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The End of Anglo-American and Japanese Style Risk Management Paradigms
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The financial crisis and the Fukushima disaster spell the end of the contemporary paradigm of risk management. They also spell the death of the Anglo-American and Japanese models, given that fundamental solutions to the crisis remain far off, despite the fact that all means are being employed to sort them out.

Choi Bae-keun. Professor of Konkuk University, Economics


In spite of rock bottom interest rates that can be lowered no further, the printing of dollars (the second round of quantitative easing) and financial injections of an order that has pushed national debt up to the limit, the US housing market, the original source of America's recession, has so far failed to emerge from the swamp of stagnation.

Income inequality has been increasing since the crisis. This is due to the fundamental lack of improvement in the employment situation.


Can't America pull itself out of the crisis?

The unemployment rate, in terms of figures, has fallen below nine percent, but the quality of employment is extremely weak. 8.75 million jobs have disappeared since the crisis, while seven out of every ten jobs created last year were temporary.

The US Bureau of Labor Statistics has forecast that the majority of jobs created in future, too, will be low quality positions with wages averaging no more than 40% of per capita GDP.

A look at the recent rate of increase of the average wage (annually adjusted), moreover, shows it to be barely one percent: the lowest for the past 25 years.

In these circumstances, the second round of quantitative easing will come to an end this June. Reserve funds, meanwhile, have run out through the government's reduction of the financial deficit. A change to raised interest rates will soon become inevitable.

Considering the fact that consumer spending accounts for 70% of the US economy, a long-term recession is unavoidable. This is the reason that two out of every three Americans currently believe that the economic lives of their children will get worse.

The polarization of income distribution is greatly damaging democracy, too. The American people think that an elite minority is using its money to buy politicians, scuttling attempts at reform, and manipulating the government in order to increase its wealth.

The Republican Party, which is merely seeking to capitalize on such popular anger, has utterly failed to come up with a solution and is desperately struggling to find scapegoats and targets for criticism.

Elite business figures, too, are claiming that Obama is demonizing them and are complaining, unlike the general public, that the Obama administration is anti-business.

The elite's sense of communal responsibility has thus been lost, with the rich merely attempting to increase their share of the pie through sacrifices on the part of the middle and working classes.

Social mobility in US society has been greatly damaged, to the extent where the income of parents plays a greater role in determining the future of their offspring even than it does in Europe.

America, which once prided itself on being a fair society where all enjoyed equal opportunities, has had its identity and its very foundations shaken, and is now becoming a "society of extremes." It can no longer be called a first-class country.

In the same way, the Fukushima disaster, which tolled the death knell for Japanese-style risk management, spells the end of the Japanese model that is based on bureaucratic leadership.

As is well known, the success of the Japanese model was due to bureaucratic leadership after the Meiji Reform. Some say that trust in the government has been shaken because of the nuclear problem, but the Fukushima disaster merely reconfirmed the governmental impotence and bankruptcy of bureaucratic leadership that had already been revealed. The "lost 20 years" had already shown just how impotent Japanese governments are.


Faith in Japan non-existent due to nuclear accident

The power shift in Japan to a Democratic Party government was the product of the drastic change demanded by the times: a revolution in the bureaucrat-led national order that had been in place ever since the Meiji Reform.

The leadership shown by the Democratic Party government in dealing with the nuclear problem, however, goes not a single step beyond the existing bureaucrat-led Japanese model.

The reason for these losses of leadership in American and Japanese society is that the Anglo-American and Japanese models no longer function properly. The bankruptcy of the Anglo-American and Japanese models, which had been judged as building the most successful industrial civilizations and creating the best systems, is an undeniable "historical reality."

Given this, the bankruptcy faced after three years by MB-nomics (the name commonly given to President Lee Myung-bak's style of economic leadership), which is symbolized by a fusion of "competition-ism" and construction industry-oriented leadership, is also the fate that had been foreseen for a hybrid model that amalgamates toxic assets from its Anglo-American and Japanese counterparts.
(Opinion: "Economy and the World," The Kyunghyang Daily News. April 15, 2011. p. 31)


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