform itself while the other fell deeper into poverty and disarray?
These are the sorts of questions journalist Michael Schuman sets out to answer in his cleanly written book "The Miracle." For readers unfamiliar with the story of Asia's rise, Schuman provides an engaging and readable account of some of Asia's key policy makers, national leaders and business tycoons. It is economics as biography, character as developmental destiny.
Almost every chapter features a political leader and private business figure. For Japan, Schuman gives one leading role to Shigeru Sahashi, a career bureaucrat in the Ministry of International Trade and Industry, which picked economic winners and provided them with loans and protection. The counterpart is Akio Morita, the founder of Sony, who defied Japan's industrial planners to build his own empire. For South Korea, Schuman pairs military strongman Park Chung Hee, who mimicked Japan and steered money to a handful of sectors such as steel, and Park's favorite businessman, Chung Ju Yung, founder of Hyundai, a sprawling conglomerate that builds highways, cars and ships, among other things.
For China, Schuman describes the reforms of Deng Xiaoping. He appropriately gives credit to Wan Li's introduction of private farming plots after years of collectivization, a move that gave peasants an incentive to work hard, and to Deng's lieutenants Zhao Ziyang and Hu Yaobang. He points to Deng's decision to permit freer capitalism in special economic zones. Later Schuman profiles the head of Lenovo, which eventually bought IBM's personal computer manufacturing business. Business, political and military leaders from Indonesia, Hong Kong, Singapore, Malaysia, Taiwan and India also march across Schuman's stage.
One important point Schuman makes is that even though the Asian tigers are often lumped together in the minds of Americans, those nations took different routes to prosperity. Japan and South Korea protected their home markets, while Hong Kong and Singapore welcomed foreign investment and companies. South Korea nurtured its own unwieldy conglomerates, or chaebols, while multinationals took the lead in Singapore. India infused energy into its economy by controlling and shrinking its bureaucracy. And China's government under Deng interfered less in the economy, while Korea and Japan's governments interfered more.
So what binds these nations' experiences together? Schuman presents the leading explanations for Asia's stunning postwar economic success: culture, authoritarian leadership, industrial planning, high savings rates (itself perhaps a facet of culture) or some combination of them all.