Prof Leipziger puts his finger on the challenges facing Korea. A few things to clarify: 1)Central govt debt of 37 per cent is widely misleading -- the Korean Govt has shrewdly taken public debt off their balance sheet by pushing them down to Govt-owned businesses whose combined debt is near 100 per cent of GDP, 2)Korea's prospect going forward can only expand public expenditure on providing health and income transfer -- a guarantee for marginally increasing debt level.



Prof Leipziger, in saying the country's capital stock is adequate, makes the mistake of seeing the forest and missing the trees; most of the capital stock is held by pension funds with defined payout schedules, and the majority of the rest is held by 30 or so families who control chaebol groups. Most everyone else is deeply indebted and cannot access capital for investment.



Finally, the chaebol group families -- especially the Lee and Chung families who control Samsung and Hyundai Motor respectively -- have captured the Govt, the press, and their own capacity to innovate by turning bureaucratic. With their iron grip on the economy and resources of all kinds, the chaebol groups have begun to hurt prospects for growth for the country and for themselves now.

