
Political Crisis Engulfs Samsung, a Firm Tied to South Korea’s Success - zonotope
https://www.nytimes.com/2017/01/16/business/lee-jae-yong-samsung.html
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twblalock
Most large Korean companies are family-owned or family-controlled, and most
are corrupt. An unusually high percentage of the heads of these companies have
criminal records for financial crimes, compared to other developed economies.
For decades, presidents have frequently pardoned them -- and many other CEOs
would be convicted of financial crimes if the government bothered to charge
them.

Presidents of South Korea have often justified their pardons of criminal CEOs
by stressing the consequences for the economy. Fortunately, those excuses are
less widely accepted than they used to be. Besides, it's not healthy for an
economy to be heavily dependent on a small number of family-controlled firms,
whether they are corrupt or not. It's true that enforcing the law against
those companies may cause a short-term economic downturn, but in the long
term, the economy will have a more sustainable foundation.

Incidentally, the Korean term for these large conglomerates, chaebol, is
cognate with the Japanese term zaibatsu, which dominated the pre-WWII Japanese
economy and shared many characteristics, including family control and
political and financial corruption. Japan was better off when they were broken
up. Despite appearances, the current Japanese conglomerates are better than
the zaibatsu in important ways: they are rarely family-controlled, and they
are less corrupt, more accountable to shareholders, and have much better
corporate governance as a result.

Some reform of the economy, and less tolerance for corruption among the
voters, are likely to be the best things that comes out of the impeachment of
the current president.

~~~
coliveira
American companies are also extremely corrupt. The difference is that they
operate through loopholes in the law, and pay armies of lawyers to find such
loopholes. They also pay a fortune to lobbyists to maintain and expand these
friendly laws.

~~~
mifreewil
I agree with you, but I have to say it's probably better to have transparent
corruption within the law, than opaqueness. In America, most of the corruption
is open, people are just too busy with their own shit to worry about it.

~~~
kubelsmieci
> most of the corruption is open, people are just too busy with their own shit
> to worry about it

And this is reason, why Basic Income won't come easily. They (government,
corporations) don't want people to have too much free time, to worry about
theirs wrong-doing.

~~~
simonh
Basic Income is intended to be a more efficient and fairer way to provide
social support and to eliminate the poverty trap that makes some people worse
off if they get a job. It's actually designed to encourage more people to work
and thus reduce aggregate free time. After all, the money to provide the Basic
Income has to come from somewhere.

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Radim
The stranglehold that large "chaebols" (large family conglomerates) hold on
the Korean economy and politics here is frightening. And it's still such an
"honour" to work for them, a sign of social prestige, which makes change
unlikely any time soon.

Kind of like publishing in top journals is so prestigious and career-advancing
for scientists. It makes creeps like Elsevier "above the market laws",
virtually undisruptible (as well as fabulously rich). It's a deeply cultural
thing, with glacial inertia, not a question of technology/funding!

On a similar note, after the AlphaGo commotion, Korean government allocated
some $860M to "AI innovation". I may be too cynical, but it wouldn't surprise
me if the money ended up in "friendly hands", the likes of Samsung.

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yongjik
It doesn't help Lee Jaeyong that, unlike his ruthless father (who was somehow
brutally efficient at making Samsung the most powerful company in Korea), Lee
Jaeyong has the moniker of "Hand of Minus", after several of his pet projects
that went nowhere.

Already some people are (somewhat jokingly) predicting that maybe his arrest
would be a _plus_ to Samsung...

That said, it was quite a bold move by prosecutors. Without the current
scandal of president Park and puppetmaster Choi, I don't think they would have
dared arrest Samsung's leader. (Well, the court may still say no to the
arrest; we should wait and see.)

~~~
bane
Despite the history of corruption in Korean politics up to the presidential
level, my gut feeling is that the Park/Choi scandal is unprecedented in Korean
history, both in terms of the scale of the revelations, and the low level of
tolerance that regular Koreans are showing towards it.

I think in 20 years, people will talk about pre and post Park Geun-hye Korea
because the difference will be that important.

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archildress
Hard to imagine Tim Cook or Sundar Pichai being arrested.

It's an even bigger deal in SK than either of those guys, where Samsung's role
in the respective GDP is much higher.

~~~
h4nkoslo
Partly because they are involved in politics on a mostly cosmetic basis. It is
much easier to imagine a specifically politically connected figure (imagine a
John Podesta or Rick Perry level personality) being arrested for some sort of
corruption; in SK evidently those figures are also businessmen of various
sorts.

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chajath
It's about time Korea moves away from this oligarchical bs and embrace a true
liberal democracy and market economy

~~~
noobermin
Right, they should follow our lead in the west where we recognize that
campaign donations are speech and end up with the CEO of a major corporation
as the next Sec. of State. We don't just do bribery, we've legalized it.

~~~
AnAfrican
To be fair, that's mostly an American thing.

compaign donations are tightly controlled in almost all the rest of the West.

~~~
gambiting
Straight up illegal in Poland.

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bane
When South Korea was coming out the war, it was around the poorest country on
Earth. The generation who lived through the war, or who grew up right after
saw their country going from being literal rubble to being a global powerhouse
-- and lots of the credit is given to the dictatorship of Park Chung Hee and
the particulars of the economic development program he initiated. The downside
to that program, and much of it still exists today, is that is was designed to
operate in a way that tolerated lots of corruption in both government and
industry.

The <40 generations, who remember, at the earliest, leaving behind the
military dictatorship and emergence as a fledgling democracy are far less
tolerant of the excesses that the old system tolerated and want to raise
expectations, bring about accountability, "deconfucionize" the national
leadership (both political and industrial/commercial), and I think along with
that further diversify the economy.

South Koreans are tremendously entrepreneurial, there are many many small
businesses that are formed every year, and they operate in some ways in the
shadows of the offerings from the major conglomerates. The government, for
what it's worth, has been toying around with growing and promoting VC-like
startups to help formalize the grow-and-sell approach. But there's still a
tremendous disconnect and you find very few medium-sized, or even large
businesses, as the conglomerates tend to either out-compete or buy up all of
those companies.

From the normal person's perspective you find yourself trapped in a cycle of
"making it big" and getting into a salary-man's life with a big firm (and all
the downsides of that lifestyle), or doing similar jobs with less security and
less pay for tiny companies. Many people don't want either choice, they want a
third-way, even if they're having difficulty articulating this desire, and I
_think_ the country may be on the verge of this transformation into a more
fully diversified economy.

Superficially it's hard for outsiders to see or understand this, since you can
get all of the first-world fixings you would expect...except that they all
seem to come from the same 4 or 5 companies and it keeps the economy
perpetually trapped.

However, Korea's global position is precarious, cheaper manufacturing and
goods are an hour flight away to the West (China), and higher-quality
precision engineering is an hour flight away to the East (Japan). Korea has
neither the money, or population to really directly compete with either and
thus tries to use both the bulk of the conglomerates to act as economic gate
crashers into global trade and then massive cultural subsidies and funding to
push in awareness of Korean cultural properties and the network that comes
with that (oh, so you like K-POP? you'll love Kimchi!). Politicians are
rightly terrified of losing the relative power the conglomerates give the
nation as powerful chess pieces.

The recent presidential crisis and the continuing revelations of how corrupt,
and tied together the government and the conglomerates are has been a major
revelation to millions of young Koreans. This crisis could become a watershed
moment that could radically transform the entire political and economic
landscape in the country. It's not clear at all what that could look like or
if it would be beneficial for the country.

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otakucode
I have been convinced that NAND chips have been price-fixed for years now,
similar to how the exact same companies (Samsung a big one) involved in their
production price-fixed RAM chips and then LCD panels. A few years ago, there
was an investigation launched into exactly this. South Korea, however, closed
that investigation. Has anyone heard whether that investigation was closed as
one of the 'political favors' the bribes facilitated? Given the production
processes involved, the materials involved, and the sheer titanic scale of the
number of products which include NAND chips, it is absurd that we do not yet
have SSDs which are significantly larger, and significantly cheaper, than any
mechanical hard drives.

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patrickg_zill
The NYT once again disappoints. No mention of the 8 Goddess scandal?

It's almost as if the western media is deliberately avoiding the scandal, lest
anyone draw parallels to western corruption.

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JoeAltmaier
Reading this, it would seem the President of Samsung is more important to
Korea than their National President. One is mentioned in every paragraph; the
other in only one, offhand.

~~~
franciscop
There were HUGE protests [1][2] last year with the President of South Korea,
so people do not really like/trust their president right now. Also, I've
always been told by Koreans how Samsung is a great Korean company in a way
that it shows that it's a big national pride.

[1]
[https://en.wikipedia.org/wiki/2016_South_Korean_political_sc...](https://en.wikipedia.org/wiki/2016_South_Korean_political_scandal)

[2]
[https://encrypted.google.com/search?q=korea+protest&hl=en&tb...](https://encrypted.google.com/search?q=korea+protest&hl=en&tbm=isch)

~~~
devty
There is a hint of irony to this. Many Koreans (especially the younger crowd)
views Samsung-like chaebols with disdain not unlike many have towards Wall
Street, and yet getting an offer from one of these companies is a dream come
true.

~~~
noobermin
It is perhaps ironic, but not surprising. Familiar human nature shouldn't
surprise anyone.

I'm a damn lib, but a year or so ago, a fellow graduate student left to become
a VP at JP Morgan (he's a well connected fellow). I was damn well tempted to
follow him but I eventually decided against it.

