South Korea: the corruption that built its economy (2017) | Hacker News Reader

South Korea: the corruption that built its economy (2017)

iias.asia

76 pointskrn63 comments

> In most places in the world, corruption tends to be growth-reducing, but this is much less true in East and Southeast Asia, where it tends to be growth-enhancing.

This is a pretty astonishing claim. The richest place in Asia is famously corruption-free Singapore, and it's blatantly obvious that corruption has held back neighboring countries like Malaysia (billions embezzled from 1MDB), Philippines, Indonesia, Thailand etc.

the claim is also ridiculous. the special benefits given to a few "capitalist" firms could have been done without kickbacks to politicians...

The competition to export more in order win more govt support seems to have been the key. It doesn't require kickbacks to politicians, either.

there's a reason that almost every Korean movie or TV show has an underlying theme of extreme economic inequality

Ah, it similarly explains why Gangnam Style was such a big hit compared to that artist's other works. My understanding is that Gangnam is a very affluent area (neighborhood?), especially as compared to some others, and the song was intending to speak out in some way against this inequality.

(I don't remember where I heard this, so take it with a grain of salt; I'm not sure how accurate it is.)

Most don't recognize the visual references but every scene in that video is from a famous movie, show, or popular music video but remade with garbage blowing instead of snow or whatever. So it ends up being sharp criticism of society as a whole.

Sort of?

It mostly refers to people who act/look rich but aren't. Which is why its called "Gangnam Style", buying/doing shit to look affluent like people in Gangnam.

Korea has so much that BS, its extremely obnoxious.

Not necessarily. I have been told that the stuff that gets play over in the US is a pretty niche category in Korea.

The TV most people watch is highly commercialized.

What ever it is, Squid Games was much appreciated.

there is an enormous amount of korean stuff to stream on US services, most of which originally aired on Korean TV and are widely regarded as the most popular korean shows of all time

They'd have to have a second, huge, secret TV industry for the stuff we have available here to not be representative.

See also: Samsung's Dangerous Dominance over South Korea

https://youtu.be/oL0umpPPe-8

That channel seems to specialize in clickbait. Are they merely stating the obvious, that Samsung makes up a huge % of their GDP? It starts with a comparison in land area to a US state.

How exactly is it clickbait? The channel has generally quite well researched essays and the titles usually literally describe what's in the video, for example "The Incredible Logistics Behind Corn Farming" is about the logistics of corn farming.

This video is absolutely not just stating the obvious size of Samsung in the way you suggest.

One of the comments:

> Real Life Lore, Polymatter and Wendover Productions have a >20% influence on the gross domestic production of YouTube's world politics explanation videos, and their coalition should really be kept in check to prevent excessive dependence /s

I think I've watched enough of these for the year. I was just hoping to get some insight without watching the video. Ah well.

That article makes me think that corruption is (at best) a zero sum game, but maybe in an export oriented economy the losers could be outside the country.

> The Park government provided these capitalists promotional privileges—particularly cheap credit from state-owned banks and monopoly privileges in local markets—to grow their firms

Sounds to me like the losers were Koreans whose businesses were crushed by an unequal playing field.

Had there been true competition, who is to say there wouldn't be more thriving and innovative businesses in Korea?

Certainly smaller businesses in Korea do poorly. Maybe there is a generation of startups we are missing.

Samsung though, is leading the world in a number of areas. It makes processor chips, it makes flash memory. I think it's the only important cell phone brand other than Apple that isn't based in China. It wins in areas where (say) Sony fails.

People in the US might ask why there are no heavy forges in the US but there are heavy forges in Korea? ASML not withstanding, Europeans would like to have an electronics industry. Anybody who thinks they'd like to subsidize some business and turn it into a world beater would probably be envious of Korea.

That said, I understand that many young Koreans perceive the country to be "Hell Joseon" and immigrate to places like the US where they perceive you can get ahead if you don't get hired by Samsung. Contrast that to Japan which is said by some to be economically and culturally stagnant but doesn't have a mass exodus.

The strange thing with Sony is that they don't even seem to try in the mobile market. For years they're putting out phones that are overpriced, have very poor software support duration and focus on gimmicky features like 4K screens that are almost never actually used as such.

As a result they occupy only a tiny niche of the market but they keep going on as they are. Like they don't even care.

It's a shame because they made great stuff. My Z4 Tablet with its Bluetooth laptop dock is the most useful mini laptop I've ever had. Never saw a successor though :'(

That seems likely, on the other hand, without putting their thumbs on the scales, it's possible that no company would have been a break-out like many of the Chaebols.

So maybe the question is: level playing filed where everyone has equal access to capital and labor but achievement is limited, or do you want an uneven playing field but which results in economic juggernauts which leave small businesses behind?

> Had there been true competition, who is to say there wouldn't be more thriving and innovative businesses in Korea?

Given that Korea has outperformed most or all comparable nations, that seems implausible.

The losers are inside the country, but a rising tide allegedly lifts all boats, and the drag of corruption on a quickly-growing economy still results in net growth. And when there's net growth, and a lot of it, the sore losers can be brushed aside.

The secret to a quickly-growing economy is government investment in infrastructure, grueling work hours in high-margin industries[1], and an export focus. And, if Korea[2], China, and Vietnam are any indicators, a brutal and repressive dictatorship can't hurt.

[1] Your country won't get rich growing peas.

[2] Pre-1987.

Why did this "build" or strategy for lack of a better word work so well for Korea? They mention other countries that have adopted this model but haven't seen the phenomenal success Korea has seen over the past decades. What was the secret sauce?

There are different types of corruption. Access and speed money actually boosts development like a steroid. Just like a steroid you reap the benefit early but eventually it becomes corrosive. You can hide a lot of problem as long as the growth rate is high.

It mentions Indonesia, Thailand, and Malaysia. Indonesia and Thailand have both had recent civil wars and failed peaceful transfers of power. It presumably helps South Korea quite a bit to have a more or less constant US military presence for 70 years. Malaysia seems to be doing pretty well. If you eliminate Singapore, Hong Kong, and Macau, and only consider countries that aren't just a single city, it's only behind Taiwan, Japan, and South Korea for East Asian GDP per capita. Average 6.5% annual growth for 50 years.

Well, land reform helped create a broad consumer class but at the same time subsidized industries were required to compete in international markets early to keep their privileges so they didn't get complacent. In places like Indonesia industrial policy was more a matter of sending money to the allies of those in power. Industrial policy can work to encourage growth but only if the government really wants it to and is competent in how it carries it out.

I think the book on development I'd most recommend on development in general is Gambling on Development but for what exactly South Korea did How Asia Works has the details.

Thanks for the reading material recommendation! Very interesting topic

Are both the books approachable and enjoyable to read? I find that sometimes this stuff can be factual and content rich but not very digestible.

Thanks for reccos

How Asia works is very approachable. The author was a business reporter so he tells an interesting story with the countries covered

There are probably several factors at play:

1. Countries in colder climate are generally more economically prosperous. South Korea is colder (though hot in summer) than S/E Asian countries.

2. South Koreans have always been overzealous about education.

3. South Korea is ethnically more homogenous than S/E Asian countries. People have been comfortable with idea of putting interests of the large group (i.e. nation) before that of the individuals.

I'd be interested in any research that backs up your point 1. Russia is not all that economically prosperous. Neither is Mongolia.

Singapore and Taiwan are very much so. And Singapore is right on the equator.

I thought it was a fairly well established link, but sure.

https://web.stanford.edu/~mburke/climate/BurkeHsiangMiguel_F...

https://www.dailymail.co.uk/news/article-8477297/Why-colder-...

russia is one of the wealthiest nation on earth and their economy is one of the strongest in the world because not related to inflated bubbles like tech or healthcare but to raw materials, natural resources, engineering, steel and other hard materials production.

the war was supposed to sink them according to european leaders and yet they are stronger than ever.

Grade A copium here

copium of what? europe is sinking thanks to biden policies and russia is thriving.

Do you live in bizarro world? Get all your news from Facebook or telegram?

just look at the euro/ruble please and try to explain that we are winning. this war sole purpose is to destroy europe. america doesn't care about russia they care about a weakened europe.

Seek mental help

Yeah, all those dead soldiers and destroyed war machines, that’s all good for Russia… somehow.

Environmental determinism hardly stood the test of time, as far as theories go.

I'm curious to know more. Sure, they're not well-tested theories and never will be, given their nature, but broadly it seems to track. The powerful forces of climate and geography on a people's culture and the effect of that culture compounded over generations seem at least an adequate explanation between the wealth gap of equatorial countries and those in colder climes.

but the wealth gap only started in the last 600 years or so. why didn't it "track" the other 6000 years between 5000BC and 1000-1300AD when science, philosophy, and literature were dominated by the mesopotamians, egyptians, indians, chinese, ummayads, persians, byzantines, ottomans?

Most of the societies you mentioned formed in places with four seasons and winters that you couldn't grow anything in, so you're actually furthering my point. The theory being, of course, that such climates force people to need to prepare to survive through the winter and that forcing function has positive effects on their advancement.

Perhaps it's more accurate to say that this factor is conducive to forming empires, not just cultures. Of the four classical cradles of civilization (China, Egypt, India, Mesopotamia), only half fit this winter criterion, so it's clearly not a prohibitive factor for the formation of a civilization; perhaps just for its technological development and dominion over others.

The article lists Thailand, Indonesia, and Malaysia. Thailand is doing very well. Malaysia has done ok. Indonesia has ups and downs, but is better than you might think. And don't forget that China has been very successful building societal wealth amid corruption so deep it is almost official. The model has other successes.

But the one thing South Korea had over all of them: the USA. The ROK was a US garrison state, and a military dictatorship well into the 80s. They were a major staging ground and supplier for the Vietnam war, and billions of dollars flowed through companies like Hyundai, growing them into industrial giants. The USA was even directly paying ROK soldiers who participated in Vietnam. The USA was eager to maintain a toe-hold on the Asian continent, and provided active support. When the "Arsenal of Democracy" needs a local supplier, you can create a lot of infrastructure.

The support from the USA/NATO also included friendly trade deals despite the political cost domestically -- remember Toyota and Hyundai gutting the fat and lazy big-3 in the 80s? The cold-warriors wanted to showcase the capitalist power of wealth creation for the region to emulate, in contrast to the creeping communism of the post-war, anti-colonial era. The USA was much more invested in the success of ROK than the average independent Asian country.

As for Indonesia, geography is much of it. It is the 5th most populous country in the world, over thousands (and thousands!) of islands, speaking hundreds of languages. Just transportation and coordination costs can explain much of their troubles industrializing. Also note that they were never occupied by the Americans during WWII. Instead, they were forced to fight a bloody independence fight against the Netherlands which didn't make any friends in NATO. They then dabbled with the Soviets which certainly didn't help them long term economically, and it meant that they were frozen out of the post-war alliances. The USA was happy to leave a brutal dictator in place as long as Suharto kept the communists out. Social and industrial development of the bulk of Indonesia served no cold-war aims.

- The Vietnam War and the ‘Miracle of East Asia’ - https://instruct.uwo.ca/economics/317b-570/keunhoparkclayton...

The economist had an article on how Indonesia is the next economic powerhouse https://www.economist.com/leaders/2022/11/17/why-indonesia-m...

Unfortunately that seems less likely given their recent turn toward Islamic fundamentalism. IMHO, anyway.

Unfortunately a lot of authoritarian/fascist regimes have done phenomenally well in the past decade - China, Russia and India is slowly following that path. As much as I hate it, and west touts democracy as a necessary catalyst for growth, the past decade as shown otherwise.

> But the one thing South Korea had over all of them: the USA. The ROK was a US garrison state, and a military dictatorship well into the 80s. They were a major staging ground and supplier for the Vietnam war, and billions of dollars flowed through companies like Hyundai, growing them into industrial giants. The USA was even directly paying ROK soldiers who participated in Vietnam. The USA was eager to maintain a toe-hold on the Asian continent, and provided active support. When the "Arsenal of Democracy" needs a local supplier, you can create a lot of infrastructure.

Funny how I have read the same argument regarding Japan and the Korean War... (I'm not saying it is wrong, just that I find the similitudes interesting)

The USA spent $168 billion dollars (roughly a trillion 2020 dollars) on the Vietnam war. There was enough money for both Korea and Japan (and the Philippines, and Thailand, and ...)

https://www.ide.go.jp/library/English/Publish/Periodicals/De...

The United States (and via extension, Japan) adopted a favorable trading relationship with Korea.

Sometimes the US wants to strip-mine a country of its natural resources and use it as a source of cheap labor, in which case it will not adopt a favorable trading relationship. This makes export oriented industrialization an uphill battle.

Sometimes it wants to build up its industry so that it is militarily self sufficient. Japan and Korea fall into the latter camp.

South Korea have a fairly direct threat of invasion that at least somewhat limits how dysfunctional the elites can be without the risk of facing consequences themselves. Taiwan, Finland, Israel and so on.

1. American presence in the DMZ is an immediate no-go when it comes to a plausible 'threat of invasion'.

2. Even if the US were not involved - If you think Russia invading Ukraine is a debacle, don't think too much about what North Korea trying to invade South Korea would look like.

Because South Korea is successful at what it does. If South Korea looked like Thailand it would be a different story. And that is part of why it doesn't.

The Russian invasion of Ukraine is actually a good example. Just the other way around. What is happening to Russia is exactly what happens when you neglect your industry and population to the point that you no longer have enough of an advantage in equipment or people willing to fight. Something South Korea can't afford.

Ukraine as of the start of 2022 was significantly less developed than Russia. It was the poorest country in Europe, even behind other victims of Russian aggression, like Georgia and Moldova. [1] [2]

It just has the notable advantages of:

1. Being incredibly motivated to fight an existential defensive war.

2. Being the recipient of every surplus NATO armament under the sun. Its industrial capacity for war-making isn't located in within its borders.

It's true that Russia has significantly neglected its industry, but Ukraine has... Done the exact same thing. In a worse way, even - as despite inheriting a lion's share of Soviet industry, it didn't do anything with it.

(And to cycle back to North Korea, I'd like to point out that the economic rot in it is so deep, it's not even capable of feeding itself.)

[1] https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Eu...

[2] https://en.wikipedia.org/wiki/List_of_sovereign_states_in_Eu...

> American presence in the DMZ is an immediate no-go when it comes to a plausible 'threat of invasion'.

They’ve literally murdered people in DMZ and have sent special forces multiple times to assassinate presidents. Not to mention artillery fire on a village fairly recently.

Nowadays no one thinks NK could invade but it was certainly a plausible threat until 80s.

North Korea

-- we have an above the law but not above the law mentality here - can get "help from the government" etc - get away with a lot - as long as you act within the general interest of the country - otherwise you "get caught" - go to jail - its weird but it works --

If this was an unfriendly regime, this would be rightly described as fascism. This is basically a textbook example.

They also steal/stealing black hiphop and other music from around the world specially black.

Having lived most of my life in a very corrupt country, my view is that corruption is to society what cancer is to the body.

the park’s regimes(both father and daughter) are overthrown by chinese influence. The socalled leftist governments are consists mostly a mix of north korean spies and ccp agents. If you look closely at what happen after Park’s depature, the country is in shambles

Can you expand on this or share some links/reading materials?

that's a good thing

South Koreans have realized that their alternative choice is just as corrupt, if not more.

Some of the things that have happened since:

- President Moon's right hand was convicted for opinion rigging leading up to the election by overseeing a bot farm.

- The country's chief prosecutor resigned after the administration's desperate attempt to cover up their own corruption, joined the opposition party, won the primary to become their presidential candidate, then actually winning (!) the election (as absurd as it sounds, this is roughly equivalent to Merrick Garland joining the GOP, getting nominated as their candidate, and winning the election).

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