Learning from Biden
The author is an editorial writer of the JoongAng Ilbo.
U.S. President Joe Biden’s expression of thanks to executives from Samsung Electronics, Hyundai Motor, SK and LG for investments in America was a highlight of the last month’s summit in Washington with Korean President Moon Jae-in. The four chaebol, who endured harsh treatment as “past evils” at home, were warmly appreciated in the world’s biggest economy. The government and ruling Democratic Party (DP) congratulated themselves for the “biggest-ever feat” in the U.S. But all the credit should go to Korea Inc. Companies saved face for the Moon administration and helped buttress national dignity.
The development has resulted from the ongoing sweeping changes in the global order from a hegemonic struggle between America and China. The Biden administration has embarked on strategic initiatives to establish a U.S.-led supply chain in the high tech sector, including semiconductors, bio products, electric vehicles and batteries, to rein in China’s tech ascension. The U.S. government is doing all it can to revive the manufacturing sector. Creating jobs at home has become the top priority in U.S. politics. It inevitably had to turn to partnership with Korea Inc., with its cutting-edge manufacturing capacity. Moon was promised a partnership in vaccine production, space and aviation development, and the scrapping of restrictions on missile development in return for $39.4 billion investment pledges by four big corporate names.
Yet the aftertaste leaves a lot to be desired. It is great that Korean companies can partner with multinationals in the U.S. for deeper inroads into the global market. But we cannot but regret that the investments Biden was so delighted with were not made at home. Biden pointed out that the Korean investment would create thousands of good jobs in the U.S. At home, however, college graduates can’t find jobs after writing hundreds of resumes in between part-time jobs. Out of hopelessness and despair, some choose to end their lives. One in four among the young generation is unemployed. Over 2.7 million fell into the category of “being idled” as of February, having given up on job hunting. The Moon administration, which promised to prioritize job creation, has utterly failed in the employment front at home.
Jobs can hardly be created in such an environment. According to a study by U.S. consulting firm AT Kearney, the reshoring index in the U.S. that was negative 13 in 2016 rose to 98 in 2019. During the same period, the index for Korea dipped further from negative 16 to negative 37. More companies are returning to the U.S. but companies in Korea are heading out the door. In the U.S., Ford, GM and Whirpool have shifted their production bases from overseas. In Japan, Sharp, Canon and Honda returned. In Korea, Hyundai Mobis was the sole reshoring case in 2019.
Moon hosted a luncheon for four corporate leaders at the Blue House on Wednesday to thank them for their U.S. investment and contribution to a successful summit. “I know there are concerns that investment in the U.S. can reduce jobs in Korea,” he said. “But when large companies go abroad, they accompany smaller suppliers so they help increase exports in parts and materials that results in job increases at home.”
He is not wrong. But that cannot be the answer our companies want to hear. Moon should have promised to do away with regulations that stifle corporate sentiment, and work to improve the business environment to encourage investment and hiring at home. It’s a pity Biden didn’t teach Moon how to encourage companies to invest.