Lotus of Wealth in Mud of War

When 70,000 North Korean soldiers filed across the 38th parallel during the rainy pre dawn of June 25, 1950, their aggression sparked a three year flame of destruction. After the armistice doused the flames in 1953, South Korea’s per capita GNPwas under $100 per year.

To humanize that figure, the Ford Motor Company used as much electricity during the mid decade as the entire country. Teachers taught penurious students to tie their pencils shortened from wear and tear to twigs for extra use. An ironic Buddhist teaching comes to mind; from the muck and slime grows the pure and beautiful lotus. Adversity breeds life. But this ancient truth played out here as rice paddies gave way to industrial parks, tin shacks to high rises and twiggy pencils to an ITindustry.

In truth, “miracle growth” occurred in Japan, too. By mid-1945, American firebombing raids had carbonized some 6 dozen Japanese cities. The air raids so ruined the transportation network that Japanese planners predicted a famine for mid-1946 that would kill about 8 million people. By 1973, Japan was the globe’s second largest economy and its diet touted for promoting health.

How to explain the Japanese and Korean transformations? Some -- counter intuitively -- insist that the world war, Cold War, Korean War and Vietnam War were the slime in which their lotus of post war wealth blossomed.

The world war that Japan lost and its smaller Korean successor that stalemated here so ruined their respective economies that afterward they -- involuntarily -- held major assets. These spanned weak currencies, which boosted exports; low labor costs; preferential access to the huge, rich markets of Cold War allies; official national programs under planning czars; hard working, focused populations literally hungry for success; military protection from a superpower patron, which reduced their defense outlays and protected the sea lanes through which they imported raw materials and exported value-added finished goods; state of the art, imported technology in fledgling industries, e.g. textiles that was superior to their competitors aging plants.

David Russell, a Tokyo-based award winning author on the Japanese economy, notes that 1947 was “the period of the Dodge Line.” Joseph P. Dodge was the Detroit banking chief who set the yen’s value at a floor-low 360 to the dollar -- exports soared. This was a “U.S.-imposed policy designed to reform the Japanese economy, make it more market-oriented, and help it to grow as an integral part of the U.S. Cold War strategy in Asia,” he explained to this author in an exclusive exchange.

Many experts reject the popular notion that “Japan achieved economically what it failed to do militarily” as misguided because it grew after Washington “laid a new framework ... and planned for it to grow and expand in Asia.”

While Koreans suffered during their 1950-53 war, it was a boon to Japan, the U.N.’s forces staging and production area. For instance, the former ordered trucks from Japanese makers, injecting vital capital into the nascent vehicle industry that later produced cars. As for its self-professed post-1945 pacifism, it passed the burden of defending its neighbor to others, but did not discourage Japan from reaping war related profits.

The numbers proved it: in 1951, Japan’s GNPwas $14.2 billion, but by 1955, it had reached US$22.7 billion. By 1960, Japanese Prime Minister Hayato Ikeda inaugurated a national income doubling plan slated to take ten years. After only eight years, it was a success in part because Tokyo had started low with the above advantages.

As many American historians on Korea such as Bruce Cumings have recorded, South Korea’s own “war boom” was the Vietnam conflict. The U.S. ambassador to Saigon, namely Henry Cabot Lodge, visited Seoul in 1965 to implore it to dispatch troops. Through hard nosed negotiations, the ROKconvinced its ally to pony up cash and aid. The Brown memo of 1966 records that $1 billion went to South Korea between 1965-70. This was about 7.5 billion per division as 320,000 soldiers in the Tiger Division and others notorious for brutality pulled the trigger on their fellow Asians, never mind Koreans condemning Japan and the West for “interventionism.” Between 1966-69, the funds amounted to 19 percent of the ROK’s foreign exchange earnings.

In addition, the chaebol especially won construction contracts for the war zone that fattened their coffers, deepened their experience in international commerce and boosted their name recognition. Cumings notes that 94 percent of Korea’s total steel exports and 52 percent of its transportation equipment sales were scored there.

General Sherman famously warned that “War is hell!” During this summer, which marks the 60th anniversary of the Korean version, we should honor the U.N. soldiers who fought for freedom and unification here. But we might also reflect on the Buddhist insight noted above about how the seed of Japan and Korea’s post war flowers of affluence sprouted in the soil of bloodshed.