The Youth Overwhelmed by ‘Rent-Seeking Society’
[IDEA2050_007E]
Jae-Kyung Lee, Researcher at Democratic Social Policy Research Institute, Hanshin University
Low growth and economic depression have persisted in Korea since the Asian Financial Crisis in 1997 and economic vitality diminished even further after the 2008 Financial Crisis. All generations have suffered from the sluggish economy, but the youth in their 20s and 30s bore the brunt of it.
It is harder for the younger generation to land a stable job even though they put in more work than their parents. A lot of them cannot find a way to leave a ‘temporary job’ and are spending their youth suffering from low wages and long working hours. They call themselves the ‘N-po Generation’, which means they gave up on multiple sources of happiness such as marriage, romantic relationships, childbirth or buying a house.
“We will support you once you get married and have children.”
The youth newly appeared as beneficiaries of government policies as things have got especially tougher for them. The content of government policies, however, is contradictory. Government policies designed to give more financial stability to the youth are often provided when they get married and have children.
When the youth unemployment issue became more grave, political leaders started to encourage them to go abroad for job opportunities. They were pushing the back of young adults who often said they wanted to leave ‘Hell Joseon’ (N.B. a satirical term that refers to current socioeconomic situation in South Korea) in despair. Government policies have encouraged and supported the youth to find jobs overseas, but success stories have rarely been heard. According to press reports, the policies were poorly managed and operated.
They find it hard to understand why government-backed student loans come with high interest rates even when the market rate is low. The benchmark interest rate decreased to 3% after the 2008 Financial Crisis, but student loans had an interest rate of almost 8%. Students had to pay interests higher than mortgage loans. They became a debtor even before striking out into the world and had to pay interests by studying and working at the same time.
The government has repeatedly said that it would resolve housing issues by providing more houses. It has been providing housing spaces for single-person households. But why do security deposits and rents rise every year? The older generation criticize the youth as if they are the culprit of the demographic cliff. They take to the streets with a hairband when the government announces its plan to build rental houses for the youth because it would wreak havoc to their stable income from the rents.
‘Rent-Seeking Society’ is the true colors of Korean society that suffocate the youth. The government only acquiesces with their arms interlocked.
Korea, Rent-Seeking Society Through and Through
‘Rent’ is a regular payment for the use of land or houses, but it also means excess or non-work income. The more people pursue assets that come with rents, the smaller pies go to those who try to earn income through labour and business activities.
Real estates are at the epicentre of any rent-pursuing act in Korea. Those who first took opportunities to enjoy benefits from early economic development have established their own cartel to share profits within. The entry barriers such people have created are getting ever higher and exacerbating the unequal distribution of wealth.
Rent-seeking society instigates desires in all members of society to receive rents in one way or another. Other factors that consist capitalistic market economy such as wages, profits, savings and investments languish. The only concern of citizens is ‘how to secure rents’ in rent-seeking society.
Now hard working individuals are ridiculed, rather than being complimented, while those who earn a huge amount of non-work income are revered. Korea’s socio-economics system, at some point, has turned into casino capitalism, a gambling table, where every player strives to earn excess and unearned income.
If games are just or at least participants recognize them as just, less conflicts would arise. But what if the youth who recently entered the real world must compete against the older generation who already have secured rents? An average young person is in huge debt because of student loans and is without inherited properties. It is only natural for them to leave the table rather than participating in the competition in this social structure.
Some young people would of course want the game to go on. Those are the ones who inherited rents from their parents. The older generation that secured rents hand down more than just houses and cash. Powerful and influential parents can get their children into prestigious universities or graduate schools or even get them good jobs after they graduate, which was seen in recent corrupt admission or hiring scandals.
Choi Soon-sil is the epitome of those parents. What she did for her daughter Jeong Yoo-ra provided fodder to the impeachment of former president Park Geun-hye. However, there are still parents and children like them in every corner of our society. The youth who directly and indirectly experienced this do not buy the promise of (neo)liberal society that individuals are assessed and rewarded based on their competence.
This is why the youth in Korea are sensitive about, or even angry at injustice. At the same time, they are anxious to grasp opportunities to secure rents such as the crypto currency boom.
Politics Heading Towards Silver Democracy
Politics is almost the only solution to this issue. But the reality of Korea’s politics is bleak. Just as Middle Eastern politics was monopolized by a handful royal families, priests and soldiers, Korea’s politics is thoroughly monopolized by the older generation in their 50s or older.
The average age of current lawmakers in the 20th National Assembly is 55.5. That of 19th National Assembly was 53.9 years old. Between 1st and 17th National Assembly the average was 50.4. In the 19th National Assembly, 6.3% of the lawmakers were under 45 (OECD average: 32.1%), 2.3% was less than 40 (OECD average: 19%) and there was no MP aged under 30 (OECD average 2.8%). Korea has the lowest ratio of young lawmakers among OECD countries. Even though the generational imbalance has been constantly questioned, only one lawmaker was in his 20s and two were in their 30s in the 20th National Assembly. The imbalance is too stark to even calculate the ratio.
This generational structure inevitably isolates the youth in politics. The number of bills related to the elderly was four times higher than those related to the youth in the 19th National Assembly. There were 152 bills with the keyword ‘elderly’ and 65 bills with ‘youth’ on the Bill Information of the National Assembly.
There have been sharp conflicts between generations in recent elections as if they reflect the sense of crisis that the youth are feeling. Elections are supposed to demonstrate the power of democracy by providing one vote to each person regardless of their wealth and social status. However, the power of democracy did not shine during elections because of the structure the older generation created. The youth are invited and mobilized only during elections and have not been able to participate in politics other times. There have been no drastic policies for the youth, either.
The problem is that this phenomenon could become even more serious. It could develop into silver democracy along with the trend of aging society. Silver democracy means a phenomenon where politicians prioritize politics for the elderly to receive more votes as they account for the majority of the population. It is a term often used to explain politics in Japan and Italy.
Silver democracy could aggravate gaps and inequality rather than balance out the uneven playing field of Korean society.
Let us look at housing policies. If too many citizens suffer from high housing prices, the government needs to implement policies to lower them. However, the government guarantees loans for the youth so that they can afford houses and financial institutions grant loans. This only protects the rights of the older generation.
Rental houses for the youth also benefit real estate developers and multiple homeowners. The government builds rental houses near subway stations or rents out houses to re-rent them to the youth.
The same goes for job policies. Youth unemployment is the main topic in unemployment discussions, but beneficiaries of job projects are mainly senior citizens.
The Youth May Find Opportunities Locally
The youth need camps and trenches to endure the pain coming from the unequal social structure. They need to secure their own places to look for opportunities even though they are small and rough. For their secure base, I would like to suggest them to turn their eyes to local communities as places for possibilities.
Local communities here are space for activities and real-life economy such as socioeconomic communities and local autonomous entities including metropolitan governments and local wards.
Of course, the older generation including occupation associations, businessmen, local political and administrative institutions have firmly secured vested interests. They have maintained a strong union over a long time, which is why they are not so friendly to the youth who roam around freely. This phenomenon is more accentuated in rural areas and farm villages than cities and the capital area.
I am making a suggestion to focus on local communities despite these difficulties because they still hold more opportunities for the youth compared to the state and market economy.
Here are some proof. Rural cities started providing youth allowances (Seongnam and Seoul), established an ordinance to support the youth and began operating a youth agency and youth support centres. In the meantime, the basic youth bill is still pending at the National Assembly for the past several years. The government established a youth committee headed by someone in his 50s, but Seoul City at least appointed a person in his 30s as the head of the youth agency.
There are activist groups and organizations in wards and villages that try to provide the minimum wage and improve work-life balance for the youth. There are adults who try to support young adults who try to make living and work in the neighbourhood. They could be just another old person to the youth, but at least they are polite and warm.
Another matter of importance is making ends meet. Various projects such as communities, social economy and urban restoration are ongoing locally. A big portion of the government budget flows into wards and villages to support these projects. Even though they are still fledgling, potential business models such as local management businesses and village management co-ops are growing.
These organizations are having a hard time recruiting young workers. They may not be a good job as most work is project-based, which does not really necessitate permanent employment. That is why it is even more difficult for the organizations to invite the youth.
However, large conglomerates, public enterprises and offices can absorb only 10% of the youth. If you think it is meaningless to spend time and effort to be that 10%, or you are less excited by jobs that are stable but provide less opportunities to demonstrate your competence, then it is worthwhile to look at the jobs offered by local communities.
Local communities are a place of opportunities for the youth who are interested in politics. Their importance is growing as they started governing themselves due to decentralization. There was even a case where a lawmaker ran for the head of a district office. Moreover, local assemblies provide more jobs to the youth compared to the National Assembly. The existing political parties are more generous in giving opportunities to the youth as they are willing to nominate young candidates.
Local communities are meaningful not just because the youth can participate in politics, but because they can engage in meaningful activities in politics. As the role and authorities of citizen autonomy are enhanced, more places such as residents’ association are open for the younger generation to participate. If they lose this opportunity, the older generation or their children who inherited their vested rights may get a hold of it.
Let’s believe in the innovation that the youth will create
When I talk with young people I met while doing my research in my neighbourhood, all of them say, “I didn’t know that there was a place like this.” Some even say that they were completely oblivious of what was happening within their vicinity even though they have grown up in the area. They explore career but did not really have opportunities to experience and learn the neighbourhood and communities they belonged to.
However, it is important to note that telling the youth to go to local communities might be tantamount to telling them to go abroad. The first step should be giving them opportunities to explore jobs, activities and lifestyle in their neighbourhood.
Each city could establish systems for the youth to work for six months to a year at a local civil organization or a support group just as Seoul Metropolitan Government’s ‘Innovative young activists for social economy’ and ‘Young activists for local innovation.’ If they can provide appropriate wages, a congenial working environment and a horizontal organizational culture that trigger innovation, more young workers may choose to work and live in local communities.
A more flexible way would be to guarantee living for a certain period for young workers who try to carry out innovative activities in local communities. Local governments in Japan listen to opinions of young citizens and support various activities to regenerate cities. Local communities could support the youth who try to do something different. They could gain new energy for changes and innovation.
The government named a new city in the capital area which was developing housing sites ‘Dasan.’ Dasan Jeong Yak-yong drew lives of ordinary citizens after examining their reality in detail. The government should retract the spirit of Dasan before using his name. Maybe we could call projects to provide local foundations for the youth Dasan. These types of efforts would be more helpful to the future of Korean society than any other policies.
