When the needles of greed, corruption, and cronyism popped the economic bubbles of Asia between 1997-98, much of the Western world gloated and wasted little time in criticizing irrational Asians for their lack of financial transparency in borrowing and expanding beyond their means.

From their mighty computers, some Euro-Americans thought it was self-evident that Asians were not only irrational, but they also lacked sound Western principles of financial management. It was a humiliating time for many Asian tiger economies, which for the past dozen or so years had impressed the world with their dynamic economies and staggering GDP growth.

It wasn’t long before South Korea had to go cap in hand to the IMF in order to recover from its worst ever economic crisis. As swiftly as many South Korean business groups had grown, many filed for bankruptcy. In fact, some business leaders either committed suicide or were charged for cooking their company’s financial books.

The racial myth of the vaunted “Asian values” was taking a hard hit from the negative values of greed, corruption, and cronyism that were the root of the Asian economic crisis. The so-called Asian values of diligence, frugality, and family values were now the main culprits involved in the triangle of greed that had tamed many of the Asian tiger economies.

Despite the fact that many of these Asian business leaders were either trained in Western MBA schools or had at least attended some advanced financial management seminars in the West, some critics began pointing the finger at the Asian vice of cronyism. Others highlighted that the Asian economic crisis was an irrefutable example of long held racist views of Asians as being irrational, less innovative, and far poorer entrepreneurs.

As the argument goes: History clearly shows that the Western spirit is more rational, more innovative, and thus creates far better entrepreneurs. In fact, the Western financial system is far superior as it has at its foundation in the central concept of transparency, unlike the Asian financial system that revolves around the fulcrum of greed, corruption, and cronyism. Reluctantly, some Asians admitted the evils of cronyism, greed and over-expansion and irresponsible borrowing. Cooking the books wasn’t the greatest idea after all.

Turn the clock forward 10 years and the Asians have their time of gloating in criticizing Western greed, corruption, and cronyism. It now looks that Asians weren’t as irrational as their Western counterparts had envisioned. The U.S. mortgage financial crisis had such a devastating domino effect that its reverberations were felt in every sector of the U.S. and global economies. Many companies, banks, and financial institutions filed for bankruptcy. Unemployment soared to record highs. It was later revealed that most of these companies were also cooking their financial books and not revealing their real financial assets to their stockholders. It was also discovered that the putative Asian vices of greed, corruption, and cronyism were the root causes of this American financial crisis.

Such was the financial tsunami from this mortgage financial crisis that its waves are now being felt in Greece, Ireland, Spain and other European nations are facing financial crisis. Both Ireland and Greece have received billions in loans from the EU and are now forced into brutal austerity financial budgets.

To be sure, it wasn’t long before Asians started criticizing the West for its unbridled creed, corruption and cronyism. Despite the fact that the West is now criticizing China for its undervalued currency, China simply replied by placing the blame on irresponsible economic policies in the Western world for the present economic problems.

Throughout this Euro-American financial crisis, most Asian economies have been experiencing healthy economic growth with China’s economic machine humming at 9-10 percent annually. Now that China is the U.S.’ biggest creditor, it feels no need to heed any cries to properly value its currency. Incredibly, China advises the West to get its economic house in order instead of seeking to deflect attention on its undervalued currency. China argues that its currency is simply following market principles and not in any way related to the Euro-American economic crisis. How things have changed since the Asian economic crisis.

In short, the point of this article is not to favor/criticize either Western or Asian greed, corruption, or cronyism. Its main point is to highlight the mythological ideologies of the racial superiority of either the Asian ethnic values or Western rational superiority. Of course, it is wrong headed to think that either Asian or Western values are inferior or superior to one another. It is equally wrong to surmise that racial inferiority or superiority is the main cause of any economic crisis.

An economic crisis is such a complex phenomena that even noted scholars such as Niall Ferguson and Paul Krugman can’t agree on the causes or cures. Since both Westerners and Asians are imperfect humans at best, it would be safe to say that any economic system soiled with greed, corruption, and/or cronyism will implode and inevitably lead to an economic crisis. 

By Alden C. Mayfield

Alden C. Mayfield is a resident of Seoul. ― Ed.