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Table of Contents

 

- Korea Focus - March 2015

 

- Politics1. Violence Intolerable for Any Ideological Cause

2. Korea-Japan Relations Must Break Free of the Shackles of the Past

3. Reform of 'Indiscriminate Welfare' Comes before Tax Hike Debate

4. Korea’s Public Diplomacy Needs Better Coordination and Strategies

5. Unbelievable Stories about Presidential Funeral Flowers

 

- Economy1. Economic Democratization of Two Presidents

2. Winning the Hearts and Minds of Chinese People

3. From ‘Incomplete Life’ to ‘Complete Life’

4. Another Protest from Salaried Employees

 

- Society1. Child Abuse at Daycare Centers Requires Gender Perspective

2. Retirement Tsunami of the 386 Generation

3. Society that No Longer Needs Patriots

 

- Culture1. Royal Palace Kitchen Restored after 100 Years

2. Legoland or Gojoseon Land?

3. Conflict Creeps into the Busan International Film Festival

4. Retro Fever Sweeps Young Generation

5. Zero Budget for Art Works at Cheong Wa Dae

 

- Essays1. Economic Effect of the Reunification of the Korean Peninsula

2. Trends in Economic Happiness and Policy Implications

 

- Features1. Neighbors Help Siblings from North Korea Enter Seoul National University

2. ‘Seals Embody a Person’s Fate’

 

- Book Reviews1. Destruction of Humanity in North Korea More Serious than Food Shortage

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2. Life Seen through the Studies of Joseon

 

- Interview1. Kim Soon-kwon: “I was Cheated Out of Payment for Fertilizer and Used by the Politicians.”

 

- COPYRIGHT

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 - Violence Intolerable for Any Ideological Cause

 - Korea-Japan Relations Must Break Free of the Shackles of the Past

 - Reform of 'Indiscriminate Welfare' Comes before Tax Hike Debate

 - Korea’s Public Diplomacy Needs Better Coordination and Strategies

 - Unbelievable Stories about Presidential Funeral Flowers

5

Violence Intolerable for Any Ideological Cause 

U.S. Ambassador to South Korea Mark Lippert waves as he leavesSeverance Hospital in Seoul, after a five-day stay following surgery forknife wounds inflicted by a lone assailant.

 EditorialThe Seoul Shinmun 

The attack on U.S. Ambassador Mark Lippert in the very heart of Seoul yesterday

(March 5, 2015) once again reminds us of the distress caused by the territorial

and social division on the Korean peninsula. Police will attempt to expose all the

details surrounding the incident. Yet, it is obvious that ideological animosity

fomented by 70 years of division has been raised to a new level, whether it was

part of a conspiracy or the act of a lone representative of a radical group.

 

Kim Ki-jong, who was arrested at the scene of the attack, claims to be the leader

of a group called “Our Land Dokdo Islands.” He told police that he staged the

attack because he opposed the “war game” that Korean and U.S. forces are

currently conducting. Echoing North Korea`s claim, he blamed the annual Key

Resolve/Foal Eagle military exercise for derailing Lunar New Year reunions of

families who are separated in the North and South.

 

Kim`s Internet blog “Sinchon Urimadang” contains quotations from North Korean

propaganda such as: “The Sollal (Lunar New Year`s Day) reunion of separated

families was foiled by the joint exercise”; “(The South Korean regime) remains

silent on Japan`s claim of collective self-defense while accepting an indefinite

postponement of (the return to Korea of) the U.S. wartime operational control”;

and “The Korean peninsula is again frozen because of the Key Resolve/Foal Eagle

Exercise.”

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There also is the assertion that every problem between the two Koreas, including

the implementation of the South-North agreements on June 15, 2000, will be

resolved if and when Seoul lifts its economic sanctions imposed on the North

following the sinking of the Navy`s patrol craft Cheonan in 2010.

 

There is nothing new about progressive activists calling for an end to the joint

South Korea-U.S. military exercise and the lifting of the sanctions on the North. It

is not correct to accuse anyone with such demands of being subservient to the

Pyongyang regime. But there is a vast difference between demanding such soft

approaches toward the North and attacking a foreign envoy.

 

The crime was a blow to the country`s image. We failed to protect a foreign

diplomat as required by the 1961 Vienna Convention on Diplomatic Relations.

Washington and Seoul quickly vowed that they would make sure that the attack

does not adversely affect their alliance. But it will be hard to heal the emotional

shock Americans must have had when watching news footage of their

ambassador bleeding profusely from the knife wound to his face. Growing anti-

Americanism among Koreans already is intensifying U.S. calls for Korea to share

more of the financial burden of stationing U.S. forces here. Hence, Seoul is

worried that it will have less latitude in its future relations with Washington.

 

Among Koreans, the incident may possibly deepen the ideological divide between

conservative and liberal/progressive groups. Harsher clashes may erupt between

those who call for tougher control on pro-North Korean elements and those who

oppose wholesale branding and punishment of “North-subservient” activism,

which may frustrate efforts to revive dialogue with North Korea. All this will only

help Pyongyang achieve its goal of splitting South Korean society. It is important

for the public to calmly watch law enforcement authorities bring to light every

detail about the incident.

 

 [March 6, 2015]

www.koreafocus.or.kr

7

Korea-Japan Relations Must Break Free of the Shackles ofthe Past 

Saenuri Party leader Kim Moo-sung (second from right) and JapaneseAmbassador Koro Bessho (second from left) attend a cultural exhibitionmarking a half century of Korea-Japan diplomatic ties in Seoul, onMarch 3.

 

Park Cheol-heeProfessor, Graduate School of International StudiesDirector, Institute for Japanese Studies, Seoul National University

 

This year marks the 50th anniversary of the normalization of Korea-Japan

relations. It would be great if this could be the first year of a new era of bilateral

cooperation, but the reality is that we have been preoccupied with the “comfort

women” issue ― Japan`s enslavement of Korean women during World War II. The

difference of opinion between the two governments has led to an impasse.

 

Prime Minister Shinzo Abe has stated, “I will follow in the footsteps of my

predecessors. My heart aches when I think of the suffering of the elderly women

that is beyond comprehension. But we must not politicize the issue.”  According

to Abe, only by having a “dialogue without preconditions” and adopting an “exit

strategy” can we hope to resolve this issue.

 

We cannot be sure that a half-baked summit meeting would be successful. We

do not want a repeat of the December 2011 summit in Kyoto when President Lee

Myung-bak pressed the comfort women issue with Prime Minister Yoshihiko

Noda.

 

President Park Geun-hye has insisted that it is vital for the Japanese government

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change its position to make a sincere apology and adopt good faith measures. In

fact, demanding that Japan make concessions is closer to a precondition or an

“entry strategy.” One side wants to solve thorny bilateral issues at the outset

while the other wants to tackle them at the end of dialogue. The approaches are

contradictory.

 

With little progress in negotiations between Seoul and Tokyo, both countries are

competing to slander each other in the court of international public opinion.

Does that mean the two sides` positions do not share any common ground?

 

Concerned officials in Seoul and Tokyo are aware that they cannot move forward

by avoiding the comfort women issue. They know that leaving it unresolved

creates a huge burden.

 

Considering that only 53 of the victims remain alive and that the average age of

these women is 89, it is evident that there is not much time left to help them

recover their honor and dignity. This is almost the last chance to resolve the

problem. Nevertheless, the reason this issue remains unresolved is because it has

become so politicized that no one can easily touch it.

 

There is an on-going dialogue at the director-general level, but it is questionable

if it can lead to resolution of the issue. Moreover, it is unclear whether President

Park and Prime Minister Abe are committed to trying to resolve the issue. There

is a high probability that any potential agreement would be held hostage to

Japan`s rightist civic groups and Korean groups supporting the victims. Viewing

each other as enemies, neither side is likely to budge even an inch. Without a

back channel route for the two leaders to have a candid exchange of views, the

chances of a last-minute breakthrough are not high.

 

Some people in both countries seem to think that the current state of “virtual

separation” is not entirely bad. They suggest that rather than needlessly picking

at an old scab, the two governments may simply maintain the status quo, even

though they find it awkward to continue to remain estranged.

 

Others assert that it is more realistic to normalize relations without a summit

instead of unreasonably pushing for a summit that would have a high possibility

of failing. This essentially means that while it is not the ideal choice, it is the best

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they can do given the circumstances. However, the chances are very slim for

Korea and Japan to have normal relations with such a vexing core issue like the

comfort women put aside.

 

Discarding the shackles of the past in exchange for a more forward-looking

agenda focused on bilateral cooperation is not Mission Impossible. First and

foremost, both sides must positively assess their past efforts to resolve the

comfort women issue. Only then will success be in sight.

 

Both Seoul and Tokyo need to make a good faith effort to take responsibility and

provide compensation where it is needed. A mere “shrugging off the past” will

prove to be inadequate. Both sides need common wisdom to guide them into

the future.

 

In their speeches at the United Nations, Prime Minister Abe and President Park

have both talked about the importance of protecting women and children during

wartime. If they truly embrace this thinking and put it into practice, the two

countries can develop a joint initiative worthy of the world`s respect. Then, if the

two sides are ready to improve their bilateral ties and jointly respond to regional

and even global challenges, there is no reason they cannot achieve a

breakthrough in their strained relations. Ultimately, the key is for the political

leaders of both countries to decide to make this happen.

 [Chosun Ilbo, January 26, 2015]

www.koreafocus.or.kr

10

Reform of 'Indiscriminate Welfare' Comes before Tax HikeDebate 

Senior citizens have soup with sliced rice cake, a traditional New Year'son February 12.

 EditorialThe Chosun Ilbo

 

The recent controversy over tax adjustments for income earned in 2014 was

caused by politicians and the government attempting to raise welfare benefits

without tax hikes. During the 2012 presidential election campaign, both the ruling

and opposition parties competitively spewed out rosy promises of welfare

support while promising voters their tax burden would not be heavier.

Immediately after she took office, President Park Geun-hye emphatically told her

senior secretaries at Cheong Wa Dae not to discuss any tax increases, saying,

"Don't make any plan to collect any taxes from people to raise funds to fulfill my

campaign promises."

 

The government has drawn up an action plan to increase revenue without tax

hikes. It envisions raising 18 trillion won by cutting the number of tax exemptions

or breaks, 27 trillion won by legalizing the underground economy and 84 trillion

won by restructuring fiscal spending. The plan seemed to suggest Park's

campaign promises could be fulfilled without tax hikes.

 

But the government's plan has hardly been put into action over the past two

years. For example, the government pledged to slash a total of 8.7 trillion won

from social overhead capital, manufacturing, agriculture, and forestry in 2014 and

2015, but ended up with a budget increase of 4.9 trillion won. The government

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was unable to cut the budgets of some sectors, as it drastically increased fiscal

spending to boost the economy, and faced strong resistance from concerned

parties. Higher tax revenue through the legalization of the underground economy

has been absent. So has progress in reducing tax exemptions or breaks due to

strong objection from their beneficiaries.

 

On the contrary, most of the welfare promises have been fulfilled after partial

adjustments. Every person over 65 is now entitled to a basic monthly pension

payment of up to 200,000 won. In addition, the government has worked out a

series of welfare programs, including free daycare services for children up to 5

years old, free school meals for primary and secondary school pupils, and half-

price tuition for college students. The size of the budget for these programs has

nearly doubled from 14 trillion won in 2012 to 27 trillion won this year. In short,

the government's spending has ballooned as scheduled but its fundraising plan

has proved untenable.

 

The program to give free classes to children from low-income families has

petered out due to lack of funds and the plan to upgrade school buildings has

been delayed. The budgets for other welfare and public security programs that

are in dire need of government support are being scuttled. Local municipalities

and offices of education are facing a default crisis in the second half of every

year. It is like an annual event because they can't afford to bear the burden of

expanding free welfare programs.

 

In addition, the government's plan to collect tax revenues has hit a snag as a

result of economic recession. The government fell short of 8.5 trillion won in tax

revenues in 2013 and 11.1 trillion won last year. Indeed, it is realistically

impossible to raise funds for the explosively increasing welfare programs. To

make up for tax revenue shortage, the government is brainstorming all kinds of

ideas, including raising cigarette, residency and automobile taxes. After all, this

has ignited accusations of "dirty tricks to increase taxes." Hence the heated

dispute over the new year-end tax adjustments.

 

There is another side effect of the unprepared welfare expansion. The free

daycare services allowed full-time housewives to entrust their children to daycare

facilities. Initially, there was a widespread confusion because of a shortage of such

facilities. Eventually, daycare centers suddenly sprang up everywhere as the

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government eased requirements for daycare teachers to fill the void. But this has,

in turn, led to a series of child abuse cases.

 

Politicians and the government have come up only with stopgap measures and

made things worse whenever such cases occur, without reviewing their vows of

"welfare without tax hikes." When wage earners seethed with complaints about

the year-end tax adjustments, the Saenuri Party and the government promised to

expand tax credits retroactively. As for daycare problems, the ruling party and the

government promised to give housewives more childcare stipends if they take

care of their children at home. This means that the ruling camp and the

government are going backward as they cut tax revenue, but increase spending,

despite being unable to cope with the heavier burden from the suddenly

expanded welfare programs.

 

If they keep implementing such policies to pander to voters, the nation will

inevitably face a financial crisis like Greece and Italy. If it is not easy to reduce tax

exemptions or breaks, the government should curb welfare spending first. It is

possible to save almost 3 trillion won this year simply by cutting the number of

beneficiaries of the basic pension payouts from the current 70 percent to 50

percent based on the degree of financial health of recipients. The nation needs

customized welfare to assist only needy people, instead of universal or

indiscriminate welfare to benefit rich and poor alike.

 

To this end, Park should explain the financial situation for welfare benefits to the

nation and seek everyone`s understanding about the need for welfare reform. She

should also sincerely apologize for failing to fulfill her campaign promises. She

should honestly admit that taxpayers will have to bear a heavier burden, given

that welfare spending will increase sharply because of the country's population

aging process, the fastest in the world. On the other hand, People should wake

up from the illusion of welfare expansion without tax hikes. It is high time for

people to accept the fact that it is hard to enjoy benefits without bearing the

cost.

 [January 26, 2015]

www.koreafocus.or.kr

13

Korea’s Public Diplomacy Needs Better Coordination andStrategies 

Award winners at a Korean-Vietnamese speech contest appear on stageat an opera hours in Da Nang, central Vietnam, in this file photo datedFebruary 23, 2014.

 

Lee Sook-jongProfessor, Department of Public AdministrationGraduate School of Governance, Sungkyunkwan University

 

I attended two consecutive international conferences on issues related to the

Korean peninsula at the end of last year in Washington, D.C. The conferences

were supported by the Korean government and happened to be organized by the

same think tank in Washington. With a seminar held a few days later, which was

jointly organized by a private Korean foundation and another leading think tank,

there were three Korea-related meetings in a single week. Due to the scarcity of

Korea experts in the United States, many of the panelists came from Korea and

were invited to all three meetings. I wondered what the U.S. public thought about

seeing nearly the same panelists at each meeting and hearing the same remarks.

 

When and what international conferences are held is unknown among private and

government agencies. The United States is not an exception; Korea experts have

found that similar conditions occur in China and Germany, where Korea-related

meetings are often held. Have these meetings, which require a lot of money and

time, had a positive effect on the public in those countries?

 

Traditional diplomacy is inter-governmental diplomacy, while public diplomacy is

practiced through a government to create favorable opinions in overseas

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communities. Originally, public diplomacy was used by advanced countries that

were in ideological competition with the communist bloc during the Cold War

era.

 

In addition to the superpowers, middle powers have also been actively involved in

public diplomacy. This is because the way diplomacy is conducted has changed

amid democratization, digitization and globalization since the Cold War ended.

The democratization of countries has made public opinion increasingly important.

That has made it difficult for governments to simply push ahead with diplomacy

not approved by the public. Accordingly, governments have begun to consider

not only the governments of allied countries but also their public as the target of

their diplomatic efforts.

 

Furthermore, a society that is exposed to international issues and information

through the Internet becomes informed enough to raise a voice on international

diplomatic issues. Therefore, governments are actively introducing digital media-

based people`s diplomacy to communicate with a foreign public.

 

In international relations, soft power, a country`s ability to persuade and win

favorable public opinion has become as important as hard power, the military

and economic prowess of a state. This current trend has made public diplomacy

an increasingly significant area getting more and more resources. For example,

affluent countries operate cultural centers in major cities all over the world to

introduce their culture to host countries while teaching their own language and

history.

 

Cultural diplomacy is the basis of public diplomacy because culture serves as a

foundation of international understanding. Recently, however, public diplomacy

has been strategically used as a means to win international public support on key

diplomatic policies and to create favorable public opinion on certain issues. In

other words, the need for strategic public diplomacy has come to the fore.

 

The Ministry of Foreign Affairs and the Ministry of Culture, Sports and Tourism

are in charge of Korea`s public diplomacy. The Korean cultural centers affiliated

with the Ministry of Culture and the Arirang TV, which provides multi-language

broadcasting services, undertake tasks related to the cultural domain. On the

other hand, the Korea Foundation, a Foreign Ministry-affiliated organization, is

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responsible for supporting Korean studies and research on policies related to

Korea. The King Sejong Institute Foundation that has supported programs

designed to disseminate Hangeul across the world and the Korean Food

Foundation in charge of the globalization of Korean food have been created as

affiliates to the Ministry of Strategy and Finance, and the Ministry of Agriculture,

Food and Rural Affairs, respectively.

 

In particular, the Ministry of Foreign Affairs has made public diplomacy the main

axis of diplomatic policies, creating the Public Diplomacy Division in the Cultural

Affairs Bureau, and has recently launched popular participation-based public

diplomacy programs.

 

As the need for people`s diplomacy has been steadily rising, relevant programs

implemented by government agencies have also been increasing. However, there

are two problems here. One is the absence of a “control tower” institution so

there is little information sharing and policy coordination among governmental

agencies. For example, reunification of the two Koreas is an important policy

agenda of the incumbent administration, but there has been little coordination

and cooperation between the Ministry of Foreign Affairs and the Ministry of

Unification to effectively address unification issues in the international community.

 

As for cultural diplomacy, the Ministry of Foreign Affairs and the Ministry of

Culture, Sports and Tourism have been carrying forward independent projects

rather than working together. As a result, some of the projects of the two

ministries have overlapped. The other problem is the absence of strategic public

diplomacy. As hallyu, or the Korean Wave, spreads around the globe, the share of

cultural contents in people`s diplomacy has increased. However, no progress has

been made in the development of strategic public diplomacy.

 

Eliminating public opinion leaders` doubt in the United States that South Korea

seems to be allied with China and alleviating the alarming surge of Japanese

hostility toward Korea are the two most pressing tasks Korea`s public diplomacy

has to address strategically. The Ministry of Foreign Affairs has secured a budget

of 17.8 billion won (approximately $16.18 million) for public diplomacy; hopefully,

strategic public diplomacy will actively unfold this year. If we want to obtain

fruitful outcomes in public diplomacy, an effective promotion system has to be

established and strategic public diplomacy programs need to be developed.

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 [Dong-a Ilbo, January 13, 2015]

www.koreafocus.or.kr

17

Unbelievable Stories about Presidential Funeral Flowers 

Condolence flowers from Park Geun-hye are seen beside the funeralaltar of Park Young-ok, wife of former Prime Minister Kim Jong-pil, atAsan Hospital in Seoul, on February 22.

 

Yang Sang-hoonChief Editorial WriterThe Chosun Ilbo

 

President Park Geun-hye's approval rating will not hit a real bottom as some of

her predecessors experienced. The biggest reason many people withdraw their

support for the president is corruption of presidential family members or aides. In

a public statement, Park warned her only brother, Ji-man, to "stop being stupid

and come to his senses." Under these circumstances, it seems nobody would dare

try to bribe him in hopes of a favor. Park Ji-man is a rich man. He said that he

would lead a "quiet life." In fact, he has no other choice.

 

A story about three presidential secretaries working for Park has been circulating

in recent days. What if anyone of them turns out to be corrupt? Then Park's

approval rating would plummet to around 20 percent, which is where some past

presidents ended up. The three presidential secretaries in question are under

public scrutiny. In the past, some presidential secretaries violated the law in the

waning months of a presidency and went to jail once their president`s term

ended. Park`s three secretaries must be aware of such history. Her approval rating

probably will not hit the bottom, but it will not rebound to previous levels.

 

A former chief of a local municipality, who is a member of the ruling Saenuri

Party, once said, "Park will likely end up as the worst president in history." Asked

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why, he said, "She has wasted the golden early half of her presidency, while

achieving nothing. Nobody expected her to be this bad."

 

Park's problem has nothing to do with what her close aides have done. The truth

is that she has no answer to the question, "What have you done?" In the people's

eyes, there have been ceaseless power struggles within the government, which is

doing nothing. People will not readily change their perception before Park has

achieved something tangible, regardless of the dismissal of her three aides.

 

Park won the presidential election by advocating high moral values like fidelity

and honesty. She has neither experience nor a career with which she can make

policy achievements on her own. She has trodden a life path different from

others. During the last presidential election, many people said, “We`re worried

that Park might win, but we`re also worried that she might not.” In hindsight, they

were really clairvoyant.

 

Park seems to be obsessed with a belief that she should take care of everything

herself. In one case, a family member of a former senior official died but Park did

not send funeral flowers contrary to common practice. Some people notified

Cheong Wa Dae officials of the funeral, believing that Park did not know about it.

Presidential funeral flowers finally were sent but it was too late. Curious people

tried to find out what happened, and reached their own conclusion that

presidential funeral flowers are subject to Park's approval. I hardly believed this

story.

 

But some time later, I heard about another similar story. A senior presidential

secretary once called another person who also had a death in his family. The

senior secretary said, "We'll send you presidential funeral flowers." But no such

flowers arrived. Curious about it, the person asked the senior secretary later what

had happened. The senior secretary merely said in reply, "I'm sorry. I'm not in a

position to approve anything about presidential funeral flowers." If even funeral

flowers are subject to the president`s approval, it is not difficult to imagine the

situations surrounding other matters.

 

Park reads all kinds of personnel documents. Naturally, this leads to piles of such

documents stacked up on her desk, thereby delaying personnel matters

indefinitely. Any officials, whose names are on a report Park reads first, will be

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promoted or transferred first. Taking personnel documents from the bottom of

piles and putting them on top is a big deal. If the president does what ministers,

bureau chiefs, or section chiefs do, loopholes are inevitable. A vivid example is

that Park has botched some important ministerial appointments although she

reads every personnel document herself.

 

The moment they are elected, all presidents fall into a delusion, thinking that all

the decisions they have made are right. As a result, some presidents give a

cabinet post to a person based on fleeting impressions. In addition to her

overconfidence, Park tends to distrust and suspect others due to an unfortunate

history of her own family. This has made her share power and authority only with

a selected few with whom she has maintained close relationships. Most of those

outside of this circle naturally feel alienated and seethe with discontent. Among

all cabinet members in the history of the republic, those in the Park's cabinet

obviously feel most insignificant and make the most cynical remarks about their

own administration.

 

Park can do whatever she wants to do and make achievements for the country

during the remaining three years in her presidency, considering that she is

relatively free of the fatal risk of scandals involving her family members and

relatives. In this regard, she is advised to look back on Chun Doo-hwan's

stabilization of prices and Roh Tae-woo's Nordpolitik.

 

Regardless of people liking or disliking them, Chun is credited with developing

the economy to a higher level by stabilizing prices and Roh is recognized for his

foreign policy. These two former presidents made such achievements, because

they admitted their ignorance of some matters and boldly transferred part of

their authority to their competent aides. After hearing Chun or Roh say, "You do

it, because I don't know about it well," their ministers and senior secretaries did

their best. Fortunately, Park does not frequently replace ministers like pawns on

the chess board. Many things will begin to change when she puts away piles of

documents from her desk.

 [January 22, 2015]

www.koreafocus.or.kr

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 - Improvement of Income Distribution through Structural Reform

 - Frustrating Part-time Work for Young People

 - Corporate Tax Should be Removed in the First Place

 - Deregulation in Seoul Area, Learn from London, Tokyo

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Economic Democratization of Two Presidents 

Civic activists serve hot soup to protesting non-regular employees ofmobile and Internet service providers LG Uplus and SK Broadband, at asit-in in central Seoul on February 15.

 

Park Min-heeForeign News EditorThe Hankyoreh

 

“Economic democratization" has come into focus again thanks to U.S. President

Barack Obama. In his State of the Union address on January 20, Obama pledged

to reduce inequality by raising taxes on the rich and reviving the middle class,

which has not fully benefitted from the U.S. economic recovery. He asked the

American people and Congress if they will "accept an economy where only a few

of us do spectacularly well" or commit themselves "to an economy that generates

rising incomes and chances for everyone who makes the effort." "So the verdict is

clear. Middle-class economics works," he said.

 

He reached out to the middle class by proposing raising minimum wages,

reducing taxes on the middle class, and making community college free. He said

he will raise money for these projects by raising taxes on the rich. He said, "Let's

close the loopholes that lead to inequality by allowing the top one percent to

avoid paying taxes on their accumulated wealth. We can use that money to help

more families pay for childcare and send their kids to college."

 

Obama promised the American society to fight inequality amid criticism that

there is a slim chance of its success because of an inevitable clash with the

Republican-controlled Congress and powerful Wall Street firms. Recently, he has

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persistently implemented policies, including granting amnesty to illegal

immigrants, normalizing relations with Cuba, and pledging to raise taxes on the

rich. Discarding the image of a weak president, he has been bringing back the

early image of himself who, as a presidential candidate, presented the "audacity

of hope" by which he envisaged a dream for change.

 

Obama's new policy reminds us of the promise for "economic democratization"

that President Park Geun-hye made several times, but discarded furtively. There is

no trace of the promise Park has made. She said, "I'll help the economically

underprivileged revive their dreams through economic democratization," while

stressing the importance of principles and promises.

 

Park stressed economic revival the most in her New Year's press conference. She

mentioned economy 42 times. She seems to want to be a "hero of a second

economic miracle" following her father's first, as she watched her father, despite

his dictatorship, emerged as a hero through economic development. But since her

New Year's press conference, her approval rating has been sagging. Whereas her

image of being surrounded by incompetent aides is uncomely, her economic

policy lacks vision, conflicts with the times, and shows that she has reneged on

her promise of economic democratization.

 

In this era of despair, 20 percent of young people begin their career with contract

jobs of one year or less. Not surprisingly, the policy of extending the allowable

contract of non-regular workers to four years from the current two years under

the pretext of labor market reform and more outsourced jobs is spurring fear

about "lifetime non-regular employment." The only thing we are hearing is a call

for easing regulations for conglomerates, including removing regulations in the

Seoul metropolitan area.

 

The public anger over recent issues, such as the government's year-end tax

adjustments for income earned in 2014 and its abrupt increase of cigarette prices,

is based on their belief that the government is attempting to empty the pockets

of the middle- and low-income people without rightfully raising corporate taxes

or taxes on the superrich. Under the changed global economic environment, it is

no longer possible to recover the economy with policies that only support

conglomerates in exports, investments and real estate deals. There is growing

concern that the Park administration is even damping hopes for the future with

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policies that run counter to the times.

 

At the beginning of his book "The Eighteenth Brumaire of Louis Bonaparte," Karl

Marx writes, "Hegel remarks somewhere that all great world-historic facts and

personages appear, so to speak, twice ... the first time as tragedy, the second

time as farce." The book traces the path of Louis-Napoleon Bonaparte, the first

president of France elected by a popular vote. Ascending as Napoleon III, he

follows in the footsteps of his uncle, Napoleon I, after toppling the Republic

government born as the result of the French Revolution. It does not seem far

from our own reality. In the book, Marx declares, "The tradition of all dead

generations weighs like a nightmare on the brains of the living."

 [January 22, 2015]

www.koreafocus.or.kr

24

Winning the Hearts and Minds of Chinese People 

Chinese students attend "Dream Class," a corporate social responsibilityprogram of Samsung China, held in Kunming, Yunnam province on July22, 2014.

 

Yoo Hee-moonProfessor of Chinese StudiesHanyang University

 

Many predict that China`s growth will wane this year. If so, Korean corporations

heavily committed to the Chinese market will undoubtedly face fierce

competition. They may not survive if they fail to win the trust of Chinese

consumers. Multinational corporations already have started to communicate and

make social contributions to win the hearts and minds of the Chinese.

 

Pepsi is working on a pasture project in Inner Mongolia with the Chinese Red

Cross. Not to be outdone, Coca-Cola along with the World Wildlife Fund has

launched a project to clean the Yangtze River. French petrochemical company

Total started a course on humanities, the environment and energy conservation

for students at renowned universities. Thai agribusiness company Charoen

Pokphand, known as Zhen Da in China, focuses on livestock and seed

improvement education and training in Northwest China. Starbucks has also

initiated an environmental preservation campaign among college students while

DuPont is leading a new agricultural system in accordance with government

policy. These are just some of the corporate social responsibility activities that are

being undertaken by foreign companies in China.

 

Intel has gone beyond mere social contribution. Seeking to create shared value, it

25

has launched a program designed to help reform China`s educational

environment ― a program benefiting 1.7 million teachers around China.

 

While battling corruption, the Chinese government is demanding that foreign

companies abide by international business norms, protect the rights and interests

of workers and consumers, and exercise corporate responsibility in local

communities. The issues neglected during the nation`s rapid development, such

as wasteful use of natural resources, pollution, lack of attention to food safety,

violations of labor rights and safety concerns, are also highlighted.

 

The Chinese government has also called on the local private sector to contribute

to building a harmonious society amid widening gaps in wealth. China`s key

state-run corporations are required to publish a social responsibility report. Jack

Ma, founder and CEO of Alibaba, China`s biggest private e-commerce company,

reportedly said, “The competition between me and Bill Gates is: Who can more

effectively spend money on social contribution?”

 

Lately, the Chinese news outlets are reporting more on defective foreign

products. It is a reminder that foreign companies need to communicate with

Chinese society in order to take root in the Chinese market. As labor disputes and

government regulations of low-quality products grow, and the territorial dispute

between China and Japan has led to a boycott of Japanese products,

multinationals operating in China now consider corporate social responsibility as

a key business strategy. Foreign companies in China contribute to the local

communities as a tactic to survive and expand their operations in the Chinese

market.

 

As the Korea-China free trade agreement helps Korean companies expand their

market shares in China, their corporate contributions to local communities will

become even more important. The Chinese government`s focus on qualitative

economic growth will raise demand for environmental preservation and

conservation of energy and natural resources.

 

In exploring new markets in China, Korean companies need to take corporate

social responsibility and make investments that do not infringe on China`s values.

For example, LG Electronics has launched an “LG Loves China” campaign in

accordance with the Chinese government`s ideology by investing in education in

26

underprivileged regions. Samsung China runs “Dream Classes” for elementary

school students in collaboration with the China Youth Development Foundation.

 

Cultural heritage preservation and cultural facility management can also be a

desirable form of communication with the Chinese society in the field of culture.

BMW promotes a volunteer program for historic sites and food container

company Lock & Lock has built a statue of Wu Zixu, a politician of the Wu

kingdom, in Suzhou.

 

Through partnerships forged with the Chinese government or nonprofit

organizations, foreign companies also are helping to close the income gap

between the rich and the poor, as well as the gap in education. They are also

promoting environmental preservation, cultural activities and innovative

entrepreneurship.

 

The corporate social responsibility campaigns related to a sustainability model

promoted by the Chinese government will not only translate into more revenues

but also boost brand images and allow easier entry into the market. In China,

demand for environmentally-friendly technology, such as low carbon dioxide

emissions, renewable energy and food safety, is growing. Korean companies need

to develop and implement environmentally-friendly programs customized for

local communities. Strategic activities for corporate growth, social development

and sustainability should be the focus of Korean companies operating in China.

 

The shortcut to long-term survival in the Chinese market is sharing and spreading

social values, fulfilling corporate social responsibility, protecting the environment

and promoting the interests of workers, consumers and local communities.

 [JoongAng Ilbo, January 1, 2015]

www.koreafocus.or.kr

27

From ‘Incomplete Life’ to ‘Complete Life’ 

University students test miniature ocean rescue drones at a creativesoftware demonstration fair, held at COEX in Seoul, on December 3,2014.

 

Kwon Young-jinDirector, Daegu Regional HeadquartersHuman Resources Development Service of Korea

 

“Misaeng” (Incomplete Life), a recent television drama, had great social

repercussions as it dealt with issues concerning employment and new employees

adapting themselves to corporate life. Most impressive about the drama was an

uphill battle each new employee is fighting to do his or her share of work

through trial and error. They complain that what they learned in school is of little

help in the workplace. On the other hand, corporations have difficulty in finding

suitable graduates to hire.

 

According to “Education at a Glance 2014: OECD Indicators,” 66 percent of

Koreans aged 25 to 34 have completed higher education ― the highest among

members of the Organization for Economic Cooperation and Development. But,

their rate of employment is about 40 percent, far below the OECD average. The

low employment rate is unmistakable evidence that their classroom studies and

extracurricular qualifications don`t match the tasks demanded of them at

companies.

 

As a remedial measure, the government is promoting both on-the-job training

and off-the-job training programs and encouraging corporations to participate.

The goal is to enlist 10,000 corporations by 2017, a nearly five-fold increase from

28

the current 2,079.

 

The core of the program is to dissuade young people from placing too much

emphasis on higher education and unnecessary certificates and licenses, give

them on-the-job training at an early stage and also provide them with off-site

training.

 

The program reduces the time companies would need to train new employees

and helps the recruits start building a career faster. Those who go through pre-

hiring training only need to attend off-the-job lectures once they are employed.

 

In a departure from the provision of traditional classroom education, the program

stresses employment first and lectures later. Corporations take the helm in the

training of young people, with educational institutions assisting them on the

sideline.

 

Under the program, corporations recruit “learning workers” and train them for

select jobs. Then, the trainees undergo a formal education program based on the

National Competency Standards. When the trainees complete that program, they

are ready to be tested for licenses and certificates.

 

The only way to survive intensifying competition in the world is to raise one`s

work competency. The combination of on-the-job training with off-the-job

training should serve as the first step toward the wansaeng [a go game term for

“complete life” as opposed to misaeng, meaning “incomplete life”] of the Korean

economy.

 [Chosun Ilbo, January 17, 2015]

www.koreafocus.or.kr

29

Another Protest from Salaried Employees 

A bank advertises a tax-friendly long-term fund on January 22, amidoutcries from salaried employees over increased tax burdens.

 

Jin Sung-kiPremium News EditorThe Maeil Business Newspaper

 

Salaried employees still seethe with anger over the tax returns they filed at year-

end. They cannot free themselves from the feeling that the government and the

ruling Saenuri Party have been playing “a dirty trick to hide tax hikes” from the

beginning, although, in the face of raging public opinion, they promised to

amend the income tax law and expand tax credits retroactively.

 

At the outset, the government said that there would be no tax increase for those

who were paid 55 million won or less a year, and that there would be an increase

between 30,000 won and 40,000 won for those in the 55 million to 70 million

won pay range. But one salaried employee after another cried out they had

received “tax bombs.” Instead of receiving tax refunds, as they usually had in the

past, they had to pay more. No wonder they felt cheated.

 

The government and its party are held accountable for failing to correctly explain

their tax revision bill in 2013. They replaced tax deductions with tax credits but

also removed items for tax credits or lowered their rates. They hid the fact that

the bill would, in effect, raise the burden of middle-income taxpayers.

 

The controversy shows how lightly the government and its party regard salaried

employees in taxation. In announcing the revision bill in 2013, Cho Won-dong,

30

senior presidential secretary for economic affairs, referred to a goose feather

theory. He quoted Jean-Baptiste Colbert, minister of finances of France under the

rule of King Louis XIV, who said, “The art of taxation consists in so plucking the

goose as to obtain the largest amount of feathers with the least possible amount

of hissing.” Cho apparently wanted to keep salaried employees in the dark when

the government intended to raise their tax obligation.

 

In fact, salaried employees believe they are more taxed than warranted. They hear

about various types of tax evasion when all their income is exposed to the

scrutiny of tax collectors, who they say are looking into their “glass purses.”

 

Go to an apparel store or a beauty salon. The cashiers probably won`t offer a

discount for your cash payment. Of course, they will not give you a receipt ― a

practice designed to hide part of their income from the tax authorities. Among

the tax dodgers are some restaurants that overestimate expenses to reduce the

amount of income subject to taxes.

 

High-income self-employed people are not much different. Tax audits on the

income of 721 self-employed people in 2013 found that 47 percent of their

income, or 978.6 billion won, was hidden from taxation. They included owners of

golf driving ranges and fancy restaurants and such professionals as lawyers and

doctors.

 

LG Economic Research Institute had good reasons to say in its November 2013

report that taxing the shadow economy should come before tax increases. The

report estimated the nation`s 2012 shadow economy at 314 trillion won. Among

the self-employed, 38 trillion won was untaxed. That amounted to 44.3 percent of

their income, more than double the OECD average of 22.2 percent.

 

Against this backdrop, the government took an easier path and attempted to tax

salaried employees more. No wonder it fueled their anger. They were being asked

if they were really gullible.

 

This is not to say that the government should turn its back on the self-employed.

Those in dire conditions deserve tax and financial favors. That is one thing and

the prevention of tax dodging is another.

 

31

In her 2012 election campaign, President Park Geun-hye said, “Estimates about

our shadow economy range from 19.2 percent to 28.8 percent of gross domestic

product. It is by far larger than the average of advanced nations, which stand at

14 percent.” She promised to reduce the shadow economy by dealing sternly with

tax dodging and tax payment delays. She said the nation`s information-collecting

systems would be closely linked together for this purpose. Now she is being

asked how committed she is after two years in office.

 [January 26, 2015]

www.koreafocus.or.kr

32

 - Child Abuse at Daycare Centers Requires Gender Perspective

 - Retirement Tsunami of the 386 Generation

 - Society that No Longer Needs Patriots

33

Child Abuse at Daycare Centers Requires GenderPerspective 

A teacher and children play a game at a parent Cooperative daycarecenter in Seongsan-dong, western Seoul, on January 22.

 

Ku Bon-kiRepresentativeKu Bon-ki Research Institute for Financial Stability

 

The public wrath over child abuse at a daycare center shows no sign of cooling.

The suspect`s personal information has been available on the Internet for weeks.

But does making the suspect`s identity public and condemning her or venting our

anger at her prevent such incidents from recurring? And can we now leave our

children at daycare centers with no worries?

 

From my bookshelf, I took out “The Watchman`s Rattle,” written by American

socio-biologist Rebecca D. Costa, and read it again. Costa convincingly explains

five universal behaviors, which stand in the way of progress. One of them is the

“personalization of blame.” For example, the 9/11 terrorist attacks were not

committed by Osama bin Laden alone. However, many people believed so (some

still hold onto that belief) and as a result, Osama bin Laden emerged as public

enemy No. 1. So what? After he was removed, has the terrorism issue connected

with Al-Qaeda in the United States been completely eliminated? Not at all.

 

Needless to say, personalization of blame for a systemic problem is useful in

getting the public to vent their anger. However, this very old-fashioned and

unreasonable method does not help at all in resolving the problem

fundamentally. A systemic problem should be solved in a systemic way.

34

 

The recent child abuse case is one such example. I can fully sympathize with

those who vent their anger toward the teacher who cruelly treated a toddler.

However, nothing will change by only blaming the teacher entirely for the

incident. The teacher will soon be convicted. So, we need to expend the energy

swelling in our hearts for a more useful purpose.

 

Fortunately, I have noticed moves to see this incident as a labor issue (a systemic

problem). The issue boils down to two major points. First, the entry barrier for

daycare center teachers is remarkably lower than that for teachers at elementary,

middle and high schools (a vetting problem). Second, labor intensity of daycare

teachers is very high in view of their wage level (a compensation problem).

 

I believe these two problems are relatively well summarized in an article

contributed by Professor Lee Joon-koo of Seoul National University to the

Huffington Post Korea on January 18, under the title, “Daycare Center Incident

Seen from the Perspective of Efficiency Wage Theory.” I recommend those who

are interested in this issue read the article.

 

Now, let me raise an issue from a slightly different point of view. This incident

should be seen as a gender issue as well. Labor and gender were intertwined in

the child abuse incident. We should take this opportunity to think how much we

have belittled so many household chores such as cleaning, laundry and childcare.

Most of them are simply dismissed as things that should be done by women like

wives and mothers, never by men. We also should think about how much value is

rendered on the chores that are traded as “services” in the market and how the

providers of such services are treated in our society.

 

While discussing measures to prevent abuse of children at daycare centers from

recurring, Lee Jung-hyun, a lawmaker and member of the ruling Saenuri Party`s

Supreme Council, reportedly said, “We must earnestly consider having

grandmothers visit daycare centers twice a day, in the morning and afternoon,

and observe their operations.” The statement revealed the limit of the patriarchal

way of thinking he is trapped in. He seems to believe childcare is a petty chore

for women, a self-sacrificing job of wives and mothers. This episode clearly shows

how much men look down on childcare.

 

35

Social and political institutions and ideologies are all created by men. As a

daycare teacher nobody envisions a man; daycare teachers are all women. This is

the reason why the treatment and entry barrier for daycare teachers are so

inferior to those for elementary and secondary school teachers. The primary cause

of the latest daycare center incident lies in sexual discrimination. This is why a

gender perspective is required.

 [The Hankyeoreh, January 24, 2015]

www.koreafocus.or.kr

36

Retirement Tsunami of the 386 Generation 

A job seeker looks around information booths at an employment fair formiddle-aged people at COEX in Seoul on September 22, 2014.

 

Jung Kyung-minBusiness News EditorThe JoongAng Ilbo

 

Mr. L, who was my senior at university, belongs to the so-called 386 generation:

he was born in the early 1960s and went to university in the 1980s. As university

students this generation spent more time on the street than in a lecture room,

and was more familiar with throwing stones in political protests and drinking soju

than reading books. Yet, when graduation neared, they didn`t have much

difficulty finding a job because there were piles of letters of recommendation

with professors` signatures waiting for them at the department office. Life at

workplace was smooth enough as well, thanks to an economic boom amid the

“three lows” [low interest rate, low oil price and low one/dollar exchange rate]

which prevailed in the late 1980s.

 

In the late 1990s, when this generation was in their 30s, they acted as a midwife

for the birth of a progressive administration. Faced with the foreign currency crisis

in 1998, they managed to survive the aftermath. But they had a really tough time

last year. Companies with 300 or more employees must extend the legal

retirement age to 60 beginning in 2016, so they began to lay off the older

workers in advance, especially senior managers in their 50s.

 

Mr. L didn`t worry even though he felt bitter that he had to quit just a few years

before the extension of the legal retirement age. He owned an apartment in the

37

affluent Gangnam area and received several hundred million won in voluntary

retirement incentive payment. He said he had a really sweet time in the first few

months after retirement.

 

Then, one day, his heart sank when he happened to calculate the interest income

he would get from his 300 million won deposit at the bank. It was a mere

465,300 won per month after taxes. Also, he suddenly realized that his apartment

in Gangnam, which would have been “a goose laying golden eggs” in the past,

has long been a headache for him. Under the heavy burden of private tutoring

for his two daughters, he couldn`t even afford to buy private pension or medical

insurance policies. Still worse, he must wait eight more years to benefit from the

national pension system.

 

With this sobering realization, Mr. L belatedly began knocking doors here and

there with his resume to look for a job and understood why so many people

empathized with the TV drama series “Misaeng” (Incomplete Life). He suggested

opening a fried chicken restaurant to his wife but the idea nearly cost him his

marriage. His younger daughter is still a university student, so whenever he thinks

about her tuition and the money he would need for his two daughters` weddings,

he cannot help but sigh deeply. He says he doesn`t know how he will manage to

get through the next 30 years.

 

Is Mr. L the only person finding himself in such despair? No, he isn`t. Korea`s “386

generation” has peculiar characteristics. First, this generation accounts for as

much as 17 percent of the nation`s population, while those born in the 1950s

account for 12.8 percent (based on the 2010 census). Starting from 2020, when

those born in the 1960s turn 60, some 800,000 people will retire every year. They

will be soon followed by retirees born in the 1970s, who take up 16.5 percent of

the total population.

 

This means that, for nearly 30 years from now, Korea will face the tsunami of

“half-retirees” who will continue to linger around the job market even after

retirement. Compared to this, the retirement shock of the first baby boomer

generation, who were born in 1955-1959, was a storm in a teacup. When the 386

generation, which played a leading role in the birth of a progressive

administration, is downcast, how would they react? I am afraid that our society,

already divided between the right and left, may suffer even more amid the

38

deepening gulf between generations.

 

Due to the extension of the retirement age, the 386 generation is experiencing

massive retirement five years earlier than anticipated. With the deposit interest

rate in the 2 percent range, they cannot sustain themselves for the next 30 years

or so, even if they remain “half-retirees.” Opening a fried chicken restaurant or

working as a security guard for an apartment complex cannot be a solution.

There should be practical extension of the retirement age by adopting a peak

wage system and more part-time jobs. Investment products that guarantee 4 to 5

percent rates of return are desperately needed.

 

The clock for our society`s evolution stopped at the 1980s, when we enjoyed an

economic boom amid the “three lows.” At this critical moment, the earlier we

stop expecting the “government to do something for us,” the better. I myself

should keep in mind that I will need to make a whole new life plan for my

retirement years. Already pressured by fears of deflation, we face another

unbeaten path. There is no knowing where the path will lead us.

 [January 12, 2015]

www.koreafocus.or.kr

39

Society that No Longer Needs Patriots 

Korean players sing their national anthem before a match againstAustralia at the 2015 AFC Asian Cup Final, held at Stadium Australia inSydney, on January 31.

 

Oh Chang-minBusiness News EditorThe Kyunghyang Shinmun

 

One of my acquaintances who traveled many foreign countries once said to me,

“Countries with rockier histories have more patriots.” I realized what he meant

during a visit to the Philippines. While the advanced countries in Europe have

many historic sites dedicated to conquerors, philosophers and poets, you can see

many statues of patriots of different ages and classes in the streets of Manila as

well as rural areas across the Philippines. From independence activists who were

executed for resisting Spain in the late 19th century to those who struggled

against Japan during World War II, they all sacrificed their lives for their country

and people.

 

I was saddened to see the Philippines struggling in poverty. “Why is the country

still in difficulty with its people suffering, when it has had so many patriots?” I

asked myself. But it was a dumb question. You should say that the country has

many patriots because it has had to struggle through difficulties, not that it still

has to struggle although it has had many patriots. If the country had not been

invaded by Spain, the United States and Japan, the Filipinos would have had no

reason to resist them at the expense of their lives.

 

Korea also has many patriots. During the 35 years of Japanese occupation,

40

numerous Koreans sacrificed their lives and fortune to fight for independence.

Thanks to these people, Korea was liberated from Japanese rule. When the

Korean War broke out, student soldiers picked up rifles instead of books. Decades

later, the citizens of Gwangju shed blood for democracy and a dictatorial regime

was overthrown. The nation also achieved rapid economic growth, dubbed the

“Miracle of the Han River.” The money earned by Korean miners and nurses in

Germany and Korean soldiers in Vietnam was invested in manufacturing plants

back in their homeland. The nation`s GDP, which was $1.3 billion in 1953, grew

more than 1,000 times to $1,304.3 billion in 2013.

 

When a country becomes peaceful and affluent, its people`s patriotism and view

of the state naturally weaken. Unless Japan asserts its territorial right to Dokdo

and there are international sports events such as the World Cup and the Olympic

Games, we seldom remind ourselves of our identity as Koreans. It is hard to

believe that until some 20 to 30 years ago we used to point fingers at people

smoking foreign brand cigarettes or driving exported cars. These days, Hyundai

Motors and Samsung Electronics market their products and services focusing on

their quality rather than appealing to consumers` patriotism.

 

There is no need to lament ebbing patriotism, however, because it can be made

up for with wholesome citizenship. Strictly speaking, patriotism involves aspects

that cannot be seen as a genuine goodness. Above all, patriotism requires

sacrifices of individuals. It is half right and half wrong to say that the state and

organization come before individuals. Patriotism also makes neighboring

countries uncomfortable. Patriotism of Japanese rightists who pay their respects

at the Yasukuni Shrine and try to neutralize their “peace constitution” undermines

peace not only in Northeast Asia but in the whole world. The frequent terrorist

attacks in the Middle East are also rooted in extreme patriotism.

 

The fact that patriotism peaks when nations go to war suggests a lot about the

nature of patriotism. Patriotism is also frequently misused as blind loyalty to a

political regime or leader. Germany under the Nazis and North Korea are

outstanding examples. Love for one`s country involves loyalty to the government

and regime, which in turn translates into worshipping the top leader. In South

Korea, patriotism was packaged as “anti-communism and anti-North Korean

sentiment.” The Charter of National Education, which Korea`s older generations

can recite even in their sleep, says, “Patriotism, for the state and for the nation, in

41

the spirit of democracy, is the way of our survival.”

 

President Park Geun-hye demands patriotism from Koreans. At a meeting to

review key state affairs she hosted at Cheong Wa Dae toward the end of last

year, Park quoted a line from the national anthem that goes, “Let us love our

country in suffering or in joy,” and said, “We should love our country whether in

good times or bad times.” Mentioning a scene from the recent hit movie “Ode to

My Father,” she went on, “the couple was arguing with each other but when they

heard the national anthem they stopped and saluted together.”

 

Kim Ki-choon, the presidential chief of staff, emphasized loyalty to the state and

the president, saying, “The Chinese character for loyalty is composed of two

letters meaning the ‘center.` We should keep balance around the center.” It is a

little hard to understand that the Park administration, which promised to open an

“era of happiness for the people,” demands personal sacrifices from the people.

 

Patriotism and loyalty are definitely essential for national development. The

Republic of Korea in 2015, however, needs patriotism and sacrifice from

politicians, senior officials, and the owners of large conglomerates, who threaten

to move their factories overseas unless they are given tax benefits or relaxed

regulations. If these people abandon their greed and selfishness, the general

public wouldn`t have to worry about the country too much. At the dawn of a new

year, I dream of a society that no longer needs patriots.

 [January 12, 2015]

www.koreafocus.or.kr

42

 - Royal Palace Kitchen Restored after 100 Years

 - Legoland or Gojoseon Land?

 - Conflict Creeps into the Busan International Film Festival

 - Retro Fever Sweeps Young Generation

 - Zero Budget for Art Works at Cheong Wa Dae

43

Royal Palace Kitchen Restored after 100 Years 

The royal kitchen complex in Gyeongbok Palace, in central Seoul, hasbeen rebuilt 100 years after it was town down by the Japanese colonialgovernment. (Courtesy by the Cultural Heritage Administration)

 

Lim A-youngStaff ReporterThe Kyunghyang Shinmun

 

The royal palace kitchen of the Joseon Dynasty (1392-1910) has been rebuilt a

century after it was torn down by the Japanese colonial government. Sojubang in

Gyeongbok Palace, featured in the popular TV drama series “Dae Jang Geum”

(a.k.a. “Jewel in the Palace”), was originally constructed in 1395, when the palace

was renovated and extensions were added. It was burned down during the

Japanese Invasions (1592-1598), rebuilt in 1865, during the reign of King Gojong,

when the palace was restored to its original state and again victimized by the

Japanese, who removed many of the palace structures under the pretext of

holding the Chosen [Korean] Industrial Exposition in 1915.

 

The kitchen project began in September 2011 as part of a long-term restoration

of Gyeongbok Palace, the main palace of the Joseon Dynasty. The Cultural

Heritage Administration yesterday announced the kitchen was completed in

January and that public viewing would start during the May 2-10 Royal Palace

Culture Festival. The kitchen, actually a complex of 17 buildings, will be equipped

with cooking utensils and everyday objects of the Joseon period so visitors can

experience the ancient royal culinary culture.

 

The kitchen complex is in the center of Gyeongbok Palace, to the rear right side

44

of Geunjeongjeon, the main throne hall. During the Joseon period, the complex

included the “Inner Sojubang” where the king`s everyday meals were cooked;

“Outer Sojubang,” or Nanjidang, where banquet food and ritual offerings were

prepared; and “Saengmulbang,” or Bokhoedang, where snacks, porridge and pan-

fried delicacies were made.

 

Before the restoration project, the Cultural Heritage Administration excavated its

old site to conduct preparatory investigations from 2004 to 2005. It also referred

to various documentary sources, including “The Annals of the Joseon Dynasty”

(Joseon wangjo sillok), “Illustrated Record of Historic Sites in Korea” (Joseon

gojeok dobo), “Record of Royal Palaces” (Gunggwol ji), “History of Royal Palaces”

(Wanggung sa), “Layout Plan of Gyeongbok Palace and its Rear Garden” (Bukgwol

dohyeong).

 

“This palace kitchen was a dynamic and vibrant place where many court ladies

worked diligently from early in the morning till late at night, cooking food with

utmost care because it was directly related to the king`s health,” said a concerned

official at the Cultural Heritage Administration. “We are not simply intent on

restoring the original architectural features of the royal kitchen, but plan to use it

as a space for the visitors to experience and participate in royal culinary culture

programs.”

 

Reconstruction of Gyeongbok Palace began in 1990 and is scheduled for

completion in 2030. By then, the palace will have 379 pavilions and other

structures, according to the Cultural Heritage Administration. Heungbokjeon, a

pavilion where the king met foreign emissaries, will be reconstructed this year.

 [February 17, 2015]

www.koreafocus.or.kr

45

Legoland or Gojoseon Land? 

A massive historical site with burnt home sites and dolmens, presumablydating to the 11th-14th centuries, B.C., has been discovered on Jungdo,an isle in Chuncheon, Gangwon Province.

 

Shin Dong-hoEditorial WriterThe Kyunghyang Shinmun

 

Jungdo is an isle in the city of Chuncheon. It emerged in 1967 when Uiam Lake

was created as a result of the Uiam Dam construction. Despite its small size and

brief history, it is one of the better known islands in Korea. It has lent its name to

the “Jungdo-style plain coarse pottery,” which is one of the most important Iron

Age legacies in the central regions of the Korean peninsula. It is also the place

where the foreign plant species, white heath aster, was found and earned its

reputation as the Jungdo chrysanthemum.

 

More recently, the modest isle regained attention nationwide as opposing sides

argued whether or not it should be developed as a major tourist attraction,

namely the world`s largest Legoland. A Korean consortium and the UK`s Merlin

Entertainments are partners in a 500 billion won (approximately US$500 million)

investment to create a Lego-themed amusement park, hotel, resort, water park

and retail properties. If all goes as planned, the new Legoland in Jungdo would

cover 1.3 million square meters, more than double the world`s current largest

Legoland (in the UK), which occupies 600,000 square meters.

 

All seemed to go well when a massive historical site was unearthed. Over 1,400

structural remains, including 925 homes, 101 stone mounds and a moat dating

46

back to the Bronze Age have been discovered through the first excavation in July

last year. This is the largest discovery of the kind in Korea to date. Each

unearthed home has an average floor area of 31 square meters, with the largest

one occupying 172.5 square meters. Important artifacts such as the violin-shaped

bronze daggers and bronze axes were found in one of the homes located in the

center of the site.

 

At the very least the community would have accommodated 6,000 to 7,000

people, and it may have been even larger with as many as 10,000 residents. A

town of such scale is likely to have had a strong leader governing a class society

consisting of the nobles, producers and workers. In the Bronze Age between the

14th to the 11th centuries B.C., a community with a population of almost 10,000

people could very well make a state in its own right.

 

The National Movement to Prevent Development and Protect the Ancient

Remains of Gojoseon in Jungdo was founded on December 23 to preserve the

island as a historically important site with keys to understanding Gojoseon (Old

Joseon), the oldest known kingdom in Korean history. On January 7, they held a

seminar on the ancient remains of Gojoseon on Jungdo at the National Assembly

Memorial Hall.

 

Dr. Lee Hyung-gu, professor emeritus at Sun Moon University, explained: “In

archaeological terms, the remains on Jungdo date back to the Bronze Age. In

historical terms, they belong to the Gojoseon period. We may have found a part

of Gojoseon that we have not been aware of.” This statement triggered my

memory of the Korean Route exploration eight years ago, in which Professor Lee

also participated.

 

The team set out to follow the traces of Korean ancestors across the Maritime

Province, Lake Baikal, Hulunbuir Prairie, Greater Khingan Range, Manchuria, Liao

River and Daling River, and discovered in the remains of the Hongshan Culture

certain clues that could be linked back to the Korean peninsula. We visited the

Niuheliang Site which is often referred to as the crown jewel of Hongshan

Culture. The ruins dates back to as early as 3500 B.C. and has the three basic

elements of a budding state — tombs, altars and houses of worship. The

discovery of this site is considered a major archeological feat that pushed back

the birth of Chinese civilization by a millennium.

47

 

In China, many view the Niuheliang Site as a proof that the legendary Yellow

Emperor existed. Some Korean scholars connect the site to the tribal leader

Chiyou who fought against the Yellow Emperor. Aside from these scholarly

debates, stone mound tombs in the style of those found in Niuheliang were once

popular across the Korean peninsula. In fact, the mounds unearthed on Jungdo

exhibit a structural similarity with those in Niuheliang.

 

More striking than the possible connection between Niuheliang and Jungdo is

how the former has been preserved since. Dr. Woo Sil-ha of Korea Aerospace

University who is currently a visiting professor at the Hongshan Culture

International Research Center, Chifeng University has sent some of the latest

photos of the site. The tomb of the goddess, which was protected by a makeshift

structure eight years ago, is now fully encircled by a two-story building with

artifacts on display. Far more impressive is a huge steel dome covering the entire

site of the stone mound tombs. It cost 170 billion won to build the dome over

the area, which is the size of three soccer fields.

 

Unfortunately, Jungdo does not share the same fortune. Only some of the stone

mounds and other structural remains will be transferred to another site. The rest

will be restored to their pre-excavation condition. Already, some of the stone

mounds are being relocated, and the National Movement to Prevent

Development and Protect the Ancient Remains of Gojoseon in Jungdo has filed

for an injunction to halt construction.

 

They have also proposed to designate Chuncheon as “Special Zone for History

and Culture of Gojoseon” so that the ruins can be preserved and restored while

Legoland is built where there is less likelihood of historical remains, either on

Upper Jungdo or on the former site of the U.S. military base, Camp Page. This

proposal should be given sufficient thought. If done right, this may give

Chuncheon both Legoland and Gojoseon Land.

 [January 12, 2015]

www.koreafocus.or.kr

48

Conflict Creeps into the Busan International Film Festival 

Director Lee Po-cheung and actors of Hong Kong's "Gangster Pay Day"greet the audience at the closing ceremony of the 19th BusanInternational Film Festival on October 11, 2014.

 

Lim BumPop Culture Critic

 

In the early 2000s, when I was a film journalist, major film festivals were held in

Busan, Jeonju, Gwangju and Bucheon. At the time there were endless conflicts

between the festival organizers and the respective local governments. Once the

chief organizer of a festival locked horns with a programmer over operational

demands of city officials and the mayor of another host city went so far as to

force a festival`s executive director to step down. Mostly, flawed festival

operations were cited as the reason for conflict, but backbiting ensued always.

 

Sometimes, kickbacks were brazenly demanded on the grounds that “since our

city is providing the necessary budget for holding the festival, the festival

organizers should give some benefit to the city.” I assume that there also might

have been attempts to force festival organizers to hire people based on their

political views or regional background.

 

I still vividly remember that during the opening ceremony of a festival, the mayor

of the host city was introduced only by his title since the chief organizer who was

presiding over the ceremony forgot his name. After a while, the mayor demanded

the resignation of the chief organizer and he was eventually ousted. The city

officials explained that the chief organizer was asked to resign because he was

concurrently serving as a university professor, which sounded implausible.

49

 

Filmmakers boycotted the festival, protesting on behalf of the ousted chief

organizer. The festival became the biggest victim in the dispute and the city

which provided the funding was dealt a serious blow as well. This incident

occurred 10 years ago. At least it left a lesson that the arts and politics do not

mix well.

 

The Busan International Film Festival (BIFF) has grown into Asia`s largest film

festival without experiencing any major conflict with the host city. It goes without

saying that the festival has had a tremendous impact on the development of the

Korean film industry. One of my friends attended the grand opening of the first

festival held at the open-air arena at Suyeong Bay in 1996, and was overwhelmed

to witness the unprecedented role of movies. He later became a film critic. I

believe that young filmmakers who had honed their skills watching artistically

acclaimed foreign movies at the festival helped open a renaissance of Korean

cinema in the 2000s.

 

There are countless episodes illustrating the prestige of the Busan International

Film Festival. Director Park Chan-wook has said that many filmmakers from other

countries say “I will see you at the BIFF” when they say goodbye. Famous

Taiwanese actor and director Hou Hsiao-hsien is known to have been inspired by

the fever at BIFF to make up his mind to do something for young filmmakers.

 

Is the film industry the only beneficiary of the festival? Is it possible to calculate

the festival`s contribution to the international prestige of Busan in monetary

terms? Without the festival, how bleak would Haeundae Beach and the high-rise

buildings lining it seem in autumn every year? It has been so good to see the

Busan municipal authorities refrain from interfering with the festival`s operations

to pursue a peaceful coexistence of the city administration and the festival. How

nice it is that this famously conservative city, which has unflinchingly supported

the ruling party, is magnanimous enough to embrace both conservatism and

liberalism when it comes to the arts!

 

It was not until I started to attend the festival that I grew fond of the city. Thus, I

have come to indulge in its food and even love the boisterous accent of local

people. Yes, politics and arts can go together like this. By respecting autonomy in

the operation of the festival, rather than adopting the crude notion of cronyism

50

and regionalism in staffing its organizing committee, the city has indirectly and

circuitously supported the festival to blossom fully.

 

Now, it`s disheartening to hear that the Busan city government has asked the

BIFF executive director to resign, accusing him for the failure to recruit staff

through open competition and respect the proper procedures in reporting on the

selection lineup. It`s difficult to understand how this can be the reason for

demanding the resignation of the head of an organization that is not affiliated

with the city administration. Local news media also seem to suspect the

motivation.

 

If the city`s move has to do with the screening of the controversial documentary

“The Truth Shall Not Sink with Sewol” (original Korean title “Diving Bell”) in last

year`s festival as speculated by the media, it would be paramount to denying the

raison d'être of the festival. The city denies the allegation, but….

 [The Hankyoreh, January 27, 2015]

www.koreafocus.or.kr

51

Retro Fever Sweeps Young Generation 

A store in Gukje Market, featured in the recent hit movie "Ode to MyFather," attracts tourists on January 28.

 

Jang Jae-seonCulture EditorThe Munhwa Ilbo

 

Which age group has the most viewers of “Ode to My Father,” a nostalgic

melodrama which is set to surpass 10 million in ticket sales soon? Data released

by CGV has revealed interesting results: the admission ratios of viewers in their

20s, 30s and 40s showed little difference, accounting for 30 percent, 27 percent

and 28 percent, respectively. The results were contrary to the expectations that

cinemagoers in their 20s or 30s would not be interested in seeing a movie set

decades ago.

 

Data provided by Lotte Cinema was not much different. Moviegoers in their

teens, 50s and 60s merely took up 4 percent, 8 percent and 2 percent,

respectively. The results may be interpreted from diverse perspectives, but

political controversy aside, I want to place significance on the fact that the story

from our past has struck a chord in the hearts of people in their 20s and 30s. It

means young people are communicating naturally with their grandparents`

generation through the life of the movie`s protagonist who takes care of his

family with dedication, overcoming dire poverty in the turmoil of contemporary

history.

 

Another instance highlighting intergenerational communication can be found in

the craze for an episode of “Infinite Challenge,” an MBC entertainment program

52

which featured performances by groups and soloists who dominated the pop

music scene in the 1990s. This episode subtitled "Saturday, Saturday is for

Singers," also known as "TOTOGA,” recorded extraordinarily high viewer ratings

and the songs that were featured topped the charts of online music sites. The

social networking media was ablaze with excited responses for a while.

 

The main audience of the episode was those in their 30s to 50s, who had

enthusiastically enjoyed those hit songs in the 1990s. But, according to an

analysis of the user groups who downloaded the songs from the KT music site,

20-somethings made up more than 50 percent. The majority of these people

apparently watched the program on their mobile phones. Intergenerational

communication is happening through songs from the 1990s.

 

The retro boom triggered by the popularity of “TOTOGA,” coupled with the huge

box-office success of “Ode to My Father,” has sparked a debate on retro culture.

Incidentally, the opening of "C'est Si Bon," a movie which will take viewers back

to the folk music craze of the 1970s, is imminent. KBS`s long-lived program “Gayo

Stage” featuring old pop songs has also made headlines by becoming the most-

watched show among the programs airing in the same time slot.

 

The retro revival in the pop culture scene is not new in Korea. It has been quite a

while since cultural products targeting the financially affluent middle-aged people

have appeared in various genres. Indeed, most musicals with high-priced tickets

depend largely on the purchasing power of middle-aged people. Not surprisingly,

the emotional background of the retro fever is nostalgia for the past.

 

Some critical intellectuals point out that the current retro fever reflects the psyche

of Koreans who are looking to the embellished past for comfort, avoiding the

harsh reality here and now. They warn that at a time when cultural content

straightforwardly portraying today`s life is needed to shape the future, going back

to the past may result in social retrogression.

 

They are right. We should guard against a social atmosphere in which people

turn a deaf ear to the future to be explored by young people as depicted by the

popular drama “Misaeng” (Incomplete Life), while admiring the struggle of older

generations to wade through hard times. We should fend off a cultural trend that

encourages such an attitude.

53

 

While heeding to these concerns, I want to mention virtues of the retro trend.

How desirable it would be if members of different generations can communicate

with each other through culture when generational divide grows ever deeper.

Since the old custom of home education conducted at meal times has

disappeared, cultural products will be efficient means for young people to share

the experiences of older generations. This is the reason why more works drawing

sympathy from young generations are needed.

 

It goes without saying that the quality of retro cultural products is important.

Despite criticism for some contrived circumstances, “Ode to My Father” has

strong emotional appeal that connects all generations. In an interview with this

newspaper, director Yoon Je-kyoon said, “I wanted to depict communication and

harmony between generations, regions and classes.”

 

An attentive viewer will find scenes delivering the director`s message here and

there, such as the lead character Deok-su walking while holding his

granddaughter`s hand tightly, sharing friendship with popular singer Nam Jin,

who speaks in an unrefined Jeolla dialect, and showing tolerance toward foreign

migrant workers.

 

It may sound like an overstatement, but I think that underlying the current retro

trend is a desire to look back on the past and recover the sense of unity from

community life. That is a yearning for the good old times when people dreamed

of a better future together. Some may denounce it as nostalgic nationalism, but it

is a natural desire under our present circumstances where unity among

community members is fading out. I hope that the forthcoming retro cultural

products will contribute to intergenerational communication and social

integration. Am I too ambitious?

 [January 9, 2015]

www.koreafocus.or.kr

54

Zero Budget for Art Works at Cheong Wa Dae 

President Park Geun-hye meets U.S. President Barak Obama at CheongWa Dae on April 25, 2014. Behind them is a painting of the sun, moonand five peaks, symbolizing royal authority of the Joseon Dynasty.

 

Kim Mi-ri and Heo Yun-heeStaff ReportersThe Chosun Ilbo

 

Last September, the Ministry of Culture, Sports and Tourism announced a mid- to

long-term plan to promote art. This ambitious plan aims to heighten the status of

Korean art by expanding the nation`s art market into one that is worth 630 billion

won (approximately US$600 million) by 2018. However, within the Korean art

community, an increasing number of voices are calling for a government-led

campaign to change the public`s awareness of art first, although they still

acknowledged the importance of financial assistance. Those involved in Korean

art circles also point out that it is urgent to upgrade the level of art works that

gain exposure in the international community through Cheong Wa Dae or the

National Assembly, Korea`s major window to the outside world, in order to

conduct “cultural diplomacy” commensurate with the status of the country.

 

◇ Cheong Wa Dae`s Failure to Look After Existing Art Works 

The presidential residence can serve as a kind of an art gallery where Korean art

works can easily draw international attention without having to go abroad. When

the photographs of visiting dignitaries are shown through international news

outlets, the art in the background is naturally exposed to people around the

world. According to our investigation, Cheong Wa Dae has more than 300 pieces

55

of art, including paintings by Kim Ki-chang, Jeon Hyeok-lim and Suh Se-ok. The

collection also includes some 30 pieces loaned from the National Museum of

Modern and Contemporary Art (20 pieces), the Seoul Museum of Art (4 pieces)

and the Art Bank (2 pieces).

 

The director of a state-run art museum who provided advice to the presidential

residence in preparation for visits by foreign heads of state, including U.S.

President Barack Obama, said, “Among these art pieces currently possessed by

Cheong Wa Dae are several outstanding pieces, but the collection is largely

comprised of mediocre works donated by the artists themselves, so it`s

disconcerting to regard them as art works representing Korea.”

 

The representative of an art gallery who is familiar with the current conditions of

the art collection at Cheong Wa Dae also noted, “A former president ordered a

banquet hall to be filled with works of an artist whom he personally knew.

Another former president took some pieces with him when he retired. Some

former presidents considered art works at Cheong Wa Dae their private property.

However, things changed when Kim Dae-jung, who was well versed in art, took

office. He consulted experts to arrange paintings for exhibit at Cheong Wa Dae.”

 

There also are problems with Cheong Wa Dae`s management of its art collection.

An art expert who once looked after the collection said, “The storage at the

presidential residence is slightly damp, which has caused some paintings to

become discolored.” A Cheong Wa Dae official said that there has been no

budget allocated for art purchases since 2008. Cheong Wa Dae seems to be

weary about purchasing art because of the Shin Jeong-ah scandal in 2007 and

the involvement of the Seomi Gallery in the Samsung slush fund scandal in 2008.

The two incidents have caused the public to view art circles as a hotbed of

corruption.

 

Currently, the task of managing the art collection at Cheong Wa Dae falls on the

office of the presidential secretary for administrative affairs. Beginning from the

end of the Roh Moo-hyun administration (2003-2008) into the Lee Myung-bak

administration (2008-2013), curators were dispatched to provide advisory services

from the National Museum of Modern and Contemporary Art. Currently, however,

there are no professional curatorial services in place.

 

56

All of this is in a striking contrast with the White House, which has had the White

House Office of the Curator in place to look after its collection of over 5,000 art

pieces since 1961 when President John F. Kennedy was in office. The 7th White

House curator, William Allman, has served for almost 40 years. The White House,

which considers itself a museum that preserves the nation`s cultural assets, even

held an exhibition of its collection at the Renwick Gallery of the Smithsonian

American Art Museum in 2011.

 

◇ Price Limit on National Assembly Art Purchases 

In the National Assembly Members` Hall building, which was remodeled in 2013,

there are a total of 12 works of art currently on display, including “The Forest” by

Kim Jong-hak exhibited on the third floor, “The Angel Solider,” a photograph by

Lee Yong-baek, and “A Shepherd Boy and a Crown,” a sculpture by rising artist

Lee Chang-won. All of the art works except “The Forest” were purchased at the

time of the remodeling. In accordance with the Culture and Arts Promotion Act,

some $500,000, equivalent to a hundredth of the total construction cost, was

spent on the purchase and installation of these art works.

 

Apart from them, the majority of art pieces at the National Assembly came

through donations. Currently, the Secretariat of the National Assembly and the

National Assembly Library manage 218 pieces (including 62 pieces on loan) and

365 pieces, respectively. Highly valued art works and old paintings created before

the 1980s that came into the National Assembly`s possession are mostly housed

at the National Assembly Library.

 

National Assembly Secretary-General Park Hyung-jun said, “In advanced countries,

their parliaments purchase works of art from artists representative of their

countries and use them to introduce their culture to the outside world in a

natural manner. That`s the underlying strength that culture carries. In this respect,

Korea has a long way to go.”

 

Under the Enforcement Decree of the Commodity Management Act, the National

Assembly is not allowed to purchase any art work worth more than 500,000 won

(approximately $450). Park added, “As this amount is not enough to buy good

works, the only alternative is to exhibit loaned works. But the borrowing cost is

prohibitive. Also, we have no professional curator.”

57

 

As for the management of art collection, the National Assembly is no better than

Cheong Wa Dae. The mural painting “Heaven Lake at Mt. Paektu” by Chang Woo-

sung (1912-2005) is a custom-made work built into the wall of the National

Assembly building during its construction in 1975. In order to install this huge-

size painting (190 x 650 cm), the wall across the cafeteria had to be redesigned.

However, an informed figure from art circles said, “When the National Assembly

building was repaired some years ago, the wall painting was taken off and

sloppily mounted. Since then it has been moved elsewhere.” He lamented that

the incident showcased the National Assembly`s careless attitude in handling a

valuable piece of art.

 

Art critic Jeong Jun-mo said, “It is undesirable there is a change in the cultural

atmosphere of Cheong Wa Dae and the National Assembly whenever they have

new occupants. In order to reveal the nation`s history and authenticity

consistently, the art works in their possession need to be systematically managed

and exhibited.”

 

You Hee-young, a former director of the Seoul Museum of Art, said that it is

advisable for Cheong Wa Dae and the National Assembly to allocate a budget for

art, even if a small, symbolic amount. If this is not possible, he advised that at

least they hire a professional curator to put the art works currently in their

possession in proper order.

 

 [January 20, 2015]

www.koreafocus.or.kr

58

 - Economic Effect of the Reunification of the Korean Peninsula

 - Trends in Economic Happiness and Policy Implications

59

Economic Effect of the Reunification of the KoreanPeninsula National Assembly Budget OfficeRepublic of Korea

 

I. Estimation of Economic Effect 

1. Purpose and Necessity of Study

 

People in both South and North Korea yearn for unification. Debates on possible

economic gains from reunification are actively under way these days. It is believed

that a reunified Korea would enjoy higher international status thanks to its

expanded economic scale.

 

Since the German unification, studies on territorial reunification in South Korea

have focused mainly on its cost to the national economy. Estimates range widely

from US$50 billion (Rand Corporation, 2005) to US$5 trillion (Peter Beck, 2010).

This has led to concerns about the obvious tax burdens that individuals and

corporations would face, generally souring public opinion on reunification. In

contrast, it has not been possible to calculate the gains from reunification to

society with as much clarity.

 

Yet, reunification of the divided peninsula would undoubtedly be an opportunity

to re-energize the South Korean economy, which has been stuck in low growth

due to structural problems. Enterprises have not found promising investment

opportunities, employment is unstable and consumption is sluggish. When

reunification is realized, development projects in North Korea will increase

demand for all resources, leading to large-scale corporate investments and

substantial job creation.

 

The first premise in preparing for unification or studying the effects of unification

is that strong mutual trust will prevail. Accordingly, efforts will be mounted to

form a national consensus. Unification in which one system absorbs the other will

lead to unbearable political and economic burdens.

 

After the unification of Germany, which was a case of the East absorbed by the

60

West, the economy of the eastern half rapidly shrank and unemployment soared.

Some recent studies on Korean reunification suggest that keeping the North

under separate economic management would be the best way of maximizing the

benefits of unification while minimizing its associated costs and negative

economic consequences.

 

This report analyzes the expected benefits and costs of Korean unification.

Particular attention will be placed on the financial aspects, considering the

favorable conditions of low wage levels and high investment efficiency that will

be available in the North. The large gap in economic scales and income levels

between the two sides will be a major drag on the economy of the unified Korea.

North Korea`s real GDP (as of 2012) amounted to 25 trillion won, or 2.3 percent

of South Korea`s 1,104 trillion won, and its per capita national income of

1,370,000 won was 5.4 percent of the South`s 25,590,000 won. The GDP of East

Germany before the 1990 unification approached 30 percent of the West. The

cost of unification amounted to 4 to 5 percent of the unified Germany`s gross

domestic product.

 

The important task in the process of Korean unification will be to reduce the

destabilizing factors stemming from the temporal difference between the large

cost required in the early stage of unification and its benefits created in the long

term. Government investments should be the primary catalyst for speedy

normalization and economic growth in the North. But that will be a major

challenge in South Korea, where a rapidly aging population will push up fiscal

demand.

 

Keeping the expenditures for unification at an affordable level will be an

inevitable priority as fiscal reserves will play a decisive role in managing the post-

unification economy. This study examines ways to secure fiscal soundness

through improved financial systems.

 

2. Parameters

 

The primary premise of this study is that the Korean peninsula is reunified

peacefully. The time of unification is set for 2015 so as to use all the statistical

data currently available. The more unification is delayed, the higher the cost will

be because of increasing difference in the income level between the two Koreas.

61

As such, corrections will be needed to reflect changes between the present and

the time of unification.

 

Economic benefits from unification will appear gradually as a result of policies

adopted by the unified government. In order to reduce the unification cost and

increase benefits, policies deemed most effective at present should be explored

and implemented.

 

The benefits of unification will be gleaned from different areas of unified Korea

and will be reflected in a rising gross domestic product. Positive indirect factors

also will materialize, such as reduction in military forces, higher economic

participation by youths and lower logistics costs. However, income differences will

widen and social conflicts will likely deepen. Therefore, estimates of economic

benefits in monetary units may be substantially bigger or smaller.

 

Estimates for individual economic categories will help instantly understand the

effect of unification. But more important for analyzing the overall fiscal picture is

obtaining macroeconomic variables such as GDP, unemployment rate and prices.

 

The period of observation in this study is 45 years from 2016, the year after the

supposed unification, to 2060. This much time will be needed for the

normalization of the North Korean economy and a complete integration of the

economies of the North and South. Analysis will be made on the impact of

unification on the state debt and fiscal soundness of the unified Korea in

conjunction with the long-term financial forecasts by South Korea`s National

Assembly Budget Office for the period of 2014-2060. These forecasts involve the

rising financial burden due to the population aging in the South.

 

Long-term observation is necessary to absorb the temporal discrepancy between

the immediately required costs and the benefits to be achieved gradually.

Especially in social overhead capital, large-scale investments will be needed

immediately after unification but their effect will appear over a long period of

time.

 

3. Economic Benefits

 

1) Method of Macroeconomic Predictions for North Korea

62

Macroeconomic indicators including growth rates for the North Korean area have

been estimated by the growth accounting model based on the gross production

function. The growth accounting model is widely used in development economics

as an alternative to the DSGE (dynamic stochastic general equilibrium) or CGE

(computable general equilibrium) models. Also, these methods could involve

unrealistic hypothesis that the North Korean economy is a fully competitive

market system.

 

To foresee economic growth in the North Korean area, it is necessary to review

and compare the growth process of such development models as South Korea

and Taiwan, which share some geopolitical commonalities with North Korea, as

well as such systemic transition models as China and Vietnam. Also valuable is

the experience of economic growth in the post-unification East German area.

 

Estimated investments from South Korea and foreign sources are based on

economic growth projections. The level of labor input and the ratio of labor

income distribution are linked to the overall wage scale and infrastructure

investments, including education investment.

 

It is supposed that 1 percent of South Korea`s GDP is invested in the SOC

development in North Korea for 20 years (2016-2035), after which the rate is cut

by 0.1 percent each year until 2045, to achieve 1 percent additional productivity

increase during the period. The investment will mainly go into the infrastructure

and agricultural sector, with the aim of narrowing the income disparity between

the North and South to the current level of domestic disparity in South Korea. An

annual 1 percent increase is foreseen in productivity given such advantages as

the use of the same language, free transfer of South Korean technologies and the

Northern area`s adaptation to the South`s advanced socio-economic system.

 

2) Prospects

The average GDP in the Northern area will increase 9 percent annually, from 29.7

trillion won in 2016 to 1,211.3 trillion won in 2060. The North`s relative GDP size

against the South will grow from 2.3 percent (against 1,268.0 trillion) to 39.0

percent (against 3,105.7 trillion won) over the period.

 

The North`s per capita GDP will climb from 1,190,000 won in 2016 to 47,020,000

won in 2060, or from 4.8 percent of the South to 66.5 percent. The disparity is

63

comparable to the current gap between the highest and the lowest per capita

GDP areas in South Korea ― Ulsan Metropolitan City with 18.31 million won and

South Jeolla Province with 12.49 million won, or 68.2 percent of Ulsan (as of

2012).

 

The major macroeconomic indicators used in estimating the unification cost are:

- Employment rate rising from 54 percent in 2016 to 60 percent in 2030 and 64

percent in 2060;

- Average annual wage increasing from 1,660,000 won in 2016 to 3,080,000 won

in 2020, 6,990,000 won in 2030 and 51,650,000 won in 2060; and

- The ratio of self-provided investment (from enterprises and private savings in

the North Korean area) growing from 59.3 percent in 2016 to 70.3 percent in

2020, 80 percent in 2024, 90 percent in 2029 and 100 percent in 2036.

 

The unified Korea will have a GDP scale of 1,318 trillion won in 2016, which will

grow by an annual average of 2.8 percent to reach 4,320 trillion won in 2060.

These figure are obtained by combining the long-term prospects of the South`s

GDP and the the North`s rising GDP after unification with its ripple effect on the

South. Without unification, the South`s economy is forecast to grow by 2.1

percent annually during the period.

 

 

3) Ripple Effect on the South

64

The ripple effect of the South`s investment and fiscal assistance for the post-

unification North on its own production, value added and employment has been

estimated. The inter-industry relationships for the 2007-2011 period were used to

pick up the average figures for the production inducement coefficient, value

added inducement coefficient and employment inducement coefficient in order to

minimize the variations from economic cycles.

 

This produced total production inducement effect on the South worth 3,650

trillion won (81 trillion won on average annually) and value added effect of 1,683

trillion won (37.4 trillion won on average annually) for the 45 years. In the long-

term GDP prospects, about 1 percent value added effect is foreseen to be

achieved (0.4 percent through investment in the North and 0.6 percent through

fiscal assistance). In annual amount the value added effect will increase from 26

trillion won in 2016 to 65 trillion won in 2036, but its percentage to the long-

term GDP forecasts is expected to drop slightly from 1.65 percent in 2016 to 1.5

percent in 2036 and further down to below 1 percent beginning in 2042 and

eventually to 0.03 percent in 2060.

 

The employment inducement effect is estimated at an aggregate of 29,530,000

workers (656,000 in annual average) for the 45-year period; the aggregate

number of wage earners will be 25,320,000 (563,000 on average annually). With

the ripple effect from unification, the employment rate in the South will rise from

62.8 percent in 2016 to 66.5 percent in 2025, but the rate will slowly fall to 65.1

percent in 2036, 62.0 percent in 2045 and 60.6 percent in 2060. Overall, the

number of employed people will increase by 2.4 percent and the employment

rate by 1.5 percent annually.

 

4. Cost of Unification

 

1) Method of Estimating the Unification Costs

The cost of unification has been measured in five areas ― social security, public

administration, education, industrial investment and other discretional

expenditures. The unified Korean government will be obliged to operate the four

social insurance programs ― national pension, national health insurance,

employment insurance and industrial disaster insurance ― for the Northerners,

subsidizing their insurance while collecting very little insurance dues. The

government will also have to pay the basic pension for low-income earners.

65

 

Raising the administrative and educational standards in the North to those in the

South will require a huge outlay in personnel costs. As observed above,

investment in the social overhead capital in the Northern area will amount to 1

percent of the GDP in the South for the first 20 years after unification. The

investment will be reduced by 0.1 percent annually for the next 10 years (2036-

2045).

 

In a previous study, the Korea Research Institute for Human Settlement estimated

that 93.5 trillion won will be needed to upgrade the North`s infrastructure during

the first 10 years after unification. The Korea Rural Economic Institute expects that

26.3 trillion won will be needed for the agricultural sector over the same period

of time. Investment in these and other areas will total 208 trillion won, taking up

the bulk of the unification expenditures.

 

Other discretionary expenditures will include the costs for SOC maintenance and

education programs aimed at easing social and cultural differences. In view of the

South`s fiscal capacity and the North`s ability to absorb inputs, it is reasonable to

assume that these costs will be equal to 1 percent of the South`s GDP. But this

type of spending will depend largely on the policy direction of the fiscal

authorities and the overall fiscal situation of the unified Korea.

 

2) Estimated Amounts

The National Assembly Budget Office estimates that the total unification cost for

the 45 years from 2016 to 2060 will amount to 10,428 trillion won by the current

price (4,657 trillion won in real terms), with an annual cost of 232 trillion won

(103 trillion won in real terms). The first year of 2016 will demand 68.0 trillion

won (53 trillion won in real terms) and the annual amount will peak in 2056 when

357.2 trillion won (127 trillion won in real terms) will have to be spent. The final

year of 2060 will see the annual unification cost recede to 339.9 trillion won

(115.8 trillion won in real terms).

 

The share of the unification cost against the GDP of the unified Korea will

average 3.9 percent, rising from 4.2 percent in 2016 to 4.8 percent in 2035, and

then steadily decline to 2.8 percent in 2060. These percentages will more

realistically reflect the impact of unification cost on the overall economy than the

net amounts.

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By category, social security will require the largest share of the total unification

cost. It will take up 47.7 percent. In order to stabilize the North Korean people`s

livelihood, unified Korea will need to spend 10.8 trillion won in 2016, or 15.9

percent of the year`s unification cost. The cost of this category will rise to 154.1

trillion won, or 45.3 percent of the total expenditures for unification, in 2060, with

the annual average at 28.1 trillion won over the 45-year period.

 

Expenditures in education, including teacher salaries, will balloon from 13.9 trillion

won (20.4 percent of the total unification cost) in 2016 to 48.9 trillion won (14.4

percent) in 2060, with an annual average of 28.1 trillion won. In public

administration, which will include payments to public servants, unified Korea will

spend 11.9 trillion won (17.5 percent) for unification in 2016 and 50.4 trillion won

(14.8 percent) in 2060, with an annual average of 27.7 trillion won. Total industrial

investment will reach 769.6 trillion won over the 30 years following unification.

 

Other expenditures at the discretion of the unified Korean government will

increase from 15.7 trillion won in 2016 to 86.5 trillion won in 2060, with an annual

average of 48.4 trillion won. About 1 percent of the unified Korea`s GDP is

expected to be allotted to this portion of the unification cost, which will include

the money for SOC maintenance and various training/education programs for the

Northerners to help them adapt to new social and economic situations.

 

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5. Maximizing the Economic Effect of Unification

 

1) Overall Economic Effect

The combined GDP of South and North Korea in 2013 was $1.4 trillion (1,135

trillion won). Unified Korea`s GDP in 2060 is projected to reach $5.5 trillion to

bring its global ranking to 10th place from 12th in 2013. Unified Korea`s per

capita GDP will also swell from $29,000 in 2013 to $79,000 in 2060, rising from

19th to 7th in the world. These estimates are based on the exchange rate set at

788.9 won per dollar by the OECD`s 2005 purchasing power parity.

 

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The economic benefits from unification are calculated by combining the added

value of products from the South and North as a result of unification. By the real

price, the net benefits will amount to 14,451 trillion won ― by subtracting the

total unification cost of 4,657 trillion won from the total benefits of 19,111 trillion

won. The net benefit will thus be 3.1 times larger than the estimated cost. To

calculate the portion in the North Korean area`s GDP added by unification, GDP

volumes by an imagined growth rate of 1.2 percent (the real growth rate between

2000 and 2013) are subtracted from the prospective North Korean GDP figures

obtained through the growth accounting method.

 

2) Inter-Korean Economic Cooperation

The unification cost will be higher if the gaps in income and social and cultural

standards are not narrowed. Expenditures for unification can be reduced if the

income gap is closed through increased economic cooperation ahead of

unification, possibly by transferring the South`s experience in developing a market

economy.

 

Inter-Korean trade was insignificant at $18.7 million in 1989. But it leaped to

$1,055.8 million in 2005 when the Kaesong (Gaeseong) Industrial Complex, a pilot

economic cooperation project, opened in the North Korean border town of

Kaesong. The bilateral trade increased to $1,970 million in 2012 and then fell to

$1,135.8 million in 2013 due to disagreements over operations.

 

Bonded processing trade using the North`s low-cost labor involves relatively low

investment risks. Inter-Korean cooperation in this category recorded $209 million

in 2005, growing to $409 million in 2009. However, the South`s punitive measures

of May 24, 2010 following the sinking of the Navy`s patrol craft Cheonan

attributed to a North Korean torpedo attack kept inter-Korean trade to a

minimum level.

 

The aggregate trade volume through the Kaesong Industrial Complex project

recorded $8,940 million between 2004 and 2013, accounting for 46 percent of the

total trade between the two Koreas during the period. The joint industrial park

has more than 100 production plants established with South Korean investment.

North Koreans produce goods from parts and materials brought from the South.

During the nine years from 2005 through 2013, the project significantly

contributed to the South Korean economy with total production inducement of

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10,429 billion won and employment of 43,600 people, including 32,700 wage

earners.

 

The Kaesong complex is by far the most successful international economic

cooperation project that North Korea has undertaken to date. Expansion of the

this complex as originally planned is desirable and similar facilities may be built

elsewhere in the North. In addition to the joint industrial complex, South Korea

can take part in North Korea`s special economic zones and promote its

participation in multilateral economic cooperation programs.

 

The Rason Special Economic Zone, earlier called the Rajin-Sonbong Special

Economic Zone, in the northeastern fringe of North Korea is seen as the most

important staging point for South Korean enterprises` cooperation with the North,

considering the infrastructure and geographical factors. The Sinuiju Special

Economic Zone on the northwestern border with China can be another target of

South Korean investment in the North. The South can help promote North

Korea`s economic reform and openness by linking its North Korean cooperation

programs with its East Asian regional cooperation initiatives.

 

For the success of North Korea`s special economic zones, South Korea`s

participation is essential. Inter-Korean economic projects not only assist the

economic survival of North Korea but can serve as a major growth engine for the

South Korean economy.

 

3) Labor Productivity in the North

The most desirable way to minimize the financial burden from unification in the

mid to long term is to increase productivity in the North, thereby raising its

income levels. Increase of productivity requires expansion of investment,

improvement of the quality of labor, technological development and

internationalization of economy.

 

While education and vocational training in the North are important, there is also

a pressing need to address general malnutrition, low birthrate and the aging of

population. The North`s fertility rate fell from 2.2 in 1993 to 2.0 in 2008, and it is

on course to an aged society (with the 65-and-over group exceeding 14 percent

of the total population) in 2033 and a hyper-aged society (with the 65-and-over

group exceeding 20 percent) in 2058. The infant mortality rate in the North is

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reported to be 26 out of every 1,000 births, which is seven times higher than that

of South Korea.

 

In order to slow down the aging of North Korean society, it is necessary to

provide more food and expand assistance to improve maternal health and the

general medical environment. Total grain consumption in the North amounts to

5.4 million tons a year, which is far lower than the WHO standard of 6.59 million

tons. About half of the infant deaths are caused by dysentery and respiratory

inflammation, which can be prevented with the adequate supply of basic

medicine and clean water.

 

Among children aged below five years, 27.9 percent suffer from chronic

malnutrition and 23.7 percent from anemia. Maternal mortality, amounting to 76

out of every 100,000 childbirths ― five times higher than that in South Korea ―

is mostly attributed to excessive bleeding. President Park Geun-hye has said that

South Korea will provide $13.3 million for the maternal health programs in North

Korea via international organizations.

 

North Korea will undergo a drastic industrial transformation as unification

proceeds. Therefore, it is necessary to make preparations to allow a smooth

change in job categories and skill sets. Substantial vocation training will be

needed as the North`s industries transition from being labor-intensive to

technology-intensive. The experiences of retraining refugees from North Korea

over the past years will be useful in this regard. Technical training facilities need

to be opened in any joint industrial estates to be established in the North. The

technical education center at the Kaesong Industrial Complex for which South

Korea invested 20 billion won ($18 million) should be fully utilized to produce

skilled workers.

 

Exchanges in science and technology education need to be expanded. The

Pyongyang University of Science and Technology is a successful example. The

institute established with money and facilities provided by private South Korean

organizations started lectures for 100 undergraduate and 60 graduate students

on October 25, 2010, with faculty from the United States, Canada and other

countries. Future projects could include joint science and technology research

institutes to study how the industrial infrastructure and systems standardization

could be improved in the North.

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Technological development and standardization/globalization of industrial

systems are essential for the increase of productivity in North Korea. Particularly

important is cooperation in agriculture through technology transfer and

standardization of statistics, which will help accelerate economic development in

the North. There also is the need for close cooperation in information and

communications technology which both South and North Korea regard as the

main growth engines of their economies.

 

Inter-Korean science and technology cooperation projects which began in 1999

have been suspended since May 2010. Yet it is necessary to reopen at least the

joint programs for industrial standardization and statistical collaboration as soon

as possible. The “South-North Industrial Standards Integration Program,” which

began in 2001, also remains suspended.

 

4) Maximizing the Effect of SOC Investment

Unification will bring about larger sovereign territory, a bigger population and

integration of resources and labor, which are all elements for stronger national

competitiveness. To maximize their impact, it is essential to build and operate

effective SOC facilities. In 2014, President Park proposed the establishment of

“composite rural estates” where the two Koreas would jointly engage in

agriculture, forestry and livestock projects. She also offered investment in

transportation, communications and construction businesses and participation in

multilateral cooperative programs with North Korea, China and Russia in the

Sinuiju and Rajin-Khasan areas.

 

SOC investment involves long preparation and large-scale financing. The South

Korean government should carefully study the appropriate timing of investment

to ensure maximum efficiency. All of the projects for general development of the

North with the construction of advanced transportation networks call for close

cooperation with the international community so the North can fulfill its potential

as a strategic gateway to the Northeast Asian economic sphere.

 

The Korean peninsula has the geographical advantage to play a vital role for

economic and cultural exchanges in the region in coordination with China, Russia

and Japan. These nations are participants of the six-party talks, which started in

2003 to deal with North Korea`s expanding nuclear arsenal. Besides the security

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issues, South Korea needs to get these states interested in the economic

development of North Korea.

 

The South Korean government should prepare to launch SOC projects in North

Korea as soon as unification is realized. Complete construction blueprints and

investment plans should be on hand. Under the present state of unpreparedness

for SOC investment, more than 10 years will be needed to see substantial

outcomes of any infrastructure projects in North Korea. Feasibility tests and

drafting of basic plans should start as soon as relations between the two Koreas

begin to thaw.

 

It is necessary to open SOC projects for North Korea to domestic and foreign

private investors in order to reduce the fiscal burden on the the South Korean

government. In the past, the Hyundai-Asan Group invested 98 billion won in the

development of Changjon Port in the North, Kookyang Shipping Co. spent 2.1

billion won for the improvement of port facilities in Nampo, and the Yanbian

Xiantong Ocean Shipping Group put $2.6 million in the modernization of loading

and unloading facilities at Rajin Port. These cases can be useful precedents of

private investment in North Korean SOC projects in the future. The current system

of the government bearing the entire land compensation cost and part of

construction cost in local SOC projects can be applied to infrastructure projects in

the North.

 

II. Fiscal System of Unified Korea 

1. Government Spending

 

1) Normalization of Northern Economy and Redistribution of Income

The unified Korean government will need to help normalize the North`s economy

as quickly as possible after unification to minimize the financial burden on the

South. The unification cost, as observed above, is expected to amount initially to

4.3 percent of the GDP in South Korea in the first year of 2016. The proportion

will grow to 5.4 percent by 2035 and will from thence go down to 3.9 percent in

the target year of 2060. Despite the pressure of unification cost, the South`s

economy will expand by more than 1 percent during the early years after

unification thanks to broader market access and infrastructure projects in the

North.

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As the North Korean economy grows rapidly, the government of unified Korea

should exercise its fiscal power to ensure fair distribution of economic benefits to

people in the North. In the case of China, large businesses and capitalists took up

the lion`s share of fruits from economic growth, widening income disparity. Such

consequences should be avoided by implementing an effective system of income

redistribution in unified Korea.

 

2) Private Investment to Ease Fiscal Burden

In the initial period after unification, the government should be ready to bear the

financial burden but it should also be prepared to draw in large investment from

private businesses. No one but the government can shoulder the cost of

integrating two basically different economic systems. Yet, the added value from

unification can be transferred to the private sector in the form of wages and

profits when projects are open to private investments or borrowings from home

and abroad.

 

Private capital can be utilized for SOC construction, energy and resources

development and tourism industry. The government should also pre-determine

the possibility of development loans from international organizations as well as

foreign investment.

 

The best combination of tax increases and issuance of state bonds will need to

be sought while considering the main recipients of benefits, how burdens should

be fairly divided among generations, and the relative effects of supplementing

revenues. Universal tax increase may be justified for welfare and other ordinary

expenditures as all people will benefit from unification, but expenditures for SOC

investment should be covered by state bonds since benefits will go to future

generations.

 

3) Ensuring Fiscal Soundness of Unified Korea

The unified Korea will come under dual fiscal pressures from the aging of society

in South Korea and the heavy unification cost. Strategic management of state

debt is required not to allow fiscal disruption. Without fiscal soundness, economic

growth and redistribution of income will be hard to come by amid expanding

macroeconomic instability.

 

74

Unification will vastly expand the domestic market but external dependence will

also grow. Therefore, wise fiscal management to meet short- and long-term

pressures is imperative. Despite additional acquisition of natural resources from

the North, the nation will continue to depend on energy imports. The unified

Korea`s export-oriented economy will keep it vulnerable to external factors. If

sovereign ratings fall due to soaring state debt, interest rates on government

bonds will rise to raise the cost of international borrowings. That could block

reissuance or replacement state bonds.

 

To ensure fiscal soundness, extra efforts will be needed to manage state debts at

an appropriate level and control the issuance of bonds to cover the cost of

unification. The problem is that the benefits from unification take a long time to

materialize and therefore cannot meet the immediate high cost of unification,

forcing the government to issue bonds in large quantities. In the case of

Germany, the proportion of Bunds repayable over 10 to 30 years increased from

around 40 percent of total bonds in the 1980s to over 50 percent in the 1990s

after unification.

 

South Korea has been issuing 30-year bonds. The government will have to issue

bonds with 40- to 50-year maturity to ensure stable debt management and

stimulate purchases. In 2013, circulation of 20- to 30-year government bonds

amounted to only 121 trillion won compared to 2,857 trillion won of 3-10 year

bonds.

 

2. Fiscal Outlook of Unified Korea

 

Additional revenues resulting from unification have been calculated on the basis

of a long-term fiscal outlook for South Korea compiled by the National Assembly

Budget Office. Revenue from South Korea`s long-term economic growth specified

in the NABO report was not included in the fiscal outcome of unification.

 

Supposing that the taxation rate of 19.4 percent is retained in the unified Korea,

revenue increase from unification is to stand at 12.4 trillion won in 2016, going

up to 175.9 trillion won in 2040 and 690.4 trillion won in 2060.

 

The ratio of state debt against the GDP is estimated at 38.7 percent in 2016,

eventually rising to 163.9 percent in 2060. In NABO`s long-term outlook, South

75

Korean government debts will be 36.8 percent of the GDP in 2016 and 168.9

percent in 2060. The percentage of the unified Korea`s government debt against

the GDP in 2060 will be slightly lower than that of South Korea because the

addition of North Korean residents will mean a larger tax base, which will increase

the overall GDP scale.

 

Unified Korea`s state debt is calculated by adding up the fiscal liabilities arising

from unification and their interests as well as fiscal deficits in the South

(subtracting deficits in the four social security accounts). In 2040, the percentage

of government debt against the GDP is to hit 133.6 percent, far higher than

South Korea`s 85.1 percent for the year, reflecting the large proportion of

unification costs in state finance up until that time.

 

 

The net debt burden, calculated by subtracting unification costs from the fiscal

revenues resulting from unification, will steadily climb from 55.5 trillion won in

2016 to 116.4 trillion won in 2035 but will continuously decline thereafter until

2047, when there will be a balance between unification costs and revenues.

Government debt to meet unification costs against the GDP will continue to fall

from 3.4 percent in 2016 to -2.9 percent in 2060.

76

 

 

If the tax rate is raised by 1 percentage point from the current 19.4 percent to

20.4 percent, the ratio of government debt against the GDP will fall to 122.4

percent in 2060, or 41.5 percentage points down. The raise will add 16.4 trillion

won to tax revenue in 2016, 59.5 trillion won in 2040 and 122.1 trillion won in

2060. If the tax rate is raised by 3 percentage points, the government debt to

GDP ratio in 2060 will decline to 39.5 percent.

 

HigherHiA higher tax rate will allow reduction in state bond issues and improve

the fiscal situation. A 1 percentage point tax raise will result in a dramatic fall in

the issuance of bonds and lower total interest payments from an estimated 179.7

trillion won to 33.4 trillion won in 2060.

 

77

 

3. Improvement of Fiscal System

 

1) Special Accounts for Financing Unification

Money collected through government bonds or higher tax rates to cover the cost

of unification should be managed in special accounts or special funds. If such

revenues are delivered to general accounts, the fiscal order will be disrupted and

the government could find it difficult to expend the additional revenues for

unification.

 

If North Korea`s current local administration system (one city under direct control

of the central government, two special cities and nine provinces) is incorporated

into the unified Korea`s administrative framework, there will be a total of 29

provincial and metropolitan administrations (17 in the South and 12 in the North).

It means that 12 more local administrations will share the 40 percent portion of

internal tax revenues, significantly denting the amounts distributed to the local

administrations in the South.

 

The incorporation of North Korean local administrative units into the nationwide

administration network of unified Korea may therefore be delayed and special

78

accounts may be introduced with fiscal resources secured through a unification

surtax or unification bonds for the sole purpose of meeting fiscal needs of the

North Korean area. Germany delayed incorporating the East German area into its

inter-state fiscal coordination system for five years and used the special

unification fund for the territory during this period. Normal fiscal system replaced

the unification fund in 1995.

 

2) Sustainable Welfare System for Unified Korea

The North`s population structure may help slow down a bit the population aging

in unified Korea. But the low birthrate and increase of aged people will cause

serious deficits to the existing welfare systems with fewer contributors and more

recipients.

 

As of 2013, the number of people aged 65 or older in South Korea accounted for

12.2 percent of the total population. The ratio will reach 14.5 percent in 2018 to

push South Korea into an aged society and then in 2026 South Korea will

become a super-aged society with 20.8 percent of its population in the 65-and-

over group. North Korea reached “aging society” status (7.2 percent of its

population aged 65 or older) in 2003 and is expected to become an “aged

society” in 2033.

 

It is crucial to establish a sustainable social welfare system in South Korea,

particularly various schemes related with population aging, ahead of unification

so that unified Korea will be ensured financial sustainability for welfare needs. The

public pension system in the South involves many problems, including grey areas,

low contributions and unstable management. The National Tax Service needs to

make more efforts to identify the sources of taxable income and the welfare

authorities should correctly classify beneficiaries. Occupational pension schemes

for teachers, soldiers and public servants also need measures to improve financial

sustainability.

 

In order to ensure the stable finance of the health insurance system, collection of

insurance dues should be rationalized to have richer people pay more and poorer

people pay less while generally lowering medical expenses and spending on

medicine.

 

3) Effective Management of Public Properties in the North

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Many legal disputes could arise after unification over the ownership of properties

in the North. Frequent lawsuits such as those to recover properties and get

compensation for unredeemable estates will hinder economic development and

social integration. If any SOC construction projects are delayed due to such

disputes, investment will be delayed, causing grave consequences. In Germany, a

total of 2,220,000 property claims were filed in four years after unification and the

deadline for final settlements has been extended from 2010 to 2018. As of

September 1994, the German government earned 65 billion marks through the

sale of public properties and had to pay 350 billion marks for compensation and

other expenses.

 

Unification planners in Korea need to take lessons from the German experiences

regarding property claims and other aftermaths of unification. Strenuous studies

should be made on timely investment in SOC construction and other industrial

programs to have unification accompanied by sustained economic and social

development of the entire Korean peninsula.

 

Editor`s Note: This is a summary of a report prepared by the National Assembly

Budget Office.

 [December 2014]

www.koreafocus.or.kr

80

Trends in Economic Happiness and Policy Implications 

Kim Dong-yulHead, Division of Policy StudiesHyundai Research Institute

 

Hong Yoo-rimResearch Fellow, Economic Research DepartmentHyundai Research Institute

 

I. Major Obstacles to Economic Happiness 

Most Koreans feel a lack of preparation for later life and children`s education are

the two greatest obstacles to their economic happiness, according to Hyundai

Research Institute`s latest survey. Among the respondents (812 adults aged 20 or

older), 24.8 percent citied “lack of preparation for old age” and 22.6 percent cited

“children`s education” (22.6 percent) as the primary factor that hinders their

economic happiness.

 

The survey, which was conducted on December 11-19, 2014, also revealed that as

people grow older, the factors affecting their economic happiness change from

employment to housing, to children`s education and to preparation for old age.

“Housing problem” was picked by 16.6 percent, “lack of jobs” by 16.3 percent,

“private consumption slump” by 13.3 percent, and “sluggish business investment”

by 6.4 percent.

 

Reponses differed by age group: people in their 20s most frequently blamed “lack

of jobs,” those in their 40s suffered most from difficulties of “children`s

education,” and those in their 60s or older are most worried about “lack of

preparation for old age.”

 

People in their 20s, who have just entered into adult society, cited “lack of jobs”

(27.7 percent) and “housing problem” (25.7 percent) as the two biggest

headaches, followed by “lack of old age preparation” (15.8 percent). People in

their 30s, who get married and raise a family, were most sensitive to “housing

problem” (31.1 percent), followed by “lack of old age preparation” (18.9 percent)

and “children`s education” (17.5 percent). Among people in their 40s, the most

dominant reply was “children`s education (42.4 percent), and 50-somethings most

81

often cited “lack of old age preparation” (28.8 percent) and “children`s education”

(20.7 percent), while people aged 60 or older cited “lack of old age preparation”

(48.5 percent) in an overwhelming portion.

 

 

 

Factors that affect economic happiness differed widely depending on marital

status. Also, the higher the respondents` income and education level, the higher

their response rate of “children`s education.” Unmarried respondents most often

mentioned “housing problem” (30.2 percent) and “lack of jobs” (24.9 percent),

82

while married respondents cited “children`s education” (27.9 percent) and “lack of

old age preparation” (26.5 percent) the most. The high response rate on

“children`s education” as the greatest obstacle to economic happiness among

people with higher income and education indicates they spend relatively large

sums for the education of their children.

 

On how to increase financial resources to enhance welfare services conducive to

greater economic happiness, the respondents most often cited “tax hikes on the

wealthy” (41.3 percent), followed by “preventing tax avoidance” (31.7 percent) and

“government`s belt-tightening” (21.1 percent). The response rate of “tax rate

increase” was very low at 6.0 percent, probably because it would increase their

own tax burden.

 

In scraping up funding for welfare expansion, the “NOOMP” (Not Out Of My

Pocket) phenomenon could still be observed, as people want the wealthy class

and government to be the main sources and regard sharing the burden by all

people (tax rate increase) to be the least appealing.

 

The response for “tax hikes on the wealthy” continued to rise from 39.2 percent

in 2012, to 40.5 percent in 2013 and to 41.3 percent in 2014, while that of

“preventing tax avoidance” fell from 37.5 percent to 34.8 percent and to 31.7

percent over the corresponding period. The response for “government`s belt-

tightening” was 21.1 percent in 2014, up from 18.7 percent in 2012 and 18.2

percent in 2013. Supporters of “tax rate increase” rose slightly from 4.6 percent in

2012.

 

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II. Features of Economic Happiness 

As of December 2014, the economically unhappiest person in Korea was a self-

employed, college-educated, divorced man in his 40s, while the happiest person

was a single professional woman in her 20s.

 

By age group, economic happiness was highest among people in their 20s, and

lowest among those in their 40s. Economic happiness was very low among

people aged 60 or older in previous surveys, but it spiked higher in the latest

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survey thanks to the expansion of basic pension payments months earlier, among

other reasons. Those in their 40s showed the lowest happiness level.

 

By education level, economic happiness was highest among those who finished

graduate schools, and lowest among college graduates. The level of education

paralleled the level of happiness in previous surveys, but in the latest survey the

economic happiness of college graduates (43.8 percent) fell below that of high

school graduates (45.0 percent) for the first time.

 

Other demographic trends have changed little from the past. By marital status,

the level of economic happiness used to be led by the unmarried followed by the

married and divorced; by gender, women showed a higher level of happiness

than men; and by occupation, happiness level was highest among professionals,

trailed by government employees, private sector employees and self-employed.

These trends remained largely unchanged.

 

 

85

 

By age group, economic happiness was high among those in their 20s and 60s

but low among those in their 40s, forming a U-shaped curve for the first time

since the survey was first conducted in 2007.

 

The economic happiness index of people aged 60 and over rose 8.2 points from

the previous survey period to reach the highest level ever, and that of 50-

somethings also climbed 4.7 points, indicating the economic happiness of

middle- and old-aged people soared recently. The sharp rise of economic

happiness among people aged 60 and over in the last survey can be partly

attributed to the expansion of basic pension payments in July 2014.

 

In advanced countries where people have little concern about post-retirement life

because of well-established pension systems, economic happiness of people aged

60 and over is as high as that of those in their 20s, showing a U-shaped pattern.

 

The economic happiness index of 20-something people, at 48.9, was higher than

any age group, up 1.1 points from the previous period, while that of 40-

something people was the lowest at 40.9, down 5.3 points from the previous

period. In the case of 30-somethings, their economic happiness index fell by 3.4

points to 45.4, but they still were the second happiest group.

 

86

 

 

As a result of averaging the outcomes of the last 10 surveys (from the fifth survey

in July 2010 to the 15th survey in December 2014) in 16 provinces and

metropolises, the economic happiness index was found to be highest in Ulsan,

which also recorded the highest gross regional domestic product (GRDP). In

terms of mega-economic sphere, Daegu-North Gyeongsang region had the

highest economic happiness index.

 

Five provinces and metropolises showed higher levels of economic happiness

than the national average through the past 10 surveys. They are Ulsan

Metropolitan City, Gyeonggi Province, Daegu Metropolitan City, Daejeon

Metropolitan City and North Gyeongsang Province.

87

 

In the comparison of seven mega-economic spheres, Daegu-North Gyeongsang,

Busan-Ulsan-South Gyeongsang and Chungcheong showed relatively higher

economic happiness indices than others.

 

 

 

Among the six factors of the economic happiness index, “economic equality” (27.6

points) and “economic insecurity” (31.1 points) were the lowest, pulling down the

overall results. Also below 50 points was “economic progress,” which is closely

related to economic future. It stood at 45.9 points.

 

88

“Economic progress” and “economic insecurity,” the two factors related with

future outlook, fell from the previous period; “economic stability” and “overall

happiness” edged up; and “economic superiority” and “economic equality”

showed relatively notable increases.

 

The economic stability factor, which is related with jobs and income, marked

slight gains of 0.7 point and 1.5 points, respectively, but the economic superiority

and economic equality factors showed relatively firm increases of 3.0 points and

3.1 points, respectively.

 

 

The economic happiness index in the 15th survey stood at 44.5 points to hover

below the 50-point level, but marked a 0.9-point gain from the previous period

(June 2014), and a 3.9-point rise from a year earlier (December 2013), continuing

89

an upward streak from the five-year period of the Lee Myung-bak administration.

 

Unlike the rising trend of the economic happiness index, “future economic

happiness prediction index” has been declining in the last four surveys, pointing

to a rather gloomy outlook for the future. In the first two years of the incumbent

administration (from the 12th to 15th surveys), the economic happiness index

averaged at 42.5 points, up 3.2 points from the average of 39.3 points in the five

years under the previous administration.

 

 

III. Policy Implications 

Considering that “economic insecurity” and “economic equality” got very low

points, the government will need to support old age preparations, children`s

education and stable employment, as well as make continuous efforts to reduce

income inequality.

 

“Economic insecurity” was conspicuous across all age groups, suppressing the

overall economic happiness index. Therefore, it is necessary for the government

to help ease people`s uneasiness about the future by providing support for job

security and preparations for later life. Given the continuous downturn of the

future prediction index, economic policymakers also need to draft measures to

make economic recovery more tangible.

90

 

Although the notable improvement in the economic happiness of people aged 60

and over can be thought to have reflected the effect of the expanded payment of

basic pension, Koreans still regard “lack of old age preparation” as the biggest

obstacle to their economic happiness. In this regard, the government should

continue to provide policy support for senior citizens by, for instance, creating

senior-friendly jobs and raising post-retirement income.

 

The government also ought to pay keen attention to the fall of economic

happiness among highly-educated people, including college graduates,

particularly the acute sense of “economic insecurity” and “economic inequality”

prevalent among them. Considering that the sense of economic insecurity is

widespread even among highly-educated people like college graduates as well as

middle- and high-income classes, policymakers need to exert greater efforts to

enhance job security and narrow income gap.

 

 

[Appendix 1]

Outline of the Economic Happiness Index Survey and Profiles of Respondents

 

• Outline of Survey

- Period: December 11-19, 2014 (nine days)

- Method: Telephone poll

- Subjects: 812 men and women aged 20 or older across the nation (distributed

by minimum regional allocation and population ratio)

- Margin of error: 95 percent confidence level with an error margin of minus and

plus 3.4 percentage points.

 

 

91

 

 

 

[Appendix 2]

What is the Economic Happiness Index?

 

• Definition

Hyundai Research Institute defines the “economic happiness index” as an

appraisal of the level of satisfaction and pleasure felt by an individual with respect

to economic factors that can change due to one`s economic situation, awareness

and external conditions.

 

• Purpose

By determining the meaning of “economic happiness” as well as repeatedly

measuring and releasing the economic happiness index felt by Koreans on a

regular basis, this institute aims to provide data that can be useful in formulating

economic and social policies. It has surveyed and compiled the index every six

months since December 2007.

 

• Components

The five elements that constitute the economic happiness index are economic

security, economic superiority, economic progress, economic equality and

economic insecurity, each of which is turned into an index to be combined into

the economic happiness index.

92

 

 

• Calculation Method

Economic happiness index can be produced by putting “five sub-indices” and

“overall feeling of happiness” together.

- Each of the five sub-indices is the average score of positive replies (100 points),

neutral replies (50 points) and negative replies (0 point).

- The scoring of economic insecurity was made in reverse; the higher the point,

the lower the insecurity.

- In order to measure the overall sense of happiness, the survey asked

respondents whether they were economically happy, and gave 100 points to the

happy group, 50 points to the average group and 0 points to the unhappy group,

and then produced final scores by averaging them.

- Economic happiness index ranges from the minimum 0 point and the maximum

100 points with the median level at 50 points

 

 

• Economic Happiness Prediction

This institute also surveyed future trends in economic happiness, or economic

happiness prediction.

- Separate from the economic happiness index, the survey aims to measure an

independent item and turn it into an index to predict changes in economic

93

happiness.

- So the survey asked whether the respondents think “they would become

happier economically in the future,” and added 50 points (after multiplying the

weight of 0.5) to the difference in the share of “yes” and “no” replies. If the final

score is 50 or higher, it means the respondent thinks his/her economic happiness

will improve, and if it is below that level, the person thinks his/her economic

happiness will decrease (identical method to calculating the business survey

index).

- If the “yes” replies account for 60 percent and “no” replies 40 percent, for

instance, the difference is 20 percent. If this figure is multiplied by the weight of

0.5 and 50 is added to it, the economic happiness prediction index is 60.

- Economic happiness prediction index ranges from 0 point to 100 points with

the median level at 50 points.

 

 [VIP Report 15-01, No. 598, January 7, 2015,

Hyundai Research Institute]

www.koreafocus.or.kr

94

 - Neighbors Help Siblings from North Korea Enter Seoul National University

 - ‘Seals Embody a Person’s Fate’

95

Neighbors Help Siblings from North Korea Enter SeoulNational University 

Lee Yeong-jun receives congratulations from Prof. Jeong Yong-hyeon,police inspector Lee Hyeon-suk and pastor Park Ro-Gyeom (from left) atSeoul National University on January 15.

 

Jeong Gyeong-hwa and Kim Ji-yeonStaff ReportersThe Chosun Ilbo

 

“I was admitted to such a prestigious university thanks to the help and support of

so many people. The only way for me to repay your kindness is to study hard and

make you all proud.” Standing in front of the entrance to Seoul National

University on January 15, Lee Yeong-jun (fictitious name), 21, expressed his

gratitude to the people who had gathered to congratulate him.

 

Lee was accepted to the College of Engineering in the balanced opportunity

admissions category. He is the 20th North Korean defector to enter the elite

Korean university in the past 10 years. His older sister, who is 27 years old, was

also accepted to the same university last year. The siblings finally realized their

dream of studying together at Seoul National University just three years after

fleeing the North and settling down in South Korea in 2012. (February 13, 2014

Chosun Ilbo article) The two are the first siblings from North Korea to attend the

university together.

 

Lee and his sister lived a relatively comfortable childhood in North Korea, their

father being a college professor and mother, a doctor. But when the economic

and social situation in the North deteriorated to the point that even the elite,

96

such as their parents, had to peddle goods in the market to put food on the

table, the family decided to flee the country in 2009. The first attempt ended in

tragedy. The Chinese police arrested the family and sent everyone back to the

North. Lee`s father never made it back alive. In 2012, Lee and his sister and

mother finally succeeded in making it out of the country.

 

Lee`s remarkable accomplishment was made possible through the kind and

generous support of his neighbors in Yangcheon-gu, Seoul, who cared for him

like one of their own. Gil Hye-yeong, 39, the owner of a study room in the

neighborhood, allowed Lee free access to the facility from July to November last

year. “Students that pay a monthly fee don`t even come on a regular basis. But

Yeong-jun would come here straight from school every single day and study until

we closed at 1 a.m. in the morning,” said Gil.

 

One of the criteria for college admissions was volunteer work, but Lee did not

even understand the basic concept of “volunteering.” That`s where Reverend Park

No-gyeom, 47, stepped in. He ran an organization for people with disabilities,

and he arranged for Lee to do volunteer work at the facility. Lee Hyeon-suk, a

lieutenant at Yangcheon Police Station, and people in the security division there

helped Lee`s sister get a private tutoring job, and also recommended Lee to a

scholarship foundation that agreed to provide 6 million won (approximately

US$6,000) over two years.

 

Jeong Yong-hyeon, 68, a professor at the Graduate School of Public

Administration, Dongguk University, who became acquainted with Lee through

the police officers, explained the differences in the social system between the

North and South, and advised, “Make sure to keep your promises, and value

human relationships and trust.”

 

“When I expressed concern about him studying at school in the cold, Yeong-jun

would say, ‘I`m fine! North Korea is way colder,`” Jeong said. “He is not only

studious, but such a bright and likeable kid, and full of confidence, that you just

can`t help wanting to do things for him.”

 

It was Lee`s hard work that made the neighbors` help and support all the more

worthwhile. “For the past two and a half years, I spent every waking moment

studying,” said Lee. He woke up at 6 a.m., was the first one at school, and studied

97

until 1 a.m. the next morning.

 

His math teacher Park Yeong-hui, 43, said, “Most students from North Korea are

quiet; they don`t want to draw attention. But Yeong-jun participated actively in

class asking a lot of questions.” He would follow his teachers around with

questions, and thanks to such determination he was able to maintain good

grades, ranking among the top 20 in the whole school throughout his senior

year. In last year`s College Scholastic Ability Test, he received first grade in Korean

language, a subject he had found particularly difficult. He was well-liked by his

classmates who called him “hyeong” (older brother), and would often liven up the

atmosphere in the classroom.

 

Lee chose engineering as his major following in the footsteps of his father, who

was an engineering professor in North Korea. He had been surrounded with

books on engineering when he was young and his father`s friends were all

engineers, so naturally he nurtured the dream of becoming an engineer from an

early age. “Last year I read the book ‘Robot Da Vinci, Designing My Dream` by

Dennis Hong. It inspired me to become an engineer, designing and building

robots that aid in disaster relief,” said Lee.

 

Lee`s mother, 53, worked 12 hours a day cleaning buildings to take care of him

and his sister. “After losing my husband, I took my two children and escaped to

South Korea. Now both of them have made it into Seoul National University. I

can`t express how happy and proud I am,” she said. “My daughter is doing great

in school, ranking fifth in her class. I`m so grateful that my children have been

able to fulfill their father`s wishes, and also thankful to this country for allowing

them to achieve their dreams. I hope they mature into responsible members of

society who contribute and give back some of what they have received.”

 

“My school teachers and so many others willingly extended a helping hand even

before I asked. They sincerely cared about me and help me out in earnest,” said

Lee. “All I could do to repay their kindness and generosity was to do my best.”

Gwon O-hyeon, the admission dean of Seoul National University, said, “Lee and

his sister`s unswerving determination despite difficult circumstances is truly an

inspiration to other students.” He added, “I hope they will be able to do great

things in the future and particularly play a role in the social integration of the two

Koreas.”

98

 

 [January 16, 2015]

www.koreafocus.or.kr

99

‘Seals Embody a Person’s Fate’ 

Seal engraver Ryu Cheol-gyu gives final touches to an engraving ofbodhisattva with 1,000 hands at his studio in Daejeon.

 

Kim Chung-ryeongStaff ReporterThe Chosun Ilbo

 

Wood engravings of the thousand-hand bodhisattva and Dharma; minute

engravings of aphorisms on a hexagonal stone tablet; restoration of the state seal

and written seals of noble families from the Joseon Dynasty; and various

calligraphic works.

 

Ryu Cheol-gyu, 60, is a skilled seal craftsman who was awarded the official

government title of “master artisan of the Republic of Korea.” But the artworks on

display in his workroom Seonghosa are not limited to seals. He starts his day at

dawn with a daily ritual of 108 prostrations before commencing with his main

occupation of making seals. He does this only until noon, limiting the workload to

less than two seals per day. The work requires a high level of concentration and is

something that cannot be rushed to meet production orders. He devotes his

afternoons to other artworks, such as wood and stone engravings, and

calligraphy. He was an invited artist at the Korea Calligraphy Association and the

Korean Calligraphy and Painting Artists Association. “My teacher told me to

become an artist, not just a seal maker,” said Ryu.

 

Ryu first entered the world of seal engraving in 1970 at the age of 16 as a way to

make a living. When his father passed away during his freshman year in high

school, he became the man of the family. So he had to quit school and became

100

an apprentice of the seal craftsman Lee Seok-seong in Daejeon. In the beginning,

he didn`t get any pay; he was just grateful for food and lodging. “All I did for the

first three years was clean and sharpen knives. At night I would copy my teacher`s

works,” Ryu recalled. His teacher saw the seals he had been secretly carving on

his own and decided to teach him the craft.

 

“I expected something along the lines of a ‘five-minute seal engraving technique.`

But instead he handed me the Thousand Character Classic. His principle was that

to acquire true mastery of seal engraving, one needed knowledge of Chinese

classics and calligraphy. After finishing the Thousand Character Classic, I also read

the Analects of Confucius, the Works of Mencius, as well as the Book of Odes and

the Book of Documents. It was hard enough mastering the five different styles of

writing Chinese characters, namely the decorative engraving script, clerical script,

regular script, the semi-cursive and cursive script, but learning how to write them

the other way round presented a formidable challenge,” said Ryu. Lee Seok-seong

sent Ryu to work under another famed master. That`s where he learned the craft

of wood and stone engravings, and in 1980, 10 years after setting foot in the

field, he started his own business.

 

“I believe seals are works of art that embody a person`s fate and soul,” said Ryu.

That is why he considers his clients` fortune based on their year, month, day and

time of birth prior to production. It allows him to make a seal better tailored to

each person`s nature and constitution. “Expensive materials are not always the

best. Depending on the person, I may use ivory, water buffalo horn or

thunderstruck jujube tree (thought to ward off evil spirits). For a person with a

mild temperament, I would use a stronger, bolder script on the seal,” explained

Ryu.

 

After devoting 23 years to the art of seal carving, Ryu was recognized as a

“master artisan of the Republic of Korea” in 2003 at the age of 49. Ryu has even

created his own script style, a combination of the small seal script and decorative

engraving script. “My seals are impossible to forge. I believe you should strive to

become the best in whatever you do,” he said.

 

Among his seals, there are high-priced items that are valued at millions of won.

However, since 20 years ago, the seal carving business has been on the decline.

Demand has plummeted as signatures have taken its place. Also, machines have

101

replaced human labor knocking out a seal in a matter of minutes. It`s only natural

that many have left the industry. Ryu`s seal engraving shop is the only one

remaining among the more than 30 stores that once thrived in front of the South

Chungcheong provincial government building. “Business has been hit hard … But,

then again, I only make two seals a day anyway,” said Ryu with a chuckle.

 

That is largely why Ryu devotes a good part of his time to promoting the culture

of seal making. He gets together with master craftsmen and artisans from the

Daejeon area and holds an exhibition every autumn. He also worked as a

Saemaul (New Community) leader for 12 years from 1985, helping parentless

children left in charge of their families. “I spent my youth ‘locked up` in my own

little world of seal making. I was indifferent to what was going on in the outside

world and the plight of others. That`s not how you should live life….”

 

Ryu also teaches the craft of seal making to the general public. With calligraphy

recently gaining popularity, people interested in the art of letter design come to

learn how to handcraft personal seals. But it is hard to find anyone willing to

learn the traditional art of seal engraving, thus no one to pass down his skills. “I

plan to build a seal museum,” Ryu said. “It will house a vast collection from

traditional seals to novel and unique ones. I hope it will function as a reminder of

the excellence of our culture and its great potential.” Maybe it could inspire

someone to succeed in his footsteps.

 [January 3, 2015]

www.koreafocus.or.kr

102

 - Destruction of Humanity in North Korea More Serious than Food Shortage

 - Life Seen through the Studies of Joseon

103

Destruction of Humanity in North Korea More Seriousthan Food Shortage 

Lee Han-suStaff ReporterThe Chosun Ilbo

 

On the northeastern outskirts of Pyongyang stands the Kumsusan Palace of the

Sun. This is where the body of the late Kim Il-sung lies immaculately embalmed

in a clear glass sarcophagus. Jiang Xuen, deputy chief editor of Hong Kong`s

Yazhou Zhoukan (Asia Weekly) visited the palace on April 15, 2005 as an invitee

of the North Korean government but was strictly forbidden to do any sort of

media coverage. The problem? He did not make an entry in the visitors log book.

 

The concerned North Korean official informed him that he would be prohibited

from conducting any journalistic activity in the country, and explained that no one

else had refused to write in the visitor log about his or her feelings about the

visit. What alarmed him more were the documents the North Korean agent

produced, saying, “We have done detailed research on your past and your actions

today.” The dossier included the picture of his daughter at age seven when she

performed in North Korea as a member of a children`s art troupe in 1985. It was

a silent but chilling threat.

 

Jiang Xuen had to write a repentant essay addressed to Kim Jong-il, which went

something like this: “I have acted inappropriately. I shall correct my wrongdoings.”

The next day, he was taken to the exhibition hall where the flowers Kimilsungia

and Kimjongilia were on display. There he wrote in the visitor log, “The

Kimilsungia is the most beautiful flower, and the Kimjongilia the most elegant in

the whole wide world.” In truth, he was thinking how absurd it was to see a

country suffering from severe food shortages investing so much on such flowers.

Yet, it would have been very unwise to do anything other than praise.

 

104

"The Riddle Named North Korea" written by Jiang Xuen, translated byGu Seong-cheol and published by Esse Publishing Co.

 

◇ The Money Noodles ― Instant Noodles from South Korea WorthHalf a Month`s Salary 

“The Riddle Named North Korea”

By Jiang Xuen, Translated by Gu Seong-cheol, Esse Publishing Co., 400 pages,

18,000 won

 

“The Riddle Named North Korea” is Jiang Xuen`s account of the reclusive country

based on his six visits over 15 years beginning in 1996. In his eyes, North Korea

seemed very similar to China in the 1960s. The streets were covered with political

slogans such as “The Great Supreme Leader Kim Il-sung is forever with us,” or

“The Juche ideology is the sword of no defeat.”

 

The author assumed that those propaganda lines may have been fashioned after

popular Chinese slogans of the 1950s and 60s. TV broadcasts constantly blared

out the achievements of Kim Il-sung and Kim Jong-il and praised the excellence

of the socialist system. The author also noted that the level of economic

development in North Korea was comparable to that of China in the 1960s.

 

For example, the monthly income of an average North Korean citizen was 6,000

won, just enough to buy 1.8 kg of pork. When the author stealthily asked at the

hotel`s souvenir shop while his escort was not watching, the clerk admitted that

she had only two meals a day. Goods from South Korea were traded in secret

and were apparently very popular. For instance, a packet of South Korean instant

noodles cost 2,500-3,500 won, half the average monthly salary and therefore

affordable to the elite class only. It`s no surprise that the North Koreans refer to

105

this delicacy as the “money noodles.”

 

Tap water is available only at certain hours of the day. Warm water supply runs

just for two hours in the evening even in upscale hotels. Pyongyang has

apartment buildings that are 20 stories high. Unfortunately for the residents,

however, these buildings either lack elevators or have elevators that are rarely

operated. Everyone is accustomed to using the stairs. Power is scarce, and at

night time Pyongyang is pitch black as if submerged in the dark ocean.

 

"Without You, There Is No Us" written by Suki Kim, translated by HongGwon-hee and published by Dione Publishing Co.

 

◇ ‘I study for the Great Leader` 

“Without You, There Is No Us”

By Suki Kim, Translated by Hong Gwon-hee, Dione Publishing Co., 352 pages,

15,000 won

 

“Without You, There Is No Us” is a chronicle of life in North Korea written by

Korean-American novelist Suki Kim. The author has visited the kingdom five times

since 2002, her most extensive stay being the six months she spent from July to

December 2011. She taught English at the Pyongyang University of Science and

Technology (PUST) to which only young men from elite families were admitted.

She details how all class materials and printed handouts had to be submitted to a

supervisor for permission to use. She was also informed by a source affiliated

with the school that some of the students may be reporting and/or recording the

exchanges taking place in the classroom.

 

The first shock she received in her interactions with the students was how

106

ignorant they were of the world outside their own. One of the students, in fact,

asked if everyone in the world spoke the Korean language, adding that he had

heard people in the UK, China and the United States spoke Korean because it was

by far superior to other tongues. Her students also believed that the Juche Tower

was the highest structure in the world, and their amusement park the most

exciting. They time and again declared something in North Korea was the best,

making comparisons with its counterpart in the world though they had never

seen or experienced it.

 

The university, which was dedicated to the disciplines of science and technology,

did not allow student access to the Internet. During writing class, they would

produce texts that were more like practiced choruses, speaking almost identically

of commitment to working together to build a powerful nation and studying hard

to make the Great Leader proud. In the author`s view they were either coerced to

lie and/or exaggerate the greatness of their leaders or genuinely believed in what

they were saying. She admits that she could not decide which was sadder.

 

There are people who spend a few days in North Korea and exalt it as a beautiful

country based on the managed glimpses that they are given. The reality that is

North Korea as told by the Chinese journalist and the Korean-American novelist

based on their numerous and extensive stays is quite different. "It is absurd that

North Korea should call itself Democratic People`s Republic of Korea when there

is nothing democratic or republican in the way it denigrates its people,” wrote

Jiang Xuen. Suki Kim intoned a similar sentiment by saying she could understand

the severe shortage of food and resources, but the real lack was in the stark

absence of basic human dignity.

 [January 19, 2015]

www.koreafocus.or.kr

107

Life Seen through the Studies of Joseon 

"Life in the Study" written by Park Cheol-sang and published by MunhakDongne [Literary Community]

 

Ahn Jin-yeongStaff ReporterThe Munhwa Ilbo

 

“Life in the Study”

By Park Cheol-sang, Munhak Dongne [Literary Community], 320 pages,

17,000 won

 

Yeoyudang Jeong Yak-yong, Yeonam Pak Ji-won, Wandang Kim Jeong-hui,

Damheon Hong Dae-yong … These names and their preceding pen names are

familiar to anyone who has spent his or her school years in Korea. Not everyone

knows, however, that their pen names are also the names they gave to their

studies. In fact, intellectuals in the Joseon Dynasty saw their rooms filled with

books as both the locus of life and a comfortable sanctuary. It is then quite

understandable that they preferred to be addressed by the name of the place

that brought them the greatest joy.

 

The name of a study often revealed something about the character and the

philosophy of the owner. Jeong Yak-yong`s pen name “Yeoyudang” (與猶堂) is a

reference to the words of Laozi: “Cautious, as is yeo (與 ) in wading through a

winter river, wary as is yu (猶) afraid of his own neighbors.” The words advise one

to be cautious in words and deeds and to be mindful of the people around him.

For Jeong Yak-yong who had been banished while still a young and promising

scholar for having been influenced by Catholicism, this reminder to constantly

108

reflect on his own life and to exercise caution must have held a special

significance.

 

For similar reasons, the writer Jo Hui-ryong, also of the Joseon Dynasty, named

his study “Baek-yi Yeonjeon Jeollyeo” (百二硯田田廬 ) meaning “a hut in the

country with 102 ink stones.” Instead of tilling the farmland he would grind his

ink stick against one of the ink stones, cleansing his mind in the repetitive act. He

would use the black ink stone as a lady would her mirror to study his reflection

and refine the way he carried himself.

 

King Jeongjo had the largest study. His library was called Hongjae (弘齋), literally

“a large study.” Although his official title was the monarch, Jeongjo was one of

the most prominent scholars in the history of Joseon, diligent and dedicated to

academic pursuits. The proof of his passion for learning is Hongjae jeonseo

(Complete Works of Hongjae), a 100-volume anthology of the works of the king

himself. It was not customary for the king to take on a pen name, but Jeongjo

loved his study so much that he used its name as his alias, which he had

engraved on a stamp to mark books in his possession.

 

The author of this book also gave a name to his library, Sugyeongsil. The word

sugyeong refers to “a long rope tied to a bucket.” In order to draw water from a

deep well — which he uses as a metaphor for searching for knowledge in the

works of ancient scholars — one must have a bucket tied to a long rope, or in

this case extensive effort and a wealth of materials to study. The author has a

special love for the moldy scent of old dusty books. He was exposed to ancient

texts under the guidance of his father, a scholar of Chinese classics.

 

The story of 24 leading thinkers of the Joseon Dynasty told by such an author

takes us beyond the studies they had occupied to grasp the important lessons of

the their age and to fathom their ways of life.

 [January 9, 2015]

www.koreafocus.or.kr

109

 - Kim Soon-kwon: “I was Cheated Out of Payment for Fertilizer and Used by the

Politicians.”

 

110

Kim Soon-kwon: “I was Cheated Out of Payment forFertilizer and Used by the Politicians.” 

Dr. Kim Soon-kwon at his corn farm in Sanye, Hainan Province, China,where he is experimenting with 20,000 species of corn.

 

Choe Bo-sikSenior ReporterThe Chosun Ilbo

 

“Look at my fingertips,” Dr. Kim Soon-kwon said. They were all black. “They got

this way from pollinating the corn with my own hands. At the very tip of the corn

stalk are the tassels, the male part, while the corn silks on the ears are the female

part. When pollen falls on the silks and fertilizes them, then each silk leads to the

growth of one kernel of corn. Artificially pollinating corn silks with the pollen from

a different type of corn is called cross-fertilization. I`m currently experimenting

with 2,000 different species,” Dr. Kim said.

 

‘Dr. Corn`: Former Superstar-Turned-Farmer

 

Dr. Kim Sun-kwon, 70, once a celebrated figure nominated for the Nobel Prize,

was left forgotten with the change of government. Today, he lives in Sanya,

Hainan Province, China, doing research in corn breeding. Sanya is a city where it

is summer all year round. For the seventh year now, Dr. Kim has been coming to

this city every winter. The corn is planted in early November and harvested in late

March. Dr. Kim`s farm is about an hour`s drive from the city. Pointing to the

brown corn, he said, “It contains a lot of lignin, so the cows can digest it easily.

Most types of corn have five or six leaves wrapping the kernels, but this type has

12. This means we can extract a lot of ethanol, an alternative fuel for cars, from

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this corn.” A sports cap on his head, he mumbled to himself and it was hard to

catch what he was saying. It was clear that his mind was far from worldly matters.

When speaking of past incidents that could be deemed controversial, he was

open and did not try to hide anything.

 

Q. How did you end up here in China?

 

A. I was invited to visit here in 2008 and realized that it was an ideal place to do

research on corn breeding in winter. If I succeed in producing the finest species

through cross-fertilization, surely it will help to ease food shortages around the

world.

 

Q. Back in the Kim Dae-jung administration (1998-2003), there was quite a

stir about the “super corn” that would help ease North Korea`s food

shortage.

 

A. I have made 59 trips to North Korea so far. The “super corn” was not

something special, just a type of corn adapted to fit North Korean conditions. In

cooperation with the North, we experimented with 3,000 species of corn at 12

test farms.

 

While working at the International Institute of Tropical Agriculture (ITTA) in

Nigeria, Dr. Kim developed corn that could withstand the parasitic weed called

striga (aka witch`s weed). He was lauded for relieving famine in Africa, and was

nominated for the Nobel Prize five times for this achievement. Putting an end to

17 years of research in Africa, he returned to Korea in 1995. He says he wanted to

help the food shortage problem in North Korea. He was a star. Distinguished

Korean figures came together to form an executive committee to help him win

the Nobel Prize.

 

Q. With the end of the Kim Dae-jung administration, you disappeared from

the media.

 

A. I was ignorant of the ways of the world. I think I was used by the politicians.

 

Q. It wasn`t that you were using politics? In the 1997 presidential election,

didn`t you support Kim Dae-jung, exploiting your fame as the “world-famous

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corn specialist”?

 

A. Six months before the election, I got a call from Lim Dong-won (who would

later serve as minister of unification and head of the National Intelligence Service

for the Kim Dae-jung administration), asking me to help candidate Kim Dae-jung.

I knew him from the time he served as ambassador to Nigeria. Sometime later,

Kim Dae-jung visited my farm in Daegu and we had lunch together. It pained me

that the North and the South were divided and that there was such a gap

between the Yeongnam and Honam regions. I decided to sacrifice myself [to a

greater cause].

 

Q. What do you mean by “sacrifice”?

 

A. At the time, for a person from the Gyeongsang region (Yeongnam) to support

Kim Dae-jung meant risking everything.

 

Q. Didn`t you do it in return for a promise of support from Kim Dae-jung for

your visits to North Korea?

 

A. It`s true that he made such a promise. But I supported him for the sake of the

country. It was a hard decision to make. A high official at the NIS told me, “There

is little chance of Kim Dae-jung being elected. When the election is over, we will

help you visit the North.”

 

Kim Dae-jung did win the election, by a margin of 160,000 votes. In January 1998,

when he was president-elect, Dr. Kim was able to go to North Korea. Several days

before the visit, Chung Ju-yung (the late chairman and founder of the Hyundai

Group) asked to meet me. In his office, he asked me to come near, and in a low

voice said, “Convey these words to the North exactly. First, Hyundai wants to take

charge of the Mt. Kumgang (Geumgang) tourism business. Second, we want

permission to drill for oil in the West Sea. Third, ask about the welfare of my aunt

in my hometown of Tongcheon. If all goes well, tell them I will give one-tenth of

all my assets to the North.”

 

Q. So, did you pass on the message?

 

A. In regard to the 10 percent, I thought the North would have no idea of the

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extent of his assets. So I changed the 10 percent to the highest number I could

think of, which was 10 billion won [approximately US$9.1 million]. At the time I

had no idea of the astronomical wealth of Chairman Chung.

 

Q. Did the North accept these requests?

 

A. It was my job simply to convey the message. But the North`s response was,

“Do you really think Chairman Chung will give us 10 billion won? Daewoo can`t

even give us 100-200 million won.”

 

Q. What about Chung Ju-yung`s aunt?

 

A. I went to Tongcheon myself and met her. She was very thin and could not see.

“How little have you eaten to get so thin?” I asked. And she said, “They don`t give

us anything to eat.” She couldn`t see, so didn`t realize I had escorts with me. The

escorts said, “This old woman, she must be crazy.…” I made a video of her and

gave that to Chairman Chung.

 

Q. What did he say?

 

A. He wept as he watched the video. Then he asked me, “Is there anything I can

do for you?” He donated 500 million won to the International Corn Foundation

(ICF). Later, from that amount I had to pay for the costs of the fertilizer sent to

the North, which the government failed to pay for.

 

Q. The government failed to pay for the fertilizer?

 

A. Soon after the inauguration of the Kim Dae-jung government, the Korean

Council for Reconciliation and Cooperation (KCRC) was established with

lawmakers Han Kwang-ok and Sul Hoon. It was supposed to be a channel for

cooperation with the North. An official from the organization came to me and

asked if control of the project to plant corn in the North could be handed over to

them. But I wasn`t in a position to decide. Instead, I said I would act as liaison

between the government and the North. And on the spot he agreed to my

suggestion that they send 50,000 sacks of fertilizer (1,000 tons) to the North.”

 

Q. Why did you make such a suggestion?

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A. To plant corn you need fertilizer. I purchased 50,000 sacks on credit from

Namhae Chemical in Yeosu, promising to make payment one month later. The

sacks were stamped with the name “Korean Council for Reconciliation and

Cooperation” and with a KCRC representative we delivered the fertilizer at Nampo

Harbor. But the KCRC kept delaying payment. A year and a half later, I eventually

paid 360 million won for the fertilizer out of funds of the International Corn

Foundation. You can`t imagine what a hard time they gave me back in my

hometown when I supported Kim Dae-jung. And his government cheated me. I

was through with them.

 

Q. It wouldn`t have been a lot of money for the government. Why do you

think they let this happen?

 

A. I don`t know the inside story. Before Kim Dae-jung went to the North for the

South-North summit (June 15, 2000), he invited 200 university presidents and

other people to Cheong Wa Dae to hear their opinions. I was invited too. I had

played a part, in my own way, in making the summit happen. I told him what I

thought: “You must not get mixed up in their plans. Be assertive and make sure

you negotiate from a high position.” And then I mentioned payment for the

fertilizer.

 

Q. So, did you get the money for the fertilizer?

 

A. A few days later, I got a call from Sul Hoon telling me to meet someone, and

that that person would settle the bill. The person I met turned out to be an

executive from a big corporation. It surprised me to find that the company was

going to foot the bill instead, but when the executive told me to be satisfied with

only half the amount, I got upset and refused. During the Roh Moo-hyun

government, we sued and through court mediation received just 100 million won.

That was the end of that.

 

Q. You said you played a part for the South-North summit. Does that mean

you were given a mission?

 

A. No, it wasn`t that concrete. When I participated in an international conference

on corn in Brazil in early 2000, an NIS official said to me to help President Kim

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Dae-jung win the Nobel Prize. I had also thought that rather than someone like

me, it would be better for unification for Kim Dae-jung and Kim Jong-il to win

the Nobel Prize. So I talked to the North Korean officials and persuaded them

that the two leaders could jointly win the Nobel Prize if the North allowed

reunions of dispersed families and agreed to a South-North summit.

 

Q. Aren`t you exaggerating your part in the process?

 

A. Before the summit took shape, the North said, “Dr. Kim, we will accept your

requests. Send the director of the NIS to us.” So Lim Dong-won went to North

Korea. In regard to the family reunions, I went on a hunger strike at the Koryo

Hotel in Pyongyang. I wept and wailed all night and finally the North Korean

escort said, “Dr. Kim, I told the General [Kim Jong-il] about your distress and he

said he would give his answer within 10 days. So have hope. Go back to Seoul

and wait.” Ten days later the news came out — that the family reunions would

take place. I completed the NIS mission of making the 2000 South-North defense

ministers` meeting on Jeju Island take place. In Pyongyang, I had told them to

send their defense minister. That`s what it would take for the leaders of the two

Koreas to jointly win the Nobel Prize.

 

Q. Did you have that in mind — Kim Jong-il jointly winning the Nobel Peace

Prize?

 

A. If we had strategically worked to have Kim Jong-il jointly win the prize, even if

he was not qualified, I wonder if that would have helped to solve the nuclear

issue. When Kim Dae-jung would read his acceptance speech, through an agency

I asked him to mention Kim Jong-il, but it didn`t happen. In fact it would have

been difficult for him to win the prize without Kim Jong-il`s help. When I went to

Pyongyang later, they accused me of tricking them.

 

Q. Did you ever meet Kim Jong-il in person?

 

A. No. I only heard that he was grateful to me for leaving my research in Africa

with the sole aim of helping North Korea. They say he ordered people to “learn

from Dr. Kim, the man from the South who is devoted to helping the North.”

 

Q. Your activities stopped with the Roh Moo-hyun administration, which

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followed the Kim Dae-jung administration.

 

A. After being cheated on the fertilizer payment during the Kim Dae-jung

administration, I supported Lee Hoi-chang [from the rival Grand National Party,

which is now the Saenuri Party] in the 2002 presidential election. From that time I

was no longer invited to visit the North. I was only able to return after three

more years had passed. In any case, South-North research on corn had ceased as

the government did not give us any research funds. The last time I went, there

were many regulations even when I went to visit the collective farm, unlike in the

past.

 

Dr. Kim lives alone in a room on the second floor of communal housing. The only

furnishing is a bed, a computer and a desk. They are covered in dust.

 

Q. Why are you living like this, away from home?

 

A. My son is a successful businessman in the United States. At my age, I could

live comfortably. But my work is here.

 [January 26, 2015]

www.koreafocus.or.kr

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COPYRIGHT

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politics, economy, society and culture, as well as relevant international issues. The articles are selected

from leading Korean newspapers, magazines, journals and academic papers from prestigious forums.

 

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ISBN 9791156041306 05050

Publisher Yu Hyun-seok

Editor Lee Kyong-hee

Editorial Board

Shim Ji-yeon Professor, Kyungnam University

Lee Ha-won Director, TV Chosun

Kim Yong-jin Professor, Ajou University

Hyun Jung-taik Professor, Inha University

Hahm In-hee Professor, Ewha Womans University

Sonn Ho-chul Professor, Seogang University

Kim Gyun-mi Deputy Editor, The Seoul Shinmun

Kim Hoo-ran Senior Journalist, The Korea Herald

Peter Beck Korea Represetative, Asia Foundation

Jocelyn Clark Professor, Paichai University

 

ⓒ The Korea Foundation 2014 All rights reserved.

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