Thursday, June 27, 2013

The Minimum Wage: It doesn't help, but actually hurts the poor

On June 15th 2013, the Hankyoreh reported that a group of part-time workers held a protest outside the Korea Employers’ Federation building in Seoul’s Mapo district during the Minimum Wage Committee’s meeting. The protesters called for a minimum wage of ₩10,000 per hour (about US$9.50).


The arguments that are laid out to increase minimum wage rates are all too familiar: low-income earners cannot keep pace with the rate of inflation, people must be guaranteed a livable wage so that they may “live with dignity,” etc.

Although difficult to not sympathize with, these arguments are, in effect, emotional arguments, which, when studied rationally, people will be able to see that they do not achieve their intended goals. In fact, these laws, when put into effect, actually make things worse, especially for those that the laws were designed to help in the first place.

One of the first lessons that one learns in Basic Economics is that the price of goods and services is determined by the level of supply and demand. At some point, the level of supply of and demand for goods meet and this point is known as the equilibrium point. The equilibrium point, ceteris paribus, determines the price at which sellers are willing to supply goods and consumers are willing to pay for goods. If the price is artificially set above the equilibrium point, then suppliers wanting to maximize profits will produce more of the goods but the consumers will not be able to afford them. This leads to a surplus of unsold goods. On the other hand, if the price is artificially set below the equilibrium point, then suppliers who feel that they might not even be able to recover their initial investments will produce less of the goods whereas the consumers, who can now afford more, will demand for more of the goods. This leads to a shortage of goods.

Obligatory economic graph showing supply and demand curves and the equilibrium point

This seems obvious enough and most people can recognize this supply-demand mechanism. This mechanism is what determines the price of everything, including the price of labor.

We don't particularly enjoy thinking of ourselves as economic commodities. We are, after all, human beings; each with our own sets of dreams, hopes, and fears. However, labor is indeed an economic commodity and what we call “wages” is, in fact, the cost of labor.

Going back to the supply-demand mechanism, when we look at a neat economic chart, it becomes very clear that a minimum (known as a price floor in economic parlance) leads to a surplus of unsold labor aka more unemployed people than there would be had there been market-determined wage rates instead.

I shall attempt to explain how this surplus comes about.

Some economists will argue that when wages are artificially raised, businesses will simply ‘shift’ the increased costs to consumers in the form of higher prices, which leads to a general increase in the price of most, if not all, commodities. This is a type cost-push inflation argument. This does NOT generally occur.

Businesses do raise prices when faced with inflation (to explain what inflation really is and its causes requires another very long essay of its own) but for the most part, businesses do not like to raise prices. Raising prices tends to make businesses less competitive, especially if they have to compete with foreign imports or operate within highly saturated markets.

Cost-push inflation is a theory proposed by some economists who subscribe to the idea that businesses maximize their profits by charging highest possible prices (within limits that allow businesses to maximize profits while at the same time remain competitive). This is a fallacy. In reality, businesses do not maximize profits by charging highest possible prices. They do so by minimizing costs.

Let's take Starbucks Coffee, Angel-in-Us Coffee, and Tom N Tom’s Coffee for example. All three businesses sell nearly identical goods and services. Should any one of those businesses raises its prices, there are other coffee franchises (not to mention the thousands of other cafes that exist) that customers can choose to patronize instead. Therefore, in order to remain competitive and maximize profits, instead of charging highest possible prices, businesses have to minimize production costs via wholesale buying of supplies and equipment, outsourcing transportation needs, etc.

Wholesale looks as boring as it sounds

So let’s assume that the protesters get what they want and the minimum wage is raised. Would this affect large corporations like Starbucks or Angel-in-Us? Yes, it would. Unless heavily dependent on machine labor, most businesses almost always cite labor as its biggest cost. However, these large corporations are very efficient businesses.

(By “efficient,” I don't mean that large corporations are somehow more hardworking than small businesses. I mean it strictly in the economic sense of the word, ie. economies of scale aka ability to minimize production costs.)

This means that large corporations can absorb higher wage rates into their production costs and still maintain very high profit margins without having to lay off a significant number of their workers or charge significantly higher prices to their customers. The same cannot be said of smaller, less efficient businesses like, say, your local fair trade-supporting organic coffee shop . That less efficient coffee shop will have no choice but to lay off workers in order to stay competitive against corporate competitors such as Starbucks; and if that option is unavailable, worst-case scenario, it will have to go out of business.

In short, the minimum wage affects small businesses negatively more than they do large corporations. By forcing businesses to pay a minimum wage that might be higher than what businesses can afford, the government will cause more unemployment via foreclosures of smaller marginal businesses and thus compel more people to rely on government handouts, which is the exact opposite of the these laws’ intended objectives.

Unfortunately, the story doesn't end there. As a result of the wage increase, people who work in corporations will be relatively well-off and union workers, whose union bosses always make sure that their members’ wages are almost always placed above the average Consumer Price Index, will also be relatively well-off.

But what about marginal workers? Who are marginal workers? Take your pick: high school dropouts, college dropouts, teen moms, ethnic minorities, immigrants, the disabled, juvenile delinquents, parolees, etc.

For reasons that are too numerous to speculate, whether the reasons are justifiable or not, businesses tend to avoid hiring these workers because of the risks that are perceived to be associated with them. This means that even under normal circumstances, businesses are less willing to employ them and even if businesses do employ them, they would only do so on a lower-than-market wage rate. The minimum wage would, in effect, artificially inflate the cost of hiring such risky marginal workers for businesses, which would transform these marginal workers into unemployable workers, thus inadvertently causing the poor to stay poor. Again, this is the exact opposite of these laws’ intended objectives.

Passing laws with unintended consequences since Day 1

So why do people like those protesters support such laws? There are a number of reasons.

Firstly, people oftentimes make the mistake of equating wealth with money. Wealth is not, in fact, money. Real wealth, all mushiness aside, are the goods and services that we can buy. Money is merely the medium of exchange that is used to buy these goods and services. People make the mistake of thinking that the more money we have, the wealthier we are but this is simply not true unless there is a proportionally greater increase in the production of goods and services that we can buy with that increased income.

If we have more money but still have the same set of goods and services that we can buy, yes, we will FEEL richer but in the long-run, our increased income will not be able to buy more than what reality allows us to buy. In fact, due to inflationary pressures, our purchasing power will, at best, stay the same or, at worst, depreciate.

Secondly, it is my belief that people’s emotional faculties are more highly developed than their rational faculties. History has shown repeatedly that we cannot eradicate poverty by legislative fiat or just by simply throwing money at the poor. Governments have pursued anti-poverty programs for as long as governments have been around and each and every last one of them has failed.  Raising the minimum wage in the past did nothing to alleviate poverty.  There is no reason to believe that raising the hourly minimum wage to ₩10,000 or ₩1,000,000 will alleviate poverty either.

Again, we're not talking about the price of diamonds or fancy sports cars. Those are just things. We're talking about ourselves – humanity – in all our beauty, ugliness, glory, shame, triumphs, failures, joys, sorrows, hopes, fears, etc. In our pride and vanity, both deservingly and undeservingly, we become emotional and spit out half-baked pseudo-economic statements such as “the market-determined wage rate is too low in a free market.”

At the end of the day, labor, which is merely one of the near infinite number of goods and services that we buy and sell, no matter how personal it is to us, is merely yet another economic commodity that must obey the fundamental rule of supply and demand.

I understand where the desire for the minimum wage comes from. We wish to improve our own standard of living and also help the poor. By supporting and enacting these policies, however, we will only hurt ourselves. In order to avoid hurting our own economic interests, we ought to be as rational as possible and instead of judging government policies based on their intentions, we ought to judge them based on their actual results.

If we really wish to improve our economic condition and standard of living, instead of trying to artificially raise wages by legislative fiat, we should have the government intrude less on businesses and leave the free market, aka us, to function on its own independent will.


Tuesday, June 25, 2013

Manufactured Political Scandals

Korea is being rocked with one political scandal at a time lately.

The National Intelligence Service (NIS) is being investigated for interfering in last year’s presidential election in favor of the ruling Saenuri Party. Their crime? Trolling the internet and for getting the police to cover up the incident. Well, it wasn’t vote rigging, but the law is the law. They broke the law and they should be held accountable. Problem solved, right?

But of course, the Saenuri Party can’t just let the law take its course. It has to manufacture another political scandal to distract everyone from the NIS scandal. So why not dig up transcripts that a dead president once said about the Northern Limit Line (NLL) in 2007? Moon Jae-in was President Roh’s chief-of-staff, and so that must mean that Moon must be also willing to give up the country's sovereignty to the North as well.  So why not use this old transcript to tar and feather Moon as well, right?

And of course the NIS, goaded by Saenuri Party lawmakers, would leak those transcripts that are not supposed to be leaked without the majority of the National Assembly’s vote. As long as they’re breaking the law, why not break some more along the way?

The Democratic Party lawmakers, being their usual incompetent selves, are calling for President Roh's statements to be fully disclosed but only after the NIS scandal has been 'properly' investigated.  Politics much?  Instead of simply distancing themselves from a stupid dead president, they decide to double down on a stupid political gambit.  Are they trying to lose again in every upcoming election for the next five years?  As for other progressive Koreans, instead of either distancing themselves from Roh or stating that they disagree with those views, they dig up a letter from about thirty years ago showing that disgraced former President Chun Doon-hwan once sent Kim Il-sung a sweet love letter.

So here’s what we know so far.

The Saenuri Party has once again shown that it is not above bullying a near hapless opposition by manufacturing a political crisis in a poor attempt to distract people from a real legal mess.

The Democratic Party, instead of at the very least distancing itself away from a dead president who didn’t seem to have any moral qualms about selling out the country’s sovereignty, decides to keep digging the hole that they're in.  And some of their supporters think that an appropriate defense is pointing at the Saenuri Party and basically say, “They did it first.”

The NIS broke the law and is still breaking the law. An intelligence service that doesn’t answer to the law and does whatever it wants as it sees fit? What could possibly go wrong?

And of course, there’s the mainstream media! The conservative Chosun Ilbo has long ago lost interest in the NIS scandal. Now they can’t seem to stop talking about what a stupid dead president said six years ago. Even Yonhap, the news organization that is supposed to be neutral is saying nothing about the NIS scandal or the the NLL scandal or Chun’s love letter. The liberal Hankyoreh, on the other hand, seems to be more interested in talking about how President Park ought to take responsibility for the NIS scandal, despite the fact that there seems to be no evidence to suggest that she was actively a part of it and suggesting that all she seems to be doing is thinking of future elections.

And the Hankyoreh seems to want to bring attention to the student-led protests against the NIS. Actually that’s a pretty good thing. It’s good to see the young people of this country stand against political corruption. But of course, what the Hankyoreh does not want to seem to talk about is that the student-led protest isn’t just against the NIS. Like the OWS movement in the US, this movement seems to be all over the place with no fixed message either.

For those who can't read Korean, the girl with the glasses is carrying  a sign that is condemning, besides the NIS' attempt to tamper with public opinion prior to last year's elections, President Park Geun-hye's failed campaign promise to cut college tuition fees by half.

Really? Half-priced tuition? Yes, it was part of President Park’s campaign pledges. But did anyone actually expect her to follow through on that? Why is it that when it comes to politics, people seem to always forget that you can’t get something for nothing? If the government is going to cut tuition costs in half, it’s going to have to pay for it somehow, like I don’t know, through higher taxes? But I am digressing. This is a different topic.


The point is, young, idealistic college types seem to have picked up the scent of blood in the water but they’re not always the most informed group of people, despite what they might think.  Furthermore, by failing to focus on the NIS scandal and demanding different things at the same time, they are playing right into the hands of whoever wishes to discredit them.  It becomes very easy to belittle them by claiming that they are simply children who are angry at everything in the world and are now making a ruckus over the NIS scandal because this was the convenient excuse that they needed to blame everything, except themselves, for their own shortcoming and failures.

And yet, next election season, the same guys will be involved. The Saenuri and the Democratic Parties may change their names yet again but it will still be the same people. The media, divided along ideological lines, will weigh their support behind either the party that wants to fiddle while Rome burns or the party that wants to burn Rome and then fiddle. Young people, fired on by the passion of their ideology, will vote for whoever they think will be the next Messiah, only to become sorely disappointed and bitter working stiffs in a few years. Older people, cowed by their fear of retirement and lack of savings, will vote for whoever they think will fill up their coffers, only to realize too late that there is no money and then die broke.


And as the economy slows down, as inflation threatens to wipe out everyone’s savings, as the credit bubble and the housing market are about to burst, as Korea’s inevitable pension burst threatens to destroy the Korean economy, as the manufacturing industry is about to be overtaken by their Chinese competitors, as an unstable North Korean government becomes more and more unpredictable, we keep distracting ourselves with one manufactured political crisis after another.

Well, I suppose it just goes to show that elections are nothing more than a failure to learn from history.

Monday, June 24, 2013

State Sanctioned Sexual Suppression (Part I: North Korea)

When it comes to North Korea, there is no one that I trust more than Andrei Lankov. His unique experience of having lived for a time in North Korea when he attended the Kim Il-sung University and his erudite analyses of the North Korean government and society offer the rest of the world an insightful look into the North Korea that we seldom ever get to see.

However, his latest essay about sex in North Korea in The Three Wise Monkeys seemed somewhat like a fluff piece, a kind of analysis that anyone could have made with an educated guess. After having read Lankov’s essay, the sexual mores that exist in North Korea, as titillating as it may be, does not appear to bear much difference from other tyrannical nations; be it Saddam Hussein's Iraq or Muammar Gaddafi's Libya.

Unlike other animals that engage in sexual behavior solely for the purpose of producing offspring, people choose to have sex for another reason – pleasure. The things that people pronounce to like are the things that people perceive to be good. As such, what people are sexually attracted to are what people perceive to be good; and in people’s case, what is perceived to be good is the reflection of one’s own sense of values, one’s own self-esteem.

As such, because sex, one of the most personal and private acts that an individual chooses to take part in, is a conscious or subconscious expression of one’s own self-esteem and self-worth, it is, therefore, unsurprising that a tyrannical state that wishes to control every aspect of its subjects’ lives would want to control sex as well. The tyrants themselves wish to be the source of people’s self-esteem. They cannot allow individuals to find their own self-esteem and later to express it through sex.

No tyrannical state government can allow its subjects to have this thought

By extolling ‘family values’ and indoctrinating the idea that sex is something that can be consummated only within a marriage, the North Korean government is trying to indoctrinate the idea that there exists such a thing as a pure Platonic love that is devoid of sexual desire; that sex is nothing more than a biological function, albeit a necessary one, that is needed to produce future revolutionaries and workers. In other words, as far as the North Korean government is concerned, sex is not a personal act between consenting adults who choose to consummate their love, but a state apparatus.

That early communism, while it was still primarily the fancies of nineteenth-century urban intellectuals, placed great importance on gender equality is no secret. However, communism was always the goal that those intellectuals sought. The vehicle that was used to reach that utopia was socialism. The very name of the first ‘communist’ nation of the world was the Union of the Soviet Socialist Republics.


Due to the overuse and misuse of the word ‘socialism,’ socialism has come to mean different things to different people. Especially in the United States and in Europe, when people speak of ‘socialism,’ what they usually mean is ‘welfarism.’ They are not synonymous. Traditionally, socialism is defined as the social and economic doctrine that champions government ownership and control of all property and natural resources.

In other words, a socialist system operates on the premise that a person’s life and his work do not belong to him, but belong to society; that the only justification of his existence is his service to society. As such, society can dispose of him in any way it pleases for the sake of whatever is deemed to be the collective good. Even in a socialist system, however, somebody has to make those ultimate decisions. The very nature of socialism thus gives that individual or individuals who have the right to make those decisions ultimate political power, the power over life and death.

It is, therefore, unsurprising that despite the good intentions of the early urban intellectuals who championed socialism and communism, socialism, when put in practice, attracted some of the worst power-lusters in the history of the world – Lenin, Stalin, Hitler, Mao, Castro, Kim Il-sung, Kim Jong-il, et al.

(Some might argue that Hitler was not a socialist, but a fascist. However, Friedrich August Hayek, the author of The Road to Serfdom, dedicated a whole chapter in his book giving a compelling and intellectual argument that Nazism, indeed, had socialist roots.)


That these power-lusters would put on an air of Christ-like virtue for public consumption but engage in all manners of sexual debauchery in the privacy of their lairs, “just as the first meeting between Kim Il-sung and his future political partners took place in an elite club somewhat similar to the ‘room salons’ of today,” is also unsurprising. After all, as Henry Kissinger once said, “Power is the ultimate aphrodisiac.”

Power-lusters who hold the power to determine when people die act on the premise that this power gives them purpose, glory, and happiness. Similarly, they act on the premise that their sexual conquests of high-end prostitutes give them self-worth. They have upended cause and effect. Instead of the logical outcome of sex being the result, the effect, of their self-worth, they operate on the premise that sex is the cause of their self-worth. They seek to gain value from sex, not to express their value through it.

That they pretend to be above sexual needs when presenting themselves to the public is the logical result of a morality that attempts to disintegrate people – the belief that people are composed of two antagonistic elements: his body, which seeks the sinful depravity of sex, and his soul, which is pure and clean.

As the morality and philosophy that are used to prop up North Korea are based on similar principles that have been used to prop up other tyrannical regimes in the world, explaining the schizophrenic nature of the manner that sex is treated in North Korea comes as no surprise. As such, Andrei Lankov’s essay seems somewhat redundant.

The more interesting aspect of state sanctioned sexual suppression can be found in South Korea. However, that is a story for another time.

Friday, June 21, 2013

Extra Credits for Korean Military Servicemen?

On June 20th 2013, the Ministry of Gender Equality and Family, along with female lawmakers from the ruling Saenuri Party, blocked the Defense Ministry’s latest proposal to give extra credits to male job seekers who completed their compulsory military service. The reason given by the Ministry of Gender Equality was that the incentives that were proposed by the Defense Ministry, if passed, would have infringed on the rights of women and the disabled.

Article 39, Section 1 of the Republic of Korea Constitution states: “All citizens have the duty of national defense under the conditions as prescribed by law.”

In its current interpretation, “all citizens... prescribed by law” means that all able-bodied men between the ages of 18 to 35 must serve in the military. Although women can certainly choose to enlist, women are not subjected to the draft. Whereas men who are conscripted (unlike those who choose to become non-commissioned officers after they complete their minimum military service or those who go through the ROTC route or those who graduate from any of the military academies) start their military careers as privates, women who choose to enlist start their military careers as either staff sergeants or second lieutenants.

I myself was conscripted and served in the Republic of Korea Army from June 2011 to March 2013. For the sake of clarification, I was proud to have served in the Army. Although I still feel like a foreigner in my own country, it doesn’t change the fact that this is, indeed, my country. And as an ardent anti-communist, I was more than willing to do my part to defend my country.

That being said, neither my military service nor the military service that was carried out by any other conscript was voluntary. For twenty-one months (longer for those who served in the past), my life was not mine to live. Regardless of what any conscript may have thought about the matter, it just didn’t matter. From the moment we take our oaths to defend our homeland from enemies, both foreign and domestic, until the day that we are discharged, our lives belong to the government. No one in the Military Manpower Administration asked our opinions on the morality of conscription. No one asked us if we even wanted to be there. We were just there; property of the Republic of Korea government.


During those twenty-one months, the government can do with our lives the way it sees fit. And it does. Although I received differentiated monthly paychecks after each promotion, on average, I earned about US$100 per month. For a country whose economy is as developed as Korea’s, you’d think that the government could afford to pay its soldiers a livable wage. However, the thing about a forced conscription is that the government is not compelled to pay very much. When the choice that Korean men face is between twenty-one months of military service for lousy pay or anywhere between eighteen months to three years in prison for refusing to serve as well as being ineligible for employment almost anywhere for being an ex-con or for being a draft dodger, the rational choice becomes obvious quite quickly.

As such, when I read that the Ministry of Gender Equality blocked the proposal to give extra credits to male job seekers who completed their compulsory military service, I became a little irate.

That being said, I had to recognize that I was thinking emotionally and in my experience, such kind of thinking seldom leads to objectivity.

The Ministry of Gender Equality may have been short-sighted in its rationale that those extra credits would have “infringed on the rights of women and the disabled.” However, that does not change the fact that in an economy that is as patriarchal as Korea’s, women do face far more discrimination based on their gender than any civilized society ought to permit.

Despite the fact that President Park Geun-hye is Korea’s first elected female president, there appears to be little to suggest that women are about to break the proverbial glass ceiling. In August 2011, FinanceAsia published a list of the top twenty women in finance in Asia. There wasn’t a single Korean woman on that list. According to the Korea Times, there are only a handful of female chief executive officers (CEOs) among top Korean companies and half of them are daughters of the parent groups’ chairmen.

Of the three hundred seats in the National Assembly, only forty-seven of those seats are held by women. That is a meager 15.7 percent of the seats, a figure that puts Korea in 105th place in a global ranking of the proportion of women in parliament. This puts Korea with the ranks of Albania, Burkina Faso, and North Korea. Korea has actually gotten worse in this ranking because in 2011, Korea was at 80th place.

Due to the pressure of long working hours and the lack of maternity support, women between the ages of 25 and 29 made up about at 69.8 percent of the workforce in 2010 while the figure dropped to 54.6 percent for women between the ages of 30 and 34. Furthermore, it is estimated that women earn only about 70 percent of what their male counterparts earn.


While it is true that the government has attempted to help women in the workplace by introducing family-friendly policies such as expanding tax benefits, providing longer maternity leave, and establishing more daycare centers for children of working mothers, it hasn’t changed the fact that women compose a smaller and economically weaker portion of the workforce. This is in spite of the fact that Korea is the fastest aging country in the world combined with the fact that its working-age population is sharply declining.

The most likely reasons behind Korean women’s low participation in the workforce, besides being compelled to stay home to raise children, are Korea’s male-dominated corporate culture, which is reluctant to make significant changes to their working environment; and Korea’s Confucian traditions that have promoted deeply ingrained chauvinism.

When the Defense Ministry proposed to give extra credits to male job seekers who completed their compulsory military service, considering the fact that only men must serve in the military, by definition, those extra credits come at the expense of women. Furthermore, considering the unfair social and cultural upper hand that Korean men already have over women, a barrier which at this time seems almost impossible to cross, it would appear that those extra credits would only help to make an unjust social system remain unjust that much longer.

But what of the argument that it is unfair to only subject men to compulsory military service? Considering the fact that countries like Israel and Norway have extended compulsory military service to women, would it not make sense for Korea to do the same? Would that not make things equal between men and women?

I served alongside women while I was in the Republic of Korea Army. I took orders from female staff sergeants, sergeants first class, second lieutenants, and first lieutenants. My company commander, a captain, was a woman. I even had the rare pleasure of meeting a female lieutenant colonel. As those women chose to enlist, unlike me who only served for twenty-one months, the shortest time that one of those women served was a little under three years. The lieutenant colonel, who is still in the Army, has served for almost thirty years.

Each and every one of them commanded my utmost respect and admiration. That these women exist ought to be a constant source of shame for draft dodgers.

That being said, I cannot bring myself to support the idea of forcing all able-bodied women to serve in the military. Korean women already face far too many hurdles in their lives than they ought to. Unless Korean men are willing to exchange roles with the women, cultural and legal discrimination and all, this might be a good time for us to shut the hell up and soldier on.


Korean Taxi Blues: The story where there are no good guys

I enjoy watching movies. In the movies, there are the good guys and then there are the bad guys. The bad guy, as per his character, would go about doing something bad – robbing a bank or harassing villagers. That’s when the good guy appears. Upright and moral, he fights the bad guy, saves the day, and gets the girl. When I walk out of the movie theater, I have a smile on my face and at least for a while, the world is all right.

Unfortunately, the real world isn’t so black and white. And that is especially the case when money, special interest groups, and government are involved. They all like to think that they are the good guys but, unfortunately, that couldn’t be further from the truth.

If the Korean government gets its way, the Ministry of Land, Infrastructure, and Transportation will submit the Taxi Improvement Bill to the National Assembly for approval. If passed, the bill would reduce the number of taxis in Korea by up to 50,000 vehicles over the next five years. The reason that the government gave for this proposed reduction in the number of taxis was “oversupply.”

NO!  Stay with me!  Don't fall asleep just yet.  Economics graphs aren't that boring.  And this one isn't even that hard to understand.  It's really straightforward.  All right, I swear this is the only graph I'll use!  Oh come on!  Really?  You're going to fall asleep and drool on your keyboard?  Oh fine.  Just remember to wipe down your keyboard later.

The government came to the conclusion that there was an “oversupply” of taxis when the Ministry discovered that “the number of passengers has decreased by 22 percent over the last 16 years, from 4.9 billion in 1995 to 3.8 billion in 2010, but the number of licensed taxis has increased by 24 percent, from 205,835 to 254,955 in the same time period.”

(I can’t help but wonder if the JoongAng Daily, from where those numbers were cited, actually meant ‘million’ or ‘billion.’)

The government has its reasons for wanting to eliminate this surplus of taxis. For one thing, the Korean government has been aiming to pass “green growth” policies in accordance with its “Low Carbon, Green Growth” agenda since 2008. A reduction in the number of fossil fuel-burning and greenhouse gas-emitting automobiles would reflect that agenda.

Furthermore, considering the fact that Korean taxi drivers have been lobbying and protesting since late last year to be classed as public transportation workers, which would make them liable to receive government subsidies and benefits, the government must have felt compelled to reduce the number of taxis. That is because the only way for the government to grant all those taxi drivers subsidies and benefits, if the government chooses to do so, is for it to either cut spending elsewhere or to hike taxes; neither of which would be popular.


However, the government was the very reason for the “oversupply” of taxis in the first place. The government’s guilt can be summed up in one word – licensing.

In order to become a legal taxi operator in Korea, be they corporate taxis or individually-owned private taxis, taxi operators have to obtain a license from their local governments. Seeing this as an opportunity to buy votes from their constituents, local government officials issued those licenses indiscriminately.

Due to the fact that Korea has an inadequate pension system, senior citizens, who cannot afford to stay retired and have difficulty finding employment in the corporate world due to ageism, have been seeking non-mainstream employment. As a result, more and more middle-aged men and senior citizens have opted to turn their cars into taxis. It is no wonder that there was a far greater increase in the number of privately-owned taxis rather than corporate-owned taxis.


With amoral politicians willingly selling licenses to whoever seeks to become a taxi operator (knowing all the while that they are flooding the market with an excessive number of taxi drivers, which would eventually drive down taxi fares that would reduce taxi operators’ standard of living in the long run) and middle-aged and older citizens purchasing these licenses to earn their income, it was only a matter of time before the taxi industry imploded.

To add serious insult to what is already a grievous injury, the government is promising to compensate taxi drivers who willingly surrender their licenses up to US$11,400 (because the government, in its infinite wisdom, prohibited taxi drivers from selling their licences to other people through the passage of the Passenger Transport Service law) despite the fact that taxi licenses are traded at up to 70 million won (US$62,000) each.

Former US President Ronald Reagan once said, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’” I wonder if there is a Korean equivalent of this.


As I said earlier, however, there are no good guys in this story. As mentioned earlier, Korean taxi drivers have been lobbying and protesting to be classed as public transportation workers since late last year, which would make them liable to receive government subsidies and benefits.

Although it is true that taxis are ‘public transportation’ as much as buses and trains are, it ought to take a serious amount of fantastic imagination to believe that taxi drivers are public sector workers, aka civil servants. That such a notion was even deliberated in the National Assembly and had to be vetoed by the former Lee Myung-bak administration (only to have taxi drivers seek to have the new government give in to their old demands) just goes to show the sheer depth of intellectual bankruptcy of Korean politics.

That taxi operators as a whole are operating in a saturated market, thus driving down their income, is an undeniable fact. That this was the result of government interference in the industry for the sake of making political gains is also an undeniable fact. However, what is also another undeniable fact is that the only lasting solution to the problem would be to allow the free market to readjust the supply-demand equilibrium.

Yes, that means that those taxi operators who are least successful in their line of business will have to suffer losses and seek gainful employment elsewhere. Demanding government intervention to a government problem, on the other hand, is no lasting solution.

When taxi operators demand that they be counted as public transportation workers, what they are in fact demanding is that taxpayers subsidize their incomes. In other words, they are demanding that Korean citizens help to pay for services that they do not want (as evidenced by the 22 percent decrease in number of passengers) so that taxi operators can continue to operate at a loss by offering cheap fares. They are demanding special privileges at the expense of taxpayers.

I cannot help but be reminded of what Frédéric Bastiat, the nineteenth century French economist, said about government – “The State is the great fiction through which everybody endeavors to live at the expense of everybody else.”

So long as the government insists on interfering in the free market, and so long as individuals seek government help for special privileges, problems of this kind in the taxi industry will not disappear and in the end, all we will end up with is financial losses, frustration, and disappointment.


Wednesday, June 19, 2013

Korea's Plastic Face: The Root Cause

By now, it should be no secret that South Korea holds the dubious record of having the highest number of cosmetic surgeries per capita in the world. According to a widely cited figure by Trend Monitor, supposedly one in five women in Seoul have chosen to undergo elective cosmetic surgery.


Cosmetic surgery is so prevalent in Korea that people refer to the combined procedure of getting double-eyelids and raising one’s nose as “the basics.” Seoul is inundated with casual advertisements for cosmetic surgery; some of them employing “cute” images to perhaps downplay the potentially serious side-effects of some of their procedures, such as liposuction.


There is even a cable television show called “Let Me In,” which is actually a play on words. The Chinese characters used for “Me In” are “美人,” which translate to “beautiful woman.” So translated properly, the show means “Let beautiful women be beautiful.”

In this show, numerous women who are considered conventionally unattractive compete with one another in a series of competitions until all but one are eliminated. The last one standing is then treated to “a full makeover” by the show’s team of experts who slice and dice and nip and tuck so much that when the finalist appears at the end of the show, the woman seldom resembles what she looked like at the beginning of the show. She is then paraded around in front a live audience who ooh and ah and the ‘experts’ pat themselves on the back for a job well done. If you’re wondering how these contestants compete with one another, the rule is simple – the one with the most tragic sob story wins. None of the show’s ‘experts’ ever seem to caution these women or the viewers that what passes for “objective” beauty today will change in the future due to shifting tastes.

This television show, which exploits people’s tragedies and low self-esteem for ratings, is repugnant.

Though there was certainly a time when people were loathe to admit to have gotten cosmetic surgery done, that is not the case anymore. Case in point, a popular K-pop group called “Brown Eyed Girls” made a parody of Lady Gaga’s “Poker Face” with its rendition of “Plastic Face” for SNL Korea where the group members sing about how they are tired of being negatively judged for choosing to go under the knife when so many people choose to do the same. They go on to say that they are happy with the way they look now, that they are more confident than they were before, and that they don’t want to be reminded of what they used to look like in the past.

I have yet to hear any serious Korean celebrity or politician or religious leader suggest that the objectification of women may be based on misogyny.

As the the rest of the world has gotten to realize just how prevalent cosmetic surgery is in Korea, various people have attempted to explain as to why that is so. Some have given an economic explanation. Although the South Korean economy is still widely dependent on exporting manufactured or semi-manufactured goods, Korea is rapidly on its way to becoming a service-based economy. In such an economy, especially one that is as hyper-competitive as South Korea’s economy, looks matter as more employers tend to prefer to hire those who are more aesthetically pleasing. Considering the disadvantage a person would be subjecting oneself to under the circumstances, it would be irresponsible not to get cosmetic surgery done.

Others have given a more social explanation. As the entertainment industry, regardless of country, is mostly dominated by Hollywood, much of the world has been socialized into accepting Eurocentric standards of beauty as the ideal form of beauty, which explains “the basics” and Koreans’ seeming preference for paler skin complexions (though there seems to be strong disagreements about this).

Another interesting theory behind as to why cosmetic surgery is more popular in Korea than anywhere else was given by the Korean in his blog where he stated that the prevalence of cosmetic surgery in Korea is due to Koreans’ tendency to conform with one another. He then said that this tendency can be traced back to Koreans’ homogeneity, which resulted from a long history of agriculture and poverty. He also mentions in the same blog that it is also a result of sexism and hyper-competitiveness. In an earlier entry, he posited the theory that another reason why Koreans are so susceptible to conform with one another is due to having been frequently invaded by neighboring countries. Being alike to each other was a survival mechanism because, to quote the Korean, “...[A]nyone who is different from the Korean way is probably looking to kill the men and steal the women.”

The aforementioned arguments have covered economics, history, sociology, and politics – and they are not incorrect. Though it is unlikely that one single answer is correct, it is more than likely that some combination of those answers explain the prevalence of cosmetic surgery in Korea. However, none of those arguments explains the psychological or philosophical root causes.

In a consumerist society, when there are innumerable businesses that all wish to sell us innumerable goods and services that are mostly similar or identical to one another, businesses have long ago abandoned the idea of simply selling us a product. The most successful businesses are the ones that most successfully sell happiness. The perfume that will drive men wild, the car that will reflect your powerful personality, the wine that peers into your equally sublime soul. The idea that no matter how bad your day has been, with the right perfume and the right car and the right kind of chocolate, you will be happy. It is the same idea behind cosmetic surgery – the idea that with almond-shaped eyes, a taller nose, a more fragile-looking V-line jaw, a bigger bust, a firmer and flatter belly, and lifted buttocks, even you, yes, you will be happy.


I have never met a single person who lived to be sad. When we go to work at our jobs that we have no passion for, when we have to deal with impossibly rude customers who think it is perfectly fine to crush our self-worth, when we raise children who refuse to listen to us, or whatever it is that defines our everyday lives, no one does any of those things solely for the sake of doing them. We do everything with an end goal in mind. That goal – happiness. Seeing how we are all looking for happiness, the job of selling cosmetic surgery is far too easy.

But therein lies the problem – our very definition of happiness, or at least the happiness that we are persuaded to buy. The happiness that businesses advertise implies that happiness is a purely passive emotion. It is our positive emotional reaction to external stimuli. We can’t blame businesses for selling us that notion of happiness. It’s all that they can produce. That is because genuine happiness cannot be produced or sold. Genuine happiness has to be self-generated and is not transferable to others. We can try to brighten other people’s feelings but we cannot make others genuinely happy. Happiness is a choice that each of us has to make. It sounds so simple. Yet it’s one of the most difficult tasks that any of us ever embarks on. I suppose that if it were as easy as it sounds, neither booze makers nor Oprah would have stayed in business for as long as they have.

Because alcohol never has any side or after effects.

Toward the end of the fifth season of AMC’s Mad Men, the show’s main character, Don Draper, says this about happiness: “What is happiness? It’s a moment before you need more happiness.” It is a brutally honest assessment of what happiness is so long as one subscribes to the idea that happiness is nothing more than an emotional reaction to external stimuli. The more one thinks about it, the more one realizes just how succinctly the show’s writers were able to convey the character’s low self-esteem through a single line that doesn’t take more than two seconds to blurt out.

And THAT is the problem with Korean society. Koreans, if I may be allowed to generalize for a moment, are an unhappy lot because of a lack of self-esteem. Koreans’ blind love affair with cosmetic surgery, rabid ethnic nationalism, oversensitivity to non-Koreans’ criticisms of Korean culture, high prioritization of nunchi, adherence to Confucianism – all of it points to one thing – Koreans gain self-esteem and identity through the approval (or disapproval) of others rather than from within themselves. And is there anything quite as fickle as public opinion?


Koreans, both individually and nationally, seek to improve their image because they crave the self-esteem that comes from the approval of others. However, no matter how much others praise Korea or Koreans and shower them with adulation, like Don Draper’s never-ending quest for more happiness, Koreans will never be satisfied. That is because happiness and self-esteem are not the cause, but an effect and the result of a person's sense of his own self-worth.

So the Korean soccer team has performed well. How does that translate to my self-esteem? So Kim Yuna is an amazing ice skater. How does that translate to my self-esteem? So Koreans were the first to build ironclad ships. How does that translate to my self-esteem? So Inchon International Airport is rated the world’s best airport. How does that translate to my self-esteem? It doesn’t.

No matter how many new shiny toys Koreans buy or how much they hope that others’ success would somehow rub off on them, none of it will purchase self-esteem or happiness or admiration or respect for people who never had any of it within themselves to begin with. The new faces that they get after visiting a plastic surgeon may bring them a momentary satisfaction but when the novelty wears off, and it will, it’s only a matter of time before Koreans realize that their beautiful faces are but yet another reminder of their lack of self-esteem.

Seeing how Korean culture itself appears designed to elevate the importance of others’ opinions, which by definition de-elevates self-generated self-esteem, is it any wonder that Korea holds another dubious record – that of having the highest suicide rate among OECD nations?