Discussion - 3 challenges for Korea

(my answer to a question regarding the critical challenges Korea will face in the 10 years to come)

I were to select 3 challenges, I would pick :
- one that policies can solve but are addressing counterproductively nowadays (the Brain Drain / Capital Drain),
- another one that policies are having a difficult time tackling (China and regional competitivity), and
- yet another one, utterly unpredictable (North Korea).
The fourth challenge (Demographics) could partly find, in the previous 3, solutions more sustainable than today's massive imports of South East Asian wives for the rural poor.

The most vital challenge is NK. I'm not worrying about nukes but about a brutal social / political / economical collapse, and I keep warning my Korean friends about what I call a "Albania Scenario" : they only benchmark with Germany's reunification, but they should also consider post-Hoxja's Albania, the only case vaguely similar to Kim Il-seung / Kim Jong-il's Xanadu (a country run like a sect, a people unable to live in a democracy, nor to survive in a free market).
=> Worst case scenario : a third Bush-Cheney term, with Shinzo Abe's neofascist clique to wrap it up.
=> Best case scenario : Beijing manages to coerce Pyongyang into tougher reforms (at last)

The Brain Drain / Capital Drain issue could prove more critical than it seems - the golden youth of the country is switching continents and it starts showing.
=> Worst case scenario : Korea's "undeclared emigrants" (the name I give to those who have a home and spend quite a lot in Korea but have other homes, passports and niceties overseas) reduce dramatically the time and budget they devote to their country (ie after the burst of the real estate bubble). Korea is left with a few wealthy people, an impoverished middle class and an ever increasing poverty. Even top chaebols could change nationalities (individuals as well as companies).
=> Best case scenario : Seoul decides to leverage on its diaspora (ie a "coming out / coming home" - more transparency vs less taxes and a lighter military service) to strengthen its links with the US, the Middle East and even Europe. Korea must be loved by its own people again. It must also become the herald of cultural diversity in Asia far beyond the shameful exploitation of the international fad for its disposable celebs.

Regional competitivity remains a priority for this administration, but if Korea wants to become a hub, it will need much more focus (ie too much intranational competitivity and confusion). Especially with the return of ultranationalists in Japan and a much fiercer competition from China, whose revisionists have other ideas in mind : beyond the rewriting of Koguryo history, Beijing intends to create a new regional capital of Korea in China !
=> The system of regional clusters and the strengthening of partnerships with Europe could pay.

Gloomy, but Korea's main asset remains its people. That's one of the reasons why it shouldn't risk losing its most promising talents to the rest of Asia or to the US. Also : Korea should stop selling its soul for short term profits, exports and investments : that would be the best way to become a suburb of Shanghai.

Halliburton and the 40 thieves (continued) - Dubai, we have a problem

Exeunt the Texan Oilers, welcome to the Emirate Drillers. Halliburton decides to move its franchise from Houston to Dubai, where CEO David J. Lesar will fell at home (show off new rich, bad taste contest and massive environmental plundering). The politically and environmentally correct TXU deal was just a farewell gift before the camel ride.
Like the KBR spin off. A prerequisite for the move since US military and national security is involved. The Bush administration* learned something from the DP World incident**.
Definitely, this administration can take lessons and good decisions. But only when it comes to this company***.




* Or should I say the Cheney administration ? As Jay Leno put it after the failed attack on the Veep in Afghanistan ("Red blogule to intel kept inside - Cheney caused 23 more deaths" - 20070303), the US were lucky : they could be ruled by George W. Bush now.
** "Red blogule to the DP World - P&O deal's Architects and winners" (20060224)
*** the priority of rescuers after Kathrina crushed the South (see my previous "Red blogule to Halliburton and the 40 thieves" - 20050911)

The end of financial safe havens - Red blogule to speculation

Shanghai sneezed, Tokyo coughed, the whole world panicked... but avian flu had nothing to do with it. According to Ben Bernanke, Chief Futurologist Officer at the Fed, this week's small bump on the eternal path of glory of the World's greatest stock exchanges doesn't mean the big naughty R will strike anytime soon.
Yet it shows how nervous investors are, globally. There is a lot of greedy money everywhere and not only from your usual suspects (the so called developped countries) : everybody is well informed and almost free to invest almost anywhere anytime. Speculation remains good business but demands better nerves than ever. Hedge funds were the first to collapse under their own weight and now, even traditional players struggle. The money is there, growth is there too, but the place is so crowded with both experts and beginners that nothing is guaranteed.
There is no such thing as a financial safe haven anymore, and this greedy money will somehow have to focus on tasks more useful for a larger community. No wonder some people have been rediscovering The Capital lately. But with a fresher look.
I like to compare Karl Marx with Louis Pasteur : both were great observers and could deliver pertinent diagnosis, but Carlito couldn't go all the way of experimentation and would often wander too far along the path of interpretation, coming back with irrelevant prescriptions and leaving to other doctors the honor of delivering counterproductive treatments.
I know this is the kind of excuses used in the past by the Supreme Soviet or the CPC (Communist Party of China), but I do think the time has come for the cast of pure speculators to feel the heat and join the Hall of Shame : you have a right to sell weapons, tobacco, alcohol, casino chips, and to make a lot of dough with it, but don't expect to be respected for that.

Red blogule to French oldcons, neocons and cons in general

The French are switching from a Left / Right to a Conservative / Progressive political rift. The defining moment was the vote for the European Constitution, with a significant collateral damage : the end of the Socialist Party (PS) as we've known it since Francois Mitterrand claimed it a couple of decades ago.
Reformers from the PS have more in common with reformers from the UMP than with their fellow party members stuck somewhere in the middle of the XIXth Century. Sarkozy and fellow reformers have successfuly sidelined traditional conservatives within their own ranks - a minority of harmless old farts snoring all day long at the Senate.
I'm sure the French economy would perform well with Nicolas Sarkozy, but I'm rather scared by his attacks on secular legislations and his ability to fuel radicalism and fundamentalism. I don't quite like the idea of this man enjoying the support of both US and Israeli fundamentalists and neocons, and even the presence of a Karl Rove wannabe on his side, Brice Hortefeux.
I'd rather see a more moderate kind of reformer rule the country. Francois Bayrou (UDF) has a clear opening since Dominique Strauss-Kahn lost the PS primaries vs Segolene Royal. Should he reach the second round of these elections, he would crush Royal and could even be a problem for Sarkozy (if socialist voters prefer barring Sarko to abstention).
Segolene Royal is not a moderate reformer. She is neither conservative nor reformist. She is an ambitious person used to follow charismatic leaders and has some trouble turning into a charismatic leader radiating with her own views. She keeps putting all opinions at the same level and refusing to take any clear position. As expected and despite a massive victory in the socialist primaries (60%), Royal proved unable to get full support from her own party. A couple of days ago, a group of VIMs from the left (Very Important Women) were considering a petition to call for her withdrawal from the presidential race - just to make sure this wouldn't be interpreted as yet another proof of France's reactionnary machismo (anytime Royal is under attack, she bites with the issue back).
Bayrou may be closing the gap, Royal is still far ahead of the centrist candidate and she still has a large and motivated core of supporters. But she flunked last week-end's exam, introducing a program that didn't really prove disruptive... but for the national budget. A copycat of Mitterrand's 1981 program, which led that man to the top job but the country to the bottom : a massive budget deficit, a big financial crisis and a total loss of international competitivity at a critical moment. Eric Besson, the man in charge of the financial side of Royal program, timely decided to quit after a clash with Francois Holland, secretary general of the PS and Sego's longtime compagnon.
Right now, Sarkozy enjoys a comfortable lead in the polls. But he has also been trapped into a lousy campaign where everybody promises everything to everyone. Even Bayrou, the apostle of budget orthodoxy, claims a 20 billion Euros program.
Ten years ago, France was ahead of Germany in its reforms. But the PM, Alain Juppe, went too far too quick, and Chirac (not so wisely advised by Villepin) decided to dissolve the assembly. The PS won the 1997 elections and Lionel Jospin surfed on the internet bubble years to post nice growth rates, but also to reform the country the wrong way (more spendings and the mother of all mistakes ; the 35-hour Week). Chirac won again in 2002 but limited new reforms to cautious steps when his neighbor Gerhard Schroeder would take all the risks. Schroeder lost to Merkel but Germany is now much fitter than France to face future challenges.
Here's the new deal for France : an economic breakdown with Segolene Royal, a political gamble with Nicolas Sarkozy. Should Francois Bayrou win next May, he would have the opportunity to form a new party with socialist and UMP moderate reformers. Instead of going down by turning right or left, France must try to go and grow up.

Red blogule to Wal-Mart's H. Lee Scott Jr. - "Can I hate you ?"

I suggest a new 10-foot rule to Wal-Mart's employees : if CEO Lee is less than 10 feet away, you're compelled to ask "can I hate you ?"

Judging by "Lee's Garage" worst of as selected by yesterday's NYT ("On Private Web Site, Wal-Mart Chief Talks Tough"), you can easily tell how this man made it to the top : his blog just reeks of the retailer's awful corporate culture ; XIXth century capitalism at its ugliest.

Everyday low, period.

White blogule to France's wake up call

You keep asking me what's going wrong with France these days, especially after my critics on Amerika's social collapse (ie "This is America" or "Quagmires and bayous").
My answer is : "about everything". The poor are getting poorer, the masses are getting poor and the wealthy have already left the country. The IMF can praise the government's ability to perform reforms through consensus, the country needs to go further and quicklier.
First, "social" investments are often diverted / perverted and France is paying for the so called "social peace" : I give favors to social activists in order to buy stability, but I transform them into new elites disconnected from their bases and only devoted to the protection of their own interests. The counterproductivity of this tradition of compromises becomes all the more evident than growth times are over.
Second, ethnical / racial "égalité" is a myth. The French national soccer team became the "black blanc beur" alibi for a nation of tele-spectators / non-actors. Decision makers and opinion leaders must reflect the country's diversity.
Third, the Republic kept clinging to an ideal image of itself without actually taking care of itself. It must revive its own dynamics and instead of protecting yesterday's, we must unleash the locomotives of tomorrow. Education remains to be truly reformed (beyond the content, the mindframes and inerties).
The solutions lie in both a "bottom up" and "top down" approach. Bottom up : voting, getting involved in the community beyond one's own existing circles, marketing a positive peer-pressure at the individual as well as the entrepreneurial level (I'm doing something, how about you ?). Top down : transfering investments in the socially productive hands and giving back the ability to spend to the doers and makers : saving the budget by replacing only half of the new pensionners in the civil sector, luring back the wealthy - even if unethically at the start, ie through amnisty (but with a reform of heritage in favor of productive investments and socially efficient foundations).
This crisis could prove to be the opportunity to wake the country up and to focus the energies on the right priorities.
The only positive output of this "annus horribilis" (no to Europe, no to Paris 2012, no to social exclusion...) is the existence of a genuine debate. At very last, the key issues are outspoken. To the point one could talk about a 1968 revival, with still the same idealists at one extreme and cynists at the other one, but a stronger and more mature mainstream in-between.
Let's hope France will go for the structural change instead of Sarkozy's radical reformism. One year from now, I hope we can measure the evolution in the good (if not right) direction.

Red blogule to Guggenheim - Ghost in a shell

Since the issue of "Guggenheim Economics" is raised (Newsweek 20041220), let me add that this franchise has the business model of a low cost carrier sponsored by minor league airports. But don't think economies of scale : the more outlets they open, the more dilluted the collections. The space and architecture makes for the cultural void and the original Guggenheim in New York now looks like a "ghost in a shell". Visiting Guggenheim Bilbao is quite an architectural experience but you're more marvelling at the craft of a software than the inspiration of an artist. And after the ride you realise you were lured into believing you actually met great works but hey, that's how the Planet Hollywood concept managed to sell for a little while. Stephane MOT

White blogule to cultural diversity - China is already on top

The US don't even realize it yet but they've already been overtaken by China. Forget the traditional measuring tools supposed to tell you what a superpower is (GDP, RBI... you name it). We're talking about the way a country's culture attracts people from all over the world. The US model is already dead and the Chinese one just finishing its warm up period.
This time, China won't try to overwhelm the region with its mandarin style rococco but peacefully let the world enjoy and spread the word about a second to none variety of cultures and ethnies... provided they get rid of their tradition of coating everything in a disneylike display of radical colors or in a tasteless MSG saturated sauce.
In the meanwhile, come enjoy beautiful Yunnan before mass tourism takes too much flavor out of it. Back from Kunming, Lijiang, Dali and Zhongdian.