Too Many People Trying to Become Doctors in Korea

I just finished 23 Things They Don’t Tell You About Capitalism. It’s a fascinating book about the perils of free market capitalism. Chang is pro-capitalism but anti-free-market. He makes a compelling case for government intervention in markets.

He writes about his country, South Korea, where the government put a damper on government economic intervention in 1997 and left their workers to the dictates of the market. Like the U.S., Korea has a weak welfare state, so if a Korean company goes under or  sends a Korean employee packing while the economy is bad,  that employee’s life will change in a big, big way.

The end result is that “nearly four out of five ‘top-scoring university applicants’…in the science stream wanted to study medicine.” (p.222) Koreans know that if they lose their engineering or business jobs in their forties, they’re dead. So many try to play it safe by getting a medical degree. Even if they get downsized by a hospital, they can always set up their own clinics. In a state where there is no safety, people have to create their own safety. A medical degree–in Korea, as in most places in the world–is the best way to create safety.

But as Chang points out, that’s not a great allocation of talent. He writes that there is no way 80% of the smartest science kids in Korea are cut out to be doctors; they  have diverse interests in many areas but flee to medicine because of fear. Contrast this with a culture that exists in a country with a good welfare state–Norway, Sweden, Canada–and there will most likely be more people taking risks to excel in other areas.

Chang admits that there are some people who will milk the system. Overall, however, most people want to succeed. With a safety net along with a culture that encourages success, a country can have a greater diversity of competencies, as well as a better overall economy due to better efficiency in the allocation of talent.

Some say that we don’t have enough money to support a welfare system. I say look at what the CEOs of Countrywide, Merrill, and Citi made from 2002-2006 while driving their companies–and our country–into the ground. They made $460 million. Even if they were good at their jobs–which they clearly weren’t, as proven by the financial disaster they created–those numbers are excessive. Not only did their companies pay them what they did, but our government extended welfare to these big companies when they needed a helping hand. If there were something in place to curb executive pay and use it to make a safety net, we’d be better off. Then we could help individuals as well as companies.

Think about it. If these three guys made half of what they made in those four years: $230 million dollars, divided by three guys, over four years, they’d be making $19 million a year each, which is more than enough to live on, especially for a job not well done. The country could take $57 million a year to provide a safety net. Let’s say welfare pays $15k a year for an individual to live on while finding a job. That’s 3,800 people a year who could be helped. And this comes only by cutting the excessive salaries of three people!

We’ve got too much income inequality in this country, and not a large enough safety net. Kids starve in our country. People die because they have no medical insurance. There is no reason why this should happen in a country like ours that has the means to prevent it.

10 thoughts on “Too Many People Trying to Become Doctors in Korea

  1. The US should should stop trying to intervene in companies and instead intervene in people. Though must note that I think you exaggerating about “kids are starving” as there is not starvation issue in the use. The actions of the US – like reforming health insurance by making everyone buy insurance and giving bailouts to companies – seems to indicate that we have problem of a government intervening the in the interests of large companies (specially Wall St.) rather than the people (or even the employees of the companies either).

    I find that the word “government intervention in markets” is mis-worded. The government do intervene and been doing that a great many of times in the past 4 years, but in the favor of the companies.

    There’s also the problem of current safety nets being misdirected to groups who have almost no intention to use it to get themselves up, but that’s requires a separate analysis.

    If the government intervene, it should be directly to the people. We have a big government and many are calling for a smaller one, but it is not because it is not desirable for the government to help people, but big government has largely been helping the companies to the detriment of the people (and when it does try to help the people, gravely incompetent). If the government are to give health care, it should be single payer and not making everyone buy insurance with a penance of regulations as a poor way to keep the citizens from being grouched as they are forced to buy them (licenses and copyright laws are skewed to the pharma companies as well, allowing them to jack up the prices where in Canada, the same medicine is a fraction of the price). If the economy is collapsing, it should not cater to the companies with bailouts but a moderate amount to the people (what’s “moderate” is a different debate) and encourage the rise of new companies to fill the void.

  2. Well if you do take a look at example of Korea with respect to a number of their top students going into the medical field, there does not seem enough time to really understand how the adjustment will play out. What you have basically one welfare system that is undergoing an adjustment. Even if lifetime employment was the norm there, then it may not exactly be nominally a welfare system, but it does function as one in actuality. After the shock that happened in Korea that caused major unemployment and a shattering of the expectation that lifetime employment was a guarantee, the adjustment will cause an extra cautious reaction. Eventually as pay for medical doctors plummet there will be an oscillation away from the field, and less caution. I’m sure this is going to play out over many years.

    Now I can get some of the argument realistically there is no free market system. But any intervention can as a matter just create another system that will also cause problems. If you have to back track on the welfare state you will perhaps strike at the legitimacy of the government. If you do that you could not only harm the government, but harm the whole market.

    I think I would be safe in saying that there is an optimum about how much you could provide a safety net to promote enough risk that encourages a more productive allocation, to the point where it gets too risky and/or stifles the ability to grow. Trying to peg that point at any given time would be difficult. If you take Korea, it would be at one point before its critical economic downturn and then after. You try to keep social policy of a government that agile, that is a huge risk.

    I think one other thing about that chapter (23) is his comparison of the US and European growth. The US was slower than Europe until 1980. Now haven’t really been able to look at the empirical data, nor will I get the chance anytime soon, but it seem like an asymmetrical comparison. The US really took control after WWII, while Europe was devastated. The US had less to recover, plus they took on a lot economic actions to help support its allies, especially when it came to the cold war. With respect to worldwide prices, it let the dollar act in a matter in which there was deflation. It was going to help allow imports in to help its allies export goods, especially as it feared economic problems might compel them to communism.

    Oh just as an aside, I did get the book from the library, but I’m pretty busy to read it all.

  3. Even if I do act as a critic counter to the book, a lot of the ideas are valid. Any problem I would have it is what the idea means in the context of all other factors. If markets did work ideally it would be great. It would be great if all goods and services were distributed with a high degree of efficiency and equity, but they realistically cannot be. There is a place for government and regulation.

    For me though I would still be a little hesitant of anyone who has way too much of a philosophy that is either too strictly sticking to strong national boundaries or too strictly globalistic. Both would seem like they will ultimately fail to take in full consideration of the optimal conditions. You may need to protect certain industries that are not very mature; you may also have to take steps that might economically hurt you in order to help someone else. That might especially be in your self-interest, because their failure could hurt you. I have to say I can only read so much of the book, so I do come in with some bias of what I think he will argue.

  4. Dreamer,

    I think the issue is that people are dependent on companies. So what Chang is talking about is regulating companies so that they help:

    a) the people
    b) the government

    Right now the issue is that people don’t have jobs, and they can’t get jobs except through private companies or government hiring. Since the government is broke, private companies, many of which are sitting on cash, need government intervention to help them get started doing more business and hiring more people.

    Jman,

    This wasn’t intended to be my review! I actually thought of writing a review, but there was just so much to say.

    I actually don’t know if doctor pay will ever plummet. The reason is that people are very particular with doctors–they want their doctor and no one else. Some countries have tons of medical clinics all over the place, and doctors still make good money.

    I do agree that it’s a hard one to balance. You have to protect certain industries, but you have to take a gamble on which ones those are. It’s not easy. :)

  5. Taxing rich individuals will only result in capital flight. I’m surprised this isn’t mentioned. There’s so much talk about taxing the rich and welfare systems that the elephant in the room is completely ignored:

    Iraq and Afghanistan.

  6. HJC actually covers this too, in his chapter where he says “capital has a nationality.” They won’t move headquarters because they love the culture here, nor will they do it if there are substantial tariffs to discourage that behavior.

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