The Middle Kingdom

R. B. Laughlin
Korea Advanced Institute for Science and Technology
373 Guseong-dong, Yuseong-gu, Daejeon 305-711, Republic of Korea

Chosun Ilbo, April 23, 2005

Many of us who have raised families know how true it is that birth order affects a child's personality. A great deal has been written about this effect. It is often argued that the cause is "economic," in the sense that children blocked from parental attention by "business tactics" of the older siblings tend to develop alternate strategies for getting what they need. These strategies then become incorporated into their personalities. The first child is typically a "take charge" individual, an executive who gets things done directly, right and on time. The youngest child tends to be charming and manipulative, a person who immensely enjoys getting his or her own way, and usually succeeds. But the truly interesting case is the middle child, a person who feels overlooked and forgotten by parents more interested in the "flagship" first born and the darling baby. The middle child often looks outside the family for meaning---a risk taker attracted to unconventional clothes, unconventional activities and unconventional ideas. Middle children tend to handle disappointments better than their siblings, to be empathetic on account of their family circumstances, and to be good negotiators. Famous examples of middle children are Jay Leno and Donald Trump.

A few weeks ago I was at a party in San Francisco talking to an ex-student of mine who manages a $500 million hedge fund. The subject eventually turned to Asian investments. When the right moment came, I asked him what he thought of Korea in comparison to China and Japan. He pondered for a moment and then replied that Korea seemed to him to be a country without a business plan. I was shocked by this remark, since I knew how untrue it was, but I continued to listen carefully. He said that China was clearly the where the growth in low-end manufacturing would occur, since China had virtually unlimited sources of cheap, high-quality labor, and that Japan seemed to be leading at high-end technology. He said his company had been looking for good investments in Korea for the past year and had found very few.

Whether this conversation was a fluke or representative of global investor thinking, it strikes terror in the hearts of most Koreans, whose worst nightmare is being squeezed out of prosperity by their two powerful neighbors.

However, while these fears are justified, my best guess is that they will turn out in the end to be irrelevant, like those of a middle child. The low-end and high-end markets may well be foreclosed to Koreans in the long run, for no amount of wishing or hard work can reverse the laws of economics, but the point is that there are other markets not yet discovered that are just as good. Middle children have been finding these markets since time began, and they seem to have done all right.

I actually suspect Korea is destined to become a kind of Middle Kingdom of northeast Asia, a international version of the middle child in a nuclear family. The reason is not any special cultural or genetic trait but simply that accidents of birth have taken away all options except innovation. For a middle child, the way forward is preordained by human nature and involves responding to blocked options in unconventional ways---such as bungee jumping without asking your parents or crossing the ocean in three little boats. For Korea I think the same is true, although it may be difficult for most Koreans to see at the moment because the idea of embracing risk clashes so strongly with their predilection for stability and safety. However, they would do well to remember that a middle child is never safe. Also, even the most venerable civilizations have had moments of trouble and come out all right. After a brief time of hopeless political chaos, for example, ancient Egypt rose up to form the first Middle Kingdom. History records that it blossomed into a golden age of art, literature, commerce and prosperity.

[Copyright 2005 R. B. Laughlin. The author grants permission to copy, distribute, display, and perform this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.]