Thursday, November 27, 2014

The Trouble with Non-Economists talking about Economics, Part 2

The other day, a Facebook acquaintance linked a post on his Facebook page, which showed up on my news feed. It was a link to a website called Korea Exposé. The title of the article was “Disposable Workers of Hyper-Capitalist Korea.”

It is no secret that (fairly or unfairly) Korea is known as being relatively unsympathetic to workers' rights (see here). So I agreed with the author before even reading his article that Korean workers could be treated better than they are treated. But is Korea hyper-capitalist? It is certainly news to me.

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So I gave it a read. Not too surprisingly, the author, Se-Woong Koo, started off his post by providing a list of workers being abused by their supervisors, employers, and customers. It's always a good idea to start a blog post with an emotional punch to the readers' guts. It makes sure that the readers stay interested and keep reading. Perhaps I should start doing that more often, too.

The author then says that during a discussion among his friends, many of whom are academics specializing in Korea, as they tried to figure out the root cause of all this violence against workers,

...the disagreement came down to whether we should primarily fault capitalism or Korea’s culture and recent history of colonialism, militarisation, and entrenched biases against manual labour.

Who in Korea has not had this exact same conversation multiple times? I (and I am sure that countless others) have engaged in, as well as watched, this same conversation so many times that it has become a cliché. If learned academics who specialize in Korea are having the same conversation as the rest of us laity, then I do believe that the debate over whether or not higher education is necessary to produce well-educated citizens is over.

But it gets better (or worse, I suppose) when the author says

It is true that capitalism in an unregulated form fundamentally dehumanises individual workers as nothing more than providers of labour, for which wage is seen as sufficient compensation.

That's quite the powerful statement – dehumanize. When I saw that, I was reminded of an old joke I once heard. A man meets up with an old friend whom he has not seen in decades. As the friends are exchanging pleasantries, the friend asks the man how is wife is. The man answers, “My wife? Compared to what?”

Well, let's for a moment put aside the fact that capitalism does not actually dehumanize people because capitalism is much more than simply about mass production, but about mass production to satisfy the needs of the masses (in order to make a profit). Also, let's, for the sake of argument, assume that Korea is indeed a hyper-capitalist society.

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Are Korean workers worse off today than they were, let's say, forty years ago? How about thirty or twenty or ten years ago? Or how about a hundred years ago? I am going to go out on a limb and say that anyone who is going to say that Korean workers were better off in the past than they are today is going to have a very difficult time trying to come up with an objective, backed-up-by-data answer.

To his credit, the author does add a definition for hyper-capitalism. He says:

It means that South Korea, as a rapidly developed economic powerhouse, has embraced and refined capitalism to the point unseen in other countries, a fact noted with no small amount of pride.

You will note that this is yet another assertion that the author makes without giving any sort of evidence. Especially considering the fact that the Korean economy bears some resemblance to the Japanese economy, it is quite unlikely that Korea's hyper-capitalism has been “unseen in other countries.”

Then there was this nugget:

But the term also implies that something is off with the South Korean version of capitalism, which has thoroughly succeeded in inculcating conviction in money as the singular measure of good both public and private, unencumbered by state regulation or respect for basic rights. Being the ‘purest’ form of capitalism, it also represents the worst form of the ideology imaginable.

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Whether or not money is considered to be “the singular measure of good both public and private” is debatable. Although money is certainly very important (my favorite moral defense of money came from Ayn Rand's AtlasShrugged when one of her heroes, Francisco D'Anconia gives a speech that became popularly known as “the root of money” speech), there seems to be no evidence to suggest that money is “the singular measure of good both public and private.”

But that's a philosophical discussion, which could go on forever without ever changing any of the debaters' minds. The real debate that we have is with the author's assertion that Korea's version of capitalism is “unencumbered by state regulation or respect for basic rights.”

Right now, as of this writing, Korea has 14,975 government regulations on the books. Two laws that I can think of that the Korean government recently passed are the Retail Structure Improvement Act, which prevents telecommunication companies (under the threat of criminal prosecution) from subsidizing their customers any amount more than ₩345,000 and the Book Discount Law, which prevents retail bookstores from selling books at a discount any higher than 15%.

Although it has not been made into law just yet, the International Direct Purchase Law is a proposed law, which will regulate how much, how, and what individual consumers will be able to purchase from international websites such as Amazon or eBay.

So, where is the “unencumbered by state regulation” and the “'purest' form of capitalism?”

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As for the author's comment about Korea's hyper-capitalism being “unencumbered by respect for basic rights,” though it's true that there have been many instances of Korean workers being abused, it's quite telling that he neglects to mention that Korean labor unions are some of the most militant in the world (see here, here, here, here, and here). Perhaps it could be argued that many business leaders have no respect for basic workers' rights. But that is entirely different from saying that workers have no rights.

And finally, the author says

the Park Geun-hye administration’s current motto is “Creative Economy”, a thinly veiled euphemism for deregulation.

For proof of President Park's love affair with deregulation, he provides a link to the Korea Herald, where President Park championed deregulation as the best way to revitalize South Korea's economy and create jobs.

Admittedly, there are fewer government regulations now than there were at the beginning of the year. There are currently 14,975 regulations while there were 15,282 regulations in January.

However, we also have to look at the net effects of President Park's policies related to the economy, all of which are intertwined. Aside from the three laws that I already mentioned, the Korean government and prosecutors have also been using Kakao Talk logs to monitor people, which has done more to damage the company than its competitors ever could, and expanding the welfare state. The government is also currently discussing providing free homes for newlywed couples as well as other welfare programs.

On the one hand, President Park's “creative economy” is trying to make it easier for businesses to lay off workers, while on the other, it is also slowly but surely removing the disincentives of staying unemployed via welfare programs.

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Considering the potential net effects of the “creative economy,” it might be far too early, and also too much of a stretch to claim that it is a euphemism for deregulation.

At the end of the blog post, it says that the author, Se-Woong Koo, earned his Ph.D. from Stanford University. It does not say what he got his Ph.D in. However, something tells me that it was not in economics.

1 comment:

  1. You're right, I found the following with a google search.

    Se-Woong Koo received his Ph.D. from the Department of Religious Studies at Stanford University in 2011.

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