Talking to ordinary people is the best way to check the pulse of a nation. Last week, I was lucky to be able to take the pulse of Korea through long talks with friends who also happen to be ordinary people. The talks paint a picture of a nation deeply troubled by worry and self-doubt. Above all, the overwhelming message is that the Korean dream is slipping away.

The Korean dream, like its counterparts elsewhere, is about opportunity and advancement. Opportunity comes through reforms that break down barriers and help create fair competition. Advancement is the simple idea that material advancement will continue slowly over time and that children will be better off than their parents.

The history of the Korean dream goes back to the early 1960s, when President Park Chung-hee began the push for economic growth through export-driven production. As economic growth took off, mass poverty began to disappear and the middle class began to grow. The trajectory of progress continued upward except for a few sharp but short downturns, and people expected it to continue because progress was all they knew.

The changing economy over the last 10 years has shattered faith in the idea of progress. What has happened and what, if anything, can be done about it?

The essential problem is that capitalism, particularly the variety that developed in Korea, relies on expanding markets for its prosperity. Over the centuries, capitalists have looked for new markets and have been able to find them both at home and abroad. Rapidly rising populations created a steady supply of new consumers and new workers to make the goods that they buy.

Meanwhile, a relatively small number of nations with technological advantages monopolized high-value goods. These nations boomed because they had a growing consumer and production base at home and competitive advantages in exports. The United States in the 1950s, Japan in the 1970s and Korea in the 1990s experienced this type of growth. The middle class grew rapidly and lifestyle patterns developed that are still dominant today.

The case of Japan shows how difficult things become when these conditions no longer apply. The population is falling, creating a shrinking market and workforce. Exports are no longer strong because the country now has a large number of competitors from other countries, one of which is Korea. Japan, once known for its massive trade surpluses, has seen a trade deficit for 24 months in a row since June 2012. For over 20 years, successive governments in Japan have tried to bring back the boom years, but without success, which suggests the country has moved into a new economic paradigm that nobody really understands.

Korea is not Japan, but the parallels are ominous. The population is aging rapidly, which is dampening already tepid domestic demand. Retirement ages are low, meaning that a large number of healthy and experienced workers in their 50s are being forced into self-employment, which is usually not very lucrative. The distorted housing market that grew up with the boom has left large numbers of people with assets tied up in real estate that is declining in value and difficult to sell.

Young people face fierce competition for good jobs in leading companies that pay well and offer security. People who fail to get into these companies find that they have to live with lower pay and greater insecurity, which makes the Korean dream seem very far away.

To deal with the situation, Korea faces two difficult choices. One is to declare the Korean dream dead and develop a new public ethos to replace it. The other is to try to update and revive the Korean dream. Of the two, the second option is more realistic. A look at the latest 2014 Human Development Index put out by the United Nations Development Program shows why. Among the 187 countries surveyed, Korea fell to 16th after having reached a peak of 12th in 2013. Interestingly, Japan fell from 10th to 17th, making it the first time that Korea has outranked Japan.

When inequality is taken into account, Korea drops from 16th to 33rd. The United States, where inequality has recently emerged as an important political issue, drops from fifth to 28th. This suggests that focusing on inequality is the first step toward restoring the Korean dream. To do so, Korea needs to move beyond the din of petty politics and revive the national discussion on “economic democracy” that began during the presidential election campaign of 2012.

By Robert J. Fouser

Robert J. Fouser is an associate professor of Korean language education at Seoul National University. ― Ed.