Dividing the Proverbial Pie

“Globalization has grown the proverbial pie, but it is a rich minority that gorges on most of it.  It may even be argued that the layman’s portion is shrinking every day.  The working class, the impoverished, the young, and now, even the middle class are struggling to make ends meet.  Hearts are filled with dread at the thought of this rampant raging beast.”

These comments are not mine — nor are they the words of any American liberal, OWS protester, or leftist professor.  They are words I heard in South Korea, in a speech by Chung Sye Kyun, Member of the National Assembly, former international business executive, former Minster of Commerce, Industry and Energy, and prospective candidate for President.

I had expected that South Korea, a flourishing Asian Tiger, would show me that things were different from conditions back in the U.S.  Surely in South Korea, with its Asian family values, and its status as a rising economic star at the forefront of the benefits of globalization, workers would be sharing in their country’s economic progress?   I could not have been more wrong.

Paper after paper at the conference I attended addressed a rising tide of inequality sweeping across Asia — in India, in China, and in South Korea, inequality of income and wealth has skyrocketed.  In Asia, the financial crisis of 1997-98 was the trigger for the divergence of worker and ‘top 1%’ fortunes.  The crisis forced Asian companies to slash payrolls and benefits.  But while the crisis soon receded, the new labor agreements did not.  Even the major conglomerates stopped offering the high-wage, high-benefit, stable employment jobs that had been the core of the Asian economic miracles.  Instead, they hired back and hired new workers under different rules, calling them ‘irregular’ or ‘temporary’ or ‘contract’ workers.

“The new generation is facing new challenges and hardships.  They are well educated and highly motivated, fit to lead and contribute to society.  But the economy does not welcome them with adequate and decent jobs.  Even for those who do find jobs, more than half are subjected to unstable serfdom as temporary hires. With low security and even lower wages, today’s young people do not even dare dream of committing to marriage, let alone raising children.  But now globalization has taken a turn for the worse — economies are still growing, albeit slowly, but job growth is stagnating.”   — this is more from Chung’s speech.

To be sure, the prosperity and influence of Korea is manifestly growing.  When I first visited Seoul twenty-five years ago, it was a semi-prosperous manufacturing city, full of places to buy cheap goods and with a few luxury hotels for foreigners.   By ten years ago, Seoul had become a modern Asian capital, full of skyscrapers and corporate headquarters, its streets thronged with locally-produced cars.  But compared to Tokyo or even Shanghai, it lacked style.  Fashions were out of date, women looked drab, the focus was still on following the U.S. and Japan.  But this year, Seoul seemed to have taken first place.  The degree of world-setting style on display was remarkable.  From the now sleek and dazzling Hyundai coups, sedans, and touring cars that out-style those from Germany or Japan, to women wearing the most fashionable jewelry, clothing, make-up and hairstyles, to elegant new shopping concourses stacked with the ultra-hip and costliest goods (Harry Winston, not just Tiffany) Seoul seemed to have undergone a major make-over.

But as in the U.S., that manifest luxury consumption is just one-side of the coin; the other is a working population that is struggling and whose expectations are continually racheting downwards.

Clearly, we cannot blame inequality in the U.S. just on American tax policy, or Wall Street bankers, or the policies of Bush, Obama, or any other President.  Something is going on that is world-wide, and occuring in small booming Asian countries as well as in the U.S. or Europe.  Wealth and income are becoming concentrated in a minority who are benefitting from the global extension of markets for their goods and skills; while the majority with nothing special to offer find themselves in what Chung calls ‘hypercompetition’ from similar workers in countries around the world who are desperate for work.

Some people may say that is just the normal operation of markets, and who are we to make moral judgments if some people bid up the price of Manhattan apartments to 8 or 9 figures and adorn their bathrooms with gold fixtures, while school districts around the country cut vocational training and raise class sizes from lack of funds.  After all, from the markets’ point of view, there is no difference between one family being able to afford four grand houses and two yachts and fifty families being able to afford modest homes or condominiums without being foreclosed.

But can government perform even its vital functions if the majority is too poor to pay substantial taxes?  Can a democracy remain a democracy if most people question whether the government responds to them, or operates simply to benefit the wealthiest portion of society?

Americans are starting to ask these questions, but we are not alone in doing so.  Not just Greek protestors, Spanish Indignados, and British looters, but even Korean politicians, are singing a similar tune.

 

 

 

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About jackgoldstone

Hazel Professor of Public Policy at George Mason University
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