Korea needs `social mobility`

Self-made entrepreneurs’ stories are impressive. As times go by, the legends of “corporate heros” like Samsung founder Lee Byung-chul, Hyundai founder Chung Ju-yung, and LG founder Koo In-hwoi add value.

Bloomberg’s 200 world’s richest people showed that 139 rich individuals (69.5 percent) are self-made while 61 people (30.5 percent) inherited wealth. Nine out of top ten rich individuals are self-made including Bill Gates, the richest man in the world. Seven are from the U.S., a country of challenges and innovation, and one from Mexico, one from Spain, and one from Sweden.

Six Chinese and three Japanese entrepreneurs are among the top 200 list. Korea has only two – Samsung Group chairman Lee Kun-hee (108th) and Hyundai Motor Group chairman Chung Mong-koo (194th). The Chinese and Japanese rich individuals are self-made while Korean counterparts have inherited their wealth. Fifteen out of 16 Korea’s richest people with their stock value of over one trillion won (927.2 million U.S. dollars) are the children or grandchildren of large conglomerate founders, or their spouses. This reflects Korea’s rigid social mobility.

It is not a balanced view to criticize Lee Kun-hee or Chung Mong-koo for being born with a silver spoon because maintaining a successful business is much harder than starting up a business. It should be noted, however, that Korea has fewer self-made rich men than the U.S. and Japan, which have longer capital market history than Korea, and even China, which made a belated reform towards the market economy. This indicates that Korea is losing vitality and dynamism and becoming a structure with less social mobility than the past.

The growing social and economic gap of parents translates into a divide in education, jobs, and household income, and this would increase the social conflicts and complaints over the inequality of opportunities. The latest edition of Foreign Affairs said on Korea’s inequality, “Given the growing wealth gap, the center-left could return to power in 2017.” Korea should increase social mobility by creating a social safety net and reforming regulations without being swayed by populism hampering growth.