In this episode, Simone talks about why the fertility rate in South Korea is at a record low of 0.68 births per woman in 2023, and why this is a problem that will only get worse as the population continues to decline.
00:00:00.000A lot of people see South Korea and North Korea as being almost antithetical to each other, when that really isn't the case.
00:00:10.080What South Korea is a collection of North Koreas competing against each other under a capitalist broad economic rule system.
00:00:19.700And that's what the chaibals are. And Korea is also an extremely meritocratic system, but meritocratic in regards to measurable statistics, not in regards to measurable efficacy.
00:00:34.780And this is the core of what will cause Korea to fail as a culture and what makes it unsalvageable.
00:00:40.860And we'll get to why, because it may seem like such a small thing.
00:00:44.020You want to fix the entire Korean system? I'll tell you how you fix it.
00:00:49.700You can fix it in one generation. Korea, listen to me here. People will freak the fuck out if you do this, but it would fix things.
00:00:58.420Hello, Simone. We are so excited to be joining our audience today with the newest member of our family.
00:01:05.960Many people know that I worked in Korea. I lived in Korea for a year, and it was where I started caring about fertility rate issues.
00:01:12.540But before I get further on that, I want to introduce our audience to an alternate country.
00:01:17.780Now, in this alternate country, they've done everything right. In this wonderful, conservative country, same-sex marriage is still illegal in the year 2024.
00:01:30.200Porn is illegal in the year 2024. Abortion was illegal until just three years ago.
00:01:37.980There's almost no immigration and total ethnic homogeny. Women are permanently underclass citizens.
00:01:46.280And for the last 20 years, the government has spent over $200 billion trying to increase fertility rates.
00:01:53.920In this wonderful country, companies will pay their citizens $75K to have kids.
00:02:01.540Of course, this is a joke. The wonderful country I'm describing here is, in fact, South Korea.
00:02:07.960All of these things are true about South Korea.
00:02:12.180They have tried both the fever-dream fantasies of the right and the left, and it has not worked.
00:02:19.400From cash handouts, to ethnic homogenous state, to banning abortion, to banning pornography.
00:02:26.660This is why I always laugh when people suggest these things.
00:02:29.060I'm like, these things were institutionalized in Korea before their fertility started to collapse,
00:02:33.400and have been there throughout the entire process.
00:02:37.420And people will be like, well, how bad is the situation in Korea really right now?
00:02:42.240The average number, and this I'm quoting here, the average number of expected babies for a South Korean woman
00:02:48.880during her reproductive life cycle fell to a record low of 0.72 from 0.78 in 2022.
00:02:56.440Data from statistics on South Korea showed Wednesday.
00:02:59.740And if you project this forwards, South Korea is now projected to have a fertility rate of 0.68 in 2024.
00:05:31.540And another interesting thing that we are seeing, though, that is worth noting in the statistics, is a rise in the acceptance of out-of-wedlock kids.
00:05:39.080With 20% expressing a positive perspective on it in 2020, up from 11.1% in 2015.
00:05:47.440So in half a decade, almost double the acceptance.
00:05:50.520Now it's still low, but you can see a change in perception as society is beginning to become desperate.
00:05:57.520But from what we see with numbers in Sweden, for example, that acceptance doesn't necessarily correlate with higher fertility.
00:06:06.260Like fewer couples than ever are getting married in Sweden.
00:06:10.220More are having kids while staying unmarried.
00:06:14.960But their birth rate is also going way down.
00:06:41.380Now, generally, the first answer they're going to say is it's just the economics.
00:06:44.320I can't afford to have kids, which is partially right, but not in the way they mean.
00:06:49.120And what's really interesting is I saw some studies done recently on like space, because people always try to work like nimbyism, building more housing, interplanetalist policy, right?
00:06:57.420And what you see actually is a correlation between the number of people who live around you and your fertility rate in the United States.
00:07:04.340So did you know that your average United States citizen or family that lives in a house that they are either renting or own, but like a house, not an apartment or a subdivided house,
00:07:15.340But as soon as you get to apartments where houses are subdivided, it goes down to 1.8.
00:07:20.080And then it continues to go down the more people live in that apartment complex.
00:07:24.280Now, this is a big problem in South Korea, where the majority of the population lives in these ultra high rises, even when they're living in rural areas.
00:07:33.860For example, we took a train out literally, actually, ironically, to a baby convention, where they sold lots of baby products.
00:07:41.800And in this town outside or city outside Korea, there was nothing around except for a couple high rises of apartments, a giant mall, and then this convention center.
00:07:51.360So there weren't spread out suburbs like you'd expect to see in the United States or even Europe.
00:09:49.620And I need to be extremely clear about this to our listeners.
00:09:52.860It is an economy that allows for capitalism, but has not sorted itself capitalistically.
00:09:58.860In the same way that when many people think about communism, for example,
00:10:04.420it would be possible for under capitalist rules,
00:10:08.240one company to basically dominate all of daily life and pay everyone a UBI
00:10:12.880and then basically end up with a communist system under a capitalist hierarchy.
00:10:18.080In the same way that people often see communism as fundamentally at odds with democracy.
00:10:23.500And it's like, no, you can vote communists into power.
00:10:25.260You can vote fascists into power, for example.
00:10:27.340These things aren't in conflict with each other.
00:10:30.220You can set up a capitalist system and have another system develop under it.
00:10:35.020And the chaibold system in Korea is fundamentally very different from the way capitalism works in any other country.
00:10:47.040And it is also fundamentally why Korea cannot fix its fertility crisis.
00:10:51.780Can you first, just for people who aren't familiar with it, sorry, define the chaibold system?
00:10:57.700I'm going to go deeper into all of this because a lot of people see South Korea and North Korea as being almost antithetical to each other.
00:11:08.160When that really isn't the case, what South Korea is a collection of North Koreas competing against each other under a capitalist hierarchy or capitalists, the broad economic rule system.
00:11:24.960When you go to North Korea, you will see these shrines and these museums to the dear leader and everything like that.
00:11:33.120And they deify him and they come up with all sorts of stories about him and they have these strict hierarchy-based systems.
00:11:38.540If you go to any of the chaibolds, which I'll get to a deeper explanation in just a second, but just for example, chaibolds would be like Hyundai, Samsung, et cetera.
00:11:47.440You will find the museums dedicated to the founder of the chaibold and it will be almost as mythical as the museums you would see in North Korea.
00:11:57.300They will have his little shoes from when he was a kid up on a golden shrine.
00:12:01.760They will have, it is weird if you are coming from an American system.
00:12:06.540So people who are broadly familiar with chaibolds, they are like, so chaibolds are like big economic conglomerates, like 3M in our country or something like that, or GE in our country.
00:12:19.540And it's no, that is not really what chaibolds are.
00:12:25.400Just let me paint a picture of what it's like to live under a chaibold system.
00:12:28.420I can go as a Samsung person to my Samsung day job, go home to my Samsung apartments, which will say Samsung in giant letters on the side of them, go shop at the Samsung grocery store, buy Samsung insurance, watch Samsung TV on my Samsung phone.
00:12:55.420The one where I would see it in everywhere.
00:13:19.320Part one has to do with when they converted to capitalism, they were under a fascist dictator.
00:13:25.420So a fascist made them a capitalist system before they became a democratic system.
00:13:30.600As he converted them to capitalism, he used state resources to hyperspeed this conversion by pouring resources into individual competent families who had companies to grow those companies at a super fast speed.
00:13:46.420And this created the birth of the original Chibals.
00:13:50.880But this system would have fallen apart without Korean culture, which is the second thing at play here.
00:13:57.600When I mentioned that South Korea is actually more like North Korea than you would imagine, and people were like, well, why aren't people starving in South Korea?
00:14:05.180And people were like, well, competition can't be it.
00:14:06.960No, we wrote a book on governance, bestseller in the Wall Street nonfiction section, top of the list.
00:14:13.020And so we know what we're talking about when it comes to governance structures.
00:14:17.120For a governance structure to maintain efficiency, really all you need is for the possibility of it to fail and be replaced by a competitor,
00:14:23.720and for it to compete with consumers against competitors in a relatively free economic system.
00:14:28.100What Korea is essentially multiple fascist dictatorships that are competing against each other for the population to join them.
00:14:37.400It's almost, if you think of seasteading, the initial seasteading thing, they were like, what we'll do is we'll create like modular cities where people can split off and go join other cities if they're not being run well.
00:14:46.920And so you could even have a fascist city that could be desirable.
00:14:50.000That is basically the way the Korean economy works.
00:14:52.880Although people build a huge degree of loyalty to their companies as well.
00:14:56.680So even when the companies are treating them as well, they don't split off as frequently as you would see in other systems.
00:15:02.960It's actually a decent system if all you're caring about is capitalistic output.
00:15:09.560However, if you care about quality of life, this is a totally different thing altogether, which we're going to get to in a little second here.
00:15:17.460But the other reason why chaibals have persisted after they were originally set up is because within Korean culture, you do have this strong predilection for strict hierarchical structures.
00:15:33.020And I want to give you an idea of how hierarchical Korean culture is.
00:15:36.280When you are in Korea, if you're there for even a short time, people are sure to ask you their age, your age, because the way they talk to you changes like the grammatical structure changes.
00:15:47.140If you are even a few months older than them, it matters that much.
00:15:52.740And when you leave your company, go home or hanging out with your friends, your title, in the same way in the U.S. that we use terms like Mr. and Mrs., is often your position at the company.
00:16:06.840Like CEO would be like your title in a social setting.
00:16:11.740That is how much this stuff matters in Korea.
00:16:15.340It is baked into every layer of the culture.
00:16:19.480Some startups in Korea have tried to get around this through doing things like insisting that everyone uses English all the time and only English names because it causes people to use different grammatical structures so they don't fall back on these, which leads to less hierarchy.
00:16:42.320I'm watching a Korean drama now on Amazon Prime that is about a dating coach, actually, a female dating coach.
00:16:48.240And it begins with a bunch of meet cute situations.
00:16:51.240And then the individuals involved, like the man and the woman in each situation, not following through and not dating, which is so South Korean.
00:17:00.520But there is like a small publishing company, like a startup in this drama.
00:17:05.820And it's the CEO of it keeps giving these speeches about how we like we should not we should have an open office.
00:17:13.040We should only address each other by our first names to have open and easy communication.
00:17:17.800So I think it's even become a trope or a joke for visionary or self-aggrandized trying to be visionary people in South Korea, trying to break down these barriers and it being seen ironically by the culture is cringe, which is really interesting to me.
00:17:36.560And this to understand how much the tribal system matters in Korea, you are like not a person of equal status to other people.
00:17:43.740If you don't work at one of the tribal's, the tribal's are extremely important to your social status was in Korea.
00:17:51.600They are, when you are dating somebody, when you are like your life is spent to try to get that perfect test score, so you can get into the perfect tribal.
00:18:01.440And Korea is also an extremely meritocratic system, but meritocratic in regards to measurable statistics, not in regards to measurable efficacy.
00:18:13.360And this is the core of what will cause Korea to fail as a culture and what makes it unsalvageable, really.
00:18:22.740And I'll get to why, because it may seem like such a small thing.
00:18:25.740Why is the meritocratic thing so important?
00:18:30.200Because in Korea, and when I say meritocratic in the extreme, there is a test.
00:19:09.520Like I've seen, they didn't get high enough scores or kids killing their families because they didn't get a high enough score or it's horrible.
00:19:17.240To give you an idea of just how horrible it is, one in three students in Korea feel suicidal, according to this poll I found.
00:19:24.780Everything is based around this one meritocracy.
00:19:26.780And this is a problem with statistics-based meritocracies instead of efficacy-based meritocracies.
00:19:32.140In America, you can fail out of college and still start a company.
00:19:44.220They're America's greatest strengths as a small business owner.
00:19:46.200You do not have this mindset in Korea at all.
00:19:49.600I remember I was looking because at Korean matchmaking things, I wanted to see like what rank I would get on a Korean matchmaking website to see who I'd get matched with as like a partner.
00:19:58.680And they give your job a status, right?
00:20:03.300Being an entrepreneur is right under being a fisherman in status.
00:20:08.840Wait, so you're better, you're more of a marriage catch if you're a fisherman.
00:20:13.920If you're a fisherman than an entrepreneur in Korea.
00:20:16.020But it needs to be understood how demonized this is.
00:20:18.760So at my VC, we were the number one early stage venture capital firm by government survey.
00:20:23.460So this meant that when the government did a survey of where early stage startups wanted capital from, like what was considered the most prestigious capital to get, that was my firm.
00:20:49.480It really genuinely, like this experience in Korea, having them raid our office and stuff like that, kind of makes me hate the Korean government and the Korean culture.
00:20:57.600But like part of me loves the Korean culture.
00:20:59.340But seeing the way that they targeted and what was the sin of this company?
00:21:03.400Yeah, they made up some trumped up charges that were mostly proven to be trumped up as time went on.
00:21:07.920But what was the core sin of this company?
00:21:10.340And I remember being told, like by other Koreans that I talked to, that this company was bad news because of what it was doing.
00:21:34.240Yeah, we also invested in some people who dropped out of college, which was seen as particularly bad.
00:21:37.480In the U.S., if you can't understand why people would hate this so much, it would be like in the U.S. if there was a VC firm that like disproportionately invested in only meth addicts.
00:21:47.980You'd be like, that's a very bad message for children to invest in meth addicts.
00:21:52.700Like obviously our society, because in Korea, in the U.S., when we look at rich people who have gotten rich because of institutional mechanisms, like their parents were rich for many generations and they were born into the ownership of 3M or something.
00:22:06.460We're like, they don't deserve that money.
00:22:08.700That is society not working properly because they didn't build that wealth themselves.