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Learning how capitalism works

Rico Gagliano Oct 1, 2007

Learning how capitalism works

Rico Gagliano Oct 1, 2007


BOB MOON: Picture this: South Korea’s president leading a motorcade of business leaders across the world’s most heavily militarized border.

Tomorrow’s summit with North Korean leader Kim Jong-Il is the second between the two leaders. The eventual goal is a full peace accord to replace the 1953 Korean War ceasefire.

Over the years, the south has become a rich, democratic nation. And that’s drawn as many as 10,000 from the north to take huge risks crossing the border.

Adapting to a capitalist society may be less dangerous, but it’s no less difficult. Marketplace’s Rico Gagliano reports from Seoul.

RICO GAGLIANO: I spoke to Kyung-Wuk Lee three months after she defected from North Korea — she asked me not to use her real name and to digitally mask her voice. In her homeland, she was at the top of her field. Here, she doesn’t even understand some basic economic concepts, like the difference between income taxes and utility bills.

GAGLIANO: So, you haven’t paid taxes yet. Will you owe money this year?

KYUNG-WUK LEE: No, actually I pay taxes every month. I get bills for rent, for the water, TV, telephone. So I think I’m paying taxes every month.

GAGLIANO: But I’m talking about income taxes. You pay, at the end of the year you have to sort of . . . How do I explain income taxes?

I tried. She never did quite figure it out. There’s a lot she hasn’t quite figured out. Like how to compare products and prices when she goes shopping. She’s afraid to ask for help in the stores, because people here don’t speak Korean, they speak South Korean.

LEE: For example, if I were to buy something which I would call a “blouse,” the people here use a different term like “shirt.” I’m still not comfortable with these words, and I’m still not sure what they are. So basically, I don’t go shopping very much.

Recent defectors like Kyung-wuk need a lot of help navigating South Korea’s modern economy. And every year, there are more of them.

HEESANG YOON: We had less than 100 before the year of 1998. Last year we had over 2,000.

Heesang Yoon is a government spokesperson at South Korea’s consulate in Los Angeles. He says defectors head south to escape famine. Others say northerners are fleeing political persecution. Either way, shortly after arrival in South Korea, every one of them gets whisked off to a 10-week crash course in modern living. But even the government admits it’s not enough.

YOON: They have some difficulty — and then they usually find that, in the market economy system, there is a fierce competition to survive.

Ms. Kim — again, not her real name — defected with a dream of going to beauty school. Instead she ended up here: a small windowless room in the basement of an office building in Seoul. On a table lie tubes full of microchips the size of her pinky nail. It’s her second day of work in South Korea.

MS. KIM: So what I do is, I place the tiny chips on this machine, and when the lights turn green, it means they’ve been programmed.

Chips go in machine, chips go in a tube. For this she’ll earn $1,300 a month, 20 percent less than the average South Korean salary. She says she’s grateful for the money — but she’s surprised, in a country so advanced, that this kind of manual labor still exists. Many defectors arrive with high expectations. Kyung-Wuk Lee did.

LEE: I thought South Korea would be heaven. I thought once you got here, the government would give me a house, A car, and enough money to assure a certain quality of life. That’s what I was told. But after I came, I discovered that was not true.

It’s an old story: Immigrants find their new country’s streets aren’t paved with gold. But once upon a time, South Korea’s government did reward defectors with jobs and free homes. Andrei Lankov teaches North Korean history at Kookmin University in Seoul.

ANDREI LANKOV: During the Cold War, these people were indeed very useful — they were living proof of their superiority over the godless Communist system. However, these people are increasingly seen as a kind of drain on the South Korean resources and social security budget.

GAGLIANO: Is that true?

LANKOV: To a very small extent.

South Korea still gives each defector a minimum of $10,000 in aid, plus low-cost housing and job incentives. Defectors say it’s not enough to really pay the bills in one of the most expensive countries on Earth. But it is enough to make some South Koreans resentful.

Eran Lee defected 10 years ago:

ERAN LEE: Back then, people were fascinated with the defectors. Now that more are coming, they’re more likely to think, “Don’t we have to pay more taxes because of the North Koreans?” It’d be OK if the defectors came here and were able to adjust very quickly — but that’s not the case.

It takes years, but most defectors do adapt. But Kookmin University’s Andrei Lankov worries eventually Korea won’t be able to afford to wait for northerners to adjust.

LANKOV: Sooner or later, unification will come, there will be millions of North Koreans coming to the south, and we’ll have the same problems — but multiplied by many, many thousand.

In Seoul, I’m Rico Gagliano for Marketplace.

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