Henry M. Seggerman
of International Investment Advisers
substantive free trade agreement (FTA) between the
United States and South Korea is as likely as long-term
peace in the Middle East.
Normally, I criticize governments, but today I am
criticizing people, too. Simply put, the people of the
United States and South Korea are just too self-centered
to permit any kind of meaningful free-market agreement
between the two countries.
It is like trying to push together the ``North’’ ends
of two magnets. You can’t do it.
Korean law stipulates the National Assembly must
ratify any treaty.
The other day, about 84 percent of Korean lawmakers
indicated they would reject the Korea-U.S. FTA. So, Roh
and other government officials can continue to brag
about the FTA, but right now Korea’s Assembly is poised
to throw it right out the window.
Pundits in the West just will not shut up about Korea
being xenophobic, the ``hermit kingdom’’ etc.
Stop for a second and recognize how much the American
people hate foreigners, too. A few years ago, American
businesses without much fanfare did the math on building
factories in Mexico versus paying Mexicans to work in
U.S. factories, and went with the second option.
Today, about 5 percent of the U.S. population is
Mexican immigrant workers.
As for their undocumented status, most of these
workers took one look at our post-September-11th Nazi
immigration process and decided not to bother with it.
The result of this perfectly logical response to the
inexorable pressure of globalization is a majority of
the U.S. population is now in favor of closing off the
Mexican border and thousands of heavily-armed,
cheap-beer-swilling, vigilante thugs, the ``Minutemen,’’
swarming to the border, crazed with the idea of mowing
down America’s most profitable workforce component the
instant they cross the line in the sand.
And guess where 75 percent of the U.S. Navy’s ships
are serviced? Dubai.
Why? Because Dubai has easy access, great yards and
good weather. It is good business with good business
But when a deal was closed with Dubai’s DP World to
service U.S. ports, Congress reneged on it in the
eleventh hour because the American public, inflamed with
racist hatred of evil Islamic ``towel-heads,’’ disagreed
in one of those instant TV polls.
Imagine trying to get a smart deal like that done
after the Nail Polish Bomber plot. Even less likely.
In South Korea, you have to be careful using the
``P’’ word: pedang. That’s
right. Don’t dare ask for more dividends.
A few months ago, a small 7 percent foreign
shareholder of a company whose business is killing
thousands of Koreans with lung cancer, had the audacity
to ask for more dividends.
This led to more screaming ``Hostile Foreign
Takeovers!’’ headlines in the Korean Press, and the
governing Uri Party is now planning to issue
anti-democratic ``golden shares’’ with exponential
voting power, to managers of cancer companies, decadent
chaebol dauphins, and anybody else who has diluted down
their own shareholdings with endless rights offerings to
finance mindless ``de-worseification.’’
These golden shares will be brought to you by the
same administration whose court system recently told a
business leader it had convicted that it was more
important for him to serve as board chairman of a blue
chip company than to serve out the prison term it had
sentenced him to.
Why? Same reason. A small, 14 percent foreign
shareholder had had the audacity to ask for more
Excuse me, but please digest these facts. There has
never been a hostile foreign takeover in Korea.
In fact, there has never been any kind of hostile
takeover in Korea, other than a very small handful of
government string-pulling and palace back stabbings
among feuding chaebol family members.
Agriculture subsidies and film quota system
Did you know that Korean consumers pay 4,000 won for
1,000 won worth of rice? God knows why they do this, but
It is because Korean rice farmers have not turned a
profit for decades.
Rice can be grown profitably in countries with
per-capita gross domestic product (GDP) of $1,000, like
Cambodia, but not in Korea whose GDP is over $15,000.
So, instead of investing in assets which can
appreciate, Korean consumers are required by law to
flush their hard-earned pay down the toilet to support
one of the most consistently unprofitable (perpetual
guaranteed 75 percent net loss margin) businesses in the
history of the world. This moronic policy is one of the
Korea-U.S. FTA’s primary obstacles.
Each month, the U.S. government steals from my
paycheck money to pay subsidies out to sugar and cotton
farmers who have also not made a profit in decades and
Sugar and cotton can be grown profitably in countries
like Ghana with per-capita GDP of $1,000, not in the
U.S. with a $40,000 GDP.
So, instead of investing in assets which can
appreciate, U.S. taxpayers, including myself, are
required by law to flush their hard-earned income down
the toilet to support one of the other most consistently
unprofitable businesses in the history of the world.
Western Europe’s agricultural subsidies are just as
bad, and countries like France refuse even to consider
Artificial, anti-economic price supports such as
Korea’s, and subsidies, such as in the U.S. and Western
Europe, lead to massive surpluses because the normal
laws of supply and demand have been castrated.
The countries dump these surpluses at huge discounts
anywhere in the world they can sell them.
As a result, when poor countries in Southeast Asia
and Africa bring their decently-priced crops to market,
they simply cannot sell them.
And since they have little besides agriculture in
their economies, millions of people starve to death. So,
next time you eat a 1,000 won worth of rice your
government forced you to pay 4,000 won for, and the next
time I see the Federal tax withholding on my paycheck,
we should both realize someone in Africa is dying to
support our ridiculous, unprofitable agriculture
This is one of the reasons the recent Doha Round
conference just collapsed and was nicknamed ``Doha
Koreans make great movies, and Korean audiences
prefer them over Hollywood films. About 60 percent of
films open in Korea are locally produced.
In this happy situation,
what logical reason on earth exists to perpetuate a 40
percent protectionist Korean film quota system?
Farmers, laborers and civic group
members hold a large-scale rally in downtown Seoul
to protest the government’s move to sign a free
trade agreement with the United States in this
file photo last month.
The free market has already given superior Korean
film products an edge over inferior foreign competition.
Isn’t it kind of wimpy for Korea to demand the screen
quota system when it is not needed?
Inter-Korean industrial complex in Kaesong
Hyundai Group have subsidiaries manufacturing
products in many countries around the world, and when
these products are made, they are usually sold on the
spot, for local consumption or as exports out of those
Newsflash: North Korea is a sovereign country, just
like Malaysia, Thailand, or anyplace else where a
Hyundai company sets up an overseas operation.
We all know how much George Bush ``loathes that
dwarf,’’ so it has been almost comical watching these
FTA big shots quibble about some low-grade North Korean
pots and pans.
To South Koreans, these pots and pans trigger
misty-eyed reunification fantasies, though massively
overpriced. To George Bush, they should be locked away
in Axis of Evil kitchens forever.
People who support protectionism are destroying their
own financial future. It’s obvious to anyone with a
brain that wasting money to support unprofitable
businesses damages the economy.
It is just as stupid for the Minutemen to get their
way and deport twelve million Mexicans.
What these people think is that the companies will
hire Americans for these low-level manufacturing jobs.
But that is not the case because they will just go back
to their first game plan, building factories in Mexico,
which will be more harmful to the Minutemen idiots.
Stopping the inexorable momentum of globalization
with these foolish and puny protectionist measures is as
likely to work as stopping a mighty river rushing
downhill into the sea.
People want good deals for products and services so
they go online to find the best deals.
This is when they click ``add to cart.’’ And they
sure aren’t going to do it to buy 1,000 won rice for
This applies even more absolutely to businesses. To
keep up with the exponentially building pressure for
lower prices worldwide, all competing businesses have no
choice but to reduce raw material acquisition costs to
absolute minimum, and to seek out the most efficient
labor solutions available worldwide.
A single worldwide currency and a single worldwide
stock market are also likely as a logical outgrowth of
I would predict these will be in place by 2050.
When our children look backwards from that time
frame, they will view these FTAs as quaint baby steps on
the way to a unified international free-market economy
like lug nuts on Wilbur and Orville Wright’s biplane
look to an astronaut today.