A demonstration of passivityThis past Saturday, I spent hours photographing some of the 14,000 peaceful antigovernment protestors. It took me back to my experiences at the demonstrations over the lifting of the ban on U.S. imported beef after a case of mad cow disease in 2008. In both cases, there was much going on, beyond the apparent demands.
Both demonstrations were largely made up of nonviolent protests. The ambiance was more similar to a people’s festival than anything else. Yes, there was the mishmash of antigovernment demands, ranging from calling off government-written history books to opposition to the rice market to mocking the president.
But beyond all that messaging was a profound sense of powerlessness within the middle class about their future. Young people - and now middle-aged families - are anxious about their economic wellbeing.
Too many young people are unable to get meaningful or any kind of full-time employment. Part of the problem is that there are too many college-educated young people for the market to absorb. But another part of the employment dilemma is that there are too few jobs in general.
For example, according to 2013 OECD data, South Koreans have a 61 percent labor participation rate, similar to many industrialized nations. However, the self-employed represent 27 percent of the population and 15 percent of South Koreans work part-time. Which means, if one multiplies 61 percent times the number of full-time, employed population, it comes to only 25 percent of the population working full-time.
Given that the vast majority of high school graduates go on to some kind of secondary education, there are too few jobs being offered by employers for the number of college graduates.
The lack of jobs forces many young people to borrow from their parents’ savings and pensions to start their own businesses. And like elsewhere, most first-time businesses fail. Unfortunately, that ends up destroying middle-class wealth with little to be shown for the efforts.
What we are seeing in Korea is happening in various forms around the world. The symptoms vary, but the fundamental problem is similar. That is, even with economic recovery, wealth is largely flowing to the very top of society without commensurate job creation.
Last year, Thomas Piketty rocked the academic and business world with his best-seller, “Capital in the Twenty-First Century.” Recently in the French newspaper Le Monde, that economist spelled out how income inequity is a major driver of Middle Eastern terrorism.
Petroleum-funded oligarchies, backed by Western interests, have enriched themselves without adequately sharing the wealth with most of their citizens. The net results include unemployed, increasingly frustrated youth who feel they have very few options in life. When economic prosperity is viewed as unobtainable, radical options become more appealing.
Ultimately, Picketty argues the war on terrorism cannot be won militarily or even politically. It must be won economically with a greater distribution of wealth to the point that most young people who prepare themselves for the future are rewarded with reasonable prospects for employment or means of earning incomes.
While the masked Korean demonstrators are not similar to the Islamic State, as suggested by President Park, to a lesser extent they share frustrations with many of their Middle Eastern counterparts. The employment game seems to be rigged to allow only about a quarter of graduates to get a decent job and an even smaller percentage to be given meaningful career paths.
So, does this mean that Korean politicians need to find some kind of “soak the rich” type of wealth redistribution scheme? No, not even if such an idea was feasible.
A pragmatic approach may be to stand back and look at this economy’s legal framework. Like all countries, there are several inconsistencies in the laws and regulations. Unlike many advanced nations, the problem is greater as a result of the country’s rapid development.
The chaebol operate by their own rules. While despising the rich for doing so, most Koreans accept that reality. It’s impossible for anyone or any business to be 100 percent compliant with all the laws and regulations. People are forced to be mindful of what are community practices, which constitute a largely but not entirely, law-abiding society.
Until there is some kind of top-to-the-bottom review of all of the nation’s fundamental laws, effective and consistent compliance and enforcement will remain virtually impossible. Without enforcement, well-meaning laws and regulations will fail to achieve their ends.
One may argue that such a review would be gargantuan and virtually impractical. Indeed, to do so would be of historic proportions. But let’s consider where we are today and why many laws and regulations fail to achieve the common good.
Without some kind of legal reform, Koreans at all levels will continue to operate by their own rules. Even the wealthy risk their long-term welfare by allowing the middle class to deteriorate. It is on this important but shrinking class that their prosperity depends.
Except for a few hotheads, Korean demonstrators have remained peaceful. But without greater opportunities for middle class youth, no society can expect social harmony.
Be it major legal reform with consistent enforcement/compliance or perhaps by some kind of major economic restructuring, all other attempted remedies are likely to be ineffective.
A strong middle class is essential for economic and social stability. This is true anywhere in the world, and South Korea is no exception.
*The author is a long-term resident of Korea and author of two books on doing business, including “Doing Business in Korea: An Expanded Guide.”
by Tom Coyner