[VIEWPOINT]Korea is forever blowing bubbles

“Bookstores are filled with real-estate related books and the prices of homes are rising because not only the wealthy, but also actual buyers, look to live in houses where the real estate prices will rise ... The skyrocketing housing prices aggravate social polarization by mass producing people who give up the idea of owning their own home. However, I have a feeling the real estate corners of bookstores and the bubbles in people’s dreams will burst someday.”
This is part of an article written by a Seoul correspondent of the Asahi Shimbun, in the national paper’s Saturday edition. The stories on the Korean real estate market have become an international topic nowadays. Even here in Japan, Korean real estate is a popular topic at year-end parties. Not only at gatherings with the resident members of Korean companies in Japan, but also among Japanese people who know little about Korea, there is talk about the “real estate bubble” of Korea. But real estate may not be the only bubble in Korea.
The owner of a Korean machine component material manufacturing company I met in Tokyo some time ago also told me something significant. He said he was able to line up an investment from a well-known Japanese chemical component material company, but gave up the project right before the transfer of technology between the companies. The reason was simple. Only one year ago, the exchange rate of the Korean won to Japanese yen was 1,000 won to 100 yen, but now it is only 800 won to 100 yen. So, it is more profitable to import finished goods from Japan and sell them in the Korean market. It is said that people no longer pay attention to long-term effects such as the elimination of the technology gap between Japan and South Korea in the component material industry.
“Real estate bubble,” “education bubble,” “foreign exchange bubble.” Why are there so many bubbles in Korea?
However, there are even bigger and worse bubbles in our society. In a way, there is a possibility that all other bubbles could originate from that. That is the “bubble of consciousness” of the Korean people.
Korea’s per capita gross domestic product is around $17,000, but the standards of Korean people’s consciousness seems to be many times higher than that of the Japanese, whose GDP is $37,000. We live on land many times smaller than that of Japan, but our houses are a lot larger. The price of unit floor space of housing in the most expensive residential areas of Korea exceeded that of Japan a long time ago. Japanese private schools are well known for making their students study hard, but they are amazed when they hear of the way cram schools in Daechi-dong in Gangnam force students to study. And for ordinary Japanese people who cherish the importance of their family above their children having good English skills, the term “wild goose father,” who is separated from his family because of his child’s education, only sounds odd.
What about businesses? For the past 51 years since the establishment of diplomatic relations in 1965, the profit from the trade balance between the two countries has increased 250 times. Yet, Japanese companies complain, “We are being pushed aside by Korean companies.” Even though the economy has greatly revived after going through the tunnel of “10 lost years,” the Japanese are tightening their belts saying, “Another bubble might be coming.” If that is the case, is the present address of Korea, which is still in the era of the $10,000 level per capita GNP, correct? Of course, we must not find ourselves satisfied with the present situation just because our national income is low. When we desire more, the road to development will open to us. However, I wonder whether the people’s minds and standards themselves are set at the $30,000 to $40,000 level, not at $17,000.
I wonder whether the “consciousness bubble,” which seldom gets satisfied if the standards required by the people are not met, is a chronic disease of the Korean people. It occurred to me when I watched Korean tourists crowd into designer shops in Tokyo and buy bags of high-priced products, taking advantage of an exchange rate favorable to the Korean won.
As long as there is no “reform of consciousness” that will make people know their own position and act accordingly, it seems that sequels in the “bubble series” will follow continuously.

*The writer is a Tokyo correspondent of the JoongAng Ilbo.

by Kim Hyun-ki