Philip Tose, the chairman of what was until last week Asia's largest investment bank outside Japan, was one of the biggest fans of what came to be known as "Asian values." In 1992, one of the boom years, Mr. Tose extolled the virtues of "strong government -- some would call it dictatorship," which "delivered much better economic growth." His Hong Kong-based Peregrine Investments Holdings went into bankruptcy on Monday because it had placed too large a bet on one of those strong governments, Indonesia.
Mr. Tose was not alone in his preference for unrepresentative governments admired for their "efficiency." Other prominent Asian and Western business leaders shared his admiration for authoritarian countries such as Indonesia and China and mocked the "inefficiency" of democracies like India and the Philippines.
It is no accident that Indonesia is now suffering the most from the Asian financial flu. This malady's causes? Despotic rulers who learned to cash in on absolute political control, investors who relied on cronyism instead of market forces, and a lack of accountability and common-sense financial controls.
Last week, under International Monetary Fund pressure, President Suharto finally signed on to economic reforms, including dismantling the monopolies controlled by his friends and family.
Let's hope that the region's economic reckoning and Indonesia's disastrous path will help put to rest the myth of "Asian values": that democracy and human rights are "Western" concepts inimical both to Asia and to economic growth.
Now across Asia, people increasingly see the advantages of having open and accountable government and are indeed beginning to demand it. The countries that have weathered the Asian financial storm best are democracies -- Taiwan, the Philippines and Japan. And those nations that are in the process of recovering, including South Korea and Thailand, have done so only after jettisoning their corrupt former regimes through a democratic process.
The first lesson from the Asian crisis is that a government that is not answerable to its people will not be likely to have transparent markets or the institutions required to impose economic discipline to overcome financial chaos.
A second lesson is that guanxi, or connections, are never a substitute for the rule of law. Why is it a shock to discover that rulers in Indonesia, Thailand and China have taken advantage of the wealth created by foreign investment and their own people to line their pockets?
It is important for the United States and the West to seek not only economic restructuring from Asia's teetering autocratic regimes, but substantial political reform as well. A failure to diagnose the need for democratic and accountable government will bring only more economic misery.