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[Opinion] Lemon Dilemma

Posted February. 20, 2003 23:15,   


There are two cars on the sale block – one is a strong-built used car and the other is a old car with slick looks Americans call a `lemon.` They are sold for $20,000 and $10,000 respectively. A consumer is willing to pay about $15,000 but they do not know much about cars. There is little information about differences between the two, either. What will he buy? According to 2001 Nobel Economic Prize co-winner Joseph Stiglitz, he is bound to buy the lemon. As bad money repels good money, the strong used car refuses to be sold cheap, and only the sloppy car will be left. Imperfect and imbalanced information do harm to consumers and to the market, the `lemon dilemma` observes.

▷Professor Stiglitz at Columbia University is better known for an anti-globalization activist or advocate who insists on revamping of globalization, rather than his Nobel prize-winning `imbalanced information and market failure` theory. He has long been criticizing that U.S.-led globalization is a culprit of prevailing poverty in underdeveloped countries and financial crises. He quit his job as Vice President of the World Bank after having a big argument with IMF officials, and wrote `Globalization and Its Discontents,` a best-selling book his critics called `IMF and My Discontents` instead. `Globalization has helped people reach a better standard of living. During the process, however, jobs were destroyed and lives became insecure, degrading the quality of life in general.` Many agree to his point, and still many other criticize him that he is a beautiful mind as a scholar but not as a policymaker.

▷Professor Stiglitz will attend the inauguration ceremony for president-elect Roh. He is now being named the most likely candidate of a foreign economic advisor for the new government, and expected to meet the new president during his visit to discuss a wide range of economic policy issues. It is known that the president elect himself, who puts more weight on distribution than economic growth, was influenced by the Nobel laureate. Then the meeting with the renowned economist must carry significance for him.

▷Concern is that Roh is also likely to fall into the trap of the `lemon dilemma.` As Stiglitz points out, imperfect and imbalanced information is bound to fail. The president elect, not having visited the U.S. before, was even told that he had little knowledge about international affairs. The Financial Times in Britain wrote, “President Kim understood the trend of globalization and wanted to established a better capitalist system. With president-elect Roh, however, it remains to be seen.” It is good for the president elect to meet with Prof. Stiglitz. It is just that he needs to listen to the other side of the story as well.

Kim Sun-deok, Editorial Writer, yuri@donga.com