Economics – Current events through a historical lens

An Unholy Abomination

By Alex Gratzek

One technological issue facing America and the world at large today is the threat posed by algorithms. These algorithms, when coupled with Facebook and YouTube, pose a threat to public civil discourse in America and by extension, to democracy itself.

Platforms such as these are eager to keep users online and engaged as long as possible. Being corporations, their motive is to maximize profits, with any thought of public service a distant second at best. To this end, they use algorithms to promote similar but slightly more extreme videos or conspiracy theories, aiding in the delusions of those who go down that rabbit hole. Once down that rabbit hole, it’s hard to escape from it.

Algorithms need to be tweaked to present a more balanced and nuanced view of topics. If one were to end up watching a video exploring the supposed merits of the Flat Earth Theory, then the next video should point out every inane aspect of the Flat Earth Theory instead of promoting more flat earth videos.

These algorithms send the viewer into the rabbit hole of more conspiracy theories. Here, in the most delusional recesses of the internet, an unholy abomination has been born. It reminds me of the alien-monster in the 1982 John Carpenter classic “The Thing.” In the movie, an alien life form is able to absorb and imitate other life forms, becoming an abominable amalgamation of multiple animals.

The abomination is the new conspiracy theory group Q-Anon. Some of its adherents are running for office and they make the fringe 2010 Tea Party look sane by comparison. One can only hope that all the Q-Anon linked candidates get crushed in the election to prevent the “none-sense” from becoming established in mainstream American political discourse.

However, as much as I can hope, I won’t hold my breath. The sad part is, the promise of all the world’s information and knowledge at one’s fingertips has not played out as expected. The advent of so much information has made it nearly impossible to find “the truth.”

Every Tom, Dick, Harry and Jane can make a YouTube video espousing views that the coronavirus is linked to 5G, that Obama was born in Kenya, that the world is secretly controlled by lizard people ― or that the world is really controlled by a cabal of satanic pedophiles who are lizard people ― that Bill Gates is trying to control us via microchips implanted in us by an as of yet uncreated vaccine, that George Soros is secretly financing Antifa to overthrow the government and subordinate America to the U.N. or that Goya Beans are the best bean product on the market today or other utter nonsense.

Sending people down these rabbit holes brings them into contact with other like-minded individuals who are prone to conspiracy theories, so you have the confluence of flat earthers, anti-vaxxers, 5G and corona conspiracy theorists leading to the bastard abomination of a conspiracy theory represented by Q-Anon. It hasn’t yet met a conspiracy theory it can’t co-opt into its grand pantheon of nonsense.

In the olden days, the crazies would stereotypically be dirty hobos or homeless people eating cans of beans while carrying around cardboard signs proclaiming the imminent demise of the world. People would steer clear.

Now, every person who spouts conspiracy theories can find other like-minded people on the internet who, other than their fervent excuses for conspiracy theories, appear to be normal, making these conspiracy theories more palatable to the main stream.

To successfully battle this would likely mean less clicks, likes, views, ratings, an uproar about “muzzling free speech” and by extension a hit on profits, but it will keep the foundations of society on solid ground.

This should be paramount to tech companies as a strong societal foundation will ensure future profits, but the problem with the American version of capitalism is its emphasis on immediate monetary gain above all else. Companies should be free to pursue profits but not at the expense of societies’ health

As an example, Facebook has rightly been under close scrutiny for its role in running deliberately misleading or outright false political ads. When a legitimate company like Facebook runs blatantly misleading or false ads, it only serves to legitimize “The Paranoid Style in American Politics,” and may I dare add delusional, which has become increasingly prevalent in America.

The fact that Facebook is running such ads is horrifying. During World War II, Goebbels, Hitler’s chief of propaganda, said “If you tell a lie big enough and keep repeating it, people will eventually come to believe it.” With Facebook incessantly bombarding its users with false or misleading information, the threat of lies becoming truth to many increases. Many already are taking these conspiracy theories as truth.

Instead of tackling real issues, time is being spent and wasted on birtherism, face masks and other rubbish. Algorithms need to be redesigned to ensure contrasting views are exposed to people instead of other conspiracies or similar but increasingly extreme like-minded videos.

Coming Collapse: Part 2

In my first Coming Collapse piece which was published in The Korea Times, I wrote how the coming of man was the harbinger of death for megafauna around the world in prehistoric times. As man’s technological prowess has improved, so has his ability to wrought destruction on the finely tuned planet we call home, Earth.

Over the last few decades, the size of fish caught off of Florida and around the world has shrunk. Why? Because man has overexploited fisheries to such an extent that we are causing natural selection at an accelerated rate. Big fish make good trophies for the wall or a hearty dinner while smaller fish are thrown back to pass on their DNA.

The same goes for lobsters. It used to be common to catch specimens which weighed several pounds. Now, lobsters are caught as soon as they come of age and are no longer protected by regulations. 1 pound lobsters are the new norm while in olden times they would be considered runts.

New technologies have allowed for the oceans to be over conquered exploited. Knowing man’s insatiable desire for protein, it isn’t inconceivable to think that oceanic ecosystems will be affected. The acidification of ocean water is already underway due to the use of fossil fuels and this will inevitably distort the status quo if not outright causing oceanic ecosystems to collapse while microplastics and plastics are increasingly abundant.

As human kind destroys the Earth, there is a growing chorus calling for man to spread to the stars and colonize other planets like Mars. One such voice is Elon Musk of the Company Space X. Also, in a similar vein, Senator Rand Paul called for the terraforming of Mars in order to make it eventually suitable for human habitation. This is crazy talk.

On Earth, where 7 billion plus humans live, Senator Rand Paul denies that climate change is an issue or could be caused by humans yet he calls for man made climate change on alien planets. He is so close but yet completely unaware of his hypocrisy and absurdity.

In the early 90’s, man tried to create an artificial enclosed Earth in an attempt to experiment with the practicality of living in small enclosed areas in space. The experiment was the biodome project. The project tried to mimic Earth’s various ecosystems to replicate Earth in an enclosed environment with different ecosystems represented.

However, the experiment failed. As mentioned, Earth took billions of years to evolve to its current state. To think man can imitate such a complex wonder is a testament to man’s hubris and delusions of grandeur.

To point out one problem, the trees in the biodome would not grow. Why not? To grow upright and strong, trees need wind. Without wind, they grow weak and droopy. Despite all of man’s technological prowess, we can’t grow trees in an enclosed environment and we can’t grow wood in a lab. There are some things man will never master.

Now people are acting like parasites on the Earth. We have conquered nature, throwing off the natural order of things, upsetting the finely tuned equilibrium of Earth. As we change the Earth’s equilibrium, we have no idea what the new equilibrium will be but as a betting man, I’d wager it wouldn’t be as conducive to human kind as it is now. The point I am trying to make is we have a finely tuned planet that supports us. Instead of looking to space for a new home, we should take care of the one we have now which is perfectly suited for us.

Only when mankind can live in harmony with the Earth should we look towards outer space for future colonies. Until then, anything established is likely doomed to failure. Let’s turn to the colonization of the Americas for a historical perspective.

The Norse colonized Iceland successfully and then unsuccessfully attempted the colonization of Greenland along with forays to North America. The colony on Iceland succeeded but the ones in Greenland failed while the forays to North America were never intended as permanent settlements. Why?

Iceland, Denmark and Norway lacked the population base and resources to support Greenland Colonies let alone even more remote colonies in North America. They were simply too far, isolated and the colonizers were bringing European ways with them which were unsuited to the new ecosystems to which they found themselves. They survived for a while but eventually withered on the vine and went extinct as the Earth’s climate cooled during the so-called Little Ice Age.

If colonies were established on Mars, they’d need massive support and supplies from Earth to become established and continued support thereafter. If we destroy Earth’s ability to sustain us, which looks increasingly likely, any colony on Mars would wither and die. It’s best for humans to focus on taking care of our current home rather than looking dreamily towards the stars for our species salvation.

Missing the Current Zeitgeist

Zeitgeist is a German word meaning the spirit of the age. As Corona continues to ravage America, I can’t help but look around and see a huge disconnect between the Zeitgeist of our time and the leadership as being shown by President Trump which in no way reflect each other.

Over 30 million American’s have lost their jobs as a result of closures across the country designed to halt the spread of Corona. Despite efforts to stem the spread of the virus, as of May 22nd, new cases are around 20,000 a day.

It has been estimated that nearly 42% of these aforementioned jobs will never be coming back. These lost jobs will stem from failing retail stores and the overall lessening in demand for services as consumers become more hesitant to travel, go out to eat and other activities.

This is a pivotal point in time as the job creation in the aftermath of the Great Recession was sluggish and that was 10 years ago. Now, certain segments of the economy will not be coming back making the eventual restoration of low unemployment a more difficult task. During this transition time, as as old industries die, new industries will eventually emerge to employ the surplus labor sack but until that time, times will be tough for those who lost their jobs.

This is a time when foundation on which our society was built is changing, the challenge is to ensure that we are aware of these changes and adapting to meet the new reality.

It should be the government’s role to provide a bridge to overcome these hard times. The 4th Industrial Revolution is coming closer and closer but under President Trump’s leadership, there doesn’t look like much preparation for its eventual arrival let alone for dealing with corona.

Many in Congress would hem and haw that the government can’t afford such lavish measures as $2,400 dollars a month to citizens indefinitely. However, if there is a will, there is a way. We willed ourselves into two wars in Iraq and Afghanistan which we managed to pay for but we can’t find a way to invest in our citizens?

One idea would be to raise the corporate income tax from 21%, the current rate which was down from 35% under President Obama while also forcing corporations like Amazon to pay taxes. After all, the company’s success was built on the infrastructure of America which was paid for by taxpayer money. If they draw benefits, they should pay accordingly.

The point is the government should be paying more attention to the needs of its citizens rather than the wants of its corporate citizens. Citizens are struggling to get by while corporate citizens are scheming on that money mission to increase their paper supply.

Instead of using the Pandemic as a means to draw Americans together in order to overcome the obstacle and build a better future as his predecessors have done, President Trump has continued to play politics, laying blame on President Obama and stoking divisiveness.

Instead of offering up his vision of a more perfect union and striving to realize the actualization of his dream, President Trump continues to deny responsibility and play the blame game. When former President Bush spoke in generic terms on the need for America unity, President Trump lashed out at him as if it were a personal attack instead of a call for unity.

In previous times of national crises, America’s Presidents stopped playing politics and instead stepped up to lead the nation in order to bring about their vision of a more perfect Union.

After 9/11, President Bush took the time to unify Americans against the threat posed by Islamic extremists and to combat its ideology, he was determined to spread democracy in The Middle East. During the Great Recession, he took efforts to minimize ripple effects via the bailout.

FDR dealt with the double whammy of the Great Depression and The Second World War- from these crises came the modern American social safety net along with American economic and military preeminence following the conclusion of The Second World War.

President Truman picked up when FDR died and found America and The Soviet Union eyeing each other warily. President Truman used the threat of Soviet domination of Turkey and Greece as a rallying cry to wring more funds from Congress in order to finance America’s efforts to contain the Soviet Union around the world.

Furtherback, Abraham Lincoln used the secession of the South to abolish slavery, create a stronger and more unified Union, oversaw the economic expansion of the United States and generally leave America stronger than when he took over.

Instead of learning from his predecessors, President Trump has so far only sought to use Corona as a means to divide America by stoking the culture wars which have plagued America for the last few decades.

Instead of encouraging people to continue quarantining and wearing masks and taking other basic steps to battle Corona, President Trump has been fanning the cultural wars by encouraging people to demand that their states be reopened, to hell with Corona and the dangers it poses.

Large swathes of America have shown support for quarantine efforts and to delay the opening up of the economy. The thought of putting a monetary cost on human lives has proven to be an anathema to many Americans but that is President Trumpss overriding concern, seeing the economy recover in order to boost his chances for re-election.

America stands at a pivot point now. In former times, America had exceptional leaders in times of national crises. Leaders who could rise to the challenge in order to leave America in a better position than which it was found or leaders who were passable and could at least maintain the status quo.

In lieu of those great leaders, we have President Trump. A man who has shown no ability to lead, learn or take the advice of those more knowledgeable than himself and the result is that average American’s are paying the cost in the form of lost wages and increased chances of dying.

Today, the world and America stand on the cusp of a new reality. America has traditionally been a leader in world affairs and trends but currently it is not. While many of other developed and developing countries have tackled and contained the Corona Virus within their societies, it continues to run rampant in America. Hopefully this dearth in leadership on the national and international stage proves to be a temporary aberration.

The continual bungling response to Corona makes America, and by extension democracy, look less appealing to countries around the world. Instead of harnessing the zeitgeist of the times and using Corona as a catalyst to achieve a new vision of America and institute needed social reforms, the crisis is going to waste while the wounds which divide America continue to fester and gnaw at America’s innards.

Capitalism: Dueling Legacies

Originally published in The Korea Times on January 19th, 2020.

One of the issues I have been writing about is the issue of capitalism in the modern world. Probably because it is the driving force in society. Whatever the answer, it’s a topic that deserves to be thought of and discussed.

The specific issue I want to address in this article is the excess wealth capitalism has created. Bob Iger, CEO of Disney, received over $65 million in compensation for his work in 2018. This amount is 1,424 times the median pay of a Disney worker. In the 1950s, CEOs made an average of 20 times more than the average worker.

Capitalism, the system which basically runs our society, has done well for society. It has produced great winners and generally lifted the wellbeing of people all around the world. One of its side effects, which is becoming more pronounced, is the concentrated accumulation of wealth in the highest stratum of society.

The way I see it, there are dueling legacies concerning what to do with this wealth. For one, there are those like the Koch Brothers, the Walton family of Walmart, whose desire is to pass money down to their offspring and their vested interests. Their legacy would be limited to ensuring their descendants were comfortable rather than having a legacy which benefits mankind as a whole.

On the other hand are people like Warren Buffett, Bill Gates and Robert F. Smith, recent benefactor to the 2019 Graduating Class of Morehouse College. The legacy they aim to hand down is the legacy of their gratitude, monuments, donations for the betterment and benefit of society and leaving their name in a positive light as their legacy ― a la the Carnegies or Alfred Nobel.

In Carnegie’s case, his wealth helped the building, creation and financing of a number of institutions, buildings and schools. All bear his name and his contributions to his fellow man. His generosity and foundations continue to bear fruit for the benefit of humanity.

Nobel saw an obituary written for himself after his death was falsely reported. The obituary castigated him for being an agent of death and destruction because of his invention of TNT. This negative legacy prompted him to put the wealth he derived from TNT to finance the Nobel Prizes which continue on to this day.

Today’s capitalist winners face a different problem. Capitalism has produced great wealth but also resulted in the rumblings of discontent. Today’s uber-wealthy face two choices: spread the wealth to limit the excesses of capitalism or try to perpetuate their exalted status to their children.

The way I see it, there are two outcomes. A, we continue along our merry way as is, with average people getting more and more upset as the inequality gap widens, running the risk of social upheaval. Maybe the uber-rich, being secluded from the struggles of average people in their cocoons of wealth, think they can ride out any upheaval due to their privilege.

Or B, use some of the vast wealth created by capitalism to ensure a modicum of living standards for all.

What I find especially appealing is the route Gates and Buffet have taken with their fortunes, the Giving Pledge. In this pledge, uber-rich individuals pledge to give away over half of their money. I love it because it marries capitalism with the wellbeing of society.

These guys didn’t make their fortunes through blind luck or stupidity. They are incredibly intelligent individuals whose main concern is creating a better world. That means, these guys are not going to throw their money away in ineffectual pursuits. Rather, they will use their money wisely, see what works and what doesn’t and continue to use money in a wise manner rather than the government which can spend money in an inefficient manner.

As successful businessmen, they have more wealth than they know what to do with. They can look around the world and see which issues need to be addressed and pledge money to researching and solving or alleviating these issues. They will look at and attempt to solve but in a pragmatic fashion. The problem with governmental approaches is they are too slow to turn the ship around because there are so many vested interests.

On the other hand, you have uber-rich individuals whose main focus is to ensure their offspring retain an exalted status. It seems their idea is to perpetuate a permanent class of idle rich who have absolutely no relation to the struggles of regular people. Maybe they think the ills of society don’t affect their wellbeing because of the sheer amount of wealth.

However, if they think they can escape catastrophes such as plagues, famines, global warming or the increasing rate of species extinction around the world, then they have another thing coming. As the poet John Donne once said, “No man is an island.” The more the uber-rich attempt to escape their responsibility to society, which created the foundation for their wealth, the worse it will eventually be for all members of society.

One just needs to look at the development of the British political system compared to France before the French Revolution. The British elite gradually extended the right to vote and other benefits to all stratums of society while the French king and nobles attempted to keep benefits solely for themselves. One monarchy survives while the other lost their heads.

Sure the uber-rich could escape off the sinking boat of society to a life raft. However, they would just be stranded at sea alone with no recourse and no safe harbors. Society functions when all members work together, and depends on all members living and working together in a mutual fashion.

Promise of capitalism

By Alex Gratzek – Originally published in The Korea Times

Today, the world is suffering from the impacts of the Third Industrial Revolution as it stands on the cusp of the so-called Fourth Industrial Revolution. The question of our lifetimes is whether the world stands ready for such a drastic transformation when the ability to digest the impact of the third is proving to be a difficult task.

The Third Industrial Revolution saw the incorporation of robots and the automation of assembly lines. The result was a steady decrease in the number of workers needed in these factory jobs. These jobs were well-paying enough to give those working them a middle-class life.

However, the percentage of workers engaged in factory work has declined steadily as robots and other labor-saving devices become more prevalent. The Fourth Industrial Revolution stands to propel this replacement of workers at an accelerating pace. In essence, this revolution will see the marriage of human and machine capabilities in the form of artificial intelligence (AI) and an accompanying surge in productivity and a diminishing demand for labor.

The Fourth Industrial Revolution will likely see the rise of autonomous forms of transportation for taxis and long-distance trucking along with the replacement of cashiers, clerks and more by robots, computers or AI. Around Seoul, it is not uncommon to find McDonald’s restaurants which allow you to place your order at kiosks, entirely bypassing the cashier. How far away can burgers or coffees made to order by robot be?

However, the loss of jobs will not be limited to simply those with lower skilled jobs. Lawyers, accountants, financial analysts, insurance underwriters and more will also have their professions threatened by AI.

In such a scenario, who stands to benefit the most? Increasingly, capitalism has found all the profits generated by companies or corporations making their way into the pockets of shareholders. In previous decades, it wasn’t uncommon for companies to have profit-sharing programs with their workers.

This is not the case anymore as rising inequality attests to. Increasingly the rich are become richer because of investments, not through labor. The replacement of people with robots and AI will only encourage this trend of widening inequality as capital holders stand to gain at the expense of labor.

The average worker, along with increasing numbers of skilled workers, will find themselves out of work. The question of the Fourth Industrial Revolution is what to do with them? Capitalism has seemingly always promised that the economic pie will eventually get big enough for everyone to have a satisfactory piece of it. However, it always seems that such a time is just around the corner.

In 1988, U.S. real GDP amounted to just over $9 trillion. Thirty years later, it had doubled to over $18 trillion. Meanwhile in Korea, 1988 saw its coming out to the world with the Seoul Olympics and soon thereafter reaching the status of a high-income country. Despite the economic growth, large numbers of people are suffering from economic anxieties such as worrying where their next meal comes from. For a true flowering of society and culture, these fears need to be allayed.

For a historical perspective, one needs to go back to medieval Europe and the Black Death which ravaged the continent in the 1300s. During that time, 30 percent to 60 percent of Europe’s population died.

This drastic reduction in Europe’s population spelled the death knell of feudalism in Western Europe. Peasants were no longer tied to the land as the shortage of workers allowed for peasants to travel in pursuit of paid wages. The resulting shortage of labor helped to curtail inequality in Europe as labor became more valuable than land itself which was owned by the aristocracy. Today the opposite holds true: the haves stand to gain even more.

The lack of labor in late medieval Europe entailed a shrinkage of cultivated land and an increase in the land devoted to livestock. The result was an increase in meat and cheese consumption and standards of living which helped to set Europe on the course to the Renaissance and the Enlightenment.

The connection between the two is that in the past, the narrowing of inequality helped the general population allowing for society to move forward. In today’s world of unfettered capitalism, the benefits of AI stand to flow to an ever-narrowing elite.

Accommodations need to be made for the people who find themselves out of jobs or forced to work reduced hours instead of fending for themselves as best they can. The rumblings of discontent that are being heard around the world presently will dwarf in comparison in the future if no accommodation is made for such an eventuality.

The decrease in inequality led to a rise in opportunities in medieval Europe for the general population. These opportunities helped propel Europe toward the creation of the scientific and industrial revolutions.

In modern times, the goal should be to ensure that the average person is able to live life free of worrying about food and shelter. The pie is big enough. Instead of individuals’ energies being focused on meeting their basic survival, they should instead be redirected to focus on areas that can allow for human creativity to flourish and for society to thrive.

Such a scenario of massive job losses to AI is not guaranteed to play out. New industries may arise in response to AI as new industries have arisen in the past as old industries died away. However, preparations should be made for such an eventuality as a lack of preparations could lead to a dystopian future.

Re-examining marijuana laws

By Alex Gratzek – Originally published in The Korea Times

Recently, Canada joined Uruguay in becoming the second nation in the world to legalize marijuana.

It is time for Korea to re-examine its relationship with hemp and marijuana since the 1976 Marijuana Control Act was put into effect under the leadership of then dictator Park Chung-hee. This act effectively outlawed the possession and smoking of marijuana while creating strict regulations governing the cultivation of hemp.

Within Korea, the cultivation of hemp goes back before the common era. Fabric found in Korea dating back to 3,000 BCE contained hemp. Sambe was traditionally used in more recent times for Korean clothing.

Although there is no evidence that can prove or disprove consumption of marijuana through smoking it, it is highly likely that ancient practitioners of Korean Shamanism partook in its ritualized consumption. During the Japanese occupation of Korea, hemp was grown commercially throughout the Korean Peninsula.

Despite the long history of hemp cultivation within Korea and possessing a significant role within society, the plant was only outlawed in recent times. The illegalization of hemp and marijuana came in two phases coinciding with the increase of American influence within South Korea.

In 1957 President Syngman Rhee outlawed “Indian marijuana” largely due to the influx of American troops who were permanently stationed in Korea following the ending of the Korean War.

The cultivation of “Korean marijuana” continued on until 1976 when it was outlawed under then President Park. The consumption of marijuana had become more prevalent during the 1960s and early 1970s.

The increased consumption could be traced back to American influence in the form of the counterculture and hippies which emanated from American Army bases. President Richard Nixon, in an effort to demonize his political opponents, launched a “war on drugs” in an attempt to disrupt the hippies and counter-culturalists who were opposed to his administration.

Likewise, President Park saw the increasing usa of marijuana among the youth of South Korea as an opportunity. Students and young people had been the traditional opponents of the military dictatorship so it made sense for him to take a page from Nixon’s playbook in an effort to hobble the opponents of his regime.

The result was the outlawing of marijuana and hemp and its portrayal as a threat to the fabric of society. Many musicians were made examples of in order to cow their followers into submission.

Within America, attitudes toward Marijuana are shifting in favor of its decriminalization, allowance for medicinal purposes or even outright legalization and regulation as in Colorado. As the winds shift in America on the topic and the rest of the world, it is natural for Korea to re-examine its own relationship.

With the legalization of marijuana in Canada, South Korea holds that any citizens who use marijuana abroad will be subject to punishment in Korea. This is a dangerous road which should not be trodden without careful deliberation.

In Thailand, if one is robbed and posts on social media about the incident, then that person can be subject to punishment for the besmirchment of Thailand.

Koreans would be livid at the treatment of Koreans in such circumstances as it goes against what an open society should stand for. The same should apply to Koreans who are punished for doing something which is legal in their circumstances.

Dr. Kwon Yong-hyun, head of the Korean Cannabinoid Association, advocates for the use of medical cannabis to further the care of patients in pain.

“There are some types of diseases that can only be cured with medical marijuana, and it also helps in easing some symptoms, and treatments,” Kwon said.

He continued by pointing out that tens of thousands of studies and medical procedures over the years have found medical marijuana to be effective in treating numerous diseases including epilepsy, atopic dermatitis, dementia and Parkinson’s disease.

One of the most prominent issues in Korean society today is the economy and the lack of economic opportunities for today’s youth. An estimated one in 10 youths aged between 15 and 29 are out of work. A radical approach to the issue would see the outright legalization of marijuana.

It would immediately create a new industry overnight and would drive job creation via the new industry and the accompanying increased demand for services it would create. It has been estimated that 18,000 jobs were created in Colorado due to the legalization of marijuana. Colorado has a population of just over 5 million.

Currently, many tourists go to places like the Netherlands, Canada, Colorado or other places where marijuana is tolerated if not strictly legal.

The legalization of marijuana in Korea would create a new destination for tourists in Northeast Asia. Neither Japan nor China currently allows marijuana to be consumed legally. Korea would hold a monopoly for marijuana tourists in the region.

As the world opinion on marijuana and hemp changes, it is natural for Korea to re-examine its relationship with the plant and drug. At a minimum, those who use marijuana abroad in legal settings should not be subjected to punishment.

A middle road would be to allow for the use of medicinal cannabis and the easing of regulations governing the growing of hemp which holds a wide range of industrial uses and a THC count so low as to not produce a high effect if smoked. A radical approach would be for the regulation and legalization of marijuana.

Capitalism under siege

By Alex Gratzek – Originally published in The Korea Times

Following the end of the Cold War, it appeared as if capitalism was the undisputed victor.

However, since the Great Recession of 2007-08, capitalism has come increasingly under strain as it becomes evident that the huge wealth created by it is not spread evenly enough throughout society.

The gap between the elites and masses is increasingly turning into an unbridgeable chasm.

In a 2012 survey of 1,000 Americans, a staggering 45 percent wished they could skip Christmas because of the financial pressures they faced, while six in 10 didn’t have savings to cover an unexpected bill between $500 and $1,000.

For a large percentage of Americans, their economic situation is tenuous at best while for those at the top of the economic pyramid, things continue to improve.

The same goes for Korea. Young adults are increasingly unable to find decent jobs and are living longer at home with their parents. When the time comes to strike out from the nest, parents are often needed to provide money to their children so they can obtain housing or furnish any homes they can find because the costs are so prohibitive.

On the other hand, people born into families related to the leaders of chaebol or other elites are set for life, regardless of their ability or temperament.

One only has to look at the cashew nut lady on Korea Air or the girl who obtained entry into Ewha Womans University because of her mom’s connections to impeached former President Park Geun-hye. These elites are succeeding because of connections, not through their own ability.

In both Korea and America, success in life is not determined by ability but by the sheer happenstance of being born from the appropriate womb. Such a system, where working hard does not give one a leg up in society, is not one built upon strong foundations.

The delusion of being able to work to achieve success in life is increasingly being undercut by the grim realities that unfettered capitalism has created.

This disappointment in the system is manifesting itself throughout the world. A large number of Obama supporters switched over to support Trump in the latest U.S. election, while in Europe, the far left and far right have seen significant gains at the expense of the center.

In 2012 and 2016, Mitt Romney and Hillary Clinton were rejected because they were seen as manifestations of the status quo. Obama and Trump, despite being on opposite sides of the ideological spectrum, found victory because they were seen as outsiders.

In the aftermath of the 2008 Great Recession, the average person lost a significant amount of wealth ― whether it was their houses or savings ― while bankers, the ultimate creators of the mess, retired with “golden parachutes.” The average person suffered with no bailouts or relief, while those who were already the “haves,” thrived.

After President Park’s impeachment for corruption and influence peddling, Moon Jae-in was elected president. When he ran for the presidency, he ran on a platform of widespread economic appeal; taxing the wealthy, raising wages, increasing the housing supply, expanding the social safety net, while increasing money for job training and education.

He was seen as a relatively clean candidate, free of the taint and corruption which permeates Korean politics; allowing him to win.

Moon and Trump’s success can be ascribed to anger at the corruption democracy has seemed to spread. The elite are increasingly able to buy influence and increase their own personal wealth, clout and benefits in society at the expense of all others and the health of the society itself.

There is coming a point where the system needs to either correct this through the democratic process or a more dramatic reckoning will occur. It’s not a matter of if, but a matter of when.

One needs to look at the examples of England and France. The English allowed for the gradual expansion of the vote to the under-classes and created regulations to prevent their exploitation by factory owners.

In France, the elites tried to keep a complete monopoly on political power, an inequitable system, and the result was the French Revolution.

The police become absolutely necessary, only at the juncture in human society where there is a split between those who have and those who don’t. This gap can never be completely done away with but when the gap becomes too large, the police aren’t able to maintain order.

At that moment, the result is either revolution, rule at the point of a bayonet as towards the end of Czarist Russia or the implementation of reform to gradually reform society as did the English.

It is natural for capitalism to create a system where a child born into a certain area is more likely to succeed than a child born in another area. But when the situation arises where a child born into a certain area or segment of society is unable to escape it, regardless of effort or ability, is where problems arise.

Capitalism has allowed for the creation of mind-boggling wealth along with an unfathomable distribution of this wealth. Eight people own as much as $3.6 billion. The problem is it promotes the pursuit of wealth at the expense of individuals’ wellbeing.

Americans have been waiting for a chicken in their pots since Hoover ran for the presidency in 1928. Since then, the national wealth of America has skyrocketed but there are increasing numbers of empty pots.

The crucial issue for the future is addressing these shortcomings of capitalism. Democracy and capitalism “won” the Cold War.

However, if these imbalances aren’t addressed, then communism or socialism might very well be the victor. Although capitalism seemed unquestionably the ultimate success, it is increasingly under siege.

“IMF crises” 2.0

By Alex Gratzek

*Please note, in Korea it is referred to as the IMF Crises while in most of the rest of the world calls it the 1997 Asian Financial Crises.*

Twenty years ago, South Korea experienced the “IMF Crisis.” The contagion, spreading from Thailand, affected much of the rest of Southeast Asia and moved on to South Korea. The impact was brief but deep.

More recently, Korea was largely able to escape the worst of the 2007/2008 crisis. As a nation largely dependent upon trade, Korea needs to prepare for the next crisis.

In 1978, under the leadership of Deng Xiaoping, China embarked on a mission to grow its economy, allowing it to operate along increasingly capitalistic lines. However, it has never fully embraced capitalism and the state retains a large presence in the economic sector.

The decision to adopt “pseudo” capitalism has led to an unprecedented 40 years of uninterrupted economic growth, allowing China to become the second-largest economy in the world. Oftentimes, this growth rate has exceeded 10 percent while in recent years it had slowed to 6 percent.

This is a remarkable achievement but one that comes with costs that have yet to been paid. The Chinese government has come to stake its legitimacy on delivering economic growth. To this end, it has consistently intervened in its economy to ensure this. The time for a recession is long overdue. The longer one is artificially avoided through government machinations, the more drastic any eventual recession will be.

In recent years, the government has only been able to ensure economic growth by utilizing debt to promote it. This is becoming an increasingly expensive and perilous way of ensuring growth. The amount of debt that is needed to ensure growth is increasing in proportion, while the extra growth that is generated is shrinking. The input (debt) costs needed to create a fixed amount of growth (output) are increasing.

State companies have seen their debt load rising in recent times. With access to government officials, they have been consuming government loans in order to stay afloat, and have avoided laying off workers for the sake of stability. Their proximity to power means they can access loans and pay a lower interest rate than the market dictates. Increasingly, new loans are being used to pay off old loans while banks are reluctant to report loans as nonperforming. This is not a sustainable practice.

Another related issue of concern is the housing market which has been encouraged as a means of maintaining economic growth via construction. This market witnessed prices double between 2010 and 2017. Housing prices posted a double digit increase in 2016. Chinese capital controls prevent money from being invested abroad and many Chinese are weary of the domestic stock market. Money left in bank accounts receives a pittance of interest. Therefore, many Chinese with money to spare have parked their money into housing.

This accounts for the dramatic rise in the price of apartments, and many speculators and individuals own multiple units. Outside of major cities, there are so-called ghost cities in the interior ― fully constructed cities but with populations well below maximum capacity.

The one child policy and the cultural preference for males resulted in a skewed gender ratio in which males outnumber females. Bachelors know owning a house is a minimum requirement in order to be considered marriageable material to any potential partner.

Any resulting coupling will be two young adults with no children. Thanks to China’s former one child policy, which started to result in a shrinking population, married couples will stand to inherit two or more houses from their respective parents while already owning their own. This will ultimately crash the housing bubble if it hasn’t crashed before then. A couple owning three or more apartments will inevitably sell them; especially if a debated property tax is put into effect.

The Thai crises originated from the economy needing more and more money as asset bubbles grew within the country. Those who were able to acquire bank loans were those with access to the center of power. A key component of this bubble was real estate speculation. This is being mirrored in China at this time.

A key characteristic of capitalism is inevitable recessions. Forty years of uninterrupted economic growth is not a natural outgrowth of capitalism but a reflection of government intervention during bad times. Eventually, this will no longer succeed and Korea needs to be prepared for when it does.

The “IMF crisis” originated from a small economy in Southeast Asia before spreading throughout the region and to Korea. The 2007-08 crisis occurring across the Pacific, allowed Korea to escape the worst of the fallout. Korea was also spared because China, its largest trading partner, went ahead with government intervention to ensure economic growth.

It is not inevitable that China will suffer a recession. Its efforts at pursuing reforms to clean up its banking system along with an attempt to rein in the housing market could work. However, Korea needs to be prepared in case China fails in these endeavors or some other unforeseen event causes a recession.

China is the largest trading partner of South Korea, accounting for around 25 percent of South Korea’s exports and is the second-largest economy in the world. Any Chinese economic issue will dwarf the 1997-98 crisis in its impact, while South Korea will not be able to escape unscathed as it did in the 2007-2008 crisis. As the bible says, in times of plenty save for the bad times. I hope Korea has done so.