Why South Korea isn’t having a crisis…

Came across the Sovereign Man’s nostalgia trip about mid-1990s Seoul (Hat-tip to See-tell). I will spare you readers the history lesson (if only because The Korean has done an entire series of articles on it anyway) but suffice to say, many Koreans went bankrupt and the entire system, as occurred in Indonesia had to be reformed. Flash-forward a decade and a half later South Korea continues to grow steadily, with low debt and an armory of good guns, good companies and good TV shows (Note: I am saying good in terms of soft power, this is not reflective of taste). Why is that? Well, according to sovereign man it is because Korea did the following:

When everything collapsed, the policy prescriptions from the World Bank and IMF for Asia’s sick economies was to:

1. HIKE interest rates,
2. CUT government spending,
3. Further deregulate, liberalize, and open their economies to foreign investment to attract capital;
4.  And let their zombie banks FAIL.

Though, they experienced brutal recessions after swallowing this tough medicine, the two countries which carried out these policies to the fullest extent:  South Korea, and Indonesia, are today among the most successful and dynamic economies in Asia, and the WORLD.

Hmm… Not quite what happened. South Korea is ranked at 31 with a score of 69.9 in the World Heritage Foundation rankings (Japan is at 22 with 71.6 and Taiwan at 18 with 71.9). This is of course not taking into account the social malaise and other issues that have plagued Korean society.

However, it is still higher than Spain (36), Belgium (38) and France (67). Which countries are currently at the centre of a financial crisis? The short answer is: work ethic.

With few exceptions, the Club Med and the EU just doesn’t work. Yes, it has a tourism industry, yes it has wine and yes the size of the grey economy is large but it doesn’t bring real value-added income or sustainability to the populous in the long-term. If one wishes to see this in action, go to Nice or Cannes. The food is terrible (with the exception of La Voglia in the old town), the service is even worse and it is overpriced.

In contrast let us magically fly to Seoul, Busan (and speak Korean) and try the whole thing again. Competitive prices, competitive service and a can-do attitude. There is that understanding that if you work, you can get something. Now that is not to say that South Korea doesn’t have it’s own problems, notably a rising elderly poverty problem as well as a over-reliance on Chaebol, but there is a general understanding that work is a necessary component, not some entitlement culture that plagues the unions and the political system has conjured up as a mechanism for getting elected rather than the demonstration of any real concern.