Geopolitics

Not The First Time Elites Failed To See History Being Made

Experts do know a lot. But they have a tendency to consider the object of their expertise as immovable.

On the go
Remembering when the Wall came down
Claus Christian Malzahn

BERLIN —The elites' misreading of current events did not begin with the blindness to Donald Trump's impending victory in the election to become president of the United States. Those who hold power and establish conventional wisdom have often misjudged the signs of the times. Need only look back a few months to the vote on Brexit, or what was then the unforeseen crumbling of the Berlin Wall. History seems so clear in retrospect, but those reading the teas leaves of the present so often get it wrong.

END OF HISTORY

The American political scientist Francis Fukuyama published a stunning essay in the summer of 1989, declaring: "What we may be witnessing in not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such." What a hypothesis!

While many Europeans failed to grasp what was happening on their own continent, here was an American academic who, from a distance, already perceived an epochal shift. Liberal democracy had defeated communism. For Fukuyama, it was an historical happy ending! The only thing missing were the rolling of the credits that read: "And humankind lived happily ever after ..."

Except it didn't end well, as we now know. The Balkan wars soon broke out, demonstrating that genocide was not just confined to the history books. Rwanda as well showed us how people of the same country could still slaughter each other mercilessly. Then there were the 9/11 attacks, which triggered wars in Afghanistan and Iraq that still haven't truly been extinguised.

The end of history? I think not, despite the fact that for one happy but brief moment in 1989, it really did feel like that.

BREXIT

Sure, the British like to march to their own beat. But leave the European Union? They're not that crazy. It would be against their own best interests, after all. It would be irrational. It would endanger London's standing as an international center of finance.

These were more or less the comments many an expert and public opinion analyst made before June 23, 2016, when what had been deemed impossible happened: Referendum voters chose to sever ties with Brussels.

People in London, where the elite of the country lives, were especially shocked. But no observant person living elsewhere in Britain could have been that surprised really. "The debates surrounding Brexit were instilled with a passion that had long been absent," says British historian Fred Taylor, who lives in Cornwall. "Class and race all of a sudden playing a role once more in political debates."

The historian recognizes the language used during the Brexit debate, and by Donald Trump in his campaign for the U.S. presidency, as "rhetoric we last saw in the 1930s and 40s." Supports of the "remain" campaign, he recalls, were denounced as "traitors."

Patriotism and nationalism are, once again, strong motivating forces within Europe and the United States. Trump's slogan is "Make America Great Again." The motto used by Brexit supporters was "Take Back Control." Both smack of hurt pride — evidently something that is hard for elite opinion to understand.

Finding a voice in the face of Brexit — Photo: David B. Young

THE BERLIN WALL

The then German Chancellor Gerhard Schroeder articulated, in 1989, what not only his party, the Social Democratic Party (SPD), but the elites of the entire country thought: "After 40 years of the Federal Republic of Germany being in existence, we should not lie to a new generation of Germans. There is no chance for reunification." Presumably the Kremlin felt the same way.

And yet, just 15 months later, Germany was reunited. The Berlin Wall was razed. East Germany was history. Schroeder was obviously wrong in hindsight. But he couldn't be blamed for thinking as he did. He was just being a political realist. To imagine things otherwise would have seemed crazy.

Schroeder's "realism," however, ignored some of the reality that was indeed happening, things the elites never bothered to take into account until the general population of the GDR began fleeing their state in droves that summer and took to the streets to protest their poor living standards. They wanted to live like people did in the West. All of a sudden, the general population had power and many an "expert" was caught completely off guard by the events that followed in the autumn of 1989.

This highlights a fundamental problem with so-called "expert" opinions. Experts do know a lot. But they have a tendency to consider the object of their expertise as immovable. That misjudgement can bite you in the back, and with a vengeance. That's when we speak of a revolution.

ARAB SPRING

Five years after the beginning of so-called Arab Spring movement against dictatorship, the results are disheartening. The Islamic State (ISIS) has spread. Refugees have fled by the millions. And the regime of Bashar al-Assad is still in control, bombarding civilian neighborhoods with the help of the Russians.

In Egypt, the government was briefly controlled by the Muslim Brotherhood, only to be replaced by a military regime that makes Mubarak's dictatorship seem harmless in comparison. ISIS militias in Libya fight against Al Qaeda affiliates for dominance. Only in Tunisia is there a vague hope of establishing a system in which pluralism and democracy will play a role.

While Western opinion-makers celebrated the Arab Spring euphorically, Israeli politicians remained skeptical. Benjamin Netanyahu saw an "Arab Winter" coming and feared an anti-democratic wave succeeding the collapse of state structures. He was criticized harshly for it. But in the end, that was one example of elite opinion being right.

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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