Nonsense, horsefeathers, and idle musings from a decade in South Korea (2002-2012).


30 November, 2008

Why I Don't Ski in Korea

By Aaron
30 November, 2008

I have just as much "fun" waiting for the subway at rush hour.

Skiers and snow boarders flock to the chairlift yesterday at Yongpyong Ski Resort in Pyeongchang, Gangwon.[YONHAP]

27 November, 2008

Make Up Your Mind

By Aaron
27 November, 2008

From today's online version of the Chosun Ilbo newspaper:


Nice of the Chosun to give us some choices.

23 November, 2008

Rape Tea

By Aaron
23 November, 2008

I was in a meeting this morning and one of the participants - a partner in one of Korea's largest law firms - had brought some ginseng tea from home to share with everyone. Ginseng, even in the best instances, tastes like a combination of dirt and aspirin, but this tea had sufficient honey in it as to be at least passably palatable. Gratitude for the man's thoughtfulness was expressed around the table.

"Very nice ginseng," someone remarked.

"A while back," said the lawyer who had brought the tea, "I represented a college kid who was accused of raping a young girl. The young man's father was a big shot over at KT&G [Korea Tobacco & Ginseng]. The kid was probably guilty, but I got him released and, as a gift, his father gave me this ginseng, the best you can find in Korea."

After hearing this, I would have needed more than all the honey in the world to make that tea drinkable.



18 November, 2008

By Gum

By Aaron
18 November, 2008

Ever since some neolithic nincompoop started chomping on birch bark tar 5,000 years ago, humans have been annoying me and my ancestors by chewing gum.

"Rule number one," said my sixth-grade homeroom teacher - a woman named, appropriately enough, Mrs. Cross - on the first day of class, "no chewing gum. It makes you look like a cow chewing its cud and I expect my students to have some dignity."

If only the rest of society had had the good fortune to study under Mrs. Cross, perhaps then humanity would be a bit less bovine in its behavior.

Now maybe you're one of those people who thinks they can chew their gum discreetly, freshening your breath or exercising your jaw without drawing attention to yourself. Well, you can't, and so may I suggest a mint as a more respectable means to the same end?

Or perhaps you're one of the middle-aged women on the Seoul subway who makes no attempt to conceal her gum-chewing. In fact, you flaunt it: mouth agape, snapping and popping like hot oil in a pan. May I suggest to you that you find a mirror, take a good look at yourself, and consider whether you really want to look like a Guernsey out to pasture? If such an appearance is, in fact, your goal, fine, but please don't make the rest of us listen to you as you chew. Please at least let me believe that we humans are more refined than our neolithic forefathers in this one area.


13 November, 2008

More Patients

By Aaron
13 November, 2008

An American patient at a hospital in Seoul. (IHT)

I posted on the topic of medical tourism last July, and now Choe Sang-Hun has followed my lead and brought the subject to the front page of today's IHT, specifically pointing to Korea's plans to capitalize on this emerging industry:

On Jeju, South Korea's leading resort island, the central government is spending 315 billion won, or $232 million, on "Health Care Town," a 150-hectare, or 370-acre, complex of medical clinics and hotel-apartments where, for example, a visitor from China could have a medical checkup and his wife could have knee surgery while their children cavort on the beach.

Wooridul Spine Hospital plans to build a hospital branch, hotel-apartments, a concert hall and an art museum on the island as part of its medical tourism offerings. It has already built an 18-hole golf course there.



"We believe this is a major future industry for our island," said Kim Kyung Taeg, head of the government-run Jeju Development Center. "The town will specialize in medical checkups, long-term convalescence and procedures Korean doctors do well and cheaply, such as plastic surgery and dentistry."



The South Korean government has revised immigration rules to allow foreign patients and their families to stay up to four years on the island without a visa.



11 November, 2008

PJ Comes Through Again

By Aaron
11 November, 2008

As the Republican Party ponders the welts on its backside and decides where to go from here, its members could do worse than to read PJ O'Rourke's latest piece in The Weekly Standard on where the party has gone wrong.

A couple of my favorite sections (and further evidence of why Mr. O'Rourke is the most quoted man in The Penguin Dictionary of Modern Humorous Quotations) follow:

Yes, we got a few tax breaks during the regimes of Reagan and W. But the government is still taking a third of our salary. Is the government doing a third of our job? Is the government doing a third of our dishes? Our laundry? Our vacuuming? When we go to Hooters is the government tending bar making sure that one out of three margaritas is on the house? If our spouse is feeling romantic and we're tired, does the government come over to our house and take care of foreplay? (Actually, during the Clinton administration  .  .  .  )

Anyway, a low tax rate is not--never mind the rhetoric of every conservative politician--a bedrock principle of conservatism. The principle is fiscal responsibility.


And...

What will destroy our country and us is not the financial crisis but the fact that liberals think the free market is some kind of sect or cult, which conservatives have asked Americans to take on faith. That's not what the free market is. The free market is just a measurement, a device to tell us what people are willing to pay for any given thing at any given moment. The free market is a bathroom scale. You may hate what you see when you step on the scale. "Jeeze, 230 pounds!" But you can't pass a law making yourself weigh 185. Liberals think you can. And voters--all the voters, right up to the tippy-top corner office of Goldman Sachs--think so too.

We, the conservatives, who do understand the free market, had the responsibility to--as it were--foreclose upon this mess. The market is a measurement, but that measuring does not work to the advantage of a nation or its citizens unless the assessments of volume, circumference, and weight are conducted with transparency and under the rule of law. We've had the rule of law largely in our hands since 1980. Where is the transparency? It's one more job we botched.



Miseducation

By Aaron

A demonstration of Korean education policy.

As if the education system of Korea hadn't twisted my knickers enough for one week, the JoongAng Daily yesterday published this article detailing the fight over the Seoul Metropolitan Board of Education's decision to allow the establishment of two new international middle schools. Even if we leave aside for today the question of why the government is so heavily involved in this process, I nonetheless find that I can scarcely get into the aforementioned knickers, so twisted have they become.

Here's the matchbook overview: the Seoul Metropolitan Board of Education has concluded that two international middle schools will get the green light to open in Seoul next March. They will be private and, as such, their tuition will be higher than that of other schools in the area.

The teacher's union is predictably miffed, but lest you suspect any self-interest on their part, representative Lim Byeong-gu takes this noble stand:

“What sort of signal does this send to the public? There is not a single parent who will not take out a loan if it’s possible to give their kids a chance to get into a specialized school and enhance their chances of getting into a prestigious college. Those who have the financial means will pour in greater resources than others. How can you say this isn’t a policy that will eventually benefit the rich?”

But of course: the teacher's union is merely looking out for the well-being of its students and making sure that those from wealthy families don't receive a better education that the students from families of a lower economic station. It only follows, then, that the Korean government should ban Korean parents from sending their children overseas for school, where those children make up the largest bloc of foreign students in English-speaking countries. Korean parents, according to this article, spend about $5 billion per year on overseas education for their children, a figure roughly equivalent to 20% of government spending on education in Korea. If either intellectual honesty or the equalization of educational opportunity is Mr. Lim's true goal, I hope he'll push for the government to stop this massive outflow of rich kids and their money from Korea. Better to keep them in Korea where, in the spirit of fairness, they can suffer a poor education like everyone else.

Wealthy children already have a decided advantage in their educational opportunities, but even if we assume that this school plan will exclusively benefit wealthier families, how do we help children from more modest backgrounds by blocking educational innovation at the top? Korean parents of all income levels should welcome new schools of all types - public, private, parochial, charter, and any other type that someone can invent. The establishment of more international schools in Korea could, in fact, create an opportunity for children whose parents cannot afford to send them overseas for school.

Rather than demagoguing parents who want and can afford to send their children to a good school, and instead of seeking to give everyone equal access to pisspoor education, why not seek policies that raise the standards at every income level? Education will never be equal - what does that even mean? - and the sooner we realize that, the sooner we can constructively work toward improving education.



02 November, 2008

Backatcha

By Aaron
02 November, 2008

One of my favorite interlocutors, Dave, left the following comment on my previous post:

So then what is a reasonable course of action to take when an oligopoly colludes, either overtly (see ADM) or by sake of convenient coordination (see American airline industries) to raise prices at the cost of the consumer?

I'm not familiar enough with the situation in Korea to know if the educational system there qualifies, but just wondering how your thought system extends.

I started my reply to Dave in the comments section, but found that my remarks had taken on a life of their own and I thus decided to leave them up here for all to see.

First, two vital points on the private institute business in Korea, and especially in Seoul where the issue has the most salience:

  • Seoul has some of the highest real estate prices in the world.
  • Private institutes largely employ well-educated people who hold, at minimum, a bachelor's degree and sometimes advanced degrees - and that's just for the instructors. Add to these the necessary support staff and the personnel costs alone can bankrupt an institute.

These two factors, amongst others, contribute to the extremely high cost of operating an institute in Seoul. Fortunately for the owners (and the teachers and other staff), there is a healthy demand for their services and, as such, the well-run institutes do make a tidy profit. I emphasize the "well-run"part of that sentence because the institute market is a fairly dynamic one in Korea, with institutes opening and failing on a regular basis.

On a more specific note, the Korean government - far from helping to lower prices in private institutes - has actually contributed to their skyrocketing in the ones that offer language (especially English) instruction. Under the premise of protecting consumers, the Korean government some years back banned foreigners from teaching English on their own, outside of the workplace registered on their visa (an English teacher's visa is effectively owned by his/her employer), a restriction that remains to this day. By making this sort of freelance instruction illegal, the government drove the market for it underground and thus sent the prices into the stratosphere, such that only the affluent can now afford such services. This is but one example of how the Korean government has distorted the market it now seeks to smother.

While first acknowledging that I'm not an educational economist, I modestly suggest that the government keep its hands off the private institute market (neither protect nor strangle it) and, instead, focus on getting its own house in order. At all levels, the education system in Korea has its eye on the universities, with parents trying prep their kids for entry into a SKY university (Seoul National, Korea, Yonsei) from a tender age. As well, an increasing number of Korean students are electing to study abroad, usually in English-speaking countries. With so many students scrambling to enter so few universities in Korea, however, an expensive education bottleneck is inevitable. In addition to reforms at the elementary, middle and high school levels in Korea, then, I'd like to see more foreign universities entering the Korean market, which would not only foster improvement in university education across the nation through competition, but might also have beneficial effects upstream (e.g. private institutes). At this point, though, the Korean government has not opened its educational market to, for example, US schools or companies at any level (elementary, middle, high school, or university).

As said, I'm not an economist, much less one with any particular specialty in the education market. I'd thus be keen to see any studies that have been done on the Korean educational market, as the industry would surely provide for some fascinating research.


As to Dave's broader point about oligopolies/monopolies, Archer Daniels Midland and the US airline industry further confirm my distaste for state involvement in markets. ADM, one of the biggest beneficiaries of US corporate welfare, survives on the sustenance of government subsidies, as do the airlines (see, for example, the $15 billion they received in the wake of 9/11). It bears noting, though, that air travel is now far more accessible for far more people than it was prior to the deregulation of the industry in the 1970s, until which time the Civil Aeronautics Board had set prices and controlled routes (to put the industry's progress in perspective, in 1975, an estimated 80 percent of Americans had never traveled by air). Still, does anyone really believe that ADM would be as large or as powerful as it is absent the largesse of the US government?

Ultimately, I only worry about monopolies and oligopolies when a government has a hand in preserving them, which unfortunately is too often the case. In a dynamic economy, however, where the state is not subsidizing companies or protecting them from market competition, firms have a way of rising and falling on their own, particularly as new technologies fuel Schumpeter's creative destruction of the existing order. Unfortunately, governmental attempts at restricting monopoly too often turn into protection rackets in their own right (see: the Interstate Commerce Commission and the CAB, to name but two), captive of whatever group has an interest in preserving them.

For some reason, there is a broadly-held notion that businesses will always favor free trade and open markets, an assumption which, sadly, is wrong. Companies will predictably favor a tariff here, a quota there, and restrictions on their competitors if such measures will help to protect their slice of the market. From a historical perspective, it's not clear to me that governments have done more to alleviate this problem than to exacerbate it.




01 November, 2008

Control Yourself

By Aaron
01 November, 2008


South Korean President Lee Myung-bak swept into office earlier this year, riding high on his reputation as a CEO public servant, "promising," as Martin Fackler wrote in the IHT yesterday, "to use his business acumen as a former construction company executive to revive the nation's economy." Thus far, of course, the produce of Lee's administration has been underwhelming, to say the least. And while Lee may not deserve the blame for all that ails Korea - e.g. the global financial and credit crisis - his handling of political and economic matters has left much to be desired.

While most people, in their criticism of Lee, point to the hamhanded way in which his administration fumbled the reopening of the Korean beef market earlier this year, I've found myself more often nettled by the less-noted policies coming from the current occupants of the Blue House. Case in point: a vow last week by the Ministry of Education, Science and Technology to crack down on "unreasonably high fees" at private institutes around the country.

According to the JoongAng Daily, the move is an attempt by the Lee administration to make good on a campaign promise to lower household spending for private education. Under the current plan, "students and parents will be able to report those charging excessively high rates on the Web site of the Korea Consumer Agency and the education ministry beginning next month."

I don't fancy myself much of a soothsayer, but through this plan, Lee stands a fair chance of reducing spending on private education, albeit not in the way he intends. The record of state-imposed price controls is clear, as Richard Nixon learned in 1973 when, in an effort to combat inflation, he imposed a freeze on wages and prices: ranchers stopped shipping their cattle to the market, farmers drowned their chickens, and consumers emptied the shelves of supermarkets. Just like that, consumer spending on products like eggs and beef declined. The upshot to the whole fiasco, however, was that those involved learned their lesson.

"At least," George Shultz told Nixon, "we have now convinced everyone else of the rightness of our original position that wage-price controls are not the answer."

So, yes, when private institutes cannot charge enough to cover their costs and stay in business - to compete in the market - and when they begin to close their doors, consumers may see their spending on private education decline - that is, if the Lee plan succeeds in driving every last institute out of business. More likely, though, some institutes will close, at which point the government will realize its error and repeal the price controls, thus allowing the few remaining players to charge more than they could have had the government never acted.

Education, as it is in most developed nations, has long been a favorite hobbyhorse of politicians in Korea. Candidates earn their public stripes by promising to bring down the cost of education, usually by vowing to reign in the rapacity of private institute owners. This current proposal, while maddening in its own way, is merely the latest piece of populist demagoguery, certain to raise more questions than it answers.

At what point, for instance, does private tuition become "unreasonable" or "excessive?" Who will be the final arbiter on such questions? How will that person or group determine what a "reasonable" fee will be? And what will be done to the institute when parents report undue money-grubbing?

I sympathize with parents in Korea who are faced with the high costs of educating their children, but at the risk of defending an industry that is at times hard to defend, it bears noting that private institutes are not the cause of the problems in Korea's education system. Rather, these private businesses are, at worst, a symptom of deeper ills caused by a host of factors, ranging from a teacher's union that promotes calcification to a status-obsessed society that has a very narrow view of what constitutes success. The most we can say about these institutes is that they are providing a service for which parents are willing to pay, and we won't know what an "unreasonable" or "excessive" price is until the customers stop paying.

But if you find it easier to blame the private institutes, by all means, proceed. After all, isn't simplicity so much easier than facing the complexity of real problems?