9:   South Korea Rejects Globalization

‘The Editor’

It is becoming deep thumbs down for Globalization and Deregulation even in countries that were supposed to be profiting from out-sourcing from the most advanced countries. Our witness is The Wall Street Journal (18/11, "Push for free markets divides South Korea" by Gordon Fairclough): "While South Korean officials and their counterparts from other Pacific Rim nations extol the virtues of open markets here, many high school students across the country are getting a different message from teachers warning of the downside of globalization.

"South Korea’s largest teachers’ union has urged members to tell their classes that the free-trade agenda espoused by the Asia-Pacific Economic Cooperation group, now holding its annual summit here, can increase poverty and inequality and hurt the environment. A video on the union’s website designed for use as an instructional tool, blames APEC for problems ranging from crime and household debt to unemployment and war. Ominous music accompanies pictures of homeless people, slums and footage of fighting in Iraq. Exactly comme chez nous.

"‘This is the new capitalism,’ the narrator says. The union’s views, and a chorus of criticism that they have generated, are part of a larger debate in South Korea over how much economic openness is desirable and necessary. How South Korea, East Asia’s third-largest economy, answers that question could have a great impact on the policies of developing countries in the region and elsewhere.

"Among the most controversial issues is how quickly the country should liberalize the trade in agricultural goods. Farmers have staged violent protests and one died after setting himself on fire at trade talks in Mexico. Koreans are also worried about the role and influence of foreign capital in the economy.

"South Korean President Roh Moo Hyun has said he wants APEC leadership to consider the consequences of their pro-market policies when they meet today and tomorrow. ‘The more you emphasize a business-friendly environment, the more the social gap tends to widen,’ Mr. Roh told reporters this month.

"After decades of protectionist policies, South Korea opened its economy in desperation after the late-1990s Asian financial crisis drained the country’s currency reserves and brought many of its biggest banks and corporations to the brink of insolvency.

"Foreign capital flooded in, shoring up the economy, and trade barriers started to fall. International investors now own more than 41 per cent, by value, of the shares traded on the Korea Stock Exchange, up from 22% in 1999. Foreign ownership of Samsung Electronics and some other blue-chip companies is even higher.

"Since the country’s economy has recovered, the South Korean public is showing less enthusiasm for overseas capital. ‘Why do we need foreign capital?’ said Kim Wan Soon, the Korean government’s foreign-investment ombudsman. He said he is ‘apprehensive that hostility is rising toward foreign capital. This backlash has been fuelled in part by media accounts of large profits earned by foreign investment funds that took stakes in South Korean banks at fire-sale prices during the financial crisis and recently sold them. At the same time, workers are feeling the pinch as more Korean businesses move jobs overseas.’

"South Koreans are, on the whole, sceptical about globalization and distrustful about business. Japanese respondents were even more unenthusiastic about globalization. Both countries are export powerhouses, but only in recent years have they opened their domestic markets, under pressure from trading partners. David Richardson, regional director of consumer-research firm, TNS, said that just 27 percent of Koreans said they viewed globalization positively, below the Asian average of 38%. One reason, he said, is increasing competition from China. ‘So many jobs can easily move to China.’"

It is becoming crystal-clear that Deregulation and Globalization was a con job cooked up by Washington to serve the unrelenting expansion needs of Wall St. Could we be heading toward an escalated version of the 1929 crash? And we have buried far more deeply than the regulatory six feet how we got into that fatal decade that brought on World War II, and how we finally got out of it.

The Editor

– from Economic Reform, December 2005