hankyoreh

Lee Won-jae

By Lee Won-jae, president of LAB2050

It’s a situation we never faced in the past.

Housing prices in the greater Seoul area continue their relentless upward rise despite a worsening economy, and there’s a flood of demand to take on debt to purchase homes. Jobs are disappearing, yet the investment wave is at its peak.

Whenever I’ve met with younger people who talk about the “lost year” they spent in the face of this employment cliff, we’ve ended up talking about investments in stocks and cryptocurrency. Throughout South Korea, you find the sense that if you don’t get rich quick, you’ll end up getting poor quick.

Why are people behaving this way? Is everyone sensing how we seem to be arriving irreversibly at a new class society? Is this not a reflection of fears that if they don’t reach the upper class now, their children and children’s children will end up falling behind for good?

Let’s consider some of the major societal debates in recent years. Here we find all the signs pointing to a new class society.

First, there is the matter of irregular workers at the Incheon International Airport Corporation being converted to full-time status. The administration has sought to relieve employment insecurities by having workers employed with partner businesses or as dispatch employees hired on by the corporation, albeit with low status.

Yet this has provoked an intense outcry from the existing full-time workers, who are calling it “unfair.” Students who are preparing to vie for public institution jobs have decried it as a case of “cutting in line.”

Ironically, this debate had the effect of letting the public know how great a privilege it is to be employed by a public institution. With its retirement age guarantees and yearly salary class upgrades, a full-time job at a public institution is like a safe asset that yields a guaranteed annual rate of return.

That sort of asset becomes even more apparent in an era of low growth. Employment at a public institution isn’t just a job — it’s become a new form of status.

Second, there is the debate surrounding university admissions. Questions of “fairness” have been dogging the new admission system, which was introduced ostensibly to encourage free activities and experience-based study. Students and their parents have been vocal in calling for a system that allows them to focus on studying their designated topics and gain admission based solely on their College Scholastic Ability Test (CSAT) score.

Knowledge has become another new dividing line for class — a line that has become all the sharper with digital shift.

A diploma from an elite university has become a kind of “certificate of knowledge.” You can’t prove knowledge, but you can show a diploma. There is no scarcity value in children, since anyone can have them, but with things like diplomas, the state actually manages the scarcity.

Third, there is the fairness debate surrounding real estate investment.

The investment allegations surrounding Korea Land and Housing Corporation (LH) employees have triggered an explosion of anger, but real estate had already been the focus of everyone’s attention. Questions like which regions would be developed first, who would receive the first lots, how much people would receive in loans, and how much more they would pay in taxes had become topics of intense interest.

Indeed, real estate ownership is turning into the key dividing line for the new class system. It’s something that can be gathered even from the data.

While earned income inequality in South Korea grew rapidly after the start of industrialization, it’s become widely accepted that the curve has noticeably flattened over the past few years. But it’s a very different story when it comes to income from real estate and financial assets.

Inequality in income from assets has only intensified, becoming more heavily concentrated from the top-earning 10% to the top 1% and from the top 1% to the top 0.1%. This means that unlike before, there are limits to how far you can rise through earned income based on skill and effort.

In such a society, it’s normal for people’s interest to focus on things like the government employee examination, college admission-focused private education and real estate investment. For those who simply plug away silently, take risks to start their own business or work to serve others, a bleak future awaits.

How can we hope to change course? Is it enough to ensure everyone the same opportunity to be part of the upper class?

That’s debatable. In a society where the gap between winners and losers is growing — and the proportion of winners is shrinking — “fair rules” essentially become secondary.

At root, it’s about turning things around from our headlong dash toward a new class society. That means eliminating the unearned income that comes from houses and land, ending discrimination based on academic connections, and removing the gap inside and outside the walls of public institutions.

When people make the decision to lie down or stand up, they’re anticipating the wind. It may look as though they’re being pushed along by global currents, but if they believe the currents are changing, they tend to focus their energies in a different direction. The government needs to use its policy measures to create winds that blow consistently, based on a firm commitment.

The Moon Jae-in administration declared that results would be “just.” It still has time. It needs to focus its remaining energies on making sure the new class system does not take shape — and on getting people to trust in that.

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