Looking back at the United States in 1992, the Clinton administration pursued a “New Economy” policy under the slogan “the two Bills” -- Bill Clinton and Bill Gates -- will save the world’s largest economy. This policy was characterized by reviving competition in the markets through appropriate regulations, while nurturing the information and communication industries in order to provide innovations to the real economy. This had the effect of shifting the U.S. economy from an industrial to a knowledge and information-based one.

By contrast, the Bush administration pursued a policy of New Liberalism, whereby markets are left to roll along on their own, while the government controls the amount of currency in circulation. This had the effect of promoting a money-lending economy led by financial and other capitalistic interests. As a result, short-term investments and derivative financial products, risky mortgage loans and real-estate speculation surged, while healthy, long-term investments disappeared. The real economy and employment conditions naturally deteriorated under these conditions. The U.S. applied its New Liberalism to global financial markets and trade relations, thereby damaging the global economy.

Yet in its efforts to calm panic-stricken financial markets, the Bush administration ended up voluntarily damaging its own doctrine by undertaking massive market intervention on an astronomical scale. Meanwhile, former Federal Reserve Board chairman Alan Greenspan belatedly acknowledged the “mistakes” of his flawed market theory and his opposition to regulations on derivatives products, and voiced his support for the Bush administration’s market intervention policy.

John McCain and his fellow Republicans are going against their principle of non-intervention and seeking reforms on Wall Street. The U.S. has had to pay a huge price to learn that there is no market without rules and that the real economy comes first.

The global focus will once again shift from money-lending economy to real knowledge-based economy. In an era of such an economy, creative knowledge, rather than landmass and population, determine a nation’s wealth. The level of creative knowledge depends on intelligence. In the end, national wealth is closely related to the intelligence level of the public and this becomes more so as a knowledge-based economy becomes increasingly sophisticated.

In 2002, professors Richard Lynn of England and Tatu Vanhanen of Finland published a joint thesis entitled “IQ and the Wealth of Nations.” In the thesis, the two experts presented research data on the average IQs of different countries. Hong Kong ranked first (107), South Korea second (106), Japan third (105), German and Italy sixth (102), China and England 12th (100), the United States and France 19th (98), Russia 25th (96), Israel 26th (95) and India 59th (81). In 2003 research by the Medical School of the University of Vienna in Austria, Hong Kong ranked first (107), South Korea second (106), Japan third (105), Germany and Italy fifth (102), China and England 11th (100). Research by Dr. Thomas Volken of Zurich University in 2004 shows similar results: Hong Kong first (107), South Korea second (106), Japan and North Korea third (105), Germany and Italy sixth (102), China and England 13th (100), the U.S. and France 21st (98), Russia and Vietnam 34th (96) and India 117th (81).

The three theses show that the average IQs of Koreans is 106 -- second in the world. If you exclude Hong Kong, which is part of China, then Korea is virtually ranked top. The main reason why Korea, with its limited land and natural resources, was able to post exponential growth until now, was probably because of the intelligence of its people.

Yet we hear learned people making belittling comments about us. Self abasement during difficult times is like poison. During times like this, we need to strengthen ourselves with self-confidence backed by evidence. We overcame the Korean War, achieved industrialization, weathered out the Asian financial crisis, and created a knowledge-based economy. On top of that, the present cold spell is nothing compared to what we have had to endure in the past. Koreans, boasting the highest average IQ in the world, are already prepared for the era of the knowledge-based economy. If we remain confident and join hands to defeat this cold spell, then we will certainly be able to rise to the level of advanced nation status.

The column was contributed by Hwang Tai-youn, a professor of political science at Dongguk University.