Loosening The Chaebol's Chokehold

Sometimes, showy corruption scandals do not lead to real changes. In Japan, for example, an enormous political bribery case in the early 1990s rocked the country and temporarily pushed the Liberal Democratic Party from power. But virtually every major political figure escaped prosecution, and little was done to reform the underlying political and economic system that provided fertile ground for such abuses.

South Korea has arrived at a similar crossroads. The decision to charge former President Roh Tae Woo with corruption and reopen investigations into the killing of pro-democracy demonstrators in 1980 illustrates Korea's willingness to grapple with the problems of the past. Now, President Kim Young Sam must go beyond just the prosecution of past offenders and use the opportunity to make the structural reforms that South Korea needs to thrive in the years ahead.

The key is limiting the power of the chaebol, the large business groups that still dominate the South Korean economy. The chaebol were an essential part for Korea's stunning economic growth, because only they could mobilize the massive resources needed to build world-class steel and auto factories, shipyards, and chip plants. Yet this sort of monolithic planning may become a disadvantage in a world economy that belongs to the nimble and innovative.

One way to encourage competition is to loosen the money-power connection between the chaebol and the corrupt politicians that fueled the scandals. The chaebol would dole out millions of dollars to the politicians, and in exchange they received large government contracts and protection against the competition.

With Japan still stuck with an outmoded political system, nothing could be better for Asia's future than a fully democratic Korea, with an open and strong economy. There's no better time than now to make that happen.