Analyst Speaks on Development Strategy

The Brookings Institution is the place that gave birth to Hamilton Project, which Cheong Wa Dae is going over in order to benchmark it as the strategy for joint development. Peter Orszag, a senior fellow at the Brookings Institution, is the director of Hamilton Project. He served as the Special Assistant to the President for Economic Policy during the Clinton Administration. This paper called him on June 13 (local time).

“The government has to be as effective as the private sector, and can play a proper role in the fields of education R&D and supporting low-income households while at the same time minimizing the charge on households and enterprises,” he said.

He added, “If the private sector proves by means of appropriate achievements (that the government can show high effectiveness), then the well-accepted thought that the government is an obstacle to growth can be changed, too.”

When asked how Hamilton Project viewed the relationship between the market and the government, he answered that the market is no doubt the foundation for economic growth. But he added, “The market can gain more power when the government takes an effective role in the livelihood field for the low income households not to lose hope and in the R&D for securing future competitiveness.

He introduced a metaphor by U.S. Senator Barack Obama that the United States needed an iPOD government that works well emphasizing the importance of effectiveness in the public sector, by which he meant that the government should be as competitive as the iPOD, which conquered the mp3 player market.

Regarding the controversy of small government vs. a big government, he said, “How well a government works is more important than how big it is.” He pointed out that the opinion that the government should step aside to let the economy grow is widespread, to which he added, “It is extremely difficult to clarify how big a government should be to have the appropriate size.”

He implied the necessity for a tax increase by saying for a government to work properly, government income should be secured (by expanding tax revenue). He said, “This is not the formal research issue of the Hamilton Project, but there is a report that the tax cut policy (of the Bush administration) might be effective (in the short term) but that in the long term, a tax cut stagnates growth in the long run.”

Researcher Orszag also emphasized the importance of education competitiveness to be prepared for the time of limitless competition among nations. He said, “Currently, the education standards of elementary schools and undergraduate and graduate schools in the U.S are very high, whereas those of junior and high schools in the U.S fall short of standards of other developed nations.”

He said that the first issue to be handled in order to upgrade the education standards in junior and high schools was about employing good teachers. He said, “Many people are giving consent to the method of giving anyone equal opportunities to become a teacher and at the same time perform strict evaluations.”

Seung-Ryun Kim srkim@donga.com