Netflix's Squid Game Is a Tale of a Debt Society

After staying up all night to watch the entire Netflix series Squid Game in one sitting, I may finally understand why it’s become such a global hit. A deeply unequal society where the debt-ridden underclass gambles their lives away for a financial jackpot could be a description for any number of countries, not just Korea, in this new gilded age.

But some details in the show are distinctly Korean, like a South Asian migrant worker owed months of back wages by a callous Korean boss (a familiar tale in local news), a struggling North Korean defector (a frequent target of discrimination as a group), and a factory worker forced into early retirement ten years ago and down on his luck after opening two eateries that fail (a common scenario following the 1997-8 Asian Financial Crisis).

The name of this last character Seong Gi-hun’s fictional automotive company employer—“Dragon Motors”—is even an unambiguous reference to the very real South Korean firm Ssangyong (“Double Dragon”) Motors, which underwent restructuring 12 years ago and shed some 2,600 jobs. Ssangyong unfortunately is facing another bankruptcy and looking for a buyer right now.

But the most 'Korean' aspect of the show, at least in my view, is the use of personal debt as a plot device. Few foreign media seemed to pick up at first on what 빚—as Koreans call a loan—signifies in the Korean context, and why some might risk death to pay it back. Seong's situation illustrates the harsh reality. On paper he owes 70 million KRW (59,000 USD) to loan sharks who make him sign away his body as a collateral (for organ harvesting). But later we hear that he in fact owes 160 million KRW (135,000 USD)—more than double the principal. Korean viewers can easily guess why: it's not unheard of that private lenders apply illegally high interest rates (as much as 300 percent). Some 400,000 South Koreans are said to be in thrall to loan sharks because they don't qualify to borrow from legitimate financial institutions.

Korea is a heavily indebted society, not because it's so easy to take out a credit. Interest rates for borrowing are high even at the four major retail banks. More than 4 percent is considered usual though with a home as collateral the rate may fall below 3 percent—if one has no other outstanding loan. (In comparison German banks are currently offering something between 0.6 and 2 percent, depending on the borrower.) When banks turn one away, borrowing may still be possible at the so-called "secondary banking establishments" (credit unions and insurance companies). There, one can expect rates between 7 and 20 percent. High but legal.

Credit card loans, usual in Korea, accrue around 13 percent in interest. Many who can no longer borrow from or have no money to pay back these legitimate institutions turn to private lenders (Kr. 사채업자), i.e. loan sharks, who provide short-term respite but end up inflating the debt manifold through exorbitant triple-digit rates. Since the practice operates outside the law to begin with (as of this year 20 percent is the highest interest rate allowed by regulators), such lenders also have no qualms about resorting to shady means for recovering their money.

The 'players' of Squid Game fit this profile of desperate borrowers trapped in debt bondage.

Korea looks rich but its debt crisis is worsening and the show is keen to depict it. In one scene a TV blasts a news report about growing household debt. It is "increasing at the second-fastest speed in the world," reads the caption but the actual problem in real life is even direr: Korean household debt is now equal to the country's annual GDP (in Germany and the US the household debt-to-GDP ratio is 0.59 and 0.8 respectively, I read).

A Korean friend confessed to me last year that he was living precariously from a pay check to a pay check. I was shocked. He is a white-collar worker at a well known company. He doesn't strike anyone as extravagant. He has an apartment and a car. He travels sometimes with his wife and children. Even this seemingly middle-class lifestyle cannot be sustained with his salary alone. "It's all paid for with loans, I am telling you," he shrugged. "We just have no money."

Naturally he also cannot pay it back in full and is using his credit cards to meet only the most urgent payment obligations.

Then there are Koreans who borrow money to invest in risky assets like cryptocurrency and to buy stocks and real estate. The Bank of Korea is warning that all this has in recent years fueled the debt crisis even more.  This is fine as long as asset prices stay high. But if the prices fall—as it's expected when the benchmark rate keeps rising and borrowers default on payment installments—Korea may become a squid nation full of debtors.A real squid game may not be so far-fetched at that point.

Cover: the promotional image for Squid Game from Netflix