Yesterday I attended Daniel Tudor’s discussion about his book Korea: The Impossible Country. It was a pleasant event hosted by Barry Welsh of 10 Magazine. I haven’t read Mr. Tudor’s book so my points are based on what he said yesterday. I recognize that 1) many authors are more eloquent and thoughtful in text than in off-the-cuff discussions and 2) it is better to read the book, so I am being clear that my comments are in response to what he said yesterday.
My main criticisms and comments:
1) Like Andrew Salmon and others, Mr. Tudor makes the comparison of chaebol with government. Mr. Salmon even compares the sons and daughters of the Korean chaebol with the children of the rulers of North Korea, I don't recall now if Mr. Tudor did the same. That example…I don’t know why people think there is anything witty, profound or logical with comparing the sons and daughters of business people in a democratic country with criminals in a totalitarian country using the force of blunt political power to oppress people. In America, people also make a similar comparison between big business and government, so this is not just a slap at people here making the comparison, I'm sure the point is made around the world.
A. I have yet to hear about a businessman arresting anyone. Samsung and Apple have “market power” granted to them by consumers, but they don't have police power. They need government for that. And government does often abuse its power to grant economic privileges to companies through crony capitalism.
B. If you think big business has the same power that government does, then look at how quickly business people get in line when government targets them. Even Bill Gates hustled to Washington when the federal government targeted Microsoft during its heyday with possibly violating anti-trust laws.
C. Parenthetically, I’ve heard some South Korean progressives compare Park Geun-hye to her father (Park Chung-hee, dictator of South Korea from 1961-79). Lee Jung-hee, the progressive who just dropped out of the race, said a similar thing. The fact that she was participating in a debate should have been proof that her statement was nonsense—during Park Chung-hee’s reign, I doubt there there were presidential debates before he suspended the constitution and canceled elections in 1972 and she would have been under house arrest if not executed if she criticized him the way she has been criticizing his daughter.
2) Mr. Tudor strongly stated more than once that he is critical of the chaebol and said he was “in favor” of punishing chaebol behavior, such as price fixing, circular trading.
A. I am for competition, not particular competitors. Like Mr. Tudor and others, I am also suspicious of chaebol, but instead of such “punishment,” I support eliminating subsidies, tax breaks, and favoritism for business. There may be occasional exceptions, but they would be few and far between, with clear sunset deadlines, and such strict scrutiny that most business people wouldn't bother trying to get the exemption.
B. To truly "punish" chaebol, I’d suggest unlimited free trade. Any power that any company has would be undercut by having competitors from around the world. In my experience, most of the same people criticizing big business for having too much power are also opposed to allowing in more competitors.
3) Mr. Tudor stated that “welfare populism” has some ‘policies that can help the economy.’
A. Many South Korean progressives I've talked to point to the case of Sweden as the model. What I have noticed is that those people want Sweden’s socialism (welfare state, high taxes) but not its capitalism (unlimited free trade, wide-open free market).
B. “Economic democratization” is a vague word like “fair” that sets the stage for a lot of political mischief. For example, in the name of “economic democratization,” regional governments across South Korea have mandated that large grocery stores shut down every Sunday, the national government is still trying to block some businesses from entering some sectors in order to protect mom-and-pop stores and has also tried to force businesses to share their profits with others.
C. So that means that good-natured and well-intentioned people like Mr. Tudor will look at policies that look reasonable, then a few years later they will be writing articles about the failures that were predictable from the start.
4) Mr. Tudor stated that North Korea is more capitalist than South Korea.
A. I heard a North Korean refugee say the same thing at a conference last year. Another questioner beat me to the punch by asking him to elaborate, the North Korean refugee then pointed out that he had to apply for various licenses, pay health care taxes and a host of other things imposed by the various levels of South Korean government, whereas in North Korea, pretty much everything is illegal but people just need to bribe someone to get into business.
B. Lawlessness is not the same as capitalism. It isn’t surprising Mr. Tudor would state that North Korea is more capitalist considering that his good friend Chang Ha-Joon holds the incredibly stupid position that there is no such thing as a free market and that the free market doesn’t exist because there are regulations on it. Having said that, I do have many criticisms of too much government intervention into the economy.