The Korea Herald


[Journalism Essay Contest] Winners in business category

By Korea Herald

Published : May 27, 2019 - 15:37

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Following are the winners of the 2019 Herald Journalism Essay Contest organized by Herald Edu in May. -- Ed.

[Part 1]

Ways to Solve the Problem of Poverty

By Lee Hae-jin
Goyang Hwa Jung Elementary School

Poverty is a very serious problem all around the world. Since it is a serious problem which affects all of us, our world should be one and try to solve this problem. There are three steps that will probably make no poverty exist in our world. It will be hard and require lot of concentration and attention, but each person’s contribution will be helpful in eradicating it.

Step one is helping the weak countries first. Making weaker ones better is the key point of this step. Strong UN member countries, like the USA, could help weak, least developed countries. At this step, many countries that help weak countries can get closer together, and later they will could help each other and become stronger countries. Also, weaker countries can get out of poverty, through a system in which, for example, stronger countries are the coaches and weaker countries are the athletes (or players). As coaches help players perform better, strong countries can help the weak ones in different ways, perhaps by donating, sending food, and constructing buildings. Most importantly, strong countries can teach them how to solve their problems based on their experiences in past and how to rebuild their countries. You can take an example from the parent and child relationship. If a child gets a poor score an exam, the parents can help and encourage so that the child can get a better score next time.

Step two is not just helping other countries but looking back on one’s own country. Strong countries like the USA can still have some people in poverty. If people who are in developed countries are not helped, it would not be fair. Poverty can also cause people to die, because of cold, hunger, etc. This is why we need to look back on ourselves even if we  have helped others. If we do not, that means that still we have poverty existing in our world. We still have not achieved our goal. To achieve it, we must help poor people in our own country.

Our final step, step three, is ending poverty. We should really end poverty now to make poverty non-existent in our whole world. After checking there is no more poverty, we can choose the day as a “No Poverty Day,” or make a long document that proves poverty has disappeared. After achieving this goal, we need to keep checking and contributing to help keep the no poverty state. That will make our world a happier place.

We cannot be selfish if we are to accomplish our goal of leaving no poverty. We must do the best that we can. It is not a very hard thing. It is a very simple thing like donating money. The amount is not important. The important thing is how you donate it. Do you donate by scolding of someone, or did your mind tell you to be kind and help save the world? Let’s be a person who does good acts deep from one’s heart. Let’s be a person who loves the world we are living in. Let’s always think for the poor by not producing food garbage or not wasting food, and smiling or whispering at them.

Taming Technology through the Robot Tax

By Moon Min-jae
Hankuk Academy of Foreign Studies

Armed with artificial intelligence, today’s robots are proving themselves just as capable as humans at a wide range of physically and intellectually demanding tasks. Depending on how we manage their rapid entry into a variety of professions, they could turn out to be a blessing or a curse. To tip the balance toward the former, governments around the world should seriously consider implementing the robot tax. Levied on employers that replace their human labor with machines, the robot tax will control the speed of this replacement, and its revenues will help those replaced find new employment.

Some dismiss the robot tax as just another instance of the Luddite Fallacy, the supposedly false notion that massive technological shifts lead to net job loss. They point to past industrial revolutions -- the latest of which also involved robots -- as evidence that economies can compensate for automated jobs with new ones. But according to robotics writer Martin Ford, things may be different this time. As the New York Times paraphrases him, “Machine learning” -- or, machines’ ability to pick up new skills on their own -- “does not just give us new machines to replace old machines … Rather, it gives us new machines to replace us, machines that can follow us to virtually any new industry we flee to.”

It may be too early to declare all human labor obsolete, but it certainly isn’t to foresee a significant wave of job loss on the horizon. Some AI experts, like Kai-Fu Lee, predict that 40% to 50% of jobs will disappear at the hands of automation in the next fifteen years.

Even if new sectors do eventually spring up in their place, a period of transition will be inevitable for a vast portion of the workforce. As elected representatives of the people, governments should take the onus of retraining those out of a job, and buying time for those in endangered jobs. The robot tax would accomplish both, but more importantly, it would serve as a symbol of human society’s capacity to tame even the most “disruptive” technologies to serve its needs.

One of the direst of those needs -- in the US and other developed nations-- is to recover some semblance of economic equality. According to CNBC, the widening of the wealth gap between the super-rich and the rest in America has been accelerating since the Great Recession in 2008. Untaxed robots would greatly exacerbate this concentration by rewarding the select few with the capital to invest in automated labor, at the expense of the many who work for them, or used to. If we start consensus-building on the robot tax now, this is a manmade -- or, shall we say, robot-made -- disaster we can surely avoid.

The Economy and the Environment: A Non-Dilemma

By Kim Youn-soo
Hanyoung Foreign Language High School

There is widespread belief that environmentally-conscious policies cannot coexist with robust economic growth. This, in fact, is one of the main talking points of Donald Trump -- the leader of the world’s economic hegemon -- and his political party. In an interview last year with the Associated Press, he stated, “I’m not willing to … sacrifice the economic well-being of our country for something that nobody really knows [climate change].”

Aside from the fact that climate change is a well-known phenomenon studied by researchers the world over, Trump’s statement is problematic because it reflects a false idea about the relationship between climate change and the economy. If we are to make any progress on either front, we must first make clear that efforts to counter climate change and achieve economic growth do not have to be mutually exclusive.

Of course, it is not that Trump has no grounds for believing what he does. There are certain industries -- especially energy-intensive ones-- which are indeed hurt by environmentally driven regulations. According to a 2014 report by the New York Times, a new target by the European Union to decrease greenhouse gases was met with opposition by a prominent steel manufacturer, ArcelorMittal. Quoted in the article, executive Robrecht Himpe said the new target would hike energy costs and “risk damaging these industries.”

This potential damage, however, is limited to certain industries. Nations can compensate for the loss by shifting their economic center of gravity to other sectors that are less energy intensive, or that promote the development of renewable energy. If any economy is fit for  this kind of shift, it is the United States’ -- as well as those of other developed economies in Europe and East Asia.

Developed economies, for example, have long been known to have strong service sectors, which are generally less energy intensive than manufacturing. According to CIA data from 2017, the services sector makes up 80% and 70.9% of the US and EU economies, respectively, compared to only about 50% of the Chinese economy. In other words, the former group of nations is already well on their way to an economy that relies less on fossil fuels.

But the real sector to be nurtured is not one with a merely lighter environmental footprint, but one with a healthier environmental footprint: sustainable energy. It goes without saying that a stronger sustainable energy sector would be good for the environment, but the economic benefits are significant too. According to a Forbes report, “More than half a million jobs around the world were created in the renewable energy sector in 2017, bringing the total number of people employed in the sector to more than 10 million for the first time.” More recently, in 2018, The Global Commission on the Economy and Climate released findings that “shifting to sustainable technologies and techniques would save trillions of dollars through 2030 in increased productivity, innovation, and reduced health costs.”

Clearly, we have in front of us a real opportunity both to advance the economy and to start reversing climate change. As of now, these opportunities are most accessible to developed economies, which have greater financial and technological means. Furthermore, given that these nations enjoyed many decades of healthy economic growth on the back of intensive fossil fuel use, they should be the ones to take the first steps toward renewable sources of energy.

Antitrust Theory can’t survive on Two-sided Market

By Kim Ji-woo
Eunkwang Girls’ High School

There is a trend toward the times in economics, and economics began to systematize from Adam Smith's theory of ‘The Wealth of the Nation’ in 1776. Neoclassical school, Keynesian school, New Keynesian school and New Classics school followed the rise of the Classical school. In the Neoclassical school, the principle of "Competitive Balance" which describes the balance achieved through competition in the market and "Pareto Best" which is the optimal condition for a country to achieve. Achieving “Pareto Best” in “Competitive Balance” is called "Fundamental Theorem of Welfare Economics". The state where “Theorem of Welfare Economics” has not been achieved called a “Market Failure”. One of the main reasons why the market fails in terms of competition balance is a  market failure due to monopoly. The Neoclassical school alleged that the monopoly assumes full-competition in the balance of market competition, and if the number of companies supplying goods is small, they will have high prices and small production. At this point, the government implements antitrust policies to induce fair competition if a company is monopolized or oligopoly. Korea has “Law on Monopoly Regulation on Fair Trade”, which is an antitrust law.

Amazon, which has a strong delivery and network in North America and Europe, is enjoying free shipping thanks to ‘Amazon Prime’ which based on annual membership fees. Amazon is building a  strong delivery network in the market and growing as a marketing platform for companies. Similar to Amazon, there is a delivery network called ‘Coupang’ in Korea. Amazon is rapidly expanding its business sector by placing growth above profit and based on price policy which maintains lower  consumer prices than production costs. The main reason consumers use Amazon is the free shipping  charge. If shipping costs are calculated, products sold in Amazon are price competitive. Coupang will also be forced to set low prices and price discounts for price competitiveness if it wants to increase its market dominance in South Korea. If the antitrust law is enforced on Coupang, which has increased its market dominance, it can regulate monopoly. However, because the traditional antitrust law focused on the price or wellbeing of consumers, the enforcement of the antitrust law at the same time creates inconsistencies that are disadvantageous to consumers. In Lina Khan's "Amazon's antitrust paradox," a company with large market dominance has a "structural power" that defines the behavior and performance of other market actors. Rather than the application of traditional anti-trust theory, new direction of regulation is needed to flex the structural power.

Jean Tyrole argues that digital platform companies such as Amazon should not be regulated based on traditional antitrust theories, proving that expanding their business areas, based on “Two-sided Market Theory”, will help consumers' well-being. The more users use the platform in a virtual environment provided to enable different user groups to interact, the more valuable the product becomes. Because the presence of many users attracts new users and allows existing users to benefit from the new users, the platform that comes in first is characterized by the monopoly structure that dominates most markets. Thus, the platform that took first place dominates most markets and it is characterized by a monopoly structure. As shown in the contradiction above, if such abuses exist, it is necessary to shift corporate support measures by lowering entry barriers for latecomers to enter the market, rather than regulating them with traditional anti-trust theory. The existing manufacturing regulations that regulates anti-trust companies should be done in a way that benefits businesses, which are not anti-trust companies in Internet Commerce area. In addition, the Internet Commerce market has a structure that is rewarded not by consumers but by investors, which has a huge 'Structural Power' in the mid-term and long-term, which can threaten market sustainability as it places more importance on growth than profit. Therefore, new regulations are needed to be made into a market structure rather than a price.

Carbon Trading in Korea: How does it work?

By Lee Jee-un
Hanyoung Foreign Language High School

In October 2018, the Korean government notified a total of 591 companies of their allowable carbon emissions. 126 companies need to buy 3% of their carbon emission permits assigned by the government from 2019, through the auctions at the Korea Exchange. Companies eligible to join the auction are those with a bidding price equivalent to or higher than the minimum set by the government each month.

The carbon emissions trading scheme is a type of system that allows companies to buy or sell government-granted permits of carbon dioxides. It sets a quantitative limit on CO2 emissions for companies and allows them trade any post-reduction surplus or shortage of emission permits with each other. The government gives permits to participating companies equal to each participant's baseline emissions, which is determined based on the individual company’s historical emissions. A participant must hold permits at least equal to the quantity of pollution it actually emitted during the time period. The buyer pays a charge for polluting, while the seller gains a reward for having reduced emissions. In effect, a participant has flexibility to use the most cost-effective combination of buying or selling emission permits, reducing its emissions by installing cleaner technology, or by reducing production.

In 2015, Korea adopted the emissions trading scheme as part of its efforts to achieve the climate goals of the Paris Agreement. The “Act on the Allocation and Trading of Greenhouse Gas Emission Permits” was enacted in 2012, followed by the “National Emission Permit Allocation Plan” in 2014. According to the allocation plan including a comprehensive operation plan by phase, the emission permits were distributed to the industries during the first phase of the plan from 2015 to 2017 for free to reduce the industrial burden in the early stages of implementation, but during the second phase from 2018 to 2020, the proportion of auctioned allocation will be gradually increased. To account for international industrial competitiveness, however, 100% free allocation will be available to industries with a high share of experts and energy-focused industries even after 2018.

The carbon emissions scheme is the market-based approach to controlling pollution by providing economic incentives for achieving emissions reductions and it is regarded very cost-effective way regionally and globally but also criticized for its huge impact on the companies which are less competitive specifically in the global marketplace.

Some industries in Korea such as steel, cement and petrochemicals feel more pain than others as they inevitably emit a lot of greenhouse gases including CO2. Steel and petrochemical industries have concerns as they will be required to make further cuts in emissions. They argued that they are making efforts to invest in facilities to reduce carbon emissions but the outcome of the investment take years. Cement industry has been undergoing the worst situation. On top of the carbon permits, they may also have to pay additional 52.2 billion won per year if a revision on tax laws is passed to impose 1,000 won per ton of cement production. The nation’s cement exports dropped from 9.5 million tons in 2014 to 3.8 million tons in 2018. This is another headwind for cement companies to go through in a tough global market.

The government has made a compromise not to get in the way of economic recovery; nevertheless, kept national reduction goals intact, which means companies have to suddenly catch up with stringent emission standards. However, the target set by the previous government has been criticized for being too high for companies. In addition, Korea’s carbon emission trading system has not yet been established firmly.  A practice of holders excessively “rolling over” surplus emission credits from year to year rather than placing them on the market has resulted in carbon trading prices soaring, leading companies that lack sufficient credits to complain of huge purchasing costs.

Going green is certainly a global trend but it does not come without challenges. Companies should develop more eco-friendly technologies and the government should make the emissions trading market more transparent, stable and market-oriented and take into considers an individual industry’s global competitiveness. Of course, Korea should cooperate with international efforts to reduce greenhouse gas emissions, but its reduction goal must be set at a level companies can bear and also government’s efforts to promote the transaction of carbon permits and prevent their rolling over should be followed.

[Part 2]

Things that are impacted by increasing Korea’s minimum wage

By Song Min-young
Chadwick International School

In 2017, right before when Moon Jae In became the 12th president of Korea, he stated a key election pledge which was increasing Korea’s minimum wage to 10,000 won until 2020. He slowly increased the amount of the minimum wage which in 2019 is 8,350 won. At first, lots of Korea’s citizens thought it would help everyone to live a better life with a higher minimum wage but currently, it is leading Korea’s economy negatively. Citizens of Korea are basically separated into two teams which firstly is liking the minimum wage getting increased and the other is hating the increase of the minimum wage. In the Blue-house website, there were more than 100 petitions against and for of the increased minimum wage. Even though everyone knows about the problem or the harmful parts that are caused by the minimum wage, Korea’s government is planning to higher the minimum wage again for next year. Highering Korea’s minimum wage mostly leads the economy negatively, which shows that the government should stop increasing the minimum wage or even start lowering it.

In any chance, if the government stops increasing the minimum wage, there are some benefits that would impact lots of citizens. Firstly, not increasing the amount of minimum wage would be able to minimize the unemployed. After president Moon increased the minimum wage, small companies had to choose between closing their company or sacking their workers. If the company had worked well by doing lots of export and just had lots of money, the problem related to the unemployed wouldn’t matter. However, the income of the company has remained the same and the company has to pay for more workers which are kept on leading to increasing unemployment. According to CNBC news, in 2018, Korea’s jobless rate has reached the highest after the global financial crisis in January 2010. As unemployed are increasing, the unemployment benefit payment is increasing too. Compared to 2017, the amount of benefit increased 25% more in 2018, which means that the government is wasting money to people that don’t have to be used if they lower the minimum wage. This kind of issue still remains now which means that if the government doesn’t lower the minimum wage, it will make more issues within unemployment.

Also, increasing the minimum wage would only increase the price of a product. Higher and higher the minimum wage gets, the price of the products in Korea would get expensive. For example, in 2016 if there are 7 people in a company which usually has earned 42,210 won in total, then the owner of a company isn’t really wasting money because he/she is giving those workers right amount of money compared with the number of products they produce. However, based on 2019, 5 workers should get almost the same amount of money(41,750 won) that 7 workers usually earned in 2016. Then, the owners have to waste their money because there are fewer products getting produced(compared with having 7 workers) but the company should pay the same amount of money towards a few workers. In a point of owner’s view, because only firing the workers has no effect on the company’s profit, what people are doing is raising the price of many products. If the minimum wage increases more from now on, various companies would increase the price of a product they are producing to survive from the market economy of Korea.

In addition, when Korea’s government first planned on increasing the minimum wage, one of the important things they wanted to change in Korea’s economy was the daily income of the workers. However, company owners started using fewer workers or even hiring them for a short time which doesn’t bring a big effect on the income of the workers. Then what is the difference that is changed by increasing the minimum wage of Korea? As the minimum wage increases, the income that the workers will get will be lower or the same which will be the opposite of what Korea’s government though.

In conclusion, these arguments strongly state why the government of Korea should stop increasing the minimum wage which currently is leading the economy negatively. Korea’s government first thought increasing the minimum wage will help the workers to higher their income or could even bring the economy better. However, that was just what they wanted. After the government made a big hike on the minimum wage, most of the citizens didn’t like it. The world of reality can’t work with only what ones wish for, which now has been proved by the real world example of Korea’s increasing minimum wage. Though president Moon in wanting to increase the minimum wage in 2020 to 10,000 won, because we know how serious this problem is impactful to the society, citizens should step out and solve this problem together.

Economic Prosperity as a Pedestal to Peace

By Cho Andrew
Seoul International School

One ethnicity, one language. Yet, two countries with two ideologies. For over 7 decades, the Korean peninsula was the setting of separation, devastation, and tension. Fierce conflicts between the two have not only devastated the hearts of the two brothers, but also their economic structures. Every time the North posed a dire threat, trillions of dollars from the South’s economy evaporated as foreign investors fled with a colossal sum of money. Yet, the international society has adamantly persisted to maintain sanctions against the North, trying to threaten and force them to listen to our demands. Such actions have merely led to fruitless results. Rather than coercive measures, I call out for two carrot methods that will gradually rejuvenate the fallen economies of the two.

First, unlimited “freedom of movement” between citizens of the North and the South has to be established through the creation of “Korea’s Unified Visa Policy" that models after EU’s Schengen Treaty—a harmonized visa policy with complete abolition of border controls between 26 EU members. When travelling between Schengen countries, passports or visas don’t need to be shown, allowing EU citizens to easily work or invest in a neighboring Schengen nation. Such unified border policy has dramatically accelerated financial transactions and economic profits between corporations, reaching more than 5 trillion Euros in 2014 alone. As such, once the two Koreas institute a unified visa agreement, South and North Koreans will be guaranteed of “movement.” This transformation will undoubtedly stimulate more trade and investments, ultimately invigorating growth as well as stabilizing peace in the Peninsula.

Furthermore, mutually benefiting trade relationship must be established. As one of the least developed economies, North Korea lacks fundamental infrastructures, such as roads, schools, hospitals, and energy power plants. Absence of basic facilities has prevented the North from industrializing, leading the nation to grave poverty. South Korea can improve such situation of the North, by sending big corporations to establish infrastructure and improve their quality of life. Assistance to the North will then open doors for stimulated economic exchanges, allowing the South to obtain “price comparative advantage” by utilizing North Korea’s cheap labor. The South may even gain a vital opportunity to extract the North’s natural resources, such as iron, gold, zinc and copper, which are predicted to be worth 6 trillion dollars. Importation of these cheap resources will boost the South’s manufacturing sectors, which currently occupies more than 40% of its GDP. These results are a definite win-win situation that the two cannot bypass.

In a war-stricken region contaminated with bombs and guns, nothing can be sustained—both the life of a person as well as the structure of a nation’s economy. Instead of coercive measures to control and force North Korea to denuclearize, the South must work out smart strategies which can smoothly heal the bumpy relationship between the two Koreas. To make the North want to negotiate and maintain peace, we must create an environment where they will not want to devastate the Peninsula—and such incentive stems from the establishment of a healthy economic inter-Korean relation. After all, economic prosperity is the rudimentary pedestal to obtaining peace.

The Rising Beauty Star

By Jung Ji-in
St. Paul Preparatory Seoul

White. Pristine. Porcelain like skin. That is what 50 million Koreans define beautiful as. Surprisingly, the small nation’s perception on beauty has dramatically extended to foreign continents, most notably, North America, Europe, and other parts in Asia. With perfect, white skin shown in dramas and music videos of K-Pop, global citizens became mesmerized at Koreans’ glowing skin which they have never possessed. Such wonders have instigated interests on this nation, South Korea, a nation that seems to magically invent a solution for their skin perfection. Amidst such global trend, I seek to analyze K-Beauty industry’s influence on Korea’s soft power and emphasize on the significance of its localization tactics that must be pursued globally.

As one of the top 10 beauty industries in the world, K-Beauty has an estimated worth of over $13.1 billion in sales in 2018, significantly contributing to the “cultural economy” of South Korea. With Korean Wave having entered a golden age, it has naturally entailed a positive domino effect on to its beauty industry as numerous dramas and movies aired celebrities with flawless skin, supported with domestic beauty products. Consequently, K-Beauty’s global venture initiated, accounting for 0.2% of Korea’s GDP in 2004. This dramatic development has put South Korea on a global spotlight, framing the nation as an international powerhouse of culture with sensational rise in its “soft power,” the ability to attract others. K-Beauty industry’s collaboration with K-Pop, K-Foods and many more has beautifully resulted in the rise of tourism and even in exports of other non-culture industries. With elevated image of Korea, proliferation of soft power in the flow of rising K-Beauty definitely has opened doors for thriving Korean economy.

Despite such flourishing prosperity however, K-Beauty industry must further permeate its successful story, not only within Asia continent, but throughout the world via “localization strategies.” Such strategizing involves a unique market approach a company takes to embrace cultural differences and vary its services to serve different interests of consumers. At the status quo, K-Beauty industry fails to diversify products to foreign consumers who possess different skin tone, color, and texture, especially those with darker skin; it is important to note that Black women spend $7.5 billion on beauty products annually. Not only that, with the marketing strategy primarily focusing on “whiter, pale skin,” it overlooks on differences of preferred makeup styles, such as healthy, tanned looks promoted in the West. Such narrow vision only inhibits the growth of beauty industry. Thus, pursuit of “localization” must take place through K-Beauty customizing its products to fit into numerous foreign beauty markets. Expanding product lines from skin toner to BB cream that serve diverse demands of Asians, Caucasians, African Americans, and many more, will indubitably boost the industry’s growth as well as Korea’s soft power.

In the past, France was considered the global leader in beauty. But now, all eyes are on Korea. With rapidly-produced, innovative beauty products that amaze global audience, the nation is re-recognized as a “rising beauty star.” Despite Korea’s petit land size that barely fits between Los Angeles and San Francisco, its soft power is challenging the global superpowers. To maintain this positive trend, K-Beauty must constantly strive to develop its business models to truly listen to wishes of global consumers. Pursuit of “race-free” products will undoubtedly snowball the cultural economy of Korea, expanding fandom for K-Beauty and further igniting the extraordinary soft power of this small nation.