What is happening in Hong Kong?

This is our 800th post here at Useful Stooges. It is a landmark for our site, and consequently we have decided to devote this post to an especially crucial ongoing development in the never-ending history of the human struggle for freedom.

The handover, 1997

Ever since the United Kingdom handed Hong Kong back to the People’s Republic of China in 1997, the onetime colony’s spectacular success as an international financial hub and robust center of corporate activity has obscured the fact that it is, in fact, ultimately subject to the authority of the world’s most powerful and dangerous totalitarian regime.

Hong Kong’s history is rich in irony. Its acquisition by Britain in the early nineteenth century was, frankly, an imperialistic land grab. But by the mid twentieth century, it was, thanks to that land grab, a tiny outpost of democratic capitalism and individual liberty on the coast of the planet’s most populous Communist country. Its population was overwhelmingly ethnic Chinese, but they were ethnic Chinese who were glad to be living in a free and wealthy enclave under British rule rather than under Red China’s heavy tyrannical thumb.

Hong Kong

Yet the fact that people in Britain – and, by extension, Hong Kong – lived in freedom while people in China did not was hardly dispositive. As China’s power grew, it began to demand that Britain give up control of this wealthy jewel. Fearing that China might retake Hong Kong by force, the British government agreed in 1984 to return it in 1997 on the proviso that its people would be permitted to keep living in liberty until the year 2047. This was the famous “one country, two systems” agreement.

Hong Kong Olympic team, 2012

The result has been a often uneasy hybrid. On the one hand, Hong Kong’s legal system differs from China’s. It belongs to the WTO, issues its own passports, and sends its own team to the Olympics. There remains a tight customs border between Hong Kong and the rest of China, and Chinese citizens are not permitted to move to Hong Kong. On the other hand, the city is policed by the People’s Liberation Army – a fact that has been of crucial importance in recent weeks, when all of Hong Kong, it seems, has risen up in protest against the bullies of Beijing.

2019 protesters

It started with a proposed law that would permit the extradition of people from Hong Kong who are wanted for crimes on the mainland. Until now, rather remarkably, there has been no extradition agreement between China and Hong Kong – yet another indication of the degree to which Hong Kong has remained a separate entity. Such a law, of course, if applied aggressively, could spell an end to Hong Kong’s distinctive Western-style freedoms. Protests began in March of this year and grew in scale and violence over the course of the spring. Quite rapidly, the focus of the demonstrations broadened; they weren’t just about the bill but about Beijing’s authority generally. So it was that on the day after the bill was suspended on June 15, a massive protest took place; July 1, the 22nd anniversary of the return of Hong Kong to China, occasioned another large-scale public display; August 5 saw a general strike and yet another huge demo.

Airport sit-in, 2019

At first, Beijing held back, not wanting to do anything that the world would compare to the Tienanmen Square massacre, which took place exactly thirty years ago, in 1989. But police gradually grew more aggressive, and yet another full-scale protest on August 18 took aim at police brutality. Meanwhile, from August 12 to 14, a sit-in at Hong Kong International Airport all but closed it down. On August 23, protesters formed a human chain 50 kilometers long that stretched across much of the metropolis. As of October, the people of Hong Kong were still coming out in force, with a number of violent protests occurring on the first of the month, which marked the 70th anniversary of the PRC’s founding.

Protesters jam the streets, 2019

Sensible people in the free world should recognize the extraordinary, months-long exhibition of love of liberty and hatred of tyranny by the people of Hong Kong as a reminder of their own good fortune, a reminder that free societies are the product of centuries of struggle and development, a reminder that freedom should never be taken for granted and sometimes needs to be fought for. The brave and inspiring actions by the people of Hong Kong should also shame the leaders of Silicon Valley tech empires who blithely adapt their products to conform to Chinese censorship laws. American politicians, retired politicians, and their family members who are willing to lobby for the tyrants of Beijing in exchange for impressive cash payoffs should also have trouble looking at themselves in the mirror. Indeed, it’s fair to say that most of us in the Western world, while snapping up Chinese imports at cheap prices, have given far too little thought to the factory workers who manufacture those products and who can fairly be described as slave labor. Nor have we reflected sufficiently upon our own roles, as bargain-happy consumers, in helping Chairman Xi and his crew to build up their wealth and power to such an extent that their autocratic empire now represents a serious economic and military threat to the U.S. and its free allies.

Trump vs. Beijing

There are many ways of measuring the advance of the Chinese economy in comparison with that of the United States. But one of them is this: in 2019, for the first time, the number of Chinese companies on the Forbes Global 500 list exceeded the number of U.S. firms.

When the rulers of China decided to turn their country into an international economic powerhouse, there was a widespread assumption that the adoption of capitalism by the world’s largest country would inevitably result in a transition from Communism to democracy.

Xi

That hasn’t happened. China has gotten rich – and a few million managerial-class Chinese people have gotten rich, too – by exporting cheaply made goods to the West and by using sky-high tariffs to keep out Western products. But at the same time it has remained resolutely totalitarian, and its blue-collar workers – you know, those proletarians whose welfare is theoretically at the heart of the entire Marxist project – continue to be drastically underpaid in comparison to their Western counterparts, which of course is why China can sell its manufactured goods so cheap.

In any event, the fact that a Communist country, for the first time in history, either has the planet’s largest economy or is close to it, should be a cause for deep concern throughout the free world.

Trump

It isn’t. Not yet. Not really. President Trump, who has tried to rein in the Chinese dynamo by raising U.S. tariffs on Chinese imports – although those tariffs are almost nothing compared to the Chinese tariffs on U.S. goods – has been accused of waging a trade war. In fact he’s simply making a modest effort to come somewhere near evening out what has for all too long been a very uneven situation.

Anyway, China has thrived. Which would not be a bad thing if not for the fact that, as Bill Gertz of the Washington Free Beacon putitin a September appearance on The Mark Levin Show, Chinese President Xi Jinping has turned his country into a “communist nightmare.”

Gertz

Gertz, who has written a new book entitled Deceiving the Sky: Inside Communist China’s Drive for Global Supremacy, told Levin that Xi “has his eyes set on global hegemony, he wants China to be the dominant superpower in the world, and in order to do that, he has to diminish the power of the United States.”

Some Americans in positions of authority recognize that. Most do not. Too many of them are distracted by thoughts of Vladimir Putin’s Russia, where the vodka-addled population is taking a nosedive and the economy is no bigger than that of Texas.

On the Levin program, Gertz praised Trump for taking on China – not only by fighting for fair trade but by “cracking down on China” when it comes to “law enforcement, intelligence gathering, and spying.” Gertz didn’t claim to have a crystal ball, but he contended that just as the USSR collapsed, so might China: “with a little bit of pressure” of the sort being exerted by Trump, “the whole thing could come crumbling down in Beijing.” Which would be a magnificent development for the oppressed, brutalized, and painfully unfree people of China, and would also make the whole free world breathe a good deal more easily.

“Democratic socialist”? Nonsense.

Bernie Sanders

It was never a secret that Bernie Sanders was a socialist. In college he belonged to the Young People’s Socialist League. After graduating he lived on an Israeli kibbutz that flew a red flag and was founded by Stalinists. During his unsuccessful 1970s runs for the U.S. Senate and for Governor of Vermont, he called for the nationalization of all banks and utilities. Later he produced “radical film strips,” i.e. propaganda, for distribution to schools and made a hagiographic documentary about Socialist icon Eugene V. Debs.

Noam Chomsky

Finally managing to get elected to public office, he served as mayor of Burlington, Vermont, from 1981 to 1989, during which time he openly identified as a socialist, established price controls, hosted a foreign-policy speech by Noam Chomsky, made life difficult for local business people with his chronic hostility to free enterprise, worked with the Soviets and East Germans to defeat Reagan’s military build-up, went to Nicaragua to attend a celebration of the Sandinista government, visited Cuba, publicly praised Fidel Castro, and honeymooned in the USSR.

In 1990 he ran for the U.S. House on the Socialist ticket and won, becoming the only Socialist in Congress. During most of his tenure in the House and then in the Senate, he was a voice for radical-left ideas but, until his run for present in 2016, maintained a relatively low national profile, although he did promote and support measures to cut the U.S. intelligence budget, praised the socialist regimes in Venezuela and Ecuador, and became the first U.S. Senator to support the Occupy Wall Street movement.

Fidel Castro

Yet despite his radicalism, and despite his lifelong acknowledgement that he is a socialist, Sanders has always called himself a “democratic socialist,” a term which is plainly intended to distinguish him from out-and-out Communists. At a TV forum in April, he told a questioner that he never supported the Soviet Union. For anybody who is even superficially familiar with his personal history, this seemed a highly dubious claim. It became even more dubious, however, when, just a couple of days later, a film emerged of a 1986 lecture in which Sanders praised the Cuban Revolution. In the lecture, given at the University of Vermont while Sanders was mayor of Burlington, he recalled “being very excited when Fidel Castro made the revolution in Cuba,” adding that “it seemed right and appropriate that poor people were rising up against ugly rich people.” In the same speech, Sanders also said that he had been disgusted by President Kennedy’s anti-Communism.

John F. Kennedy

Reporting on the film, which was posted on Twitter, the Daily Mail noted that this was “not the first time that 30-year-old clips have surfaced showing Sanders making controversial remarks about American foreign policy toward communist countries in Latin America.” During his primary campaign against Hillary Clinton in 2015-16, recalled the Mail, somebody had dug up a 1985 video “in which Sanders is seen heaping praise on Castro,” celebrating the dictator’s “policies on education, health care and society in general.”

Needless to say, such video evidence makes it hard to take seriously Sanders’s insistence on qualifying the socialist label, when applied to him, with the word “democratic.” There was, after all, nothing democratic about Fidel Castro. No lover of freedom who knew the truth about Castro and his regime could possibly admire him. And no freedom-lover could possibly have responded to JFK’s hard line on Soviet totalitarianism with anything but approval. That Sanders, a man with such a manifest and enduring affection for Communist tyranny, could be a serious candidate for the presidency of the United States is reason for alarm.

Gasp! The Guardian tells the truth about Mao

Mao Zedong

When we glance at the Guardian, the favored newspaper of Britain’s left-wing elites, we’re used to seeing nonstop demonizing of moderates, libertarians, and conservatives alongside articles in which the virtue of socialism is taken for granted and out-and-out Communism is whitewashed. So it came as something of a shock, last Saturday, to encounter a more than 3,000-word essay in the Guardian that presented a sane and sober view of Maoism. The author, Julia Lovell, whose book Maoism: A History has just been published, began by referencing “the strange, looming presence of Mao in contemporary China,” which, despite its radical economic changes over the past few decades, is, she explained, “still held together by the legacies of Maoism.” Even though the sanguinary utopianism of the Cultural Revolution era has been replaced by authoritarian capitalism, wrote Lovell, the ghost of Mao still hovers over the nation of one billion-plus, and can be found in, among other things, “the deep politicisation of its judiciary; the supremacy of the one-party state; the intolerance of dissident voices.” Moreover, Xi Jinping has resurrected the long-dormant personality cult of Mao.

Xi Jinping

And the West, warns Lovell, has largely failed to notice. For decades, observing China’s economic success from afar, many Westerners have assumed that China has been gradually changing, that it has been becoming a place less alien to us, a nation more like our own. Wrong, insists Lovell. “The opposite has happened,” she writes. She points out – and this hadn’t even occurred to us – that if the Chinese Communist Party is still in charge five years from now, it will have outlasted the reign of its Soviet counterpart.

But you don’t have to go to China to find Maoism. You never did. Maoism, Lovell reminds us, has inspired revolts in countries ranging from Cambodia to Peru – revolts in which, as she admirably underscores, millions of people died. For eight decades, Maoist thought has been “a pivotal influence on global insubordination and intolerance.”

Julia Lovell

And what is Maoism, as opposed to Soviet-style Marxism? Lovell is helpful here. Unlike Stalin, Mao presided over “guerrilla wars deep in the countryside.” He preached “revolutionary zeal” and “anarchic insubordination” and “a pathological suspicion of the educated.” Stalin was no less evil and bloodthirsty than Mao, but the USSR never had an equivalent to Mao’s Cultural Revolution. The most radical ’68ers in the West looked not to the Kremlin but to Mao, especially his “message to his youthful Red Guards that it was ‘right to rebel.’” Mao posters adored dorm rooms in American college; copies of The Little Red Book abounded. In fact, the Black Panthers – that terrorist group celebrated, then as now, in chic leftist circles in the U.S. – “sold Little Red Books to generate funds to buy their first guns.” In West Germany, the violent but trendy Red Army Faction (also known as the Baader-Meinhof group) parroted lines from Mao, such as “imperialism and all reactionaries [are] paper tigers.” Today, Maoist insurgents threaten peace and freedom in 20 of India’s 28 states, and “self-avowed Maoists” now rule Nepal. So much for Francis Fukuyama’s declaration after the fall of the Iron Curtain that “the end of history” was at hand. “Write Maoism back into the global history of the 20th century,” emphasizes Lovell, and you get a “different narrative from the standard one in which communism loses the cold war in 1989.” Bottom line: with China now challenging America’s economic superiority and global power, it makes no sense whatsoever to pretend that Communism lost out to capitalism thirty years ago.

Kentucky Fried Communism

Colonel Harlan David Sanders (1890-1980), KFC founder

We’ve criticized the New York Times frequently enough on this site for its readiness to soft-pedal the evils of Communism, to sentimentalize the enduring devotion of aging Stalinists, and to assert that in some ways the ideology that gave us the Gulag, the Killing Fields, and the Cultural Revolution was, quite simply, preferable to our own.

But we have to give credit where it’s due, and the Times did deserve a thumbs-up when, in April of last year, it ran a piece by Alexandra Stevenson about the ominous way in which the Chinese Communist Party is asserting its power over international firms doing business within its borders.

Even more ominous is the alacrity with which the firms are knuckling under.

A display of some Cummins products

Stevenson provided some specifics: “Honda, the Japanese automaker, changed its legal documents to give the party a say in how its Chinese factories are run.” When Cummins, an engine manufacturer based in Indiana, named a new manager for one of its Chinese subsidiaries, Beijing put the kibosh on the appointment, and Cummins obediently agreed to new “articles of association” with the Communist state.

A KFC in China

Since Stevenson’s article appeared, things seem to have gone from bad to worse. At least that’s the impression one gets from a recent Associated Pressstory about Kentucky Fried Chicken (KFC). On March 5, according to the report, the fried-chicken empire opened a new restaurant in the city of Changsha in the province of Hunan that is specifically dedicated to the memory of its local hero, Lei Feng.

You may have heard of Horst Wessel, the storm trooper who died at age 22 and who was thereafter transformed into the center of a Nazi personality cult. The official anthem of the Nazi Party was called the “Horst Wessel Song.”

Some images of Lei Feng by Chinese children

Think of Feng, who coincidentally also died at age 22, as Communist China’s answer to Horst Wessel. After his death in 1962 when a telephone pole fell on him, he began, at the direction of Mao himself, to be officially celebrated as the perfect embodiment of Communist virtue. As one Guardian reporter has put it, he was depicted as “the epitome of selflessness, socialist spirit and devotion to Mao.”

A Lei Feng propaganda poster

The problem is that even ordinary Chinese citizens recognize the whole thing as a crock. Feng’s published “diary,” a book-length paean to the virtues of Mao, is said to be an obvious posthumous forgery. Also fishy, to quote the Guardian, are “the numerous, professional-quality photographs that mysteriously captured every good deed by a then anonymous soldier.”

But who cares about the truth when you’re out to make a buck? KFC, like other international companies in love with Chinese cash (it has some 6000 restaurants in the People’s Republic), has decided to go along with the Party propaganda. “Lei Feng has been the role model for generations of Chinese,” KFC’s Hunan honcho, He Min, told the Xinhua News Agency, adding that the new KFC branch “will spare no effort to promote his spirit.”

The date of the KFC branch opening was no coincidence: in China, March 5 is Lei Feng Day.

Has Hanjin’s ship sailed?

Hanjin HQ in Seoul

The Hanjin Group is one of South Korea’s largest family-owned conglomerates – or, as they say in Seoul, chaebols. It owns Korean Air and Jin Air, and has major holdings in shipping and industry. And like the other chaebols, it is at once admired for its wealth and power, notorious for its endemic corruption and shady political ties, and resented for the ease with which it can crush competition by upstart entrepreneurs as well as for its executives’ ability to routinely escape punishment for even the most egregious acts of embezzlement, money laundering, and bribery.

As we reported last week, a newly hatched activist fund called Korea Corporate Governance Improvement (KCGI) – which is now Hanjin’s second largest shareholder – is pushing for reforms of the sort that one South Korean government after another has promised for decades and that the current president, Moon Jae-in – who, upon taking office in 2017, insisted would be a central objective of his administration – has utterly failed to carry out.

Moon Jae-in

Now, as we noted, KCGI is seeking to get Hanjin to sell off its hotel chain, which includes major hostelries in Los Angeles and Hawaii, and – in a truly radical move – to force the firm to ditch the traditional practice that is at the heart of chaebol culture: namely, the passing on of top leadership positions from one generation of the company’s founding family to the next. Instead, KCGI wants Hanjin to agree to have its leaders appointed by an independent committee.

We’re still waiting to see how that drama works itself out. Meanwhile, a new subplot has developed – one that underscores the fact that the once seemingly invincible chaebols have entered a new era of vulnerability. At this point it should be noted that in 2016, a division of Hanjin, Hanjin Shipping, declared bankruptcy and was liquidated. It had been the world’s seventh largest container shipping line. The loss of Hanjin Shipping was a major blow to Hanjin, to the chaebols, and to the South Korean economy.

Hanjin’s shipyard at Subic Bay

Now Hanjin is facing another significant loss, also involving shipping. Hanjin Philippines is a division of the chaebol that runs a shipyard at Subic Bay, the former U.S. naval base. It is the biggest shipyard in the Philippines, and one of the biggest in the world, and has been a cornerstone of the Philippines’s ambition to become a top-flight shipbuilding nation.

Hanjin Philippines, however, has not been doing well. In January, the division, which has massive assets but is cash-poor, declared bankruptcy, defaulting on $400 million in bank loans – the largest such bankruptcy in the history of the Philippines and an event that was described as being, for the world’s shipping sector, equivalent to the collapse of Lehman Brothers. It filed for “court-assisted rehabilitation,” meaning that it wanted the courts to help it arrange debt payment with five banks in that country that had lent it a total of $412 million.

An image from the glory days of Hanjin Shipping

This month, it was reported that Hanjin Philippines might soon have to let go of thousands of employees, and that several other international corporations, most of them based in Europe but one based in North America, might be willing to help Hanjin out by snapping them up. Another report indicated that “at least two major Chinese shipbuilders” were looking into a much more sweeping move – namely, taking over Hanjin’s entire operation in the Philippines.

This would be a drastic development indeed. For one thing, a Chinese purchase of Hanjin Philippines would also contribute to ongoing expansion of the PRC’s presence in East Asia, and would be troubling news for the U.S. and all of its allies in that region. In its own small way, it could cause a shift in the worldwide balance of power.

Part of Korean Air’s fleet

In South Korea, however, such a purchase would have an even stronger impact. Like the disappearance of Hanjin Shipping, it would not only mark yet another downturn for the Hanjin Group. It would also be a blow to South Korean national pride, which rested for decades upon the bedrock of its powerhouse economy. Not least, it would further tarnish, in the eyes of South Koreans at both the top and bottom levels of society, the already fading luster of the chaebol model. So it is that the closing or sale of a shipyard in the Philippines may have a very real impact on the volatile economic developments in the Republic of South Korea.

Heroes at Hanjin?

Kim Sang-jo, the “chaebol sniper”

This would all make an interesting movie – full of colorful characters, intense conflict, mounting tension, and stunning reversals – except for the fact that it’s all just too sprawling a story, with too many villains and, so far, no hero.

What are we talking about here? We’re talking about the large-scale corruption at the uppermost levels of the South Korean government and business sector that, in the last couple of years, has made for some high drama, complete with palace intrigue, smoking guns, and courtroom clashes. What is required here is a screenwriter who can tame this tale and foreground a single arresting plot line.

Park Geun-hye

But what to foreground? OK, take a deep breath, here goes: in the brief period since 2017, we’ve seen the removal from office – and long-term imprisonment – of South Korea’s first female president (Park Geun-hye) after she was caught doing underhanded deals, through her shady best friend (Choi Soon-sil), with top business leaders – who, as usual, went scot-free – and her replacement by a self-styled “reform” president (Moon Jae-in), who, making bold promises to rein in the power and corruption of the increasingly unpopular chaebols – those massive, family-run conglomerates that dominate that nation’s economy and that operate with impunity – installed an antitrust czar (Kim Sang-jo), widely styled the “chaebol sniper,” who started off his three-year term with a lot of tough rhetoric about cutting Samsung, Hyundai, and other chaebols down to size, only to tone down his language in recent months and talk, instead, in pathetically humble language, about requesting modest alterations in the chaebols’ organizational charts, even as the president himself began getting all chummy with the chaebol leaders, apparently having decided that he needed them on his side if he wanted to kick his country’s weak economy back into high gear.

Moon Jae-in

Phew. So does that mean we’re back at square one? Not exactly. Because, as we’ve mentioned before, while President Moon and his “sniper” seem to have dwindled into impotence and irrelevance, the cause has been taken up by some of the people who actually own sizable chunks of the chaebols but who, in keeping with the curious (indeed, unique) traditions of the chaebols, have been systematically denied any meaningful input into the governance of the conglomerates. The bizarre fact, which remains unchanged, is that in most cases, the families that founded the chaebols and that still hold the key leadership positions in them don’t own a majority or even a plurality of shares in those firms. Indeed, some of the chaebol royal families would, under ordinary Western circumstances, be considered negligible minority stockholders.

Choi Soon-sil

No surprise, then, that as the South Korean economy falters and the chaebols, immense though they are, look more and more as if their best years are behind them, investors – most of them foreigners, many of them Americans – who have plunged large sums of money into the chaebols are increasingly frustrated at their own lack of power to initiate significant changes. The unfortunate truth is that while the men who founded the chaebols were business wizards, their children and grandchildren, who now sit behind the big desks in the corner offices, don’t necessarily have what it takes to run some of the world’s largest corporations. Meanwhile, many of those investors have proven track records at turning failing businesses around – at spinning off or closing down certain subsidiaries, at recognizing the need to hire or fire certain executives, and at successfully restructuring extraordinarily diversified conglomerates to maximize efficiency and profits.

Cho Yang-ho

So it is that, as Kim Jaewon of Nikkei reported on January 21, Korea Corporate Governance Improvement (KCGI), a newly founded South Korean activist fund that is now the second largest shareholder in the Hanjin Group (whose most famous holding is Korean Air), is pushing it to sell its hotel chain, which includes the Wilshire Grand Hotel in L.A. and the Waikiki Resort Hotel in Hawaii, and to form an independent committee that would select Hanjin’s CEO and other top leaders. Now that would be real reform – a change in policy that would actually make it possible to remove from office the scarifyingly rich and corrupt members of one of the chaebol royal families – in this case, the notorious Cho clan, which owns 29% of Hanjin – and replace them with new, competent, and even (could it be?) clean outsiders.

Cho Hyun-min

Such a transformation would mean the departure of company chairman Cho Yang-ho, who last year was indicted on embezzlement charges; of his wife, who has been probed for smuggling; of his daughter Cho Hyun-min, who was accused of assaulting an ad-agency executive; and of another daughter, Cho Hyun Ah, whose outrage at a flight attendant who served her macadamias in a bag and not on a plate led to a scandal and a legal mess that made headlines worldwide. In short, it’s a family that Hanjin, and South Korea generally, would be much better off without.

Bottom line: the protagonists in this drama may turn out, in the end, to be these so-called activist investors. Screenwriters, stay tuned.

Wherein we take yet another snipe at the pathetic “chaebol sniper”

Now here’s a new twist.

As we’ve recounted in some detail on this site, South Korea is going through a rough patch, economically speaking. In the decades after the Korean War, the country grew with remarkable rapidity from an undeveloped backwater into an international powerhouse. Leading this spectacular advance was a relative handful of family-run conglomerates, known as chaebols (the plural in English is often rendered as “chaebol”), whose names – Samsung, Hyundai, etc. – have become famous around the world.

For decades, the chaebols were the engines of the South Korean economy. The nation’s populace looked up to them. The dearest hope of South Korean parents was that their kids would someday go to work for one of the chaebols. In recent years, however, there has been a discernible shift in public attitudes toward the chaebols. For one thing, they’ve increasingly been seen as crowding out new businesses and thus stifling both competition and innovation – thereby making it hard for the South Korean economy to grow even further. For another thing, as ordinary South Korean citizens have grown more and more accustomed to the idea of democracy and equal treatment under the law, they’ve also grown tired of the shameless double standards that have allowed the chaebol dynasties to get away with corruption on a massive scale.

Moon Jae-in

When Moon Jae-in became president in 2017, he promised to clean up the chaebols. Other presidents before him had made the same promise – among them his immediate predecessor, Park Geun-hye, who is now in prison because of illegal transactions with chaebol kingpins. But Moon insisted he really intended to tackle chaebol corruption. To prove it, he put the nation’s Fair Trade Commission in the hands of a fellow named Kim Sang-jo, who called himself the “chaebol sniper.” One gathered that President Moon had put the toughest guy he could find on the job – a sort of cross between Clint Eastwood’s Dirty Harry and the Charles Bronson character in Death Wish. A fella who would make the bigwigs at Hyundai and Samsung tremble in their office towers and give them nightmares in their lavish mansions.

Kim Sang-jo

In fact, when it came to scaring the heck out of South Korea’s industrial giants, Kim turned out to be more like Kim Novak than Clint Eastwood. As we’ve noted, Kim, who at first came out with guns blazing, has more recently presented himself as a “reasonable reformist” who wants to nudge the chaebols, ever so gently, toward “evolutionary reform.” On January 3, in response to an extensive interview with Kim that appeared in the Korea Herald, we concluded that Kim was now yet another public official in Seoul whose posture toward the chaebols was that of a “servile brownnoser.”

Samsung honcho Jay Y. Lee being arrested last year for massive corruption; in accordance with time-honored South Korean practice, he was later given a suspended sentence

Well, it turns out that the Korea Herald story wasn’t the last word on Kim Sang-jo. On January 17, Kim Jaewon and Sotaro Suzuki reported in the Nikkei Asian Review that the sometime “chaebol sniper” was now – gasp – actually taking an adversarial position toward the chaebols. Or, at least, toward the people who run them. The ruling chaebol families, said Kim, “have lost the aggressive entrepreneurship that was shown by the generations of their founding grandfathers and fathers.” The current chaebol bosses, Kim continued, “were born as if they were princes in a kingdom. As the character of the families has changed, the decisive and quick decision-making process of the past has been replaced by a policy that focuses on the status quo to preserve their established power.”

True enough. Funny it took him so long to say so. Everybody else already had.

Hyundai chairman Chung Mong-koo

Kim went on to suggest that the people who have inherited their positions of power at the chaebols need to step down – or at least step away – from their posts, perhaps exchanging the title of CEO for that of Chairman, and choosing to concentrate on long-term strategy while allowing professional managers to make day-to-day decisions.

It doesn’t sound like a bad idea, at least to start with. But is Kim going to use his power to pressure the chaebol dynasties to do this? Or was this simply meant to be a modest suggestion from a man who, with every major media exposure, seems more and more determined to project a modest image? Apparently the latter. For Kim then went on to say: “If you thought I am a chaebol killer, you misunderstood me. The only way to succeed in chaebol reform is to make it predictable and sustainable.” Meaning what? Well, one’s first reaction is that this comment seems to have been formulated in such a way as to mean just about anything to just about anybody. It’s not a policy statement but a political slogan, every bit as empty and meaningless as “hope and change” or “stronger together.” No wonder both Moon and Kim are plunging in the polls.

A rocky start for 2019 in South Korea

Moon Jae-in

In South Korea, the year has kicked off with a bang. On January 8, the South China Morning Post reported that President Moon Jae-in had made some drastic changes in his administration. Moon, who was scoring big in the polls in the months after his inauguration in May 2017, has seen his popularity erode along with his country’s economy.

How to turn things around? Fire some people. Moon has dismissed his chief of staff, his senior political affairs secretary, and his senior press secretary. No sign, however, of him doing what he actually promised to do when he took office – namely, tame the chaebols, the corrupt, family-run business empires that are at one the engines and the anchors of the South Korean economy.

Trump: taking the opposite approach

On January 10 came another tidbit of news from the Blue House (which, of course, is Seoul’s answer to the White House). While Trump was slashing taxes and regulations, reported the Australian Financial Review, Moon was trying to cure his country’s economic ills by doing the opposite. Surprise! “So far,” wrote Michael Schuman, “it has not worked out as planned.”

Joblessness is up. Growth is down. Wages are flat. Both employers and employees are restive. And small businesses are suffering. Their costs are rising, but they’re not in a position to pass those costs on to buyers. Consequently, they’re shedding employees and finding other ways to cut corners.

The Blue House

All this might have been prevented if Moon had kept his promises and tackled the Great White Whale – the chaebols. But he chickened out. He would probably reject that characterization, pointing out that his budget for 2019 contains policy changes that are intended to reduce the power of the chaebols and help out smaller enterprises.

Others might argue that these initiatives are too little, too late. That Moon, take him for all in all, is essentially kicking the ball down the field. And allowing the South Korean economy to continue experiencing the consequences of his relative inaction.

Yang Sung-tae

Then, on January 11, Choe Sang-hun of the New York Times reported on a unprecedented development in South Korea. Yang Sung-tae, a former justice of the Supreme Court, had been confronted by prosecutors over charges that he had “conspired to delay a case that could upset relations with Japan.”

The case was brought by a group of South Koreans who, during the Japanese occupation, were subjected to forced labor by such firms at Mitsubishi. Yang will probably be indicted – a first in the voluminous annals of modern South Korean corruption.

Moon’s government, then, is on shaky ground. The South Korean judiciary has experienced a major embarrassment. The country’s small businesses are even more precariously positioned than they were a couple of years ago. And the ordinary citizens of South Korea are having more and more trouble making ends meet.

But amid all this loss and insecurity and scandal, the chaebols, as always, continue to stand strong.

A new Moon

Moon Jae-in

It’s a new year – and a new Moon Jae-in. Before he became president of South Korea, Moon referred to the chaebols – those hugely successful but profoundly corrupt and immensely powerful family-run conglomerates that dominate that country’s economy – as a “deep-rooted evil.” When Moon rose to the presidency in May 2017, he promised a serious campaign of chaebol reform. Yes, several of his predecessors had made similar promises, but Moon said his promises were for real. He appointed a so-called “chaebol sniper,” one Kim Sang-jo, whom he tasked with bringing the chaebols to heel.

Kim Sang-jo

In the more than year and a half since his inauguration, however, the South Korean people have seen very little in the way of reform. Once again, the promises have proven empty. As we saw a couple of weeks ago, Kim, in a recent interview, presented himself not as an anti-chaebol warrior but as a “reasonable reformist” who respects the chaebols and, far from cutting them down to size, seeks to render them competitive through “evolutionary reform.”

Jay Y. Lee, top dog at Samsung

Now Moon, too, is singing a new tune. As the Korea Times reported on January 6, “the President appears to be expanding communication channels to win backing from the country’s leading industrial conglomerates.” According to a spoksman for Moon, the President planned to meet with chaebol leaders some time in January and would ask them “to hire more and spend more,” in exchange for which his government would provide increased “tax benefits and administrative support.” Partly in order to win votes from younger members of the electorate who are in the job market, according to top government officials, Moon needs “to reach out his hands to Samsung, LG, SK and Hyundai,” the country’s “top four family-controlled businesses.”

Hyundai Motor Chairman Chung Mong-koo

That’s quite an about-face, even by high-stakes political standards. The man who vowed to be an anti-chaebol crusader is now going to the chaebols, hat in hand, and begging them for what is essentially a political favor – and, in response, offering to cut their taxes. In other words, it’s back to business as usual in South Korea, with the head of state and the chaebol kings scratching each other’s backs.

Already, reported the Times, “chief presidential policy chief Kim Soo-hyun met with senior executives at Samsung, LG and SK in a Seoul hotel late last year” in order to set the groundwork for the shift in approach. The question, it seems, is not whether Moon plans to woo the chaebol bosses; it is how the bosses will respond to his bootlicking.

LG Group headquarters

You see, they’re not all that happy with Moon, partly because of the aggressive anti-chaebol rhetoric with which he started his administration, and partly because his hike in the minimum wage has blunted their competitiveness abroad. It’s predicted that South Korean economy will grow only 2.5 percent this year, and the chaebols put a lot of blame for that at Moon’s feet.

The worm, then, has turned. The sometime chaebol slayer has become a servile brownnoser, trucking to the big boys at the “big four” – Samsung, Hyundai, LG, and SK – and hoping that they’ll respond positively to his kowtowing.