What Boy Band Sensation BTS Can Teach Us About Economics

but at the time it was a really good idea. Okay, So what's the point. What do you try other than other than reminding me that because of where you live, you get to eat much better food than me all the time, you're always posting about it. What is the

what else you're trying to tell me? Okay, Well, it was my first time in South Korea, despite the fact that I grew up in Asia and spent a lot of time in the region, and I learned a lot in just a few days in Soul and one of the things I learned, and this, this probably won't come as a surprise to anyone with the teenage kids, is that K pop is really really big in South Korea.

I guess I'm not really surprised that it's really really big in South Korea, but what I am struck by, and it's one of these facets of modern pop culture that I feel incredibly ignorant on. Obviously, as one gets older, particularly when it relates to music, you sort of grow more and more out of touch. But the degree to which K pop is this global phenomenon kind of blows my mind. I saw there was like I think I saw this, like there was like this piece on Axios

I saw a week or two ago. There's a band called BTS right that they're really huge. Oh my gosh, Joe, Yes, there is a band called BTS. They had a little story about how any time and any news organization does a piece on them, their traffic absolutely goes through the roof. So a as an editor, I was like, Oh, we should probably write more about them, be we should probably.

I'm glad we're sort of hitting on this in the podcast because maybe we can include it in the title and maybe we could get tons of listeners from their gigantic global fan base, like we deserve some of that some of that traffic bump. Oh, you're so machiavellian about this whole thing, Joe, so so listen. So I went to Seoul, learned a lot about K pop and K culture, came away with a minor addiction to a certain K drama, and then I started encouraging everyone in our newsroom to

actually write more about this stuff. And I got a little bit of a reputation for like, for being obsessed with K pop. But the reason I'm obsessed with K pop is not because of traffic, as you point out. It's because there's actually a really interesting economics and market story behind how K pop got so popular, both within

South Korea and globally. I'm really fascinated by this because, even excluding K pop or Korea's cultural exports in general, Korea has a history of sort of turning conventional wisdom, particularly around economics, on its head, and so all of the so called rules about how a country is supposed to develop its economy tend to die when you look at the Korean story of the country that's gotten very rich by at every step of the way, flouting expectations

about how things are supposed to be done, how you nurture a new industry, and so this idea of cultural exports fitting into a sort of broader Korean story is an incredibly fascinating one, right, And not just nurture any industry, right, we're talking about creative industries. So how does a country or government actually go about encouraging people to be more creative? That's what we're going to talk about today. So to

do that, we have the perfect person. She's a journalist and the author of a book that I read a few months before going to Soul. Her name is Uni Hong, and the book is the Birth of Korea Cool, How one nation is conquering the world through pop culture. So really everything we were just talking about. Uni, It's so nice to have you on the show. Hi, thanks for

having me. How are you good? Thanks? So, I guess just to lay the groundwork, it might be nice for you to give us an overview of where South Korea was a few decades ago, because I think nowadays most people are used to talking about it as this sort of tech powerhouse, you know, Samsung manufacturing of a big proportion of the world semiconductor chips. That's how most people know it. But just a little while ago it wasn't actually at anything close to that. Well, that's exactly right.

I mean, right after the Korean War which ended in nineteen fifty three, South Korea was actually one of the poorest nations on the planet. It was poorer than most of the South Saharan Africa uh and for decades it

was actually even poorer than North Korea. And that didn't really change until the sixties when President Parkdung he, who was the father of the former female president that was his daughter Park but parked On, he had this policy that basically was the birth of the birth of Korean cool, if you want to put it that way, and he was the guy who came up with the idea of

the Korean government cooperating closely with Korean private industry. So Ever since then, the government has assisted in the ecosystem that propped suth Chanday and Samsung and more recently, I mean President Park has been did for a long time, but his legacy continued well. Recently, the government is also propping up K pop, uh and uh K dramas and all of the what you would associate with the Korean wave cultural products, including makeup and movies and even food.

Oh yeah, I didn't even mention the face masks. I should have mentioned I bought so many face masks and soul so I made. I said at the beginning that what I love about the Korean development story is the degree to which it sort of flouts conventional wisdom about how a country can develop. And I think that if you talk to most Western economists, there's this view of, you know, open up free markets, don't try to pick winners and losers within the economy, don't try to have

centralized planning of key industries. And as you mentioned, uh, starting in the sixties, Korea's success and going from one of the poorest countries in the world to one of the richest countries in the world involved a heavy degree of intertwinedness between the government and the private sector. Oh yes, well that's spot on, Zo. And basically, South Korea is the only capitalist country in the world that can, when

necessary behave like a command economy. So, for example, in the US, you can't have President Trump forcing Apple to you know, stop making watches or that. You know, he couldn't say to Jeff Bez I was, uh, you know, I don't understand this throne thing. Can you please focus on books or something like that. But in Korea, the president and the government has always had the capacity to do that, and it's not by coercion or force. It's because Koreans on the whole belief that as the expression

goes a rising tide, boys all six. So that's the rule breaking that you're referring to just now about how they broke all the rules of capitalism. So with that sort of basis in mind, you actually wrote in the book that after the Asia financial crisis, South Korea made some of its best decisions ever. Can you walk us through that thought process and how they ultimately came to the conclusion of, Hey, we're going to make a bunch of cultural exports and make that a key part of

our economy, right exactly. I mean, um, most of Asia wasn't horrible debt after that financial crisis, and Korea was really hard hit, and it kind of doesn't make sense that they would conclude from that that they should then focus on popular culture. But the way that they got to that thinking is the crisis made them realize that

they hit put too many eggs in one basket. And one of the reasons that Korea was so hard hit economically is that their economy was overly dependent on the large corporations, which they called TiVos, and these are the multinational, highly diversified companies like Ken, They, Samsung and ld Samsung for example, I believe still makes up about twenty pent of the GDP of South Korea. And after the financial crisis,

the Korean government realized this is way too much. There's a way to us hanging on like two or three companies and if they default, which is what happens in a financial crisis, and the entire country this faults. And they said, well, what can we do prevent this from ever happening again? And what they came up with was, we have to change gears to do something, but we don't have to buy new equipment or machinery where we can act on it pretty much right away. And they decided, okay,

that's gonna be a pop culture. The inspiration apparently was Jurassic Park. There was actually a whole white paper presented to the Korean government on Jurassic Park and how in order to make the same proceeds as Jurassic Park, you'd have to sell fifteen million ten day cars. And they said we're in the wrong business. Well, I see what you're saying. So Jurassic Park, the movie, the enterprise of making Jurassic Park, not the enterprise of bringing dinosaurs to life,

was the inspiration. Well through that's happening too. I mean, genetics is a big thing. But the basic gist is cultural exports can be gigantic money makers and ultimately, if you nail it, do not require a lot of capital, so incredibly high margin. And so the basic idea is, whether it's music, whether it's TV shows, whatever it is, if you can find that secret sauce to replicate that, that is an extraordinary efficient way to get in dollars or money from the rest of the world. Yeah, that's

basically what it came down to. Low, low overhead, a fast learning curve, and the rest is luck and hard work. So what did they do to kick it off? I mean, so it's like, Okay, the math makes a lot of sense, We're going to make a fortune on cultural exports, but how do you actually jump start that? What? How did the plan take shape? Right? And the question that you're probably thinking but haven't asked it is what were they thinking? This is every thing? Well, the number one off obviously

that all Korean pulps. Top culture is in Korean and it's only spoken in Korea. And uh what it started with dramas. I mean, right now, it's the music that gets all the attention, but the Korean waves started with the soap operas. And what happened was in the ninety nineties, the South Korean Chamber of Commerce in Hong Kong tested the waters and thought that it might be a good

time to experiment with showing a Korean drama in Chinese. Now, I mean, now, there's so much med for k dramas, but at the time, there was zero interest in it. So they approached the Hong Kong TV networks and the networks said, well, there's no audience for this, you know. The Korean Chamber of Commerce said, well, we will pay for the sun titling, we will pay for the dobbing, we will pay for everything. And they said, okay, that's just the production costs. You know, there's also the question

of advertising. So the Korean Chamber of Commerce said, okay, well we'll take care of that. To all you have to do is press play. So the Korean government basically subsidized the translation of these of this drama into Cantonese and also Mandarin, I think, and they sold all of the ad times so that the Hong Kong TV network would not have to do anything. And then, to everyone's surprise, or at least some people's prize, the drama did really well.

And then the government started paying to translate more and more and more dramas, and now it's sort of a self feeding deaf. But the government never really completely got hands off, and that's why the Korean waves didn't end, you know, ten years ago. Um, they're still paying to translate them into languages that are more obscure because that they sort of see these emerging markets as being extremely important. So they're not just focusing on the languages that have

lots of speakers. They're focusing on areas where people will someday be able to I Samsung phones and L the TV and they'll already have built loyalty to the brand that is Korea. So the culture, the cultural exports are basically a sort of like first step towards other types of exports. Is that the idea, Yeah, that's right. Actually, it's not that the pop culture feed into industry or

that industry feed into pop culture. It's actually everything. At the same time, it's considered to be a whole ecosystem. So it's not that K pop is a delivery system to sell phones. I mean that's also true, but the phones are a delivery system to sell k pop, and the makeup is the delivery system to still all of the above. And it's kind of like a snake binding its tail, which actually is sort of the business model for the chip. But they have they don't have wholy

owned substidiary in Korea for these big companies. It's sort of this company on its part of that company. If you draw the structure, it's not a pyramid, it's a wheel. And that's actually how the whole economy operates, and that is how the whole Korean wave operates, in tandem with the government, in tandem with heavy industry. So if you think of it not as a pyramid but as a wheel,

I think it starts to make more sense. So I have a question about how some of the cultural exports play on the ground in South Korea, because I heard when I was having lunch with some colleagues and Soul that, for instance, BTS wasn't even considered that popular domestically until they sort of enjoyed great international success and then they were recognized as as a group that was doing something for South Korea as a whole, and then they started to get really big in South Korea itself. Is that

how these things generally happen. Mostly it's the other way around. I would say BTS and Thigh, of course, are examples of musical acts that we're not everyone's first choice when they imagined what would be the breakthrough. One big surprise to me and everyone else was that the acts that became really popular were not the girl band because I

think that the Korean industry. I can't prove it, but I'm pretty for that they were angling to make the you know, the cute, sexy baby whoever, bubblegum pop girl band, like you know, girls generation. I think I think that that was what they were pushing for, like the the you know, the pussy Cats dolls, but minus ten years or something. I thought they were not thinking that it was the boy bands that we're going to be popular for. So here's what I'm having a hard time wrapping my

head around. And I think your answer just now sort of gets at it. You know, when you think about like sort of developing a homegrown semiconductor industry allow the growth of Samsung, you're like, okay, well, if the chips are a very high quality and they're of competitive price, someone's probably going to buy them. Like that's clear. If you can show on the specs that the chip is fast and you can make it cheaper than some competitor,

it'll sell internationally. With cultural exports, you know, there's no way to be objectively sure that the taste is going to connect. So I mean, you know, the big size song that blew up, it could have just been a novelty that people talked about for one day and then moved on. Like there's nothing objective you could say, Okay, this song is better than others, and this song deserves to have major market share. Or as you pointed out, maybe they thought the girl bands were gonna do better.

It turns out that it was the guy band. Beyond even the language question, which is its own issue. Why did they think their aesthetics would resonate and do well internationally? I admit that that's kind of a black box, and everyone anyone who says they know exactly how this happened is actually just lying, because you know, the quest how to make something viral is like how to make you know the immortality pill. It's if everyone nobody really knows

for sure? How how did death Didymota become a millionaire before she was twenty? If you if you said that you knew that was going to happen, I don't believe you, right, But I think that what they did have that was going in their favorite is that it's sort of the advantage of the underdog because South Korea has been as they like to complain and or bragg they claim that they have been invaded eight hundred times in their five thousand year history, and that they have never attempted to

colonize anyone else. And they spent most of their history being um ransacked by Mongols and Manturion and of course there was a long period of colonization by the Japanese and they didn't have any autonomy over their fate. Roosevelt basically decided that Korean would go to Japan instead of Russia. He signed this this tree d and names the hotel somewhere and Rioms didn't even really know about it a layer um and so obviously this is you know, sort of getting kicked around a lot. I mean that that

happens to you kind of pay attention. It's a survival thing. As a result of this underdog status, they had to always pay visual attention into what was going on. So for example, when they were a colony of Japan, they couldn't just do whatever they wanted, but they also wanted to retain some Korean autonomy, and in order to balance that, they had to just pay attention to nuances, to reading the room um on a global and national annox the

global scale. And that's what they did when they were trying to develop these k pop songs and how could we make this catchy? How could we make this global? And they just I mean the answer is kind of boring. They just studied. And there are books that I was given published by the Ministry of Trade in various government sponsoring industries explaining how to approach different cultures based on their own local more So, for example, there was a

sext and on the Muslim world thing. So for example, if you're going to air a drama in a prey dra predominantly about the Mason, these are the times that they pray so don't air it during those times. This is rama done, so this is when they're eating some you know, in the evening, so maybe it's not the best time to premiere in evening drama. They're not gonna show lots of kissing and stuff, so don't have any

of that. And they just make careful and careful, careful studies of all of this in order to distill what they what people wanted. And in the k dramas, the formula is they realized that there was need for people to feel things and actually have people crying a lot and being really miserable and not everything having a happy ending, and which is sort of the opposite of you know,

the Hollywood formula. And until the popularity of things like cream dramas and also telenovelas, I guess most people didn't realize that there was this yearning for stories that would make people cry cathartically and you know, na every everything being okay in the end. And with K pop, I don't know if there's one formula, but they they just sort of buy things from different sources and they package things extremely well. So you probably know that the world

songwriting factory is Sweden. Yeah, I mean, not just everyone thinks ABBA, but I'm not talking ab. I'm talking about people who write there like Britney Spears of most famous hits and stuff wore they're they were They're all written by Swedes, so Korea bibes the tunes from them, and then they do the lyrics, like you stuff from somewhere else, and they get choreographers from America or you know, the French ballet or something, and you know, they're not afraid

to mix and match. They're not worried that this is gonna look like a Frankenstein, you know, like piece together songs. They're just like, no, no, this is gonna work. We're just gonna do this. Yeah, the genus is in the packaging. I would say people forget as well that before k pop, there there was j pop, right, there was Japanese pop in the indies which was incredibly popular. So it's not like K pop came out of nowhere. There was a little bit of inspiration, let's say, for it to graft

itself onto and then adapt. But that kind of brings me to my next question, which is, I guess when you're talking about creative industries, they're constantly changing and people are constantly trying to one up each other, and recently we've seen China in particular make a lot more effort at, for instance, coming up with dramas. We've seen Netflix signed some deals for for various Chinese dramas recently as well. How long can Korea maintain its edge when it comes

to cultural exports. I don't know, and I don't think it matters from their point of view because they're I mean, just the Korean expert metal, extremely adaptable. And I don't think that even they think that the Korean wave is gonna last forever. Historically, no music or pop cultureure and really last that long unless you constantly constantly reinvent yourself, you know, like mcdonna or something. Um, I don't think that they're counting on this to put bread at the

table for a very long time, if I'm honest. It's just what they want to do now, and it's basically about building Korea as a brand, not necessarily a K pop or any of those things as a band. So, I mean, if you wanted my honest opinion, I would say it's probably gonna tie out. I mean, the creawave is probably gonna die out. In terms of pop culture, and the Korean industry will simply adapt whatever the next

need is. It's you know, it might be biomedical engineering, and it might be continuing and entertainment, but focusing on technology. I know that there's some government sponsored labs that are trying to develop really hyper realistic hologram for example, so like you know, it's like if you look behind the hologram, you can see the person's back, and if you look in front of the hologram, you see the front where his current hologram technology, if you look to the side

of the hologram, you can't see anything. But so Korea is trying to make fully three D holograms so that you know, not only can you have like Michael Jackson appear from the dead as a hologram, but you can also have a surgeon. You know, Mount Fine of Hospital and new are demonstrate open heart surgery to people all over the world via holograms, and you know they can sort of it's almost like they're they're in there in the room with him. So you know that maybe you know,

is less interesting to teenagers then BTS. But Korea will will always be trying to reinvent themselves, and they don't hold onto things. I think it's a very important national chage in terms of their ability to adapt. Um. I'm not talking up emotionally, I mean emotionally. They're really no for holding on in terms of industry. If something doesn't work, they're the first to abandon it and pretend it never happened. Tracy mentioned in the intro issue just in soul and

had some great Korean fried chicken ten years ago. I'm pretty sure I've never heard of Korean fried chicken, and now I love it. And there's all kinds of change that have opened up in New York City that sell Korean fried chicken. Everyone I know like that. How much has U This sort of the emergence of Korean food internationally also been part of the same government effort. Well yeah, I mean people would be surprise to learn that I think Korean food is good, and then when people try

it they often like it. But the fact before you have people try, you have to have it available. The supply has to be there, and that is where the government steps. Then they put a lot of money to sponsoring food fairs. A big program that they have is these staff scholarships. I guess you could call them the government sponsors international stuffs and not the state of one, but of any level to come to Korea for free, stay there for free, and learn Korean cooking techniques for free.

And the idea is not necessarily as they go back to their home country and open a Korean restaurant. But maybe you'll see Korean cold flaw or something or real I state, but you know, a standard American restaurant quote unquote, but with Kim t doue. And guess what, I've seen all of these things, you know, And um that about saying those stuffs actually went on these trips. But that is the kind of thing that can only happen if

somebody is making it available to them. I have a big picture question, which is how much of the sort of special Korea economic model is replicable in other countries, Like how much does the South Korea miracle, this idea of cultural exports depend on the particular nature and structure of Korean society or could any emerging market do what

South Korea essentially did well? That is sort of the big question is that can you bob in stellds and I mean I kind of to minds about that because, on the one hand, if it were that easy, somebody else would have done it already. You know, there are plenty of underdeveloped countries that could have done this and they didn't. But does this mean that only Korea could

ever do it? I mean probably not. What does make them have an advantage that would make it hard for other countries to do it is, as I said, they have this hybrid capitalist command economy mentality. I'm not aware of any other country that has that structure where the government could state, Okay, we want a pop industry tomorrow, so we're going to requisition funds immediately to build a stadium.

I mean here, you'd have to have so many here meeting the United States, you have to have so many levels of approvals and vote and it goes to the n e A and then you reply and it would take you know, years, and then you have the requisitions this fund and that fund in that license. And in Korea it happens very very fast because industry and government are in cooperation. Nobody else has that. I mean, China has a command economy, but they don't have the cooperative spect.

It's just too big a country. It's centralized. They don't all speak the same language, they're not all the same religion, they're not even all the same ethnicity. Hind of the country that would be most likely to do it, but they can't for sort of the honest lack of you know how much. So I have a related question, and it gets back to what we were saying in the very beginning about Korea having broken all the rules of development.

And one of the reasons that people are economists in particular are skeptical of centralized command decisions from the economy is because they figure that bad actors or inefficient actors will get propped up. Chrony is m essentially so maybe some company gets big and it gets in with the government, and even if their products start losing competitiveness, it doesn't matter because there's so much corruption and there employ all

these people and they can't be let to die. And one way that I know that Korea helped solve this problem is by sort of using the export market as the test. So the companies that thrived in export industries were given more help, and companies that couldn't find a compelling export markets they didn't get the same level of aid. And so the export market was sort of used as the ultimate test of who should get aid or who shouldn't.

And I'm curious about the cultural front, some of the same tactics were used, so that whether it's directors of soap operas or writers of songs, where's the kind of thing where you nurture the winners and if they show some formula to work, then they get more support. And if a writer or director couldn't find make it click, then they sort of over time didn't get the same support from the state. Oh, I think it's absolutely a rich get richer kind of situation. And what you're saying

is exactly right. They used the export figures as the litmus test for the viability of something. Um, the country is too small for them to rely on local consumption cleric economy. They almost don't even care about that at all. And like I said, because they're a small country, because of their history, they've always been very, very very outwardly focused for their survivals. So what you're saying is exactly right.

Like if you can't make it outside Korea, you can't make it in Korea, even if you are making it in Korea kind of thing. All right, Well, Uni Hung, the author of the birth of Korea. Cool. Thank you so much for coming on. Thank you, and that was really great. I really enjoyed it. Thank you was the pleasure to be here. So Joe I found that conversation really fascinating, not just because we got to talk about pop culture for once on this show, but also because it kind of it did put me in mind of

the conversation. Do you remember the one we had about China made in initiative and whether or not China could sort of encourage or sort of foster and innovation economy when it came to tech. It reminded me a lot

of that. You know. What it reminded me of was not that episode, but the one we did recently with a Fottle kaboob about MMT within the emerging market context, because so much of what he was saying was again this kind of stuff that like really flew in the face of conventional wisdom about how a country developed, and he was making the point He's like, Okay, first, absolutely, you have to become food self sufficient and so forth.

And I just think that, like, there are so many areas in which we accept conventional wisdom about economic development or commerce, and one of them absolutely. I would have never imagined that you could have sort of by design, manufacture a successful cultural export category. And yet there you go,

Korea did it right. And if you think, like if someone had written, you know, post the Asia financial crisis in the late early two thousands, that South Korea was trying to develop a cultural export economy because it was trying to replicate the success of Jurassic Park, I think there'd be plenty of people out there that would have thought they were absolutely crazy for a number of reasons. No,

I mean it's crazy. Like I listened to like a BTS song this morning and I wasn't in English, and your verdict, it just wouldn't never occurred to me that that could be for the language reason alone. It would not have occurred to me that it could be one of the highest charting songs on Spotify's global hit list. It just it boggles the mind that it's real, and yet it is real, and all these other things that Korea has done aren't supposed to be how it's done,

and yet they continue to do it. So I just love, like how many preconceived notion Korea is destroying. Yeah, alright, So if there's one takeaway from this entire episode, it's that K pop is a serious end economic matter, right, and I hope BTS is millions and millions of fans. I'll listen to this episode. Yes, BTS, BTS Army. Sign up to odd Lots, subscribe on your choice of player. This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at

Tracy Alloway, and I'm Joe Wisenthal. You can follow me on Twitter at the Stalwart. And you should follow our guests, the author of Birth of Korean Cool, Uni Hong on Twitter, She's at Uni and don't forget to follow our producers Laura Carlson, She's at Laura M. Carlson. To for Foreheads is at four Hest and the Bloomberg head of podcast, Francesca Levy at Francesca Today. Thanks for listening.