ed Korea and Greece

Nation should learn lessons from foreigners ― correctly

Experts trace many of Korea’s economic problems ― polarizing incomes, a diminishing middle class and dual labor markets ― back to the 1997 Asian financial crisis and subsequent prevalence of neo-liberalistic economic system here. So it is with mixed feelings that Koreans are watching what’s happening half way across the globe nearly two decades later.

Of course, Korea and Greece have quite different economies: one is basically a manufacturing power while the other is based on agriculture and tourism. But the two countries also have a number of striking similarities, such as corruption, widespread tax avoidance, large underground economy, a handful of mammoth capitalists (oligarchs and chaebol) dividing the national wealth among them, and nepotism and cronyism in both politics and the economy.

Koreans underwent the stringent "IMF remedy,” selling off businesses at fire-sale prices, conducting mass lay-offs and letting marginal firms disappear, and completed this process within a few years ― externally. Internally, the aftereffects of the harsh restructuring have continued, even aggravated.

The Greeks seem to be less (or is it more?) fortunate: after five years of belt-tightening enforced by its creditors, they are crying out "no more.” The new Greek Cabinet of the left-wing Syriza coalition is about to renegotiate the harsh arrangements with the "troika” ― the European Commission, the European Central Bank and the IMF ― behind which stands its biggest creditor, Germany.

We hope that Greece’s EU neighbors will give Athens a chance by at least extending the bailout period, reducing interest payments, and eventually, allowing a debt relief.

Many German people might as well complain, rightly, why their taxes should be spent on rescuing foreigners who are paying the prices of their profligate spending in the past. In this era of inter-connected economy, however, there can be no one-sided benefactors and beneficiaries. Few can deny the current German prosperity owes much to the EU system of unified markets and common currency. The extension of bailout package should of course be linked to domestic reforms of the debtor, namely cleaner bureaucracy and better tax payments.

True, no countries can live beyond their means, indefinitely.

However, it is ironic even that this principle applies selectively, as seen in the case of the epicenter of the 2008 global financial crisis ― America.

The U.S. economy ― which caused all these crises with decades of a borrow-and-spend spree ― seems to have fully revived, thanks in large part to the seemingly unlimited injection of newly printed dollars in the form of successful stimulus. Japan has been following the U.S. example, and EU is about to do so. Any economies smaller than these in size and influence, such as Korea and Greece, have no other choices but to avoid becoming the victims of collateral damage ― especially if they cannot help but live within the market-is-everything, liberalization-is-best neo-liberalistic system that best serves the interests of big capitalists.

It will be next to impossible for divided Korea to toy with social capitalism, let alone imagining a leftist party coming to power. That means the Park Geun-hye administration must bet its fate on rooting out corruption, ferreting out high-income tax dodgers, and weakening chaebol’s economic power ― instead of backing away from the meager, fledgling welfare programs. Learning lessons from foreign countries is okay, but they must be the correct ones.