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Cover of ”Exploring the Inequality Society through Keywords”

For a while, there was a lot of talk about South Korea having become an advanced economy seemingly overnight. This was a self-diagnosis of our society today, based on the astonishing economic growth we’ve achieved and the success of the Korean Wave.

Indeed, a look at the numbers alone suggests the talk about being an “advanced” nation is not too far out of line. But if we peel back even a single layer of that society, we can only concede that things are not at a point where we can simply bask in contentment.

Cho Hyeong-geun’s book “Exploring the Inequality Society through Keywords” undertakes an in-depth assessment of the health of Korean society — and the diagnosis it presents is much more worrying than commonly discussed.

The book consists of seven chapters, the first of which is titled “A World of Worsening Inequality.”

Polarization can be seen happening today on the global level. The conservative revolution took with it a social system “centering on a robust middle class, where upward mobility was possible in exchange for hard work under a system of fair opportunities.” The business class’s wealth has rapidly ballooned with the privatization of public assets, rising asset prices, tax system changes, and other factors.

Meanwhile, the coinage “precariat” has been used to represent the working class. It describes a class of people whose living situation has been rendered unstable by the virtual or total lack of job security.

The subject of “wealth inequality” came to widespread attention thanks to the work of Thomas Piketty, but these days it has only deepened around the world. The higher Piketty’s beta (β) ratio (capital divided by income) is, the more inheritance value rises relative to current labor.

As of 2019, the Bank of Korea estimated a β ratio of 8.6. According to one study, it was up to around 11.4 by 2020.

Comparing this with values of 5.8 in 1995 and 7.5 in 2010, we can see that wealth inequality has continued to deepen in South Korea. As causes for this, Cho points to the high net assets of the government and the high ratio of land asset prices to national income. This means we live in a rich country with severe real estate inequality.

How do we solve this? Cho says the answer lies in politics.

Historically, the decrease in the US’ β ratio came after it enacted the Social Security Act in 1935 and imposed a 94% tax rate in 1944 over income exceeding US$20,000. As we all know, the US and the rest of the West enjoyed a golden age of capitalism in the era that followed.

Cho also points to agricultural land reforms as another example of economic growth being achieved through political interventions to ease wealth inequality.

When North Korea moved in 1946 to implement farmland reforms of uncompensated confiscation and free distribution, South Korea was obliged to take action itself. In our case, we adopted an approach of compensated confiscation and distribution at a price — a system that reached completion shortly before the Korean War broke out in 1950.

Those measures were a crucial factor in the North Korean forces’ failure to win the support of the farming base in occupied territory during the war. As inflation reached extreme levels, it became impossible for previous landholders to buy back their land.

Once the farmers had acquired some wealth, the associated feelings of stability, hope and ambition translated into improved agricultural productivity and a growing zeal for education. As a result, South Korea was able to rapidly achieve economic growth alongside Taiwan and Japan, which had also successfully implemented agricultural land reforms. Other countries that had failed — namely South Vietnam and the Philippines — were left out of the pack of “Asian tigers.”

Cho lists numerous problems that remain to be solved for South Korea as an “unequal advanced economy”: irregular employment, industrial accidents, rental housing issues, the minimum wage, the need for anti-discrimination legislation, and refugee issues, among others.

Is there a way out for us from this hellscape spawned by “profit-based logic that grows inequality” and “dog-eat-dog ambitions”? Cho stresses that this can only be achieved when the have-nots stop squabbling among themselves and start uniting and working together.

By Lee Kwon-woo, book critic

Please direct questions or comments to [english@hani.co.kr]