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Eureka: Fixing the South Korean economy Eureka: Fixing the South Korean economy
by Akli Hadid
2018-09-02 08:42:02
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Korea's main problem is that there are too many mid-career level workers that is workers who save a lot of money, don't spend a lot of money and don't consume. Raising the minimum wage or lowering working hours will not make mid-career workers spend more or save less.

Basically how the cycle goes is there are too many mid-career level workers that is workers who are from 30 to 50 years old, who save money for retirement, who are either married with children or single. They spend about 1,000 dollars a month, just enough for food and clothes, and spend the rest of the time working or watching television.

skoreco01_400The cycle goes workers save too much, they don't spend enough money, company sales go down, companies don't hire new workers and force workers into retirement as soon as they can, companies don't make solid profits, the financial market does not receive enough funds, young workers don't have enough funds to start a business, and when they start a business profits lag behind, and the vicious cycles goes on and on.

So how do you fix this. Let me repeat. Companies don't make enough profits. They don't hire workers. Workers have no disposable income because they are not hired. Companies and workers don't put enough money in the financial market. The financial market cannot fund new projects. More workers don't have a job. More companies sell less. More companies hire less. The financial market has less income.

So how do you fix this. There are basically two ways you can fix this.

1.      Bring lots of migrant workers, allow them to choose an optimal job. Migrant workers make money, the spend money, companies start selling again, companies hire Korean and migrant workers, Korean and migrant workers spend more money, companies make more money, hire more people, and pay their workers better wages, the financial market has available funds again and can fund creative projects, and the cycle goes on. Migrant workers get married, have children, become mid-career level workers, and you either bring even more migrant workers, or if migrant workers have a lot of children their children solve the mid-career level crisis.

2.      You rely on exports. You don't bring migrant workers. You produce textiles, cars, semi-conductors, cell phones, food products, construction sites, services and you export them. The problem is you have a lot of competitors for exports, countries that import your products also want you to import theirs, exports depend on a very volatile international market, and Korea has been trying to brand products when branding products is the company's business, not the government's business.

So for the first case scenario, Korea is a militarized society and most migrant workers come from tribal societies. That can lead to blatant racism, migrant worker abuse, human trafficking, unpaid wages, and a myriad of social problems that  result from migrant workers and their children not fitting into a country where they are de facto second-class, third-class, or fifty sixth-class citizens. Korea being a militarized society, it is fertile ground for ultra-nationalist parties, including parties who would round up migrant workers and deport them to concentration camps, hard labor camps, or gas chambers.

For the second option, which is the export option, exports are becoming increasingly difficult. In tribal countries, army generals want their share of the cake, and countries like China are famous for providing a lot more generous kick backs, and for being more pleasant with the army generals in general. For free societies, they want the same easy market conditions in the Korean market that they have in their own European or North American markets.

The danger would be to treat migrant workers as commodities or economic agents whose only role is to help the GDP rise. The other danger is for Korean CEOs to set export targets that are so unrealistic workers have to traffic the numbers so CEOs don't fire them. 


    
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