Korean Job Discussion Forums

[charlieDD]

Watching CNN Thursday or Friday, I heard a guest speaker refer to the Korea-U.S. Free Trade Agreement as " . . in reality a foreign aid package, albeit of a higher or more sophisticated level." He pointed out that South Korea is experiencing growing pains and has high unemployment.

He was commenting on why he thought the deal would be approved by Congress even though there are some strong objections to it by the automakers, farmers and intellectual property rights agencies. He was saying that, in his view, the deal was a political one, not an economic one, for the U.S., a part of its overall strategic efforts to contain China, economically, by keeping its neighbors strong, and to entice North Korea to make capitalistic reforms.

For this reason, he felt Congress would be behooved to pass the deal in the end.

[mack4289]

Sure there's a political element, but making the rest of the world (especially Asia) richer makes sense for America economically. We have an enormous trade deficit at least partly because people in Asia aren't buying enough of our stuff and we're buying a lot of theirs. If they get richer, they buy more of our stuff. Also, their currency appreciates so it's not so cheap to buy their stuff anymore.

Also, a richer, more developed South Korea stands a better chance of figuring out how to handle North Korea. That's a goal China could get behind, too. Yeah China and the US are competing, but we also have a lot of common interests. We both want to either have countries that are rich enough to buy our stuff or have poor countries be stable enough to make our stuff.

[Treefarmer]

i would have thought that this would have been bad for the korean economy since korean companies will have to compete with foriegn companies for the first time, I know a lot of people buy korean cars and TVs in the west now, but they surely won't experience the same market dominance that they have now.

Surely this will mean a lot of the money that was going to the chapbeols (sic) is now going to leave the country. good news for korean consumers, but not for the growth of samsung etc......?

[thepeel]

The theory of comparative advantage tells us that increased trade would be good for the Korean economy.

The FTA is foreign aid. The US uses trade to influence "friends" very regularly.

[Treefarmer]

[thepeel]

[Treefarmer]

[thepeel]

[mack4289]

One of the ways that the argument about free trade is misleading is that people tend to think of wealth strictly in terms of wages, which tend to go down in the wake of increased free trade. But wealth shouldn't just be measured in terms of wages. It's also important how much your money can buy. If inflation is low because of the cheap goods produced by immigrant labor and imported from cheap labor markets, then a lower wage is worth more. Also, if your access to capital is easier, that means you can invest in the businesses that are thriving because they are basically free to keep their costs down and producitivity up however they need to (or you could just start a business of your own. By the way, I'm not suggesting zero regulation, just no unnecessary regulation). What will make Korea and Koreans rich in the future won't just be better jobs, it'll be greater investment opportunities. Right now 56% of American homes own equities. That's up from 15.6% in 1983, almost a 400% increase (http://www.ici.org/pdf/rpt_05_equity_owners.pdf see page 9). The same will happen in Korea if it opens its economy more. For right now, 15.2% of Korean workers own stocks, similiar to the US level in 1983 (http://joongangdaily.joins.com/article/view.asp?aid=2875114). So don't think the health of an economy begins and ends with wages. There's a lot more to it than that.

In open market economies, intelligence matters more and more when it comes to making money. It's easier to get poor but it's also easier to get rich. Tell your Korean friend that their historic emphasis on education will serve them well in adapting to living in an more open economy. But their emphasis on rote learning will have to be lessened. We're already seeing a push for that here and the demands for education reform will only get stronger when it becomes more and more obvious that it's not enough to know information if you want to compete, you also have to know how to evaluate it.

[Treefarmer]

i agree with all of that, my friend isn't korean, he's english and not pro korean at all, he's just come from thailand and he is kind of disgusted with the korean view that they are all of a sudden a first world nation and able to look down on countries they were poorer than or as poor as 20 years ago just cos they have all these exporters who are non competitive, and the important stuff like education and infrastructure are in reality pretty crap (they just put more wasted hours in) just cos they have this cycle of looking inward and creating a superiority complex

my view is that korea is not ready to compete with who it want to compete with (similar sized nations such as japan and EU countries) because they haven't sorted the country out yet, but i do think they won't do it until they get the kick in the balls they need. the hagwons need to be regulated, the chapbeols need to be forced to compete and stop their mafia shit, and schools, hospitals, roads etc need to be sorted out, i am very impressed by how korea has managed to get rich, without excluding it's working class, more than european countries i have experienced tbh, but at the same time that is surface level, and if it all goes to shit the working class will be excluded again

as you can tell i'm a little confused

[mack4289]

Yeah, the problem with the "they're not ready" argument is it doesn't account for the fact that the only way they'll get ready is if they have to. If they're able to keep raking in cash without changing anything, why would they change?

The other problem with the "they're not ready" argument is it promotes a very low opinion of the people who supposedley aren't ready. I notice this with a lot of anti-free trade people- they think only businesses and the rich can adapt to changing circumstances. I think all of us would be surprised by how rapidly people can adapt when they need to.

[Treefarmer]

[pkang0202]

Look at what the Koreans have done in the past 50 years.

Koreans are used to adapting quickly. FTA will be good for both Korean and US consumers. Consumers win, the businesses win.

[jvalmer]

[mack4289]

Your concerns are valid ones, Treefarmer, but the only way it's going to change is if the benefits of changing obviously outweigh the drawbacks. And don't think that if Korea doesn't open its borders things will stay the same as they are now. They will get worse. Foreign investment will go down, their export markets will get taken by countries more willing to compete globally.

I don't know much about Korea's leaders. Roh seems like kind of a crackpot but he made a difficult, courageous and correct call in pushing for the FTA. I think the increased wealth that comes with open borders will make Koreans more likely to demand more from their leaders. Some people might be skeptical of this. "Look at the USA, with all their free market rhetoric, and they elected George W Bush." Fair enough, but remember I said more likely to demand responsible leaders. It doesn't work perfectly, but it works better with open borders than with closed ones.