[Opinion] The Peak Theory of Economic Growth and AI

The claim that the Japanese economy has peaked, known as "Peak Japan," was first raised in 2019. Brad Glosserman, a senior fellow at the U.S. Center for Strategic and International Studies who authored a book with the same title, spearheaded this argument. He stated that Japan's political sphere is incompetent and its citizens are powerless in overcoming issues such as an aging population structure.

The "Peak China" perspective emerged last year. Professors Michael Beckley (Tufts University) and Hal Brands (Johns Hopkins University) co-authored the book How China Fails, where they argued that factors like population, U.S. sanctions, and resource problems would hold China back.

Recently, warnings about "Peak Korea" have also surfaced. The Japanese economic magazine Money1 published a bluntly titled article, "Korea is Finished," claiming that Korea's growth rate continues to decline due to population decrease.

In fact, Money1's article lacks credibility and weight. It contains harsh and sarcastic remarks such as, "Korean media talks about 'Peak China,' but it's not the time to worry about other countries," "Korea hopes to enter the 'G9,' but it's impossible," and "I have said it many times, Korea's growth era is over."

However, the point that Korea's growth rate is continuously declining is a painful truth. It brings to mind the "5-year 1% decline rule." Professor Kim Se-jik of Seoul National University's Department of Economics expounded this rule (research finding) in his 2021 book Imitation and Creation. He showed that Korea's long-term economic growth rate has steadily fallen by 1 percentage point every five years since the early 1990s. He emphasized that this rule is so powerful that no government has been able to stop it over the past 30 years. He also warned that if this continues, Korea will face the worst phase of long-term growth rates in the 0% range. Last week, at a symposium, Professor Kim continued his warning and appealed that nurturing "creative talents" is the only solution.

The three countries of Korea, China, and Japan, once praised as "The Century of Asia" (McKinsey) and "The Age of Asia" (world-renowned investor Jim Rogers), are now consecutively labeled with the term "peak." A noteworthy point is that the word "population" commonly follows both the causes and the countermeasures.

Economic growth (production) is a function of technology level and productivity. Productivity, in turn, is determined by capital and labor. Peak theories converging on the "population" issue focus on labor productivity. Ultimately, it is a matter of the quantity (population) and quality (human capital) of labor.

The population cliff, an urgent issue for Korea, is the greatest obstacle to sustained growth. Professor Kim's call for "creative talents" is a desperate cry about the poor reality of human capital, where only "imitative talents" abound.

The recent global debate on AI is directly linked to population and labor issues. If general-purpose AI (AGI) that thinks like humans emerges and replaces humans, the labor market and the global economy will face a paradigm shift.

American novelist William Gibson famously said, "The future is already here ? it's just not evenly distributed." Digital thinker Ray Kurzweil predicted, "By 2040, artificial intelligence will surpass humans," naming this moment the "Singularity."

Currently, AI technology is evolving rapidly with quantum leaps. It may have already passed the singularity. If so, there is no hope if countries respond to the peak theories with outdated frameworks. The message is clear: in this emergency situation where "AGI is already here, but we just don't recognize it," ordinary responses are doomed to fail.

This content was produced with the assistance of AI translation services.