[Public Opinion Briefing Vol. 52-2] The Economic Crisis is a Joint Product of the US and Each Country's Government, Finance, and Consumers

[Public Opinion Briefing Vol. 52] Causes and Solutions of the Global Financial Crisis as Seen by the World

1. Global Public Opinion Demands More Active Government Response

2. The Economic Crisis is a Joint Product of the US and Each Country's Government, Finance, and Consumers

3. Issues and Global Public Opinion Surrounding the Economic Crisis

Who is Responsible for the Economic Crisis?

A Combination of US and Domestic Government Supervision, Financial Institutions' Risky Investments, and Excessive Personal Debt

Public Opinion in 19 Countries: The Economic Crisis is a Joint Product of the US, Domestic and International Financial Institutions, Individual Citizens, and Government Policies

Developed OECD Countries Tend to Blame Domestic and International Finance; Developing/Underdeveloped Countries Tend to Blame Their Own Governments

In Korea, the Theory of US Responsibility is Strongest (72%), with Many Also Pointing to International Finance and Excessive Personal Debt

Global public opinion understands the current economic recession in various countries as a joint product of policy failures by the US government and domestic governments, coupled with the imprudent operations of domestic and international financial institutions, and consumers who have accumulated debt indiscriminately beyond their capacity. A survey of 18,066 people in 19 countries, encompassing 62% of the global population, revealed that 49% responded that US government policies bear 'a great deal of responsibility' for the current economic recession, 33% responded 'some responsibility,' and 10% responded 'no responsibility at all.' In contrast, 42% each attributed significant responsibility to the imprudent risk-taking practices of international and domestic finance, and to their own government's economic policies. Furthermore, 41% agreed with the self-critical view that excessive personal loans and debt in each country have also significantly impacted the economic recession. This indicates that a variety of factors are perceived to have contributed to the economic recession in each country following the unprecedented US-originated financial crisis.

[Figure 1] Responsibility for Each Country's Economic Crisis: Percentage of Respondents Answering 'Great Deal of Responsibility' for Each Factor

Source: WPO, EAI, Maeil Business Newspaper (2009/6)

*: Due to question limitations in Korea, the item on domestic finance was not included in the questionnaire.
Note: Figures represent the percentage of respondents who answered 'great deal of responsibility' among the options 'great deal of responsibility,' 'some responsibility,' and 'no responsibility at all' for each item.

However, a considerable gap in perceptions of responsibility for the economic crisis is found between the citizens of developed countries and those of late-developing/developing countries. Citizens of developed countries are more likely to hold financial institutions, operating domestically and internationally, and the US government, which allowed their imprudent asset management, accountable. In contrast, citizens of late-developing and developing countries tend to assign responsibility more to the US government and their own governments rather than to financial institutions or individual consumers.

Citizens in 11 countries, including China, India, and Russia, categorized as underdeveloped or developing nations, believe that the responsibility lies with the economic policy failures of the US government (45%) and their own government's policies (44%). Conversely, opinions attributing responsibility to individual consumers (33%) or domestic financial institutions (32%) and international financial institutions (28%) were in the minority.

However, averaging the public opinion from 8 OECD member countries, including the US, UK, and France, which participated in this survey, revealed that more respondents attributed greater responsibility to international finance (61%) and domestic financial institutions (59%) than to the US (56%). The response attributing responsibility to individual consumers who accumulated excessive debt was somewhat lower at 52%, and the response attributing responsibility to their own government was only 39%.

Similar to the perception patterns of citizens in other developed countries, Korean citizens strongly tended to hold the US (72%) and internationally operating financial institutions (61%) accountable, as well as individual consumers who expanded household debt (62%). The proportion attributing responsibility to government policies (49%) for the economic crisis was relatively low. The response identifying the US as a cause of the economic recession was the highest among the 19 countries at 72%. This result likely reflects the fact that Korea's macroeconomic indicators were relatively favorable prior to the US-originated economic crisis.

[Figure 2] Differences in Perception of Responsibility for the Economic Crisis between Developed OECD Countries and Developing Countries (%)

Source: WPO, EAI, Maeil Business Newspaper (2009/6)

The Magnitude of the Economic Crisis Strengthens Public Opinion for the Creation of International Regulatory Bodies to Oversee Financial Activities

Hesitancy Regarding the Establishment of International Standards to Regulate the Overseas Financial Operations of Each Country

It is a well-known fact that the US-originated economic crisis stemmed from the insolvency of US financial and insurance companies such as Lehman Brothers and AIG. This is precisely why major countries are contemplating measures to regulate the insolvency of various financial institutions to resolve the economic crisis and prevent its recurrence.

In this survey, opinions were divided on the proposal to 'establish international standards that provide regulatory criteria for each country's financial companies operating overseas.' The average percentage of respondents in 19 countries who agreed with this proposal was 44%, while 47% held the position that 'regulatory criteria for financial companies operating overseas should be determined by each country.' In countries such as Germany (56%), France (55%), and China (51%), the majority supported the idea of standardizing international regulatory principles for individual countries' financial companies. The US showed a similar level of support to the overall average, with 43% agreeing with the proposal to create international regulatory standards for financial regulation.

An average of over 57% of public opinion across 19 countries supports the stance that 'there should be an international regulatory body to regulate large financial institutions operating internationally.' In contrast, the opposing view, 'if an international financial institution is created, it will interfere with each country's economy and reduce productivity,' accounted for only 32%. Chinese citizens showed the highest support (79%) for the establishment of an international regulatory body to oversee international finance, followed by Germany (71%) and France (70%). These countries traditionally have strong state regulation and oversight functions over the market. In the US, however, the support rate was 44%, falling short of a majority.

Meanwhile, Korean citizens showed the lowest support among the 19 surveyed countries for the proposal to establish international regulatory standards for financial institutions. Only 33% of all respondents supported the idea of international standards providing regulatory criteria. It appears that once regulatory standards are established, the decision-making power and discretion of governments over internationally operating financial institutions would be significantly curtailed through international consultations. In contrast, 62% of Koreans expressed support for the idea of establishing and regulating large international financial institutions through an international body.

[Figure 3] Support Rate for Measures to Regulate Overseas Financial Institutions: Differences Between Global Public Opinion and Koreans

[Table 1] Necessity of International Regulatory Standards for Financial Institutions and International Regulatory Bodies for Large Financial Institutions in Each Country (%)