by JOHN FEFFER
South Korean President Park Geun-Hye (in green jacket) PHOTO/Wikimedia
The Korean economy has hit the skids. Could this be a moment for a radical rethink?
Over the last five years, South Koreans have worried that their economy has slipped deeper into stagnation. Growth rates have hovered between 2 and 3 percent. Consumer spending is weak, and household debt has risen to record levels. Because global demand has fallen, the world is not buying Korean exports as eagerly as before.
This is not just an economic crisis. It is an identity crisis.
South Korea has long been identified with rapid economic growth and a corresponding ppali ppali spirit. Koreans can take a lot of pride in their country’s amazing trajectory from the devastation of the Korean War to a place among the top industrialized nations of the world in the space of a single generation.
It’s no surprise, then, that Korean politicians are searching for a magic formula that can restore economic health to the country in the same way that those small bottles you can buy at a Korean store promise to “boost vitality.”
But such a cure may not exist. It’s very possible that Korea’s miraculous growth rates are a thing of the past, never to return. It’s not about a flaw in the Korean economy or in Korean thinking. Rather, developed countries all over the world – Japan, Europe, the United States – have settled into a similar malaise.
According to economist Robert Gordon, the era of dramatic growth is over. For the United States, that era ended in 1970 after an unprecedented series of inventions.
“Manual outdoor jobs were replaced by work in air-conditioned environments, housework was increasingly performed by electric appliances, darkness was replaced by light, and isolation was replaced not just by travel, but also by color television images bringing the world into the living room,” writes Gordon in his new book, The Rise and Fall of American Growth. “The economic revolution of 1870 to 1970 was unique in human history, unrepeatable because so many of its achievements could happen only once.”
The data supports Gordon’s initial conclusion, that the hundred years between 1870 and 1970 were truly a time of miracles. His second conclusion, that this age of miracles will never return, is considerably more controversial.
His argument consists of two parts. First, a set of unique inventions made it possible for an extraordinary increase in human productivity. People could make more things, make them faster, and put them in the hands of more people. Farmers became factory workers. Industrial workers became white-collar workers. Office workers became virtual employees. Most importantly, these developments can only happen once.
Second, these innovations not only spurred dramatic economic growth, they pulled huge numbers of people out of poverty and created an enormous middle class. We continue to innovate. But new technologies are more likely to create jobless growth, for instance through automation.
This slowdown in economic growth has obviously affected countries at a different pace. The United States began to see signs of stagnation beginning around 1972. Then Western Europe began to slow down. Japan wouldn’t hit the wall until 1990.
Now it’s South Korea’s turn. Perhaps there is some consolation for Koreans to realize that their economic woes are part of a larger pattern. But it doesn’t make the unemployment, stagnant wages, or rising debt any easier to swallow.
So, that’s the diagnosis. What’s the prescription?
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