Dear Presidential Candidates,


You need to get this right: it’s the economy. I get why you need to sound presidential and make big promises. I really do. I even understand why you ask each other cryptic questions during debates to bait gaffes. I really do. But please, please. The Korean economy is in trouble and whoever wins this election needs to get it right.

It’s no secret Korea’s largest industries -- electronics, automobiles, and maritime shipping -- are in trouble. A slew of competitors, mostly Chinese, are offering comparable products at lower prices. Even a growing number of my Korean students are buying Huawei phones, shunning Samsung. This cannot bode well.

I assume you know over 40 percent of Korea’s gross domestic product depends on exports. This immediately tells you something important: Korea is on collision course for serious economic damage if decline continues. Even a modest dip over five years could wipe out 5-10 percent of all jobs. If you don’t have an economic adviser telling you this already, please get one.

One of the ideas you float is the notion Korea can lower export dependence by increasing domestic consumption. Pray tell, how exactly would you do this? Korea is already strapped with one of the highest personal debt rates in the world at 91 percent GDP. It’s also strapped with one of the highest corporate debt rates at 172 percent GDP, a quarter of which is trapped in “zombie companies,” with no chance of ever being repaid. Simply put, average Koreans have no money to consume more.

Then comes the idea of raising the minimum wage. Pray tell, where will this money come from? With about 40 percent of all Korean profits being taken by the top 10 percent, it’s easy to see how large companies could probably afford the increase. But what about smaller businesses? What about the corner store already struggling to make debt payments, a store that depends on low wages to turn a margin? Will you tell them to close?

Then comes the idea of creating government jobs. Again, where will this money come from? Sure, you could raise taxes on the wealthy and corporations. If the increases are small, they will probably be sustainable. But what happens if the wealthy and corporations feel threatened by the new taxes? Simple, they will relocate their wealth and corporate centers to other countries with lower rates, threatening overall tax revenue.

The illusion many politicians suffer is that Korean corporations care about the welfare of this country. Let’s get it straight, a corporation, regardless of nationality, is designed for one sole purpose: to make money. If that goal is threatened too much, the corporation will leave, establishing tax centers and manufacturing facilities elsewhere. This has been happening in Korea for a while and has already happened in countries like the US, Britain and Taiwan. A corporation knows no loyalty.

So what’s the solution? Any path to survival will require fortifying export trade. Export dependence is a reality that must be accepted. Pretending it is something to be weaned off in five years or ignored is stupid. For three decades, Korea has been the master of making cheaper versions of existing products. That practice brought unprecedented wealth but, now, China and other countries are stealing the game. Korea must evolve, like Japan and Taiwan in the 1980s and 1990s.

A key ingredient for evolution is not new training programs for existing jobs but a totally redesigned education system that emphasizes innovation and creativity, giving young people the chance to create new products and open new markets. Korea’s current system is the exact opposite. Students from kindergarten through college are spoon-fed information as if everything is black and white. They are never given opportunities to develop opinions, create new ideas, or practice thinking on their own. Even their exams are multiple-choice with a single correct answer. Creativity has no single correct answer.

Work culture is another area that must evolve. It is undisputed fact that young workers are the most creative. Yet, survey after survey has demonstrated frustration from young workers not given the opportunity to express or exercise new ideas. Korean culture plays a critical role in this: Young workers are often looked to as servants by their superiors, existing only to carry out orders. This mentality results in the total destruction of Korean youth potential, trapping it within the confines of old ideas.

Whoever is elected president, I do not envy you. You have a hard job ahead.


By Justin Fendos

Justin Fendos is a professor at Dongseo University in South Korea and the associate director of the Tan School at Fudan University in Shanghai. -- Ed.