Understanding the Future of Korea – Interview with EDaily
In June 2015, I was asked to be one of the featured speakers at the EDAILY 6th Annual World Strategy Forum along with Wikipedia founder, Jimmy Wales and Nobel Economist, Thomas Sargent. The theme of this event was entrepreneurship.
Even though South Korea received the highest possible ranking in the 2015 Bloomberg Innovation Index, the country is better defined as a “fast follower with great secondary innovations” rather than one that spawns “unicorn companies with primary innovations.”
In just a few short decades, this tiny country has gone from being dirt poor and technically primitive to one of the wealthiest and most technically advanced in the world. Framed around a super aggressive culture that permeates virtually every aspect of Korean life, the entire country seems determined to not only reach the top, but go far beyond what anyone else dreamed possible.
Now, as they approach their 10th anniversary, editors at the EDaily Forum have asked me to once again weigh in on the future of Korea.
Q1: In 2015, while attending EDAILY Strategy Forum (then World Strategy Forum), you predicted that North Korea’s barrier may fall due to an accidental cause. How would you define an accidental cause in this context? I believe I was referring to unanticipated or unexpected causes. An accidental cause would be things like disease or freak accident such as the malfunction of a nuclear weapon.
North Korea, in its present state, is of very little interest to the rest of the world. It has a tiny economy, poorly educated population, emotionally scarred people, and few assets to boast of. The only reason people around the world pay attention to it is because of a seemingly deranged leader making threats, launching missiles, and demonstrating a willingness to create mayhem and destruction just to prove a point.
Last June’s meeting between U.S. President Donald Trump, South Korean President Moon Jae-in, and North Korean leader Kim Jong Un in Singapore went a long way towards unmasking the “crazy man” behind the curtain.
Since North Korea’s conciliatory moves did not yield the anticipated softening of sanctions that Kim Jong Un hoped would happen, he’s effectively been reduced to a not-so-scary-guy throwing a tantrum. His recourse is to either become truly scary, bow to the demands of the U.S., or something else.
Traditional chess moves are not likely to unlock this stalemate.
Two wildcards at play are the U.S. elections in 2020 and Kim Jong Un getting a taste of the global spotlight and wanting to carve out a permanent place there.
The traditional democratic process leading up to the U.S. election is being replaced by a far more volatile, less civil “war room” approach to influencing elections. With global awareness rising, and news coverage instantaneous, we will be witnessing an entire new level of gamesmanship taking place.
While it was far easier to castigate Kim Jong Un when he was still the “evil overlord” behind the curtain, he can now be molded and remolded from bad guy to good guy back to bad guy to fit whatever narrative is needed at the moment.
At this point I can imagine literally hundreds of scenarios where North Korea becomes a pawn in a much larger game. Naturally, many big questions remain as to how and when will things change, and in what way?
The Arch of Reunification, the southern gateway to the city of Pyongyang.
Q2: In the past, you made the prediction that Korean reunification may come about in the near future. Do you still feel that this prediction holds true?
Even though I would put the probability of a German-like reunification at less than 50%, it’s still too early to say it won’t happen.
Keep in mind, there is a wide range of options as to how North Korea can reform and reunification is only one of the possibilities.
As an example, a new leader could make them a “friendly neighbor” like Australia and New Zealand, or they could become an “economic toy” for either the U.S. or China, or a global refugee camp for the UN, or a global dumping ground for rare earth mineral waste, or a religious colony for fanatical isolationists, or something we simply can’t imagine.
For these reasons, it’s important that South Korea takes a leadership role in deciding the fate of their fellow Koreans.
Q3: Negotiations between North Korea and the United States on the theme of ‘denuclearization and the lifting of sanctions’ are a prerequisite to the issue of the Korean reunification. On this front, no progress has been made since the failure of the second Hanoi Summit in April. Is your prediction about Korean reunification still valid under the current circumstances? If so, on what grounds is it still valid?
The true value of a prediction is that it forces people to think deeply about a situation in the future and draw their own conclusions. Naturally, our understanding of the future changes over time, so I’m glad you’re asking these questions.
Issues like the ‘denuclearization and the lifting of sanctions’ tend to be more background noise when the decision makers are asking far more self-serving questions like “what’s in it for me?”
While we hear terms like “doing things for the greater good” and “helping the underprivileged” bandied about, there’s always another agenda at play. Keep in mind, just as every movie needs a “bad guy” to make it more interesting, every world leader needs an opposing “bad guy” to make them look good.
When it comes to dictators being removed from office, virtually none have lived to talk about it. There may be a small opening for Kim Jong Un to make the transition from “evil dictator” to “global peace advocate,” where he willingly steps down, and is offered a key position at the UN, lives on his own island with plenty of money, and spends his time trying to resolve global conflicts, but that may be a stretch. And there may not be enough forgiveness in the world for that to happen.
We currently have no one who has made the transition from being the “face of evil” to the “face of global hope and inspiration.” But there’s always a first time.
The other thing to consider with reunification will be what to do with the people who have been in leadership positions in North Korea. Many have been operating like Mafia bosses with little regard for human life. People like this will have great difficulty assimilating into a more peaceful culture.
Q4: The main agenda of EDAILY Strategy Forum, on its 10th anniversary this year, is the diagnosis on the unstable political climate surrounding the Korean peninsula and the search for a political and economic answer.
What is your prediction on the regional situation of Northeast Asia with a particular focus on Korea, and what would you say are the necessary preparations for the future?
From my outsider perspective, my sense is that Korea’s political climate will begin to stabilize somewhat after the U.S. elections in November 2020. However, there are several “elements of change” that may cause the instability to continue.
Korea’s biggest challenge over the coming years will be its super low birthrate. While the problem is currently being masked by people migrating from rural parts of the country into the big cities, declining numbers of school kids, college students, and entry-level employees will soon transition into massive shifts in the supply and demand equation. This will hit home especially hard with declining valuations of real estate.
Based on current birth rates, the last Korean will be born in 2300 when the entire population of the country will be less than 50,000.
Naturally, major changes to the immigration policy will help, but low birthrate problems are also unfolding in many other Asian countries like Japan, Singapore, Taiwan, Russia, and China.
When it comes to other issues, we’re only scratching the surface of problems with deepfakes. Deepfakes use artificial intelligence to mimic people’s faces and voices. This allows hackers to make politicians and celebrities appear like they are saying things that they’re not, in a manner that is indistinguishable from reality.
Our greatest danger in society has always been devious people, but with AI, 5G, and a plethora of emerging technologies that can essentially turbocharge the acts of underhanded people, anyone wishing to make someone look bad, whether it’s a company, a country, religious group, a race of people, or a specific community, can do so in highly deceptive ways.
Q5: In the past, you mentioned that the use of drones will allow for an influx of information into North Korea, bringing forth Korean reunification. But drone technology has been in use for a long time, and recurring predictions of commercial drone use in logistics and transportation are made difficult in the face of regulation. If this trend of regulation continues, do you feel that North Korea will be able to keep itself shielded from the wave of change?
The people of North Korea are poised for a shift in global awareness with estimates as high as 40% using smartphones. While they have very limited usefulness in their present state, it’s only a matter of time before hackers figure out ways to pierce the national cloak of secrecy.
As an example, several companies have announced plans to launch satellite networks to basically create a global Wi-Fi network.
In 2015, a proposal from Samsung outlined a 4,600-satellite constellation orbiting at 1,400 kilometers (900 miles) that could provide a zettabyte per month capacity worldwide, an equivalent of 200 gigabyte per month for 5 billion users of Internet data.
Starlink is a SpaceX satellite constellation development project based in Redmond, Washington. They have announced plans to launch 12,000 micro satellites starting in 2019. Similar proposals have come from Amazon, Telesat, and OneWeb.
This type of technology will literally put every North Korean smartphone user just one hacker app away from a peeling back of the national cloak of secrecy.
I find it confusing that anyone would want to be the leader of a zombie nation-state, and indeed Kim Jong Un has made a number of tiny moves to “open the window” to the outside world. But it may happen faster than he planned.
Much like water that always flows to the lowest point, telecom signals will find a way to infiltrate the creaky dome of silence North Korea is trying to maintain.
Q5-1: What influence do you think the 4th Industrial Revolution will have on the political climate surrounding the Korean peninsula? Please consider both good and bad.
As we become more dependent on technology, we create more breaking points. That means more things can go wrong.
With more decision points to contend with, we naturally have to automate some of them to make our lives more manageable.
So we’ve gotten good at automating things like the temperatures in our houses, our lighting, humidity, background music, coffee pots, and security systems.
Now we’re attempting to automate other areas of our lives such as the cars that drive us, how packages get delivered, who we date, and how and what we receive as news.
The next step will be to automate things like project management, mediation processes, legislative decisions, and even court rulings.
However, it’s important that we still continue to struggle with these decisions. As AI enters more and more of our democratic processes, we run the risk of overlooking key problem areas and their unintended consequences. AI should remain a tool, and not become a governing mandate.
Korean manufacturing is struggling.
Q6: With the rapid advancement in various technologies, such as AI and 5G networks, which represent the 4th Industrial Revolution, the industrial landscape itself is changing. With this change, so too is the landscape of jobs and employment shifting.
Considering that manufacturing is still the foundation of the Korean economy, how would you say that future jobs in Korea are likely to be affected?
Korean manufacturing has grown quickly since the 1960s, spurred in part by the wig industry that was driven by African-American consumers in the U.S.
In 1965, Korean wig makers joined together and convinced their government to outlaw the export of raw hair. This ban meant that other manufacturers could only buy pre-made wigs and extensions. In other words, Korean hair could only be manufactured in Korea. Six months later, the United States government created a ban on any wigs that contains hair from China, and Korean wigs began to dominate the global marketplace.
This “taste for being a global player” quickly transitioned into other industries. Focused initially on wigs, textiles, and footwear, Korean manufacturing moved into steel, heavy equipment, ships, and petrochemicals in the 1970s, and electronics and automobiles in the 1980s.
During this time, Korean businesses excelled at the “fast follower” approach where they would spot a promising but proven industry, and quickly learn to dominate that industry. However, with the rate of change increasing, being a fast follower is no longer very effective because other countries are learning to do the same thing, but with far cheaper labor.
Being a trailblazer focused on the cutting edge of technology is not a comfortable position for most people, especially when there’s no “cutting edge culture” to support it.
Startup entrepreneurs that immerse themselves in bleeding edge technology tend to lead a risky life marked with an ongoing series of failures. This lifestyle is not for the faint of heart.
Being a “first mover” is not something that can be taught in college or traditional schools because it involves a level of introspection, what some call a “gut check,” to sense whether they’re on the right track.
This is similar to shifting from textbook fighting to street fighting, where people make up the rules as they go.
While there are still several niches where Korea can excel as a “fast follower,” industries evolving at a somewhat slower pace, the country would be far better served to immerse itself into startup cultures and celebrate its failures as well as its victories.
To be sure, Korea will still be manufacturing things 20, 30, and even 50 years from now, but it probably won’t be the same reliable source of jobs and income until it somehow manages to engrain first mover thinking into its cultural DNA.
Q7: You predicted that two billion jobs will disappear by 2030, but also that new opportunities will arise. But some speculate that the number (or quality) of new jobs will be less than the jobs that will disappear, leading to the overall reduction in job opportunities with the 4th Industrial Revolution. What is your view on this matter?
Counter to what I predicted earlier, we are automating tasks out of existence, not entire jobs.
Twenty years from now we will still have teachers, doctors, nurses, and lawyers, but the work they do will require vastly different tools. So it begs the question, is this the same job?
Over the past 120 years, cars have been designed around the operational side of the vehicle, primarily driving. As car dealerships began to spring up around the world, the relationship between the buyer and salesman turned cars into a status symbol, and design features and the overall appearance of the car quickly rose in importance.
Today, however, the entire automobile industry is in the midst of a major transition. As a mature industry that touches the lives of billions of people around the planet, changing from driver to no-driver vehicles will cause massive ripple effects to sub-industries, service industries, and even tangential support industries that have no direct connections to any part of the automotive world.
Car ownership will change. Land use policies will change. The way cars are sold, services, cleaned, paid for, and maintained will also change.
Virtually every job related to the automotive industry will be affected in some way. Parking lots, garages, traffic cops, traffic courts, gas stations, tire shops, emissions testing, drivers licenses, traffic cones, weigh stations, guardrails, stoplights, and DUIs will all begin to disappear.
With very few actual use cases to guide our thinking, car designers are doing their best to guess at how people will interact with the cars, vans, trucks, and buses of the future.
To make matters even more challenging, the way people interact with the cars of the future will continually change along with the changing ratio of drivers-vs-no-drivers on the road.
As the number of driverless vehicles reach 5%, 10%, 20%, and 50% we will begin to see a number of usability shifts take place, as both comfort and convenience improve and as we develop higher levels of trust in both the vehicles and the overall system.
However, when it comes to jobs, we will still have plenty of work for the lower skilled workers. AI will require monitoring, drones will require overseers, and IoT devices will require checkers, replacers, testers, cleaners, inspectors, maintenance people, trainers, customer relations, and quality control.
It sounds easy to automate a job out of existence but it’s not. In the past, the onus of a clean vehicle has always rested on the shoulders of the driver. However, no driver means no one to clean the vehicle.
Designing a self-cleaning car is a far different challenge than designing a self-driving car.
It sounds easy to have robotic arms pop out of the floor that will quickly vacuum, wipe down, and disinfect all the surfaces. However, this is an extremely complicated set of tasks.
What if the departing passengers left something behind? Perhaps it’s a purse, phone, or set of keys. More likely it will be a half drunk bottle of water, candy wrapper, or piece of trash. How does the robot know if the item is valuable or not, and how will it respond to each new situation?
None of these are insignificant issues, and the artificial intelligence incorporated into an operational system like this will take years to perfect.
Q8: You have recently been appointed as the adviser at a local M&A platform company that specializes in blockchain technology. In Korea, due to the limited application in cryptocurrency, blockchain technology has been identified as a source of speculation and is subsequently not received well in the public’s eye.
What was behind your decision to accept this advising role, and how do you view the future potential of blockchain technology in Korea?
I always laugh when I’m reminded that there is a “very fine line between visionaries and fools.” Indeed there is!
Both blockchain and cryptocurrency are in the early formative years of development, but I see them as true game changing technologies over the coming decades.
Keep in mind the cars we drive today have been in development for the past 120 years. It’s taken that long to get to cars this good.
Early cars were referred to as the “toys of rich people” and “keep them out of my town because they scare my horses.”
With every new technology we have to work our way through the “crappy stages” before we get to the good stuff. And most of our emerging technology today is pretty crude, including blockchain and cryptocurrency.
That said, I have taken on several advisory roles around the world because each one opens a window into the growth of an entirely new industry.
GBC, the global M&A platform based on blockchain you referred to, has all the makings of becoming a world-class company competing on the global stage.
I view this as an exciting new business and a learning opportunity to help us understand the ramifications stemming from next generation mergers and acquisitions.
Korean steel processing faces new forms of competition.
Q9: The Korean economy faces a much gloomier outlook compared to the last time you visited the ‘6th EDAILY Strategy Forum (then World Strategy Forum)’ in 2015.
Thanks to the semiconductor boom from 2016 to 2017, the Korean GNI surpassed the $30,000 mark. However, the recent downturn in semiconductor business is casting a long shadow on domestic economy forecasts.
Of the various businesses boasting a promising future that you have pointed out, what industry should Korea focus on, given the circumstances?
Korea is a country that is rich with talent, and very good at spotting, and creating, new trends.
While the semiconductor industry has been a solid business in the past, with chip designs coming from foreign engineering firms, and the manufacturing equipment imported from Germany and Japan, it was only a matter of time before competition would arise from countries with lower cost labor.
However, the coming decade will be filled with dozens, even hundreds, of emerging technologies like synthetic biology, CRISPR, quantum computing, mixed reality, smart blockchain, artificial embryos, search engines for the physical world, neural mesh networks, zero-carbon natural gas, cloaking tech, smart privacy, borophene, real time language translation, dynamic architecture, genetic-based robotics, neuromorphic computing, and much more.
Since each of these embryonic technologies will require years of research and study, and the people working in the field will have enormous sway over its adoption curve, it becomes important for Korea to focus on several tech areas that mesh well with its existing talent base.
It’s also important to develop a strong entrepreneurial culture willing to test out derivative technologies that is well funded, empowered, and willing to take risks.
Q10: You have been giving lectures all around the world. What is the unique characteristic of EDAILY forum? In what direction should it be improved for the future?
EDAILY has done a terrific job of staying on the cutting edge of the future, however the future is a relentless beast and customer expectations are constantly changing.
One way I think about the future of news is that it will be interactive, where we have an ongoing conversation about the news throughout the day. Over time, it will learn what topics we’re interested in and how we like them presented.
It will even allow us to change the personality of the newscaster from famous people we’ve come to admire to personalities that reflect a certain outlook. One day you may want a more deep thinking introspective personality and the next you may want one that is more cheerful, humorous, female, male, conservative, progressive, or something else.
Personality packages will be downloadable and we can download as many as we’d like.
Naturally there will be no one-size-fits-all formula for reporting the news, but by making it more interactive and hyper-individualized, it will come across as far more relevant to those who are invested in it.
South Korea, finding new ways to connect.
For me, it was Korea. Great food, great passion, and an unwavering determination to be the best of the best. More than virtually any other culture, they spend their time thinking and planning for the future.
But the future is never a destination, always a journey. Even with significant challenges ahead, the next chapter for this great nation will prove to be even more exciting than the last.