Anxiety attack

By John Burton

Korea is beginning to confront an issue that is likely to dominate politics for years to come: a generational battle between young and old in one of the world’s fastest aging societies.

Demographic trends are working against Korea’s future prosperity. Korea now ranks as the world’s 13th largest economy in terms of purchasing power parity. By 2030, it will have slipped to 14thplace and then to 17th by 2050 (where Australia is now), according to an estimate by PwC, the international consultancy. The main reason for Korea’s slowing growth and weaker economic performance will be a steady decline in the country’s working age population.

Fears that the standard of living could deteriorate over the next 40 years already seems to cause angst among the nation’s youth. For the first time since the end of the Korean War, the present generation of Korean university graduates cannot expect to have a better material life than their parents.

The latest manifestation of such worries is the recent “How are you all doing?” poster campaign that began last month at Korea University and then spread quickly across the Internet and in public places.

The posters addressed a range of political grievances against the Park Geun-hye administration from the partial privatization of KORAIL and KEPCO’s construction of power lines despite local opposition to the alleged interference of the National Intelligence Service in the 2012 presidential election and the pro-government slant of the mass media.

But beyond these surface issues were deeper concerns that the Park Geun-hye administration represents the interests of the older generation, particularly those 50 years of age and above who were her biggest election supporters, while ignoring the desires of the young.

The opposition to the Park administration should be seen not just in ideological terms, but economic ones. There is a growing sense of frustration and disaffection among Korea’s middle-class youth. They face the prospect of low-paying jobs and high housing costs after spending too much on education.

What is interesting though is that while students criticize the Park administration for turning back the political clock and allegedly returning to the dictatorial ways of her father Park Chung-hee, they appear unwilling to abandon some of the aspects of the industrial policy that the elder Park created.

The student support shown for striking rail workers dismissed over their opposition to the partial privatization of KORAIL reflects worries that the withdrawal of state financial support for public services, such as transport and healthcare, will not only raise prices, but also eliminate coveted and secure government jobs.

The irony is that the economic reforms that the Park administration is, albeit rather fitfully, trying to pursue would actually benefit the nation’s youth in the long term. Economic liberalization and reducing government intervention is needed to overcome the threat to national prosperity posed by the demographic time bomb.

The traditional policy of top-down control by government ministries and the chaebol is proving less and less effective in generating economic growth. Rather it is a bottom-up sense of responsibility by a well-educated workforce where Korea’s future lies because it promotes a more creative and entrepreneurial economy.

The messages delivered by the poster campaign are diffuse. They support social liberal causes such as gay rights and warn of the creeping authoritarianism of the Park government. They also display a sense of individual responsibility in that they are signed rather than being posted anonymously.

But there is also an element of suspicion lurking in these poster messages about globalization and the market economy, the two main factors that are responsible for the country’s economic miracle. There appears to be little acknowledgement that government’s role should be shrunk, leaving it to the market to allocate resources more efficiently.

The privatization of state companies, saddled with the huge debts, would go a long way to make the domestic market more competitive and actually reduce prices instead of raising them as bureaucratic deadwood is cut away.

It will also be up to this generation of university graduates to accelerate the country’s growth of services industries, which currently suffer from an abysmal productivity rate, as Korea’s manufacturers face increased competition from China and elsewhere.

Korea has many of the ingredients for renewed economic dynamism, starting with a highly educated and hardworking population and a technological infrastructure that is the envy of the world, with the world’s fastest Internet speeds for example.

The problem is that these economic resources have not been put to their proper and most efficient use. The balance between group responsibility and individual creativity has not yet been reached. It is this dilemma that lies at the heart of the anxiety facing Korea’s young: a yearning for individual freedom but also worries about losing a sense of social security that comes with a well-ordered society.

John Burton, a former Korea correspondent for the Financial Times, is now a Seoul-based independent journalist and media consultant. He can be reached at john.burton@insightcomms.com.