The destruction of a nation has typically been caused by three factors in the past: conflict, internal political divisions, and disease outbreaks. Historically, these factors have created a trend in which countless nations rise and become world powers, only to collapse inevitably. The Roman Empire collapsed due to constant conflict and political strife; the British Empire collapsed as the World Wars and growing independence movements weakened its influence on the world stage; and the Soviet Union suffered a similar fate as its political system proved to be a catastrophic failure.
There is good news, however, in that these factors have become less prevalent as our world modernizes. Many nations have now adopted more free and democratic governments, and thus there exist fewer world powers and therefore less conflict, as economies evolve and shift to strong, market-based systems that ensure vibrant competition and the creation of wealth. The bad news? Modernization and the 21st century have destroyed the cultural traditions and basis a nation depends on, creating a fourth and most recent factor of a nation’s collapse: declining birth rates.
Now this brings up the dilemma South Korea is currently under. According to statistics from the World Bank and other international organizations, South Korea's birth rate in 2024 is an outraging 0.72 births per woman. This birth rate is astronomically low, as seen when compared to the average birth rate globally, which is approximately 2.27 births per woman. South Korea is the only nation in the world with a birth rate of less than 1, though a few nations such as Ukraine and China are following suit.
A low birth rate causes severe consequences for a nation, such as rising healthcare costs due to an aging population (South Korea currently has the largest aging population), a lower labor force participation, and a general population shrink threatening a nation’s survival. The recommended birth rate to maintain population growth is currently 2.21 births per woman, meaning that South Korea needs a radical change in its society to maintain population growth.
There are several causes for Korea’s declining birth rate, such as rising economic costs, changing cultural stereotypes and traditions, and the work/family environment. Several policies have been passed by the South Korean government to combat the declining birth rate, such as financial incentives for married couples $300 billion on cash subsidies and childcare, extending parental leave from 12-18 months, and even cutting mortgage rates. However, as shown in statistical models, South Korea’s birth rate continues to decline. It seems quite clear that government intervention and subsidies continue to fail as a policy, an economic phenomenon known as “government failure,” i.e. when regulation and intervention cause economic inefficiency.
Government subsidies, regulations, and controls often have “unintended consequences”, where well-intended policies tend to have negative effects on the groups or classes of people the programs were established to help. For example, subsidies tend to disorient markets and price signals while cutting mortgage rates decreases the supply of available homes, leading to further economic struggles. With the inefficiencies of Korea’s policies to combat the declining birth rate, South Korea’s government must take the initiative in tackling the core economic problems that cause a declining birth rate: rising costs.
To combat the rising costs of essential goods and services needed for childcare, the South Korean government should adopt a more economically liberal approach to economic policy: for instance, decreasing taxes. South Korea currently adopts a progressive tax income system, meaning that the tax rate increases as income increases. As a Libertarian, I believe that taxation should be reduced to a minimal fiscal requirement needed for limited government intervention. South Korea should reverse its progressive tax income system, which is generally harmful to economic growth, and adopt a “Fair Tax”, which would replace all forms of conventional taxes (property, income, capital gains, etc.) with a national sales tax. This will increase economic growth, disposable income, and productivity gains, all adding permanent wealth and income to South Koreans, alleviating worries of costs and high prices. Other policies that will increase economic growth will be Central Bank accountability to reduce inflation, eliminating regulations to increase production and investment, and strengthening property rights to expand commerce.
South Korea is currently viewed as a form of “utopian” paradise. We see South Korea as a bulwark of technology, entertainment, and K-Pop. However, underneath this illusionary veil of prosperity lies a nation with issues that threaten the social and political fabric of Korea.
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