Squid Games

Hwang Dong-hyuk

Squid Games was a fascinating, yet gruesome, look at the problem of consumer debt. When people get into massive debt, they become desperate to absolve themselves of it; in this case, they become desperate enough to engage in violent games where they are killed for not being successful or kill each other to get ahead.

While the State is not present in this show other than 2 lazy, useless police officers and 1 detective who lost a brother and suspects that he might have been killed playing the Squid Games, the State has a central role in the distribution of and the ease of which it is for individuals to acquire debt.

Central Banks

The Bank of Korea in the show is the organization who most of the players owe money to. Some owe money to the mafia, and others owe money because of stealing and crimes they have committed, but the vast majority of Koreans get their debt the normal, old fashioned way: credit cards, loans, mortgages and other financial mechanisms issued by the central bank.

Central banks and their credit expansion policies have been the core criticism of the Austrian Economists from Ludwig von Mises to Murray Rothbard to their current students today. There is good reason for this: central banks cause the business cycle, distort the interest rate, discourage savings/increase spending, encourage profligate resource use beyond the means of reality, increase environmental degradation, destroy the value of money and therefore of people’s current savings, disrupt the price system and distort economic decision making based on those prices, and, probably worst of all, enable the government to spend massive amounts of money on programs and especially on wars that would otherwise need to be financed directly via taxation. When taxes are raised for costly wars, people tend to question the rationale and the reasons for going to war, but when money printing is used to finance wars, the costs are obscured to the individuals in society and blamed instead on “mystical” market forces such as inflation or greedy capitalists.

Not having time to delve into all of these extremely detrimental affects, let’s focus specifically on affects that central banks have on the individuals in Squid Games: a focus on consumption instead of spending, and a sense of desperation, massive risk toleration, gambling, and depression.

In a free society, credit can only be available as a direct result of people choosing to save their money. The interest rate is a price; when it is low, it is a signal that a society has saved a lot of their resources for the future and have lots of current resources available for future use. When the interest rate is high, it signals the opposite: namely, that society has spent up many of it’s resources and has very few savings to apply towards future oriented goals.

When the interest rate is low, credit is abundant. As more people borrow current money, the interest rate will rise because the rate of savings has now been decreased; those savings previously available are being used now towards something such as consumption, production, or both.

When the interest rate is high, credit is scarce. It becomes very difficult and unprofitable to take out larger loans, as paying it back is so costly. A high interest rate is indicative that there is very little savings, but this also encourages more savings! The more that people save, the higher they will return in interest, thus it encourages savings which will then lower the interest rate back down. The supply and demand of savings vs credit then fluctuate in a beautiful symmetry that tries to meet at the point where people prefer things in the present vs. prefer things in the future.

Therefore, a society of mostly savers will paradoxically have more credit available to them than a society of mostly spenders. A spendthrift society can only spend so much, however, as the interest rate will rise to dry up the pool of available credit and cut people off from spending more than they are able to.

This is all well and good and indicative of the market checks that capitalism places on individuals: if we save a lot, we can spend a lot. If we spend a lot, we can only spend so much before we have to start saving again.

Enter the central banks. These nefarious agencies attempt to manipulate economic reality by making credit available even when savings is low. By adjusting the money supply (i.e. by printing money or otherwise by increasing the total number of monetary units in the economy), they push the interest rate down artificially. As this happens, credit becomes available in the form of the newly created money AND the interest rate stays low. They attempt to reverse all of the checks and balances on saving vs spending; they make it so that spending is possible without the corollary prerequisite savings that need to be accumulated before spending can occur.

This causes immense social consequences; see above. For a closer examination outside of the scope of this article, please see Mises’ “The Theory of Money and Credit” and Rothbard’s “A History of Money and Banking”.

For those caught in our Squid Games, the consequence is desperation. They become addicted to the easy money; the loans give them the ability to purchase goods in the economy without having to work hard for them. They keep jumping from loan to loan, all widely available as the central banks hand them out like free candy. They use these loans and whatever other money they can gain in the moment to try to get more money with risky ventures such as gambling or stock markets.

This easy money also influences the employers, who get loans to pay themselves but refuse to pay their workers. These loans are not part of a productive, profit oriented business model; they merely kick the can of unprofitability down the road. For example, if I am losing 500$ a month at my business, but I get a loan for 5,000$, I can put off making reforms to my business model for a full 10 months before I have to either get another loan or do the hard work to alter my business model to be profitable. Unfortunately, it may be too late at this point to realize that my business could never be profitable, and the easy credit and money I received has made that reality invisible to me for far too long.

Where is the long term planning? Where is the hard work that comes with building something and providing it to other people as a product or service? Where is the self control and discipline necessary to live within my means, to only spend as much as I’m able to bring in, and to be realistic when it comes to my economic capacity? Central banks wish all of this away in a swirl of credit that obfuscates and deceives people with the siren song of living far beyond their means with no cost or accountability.

The fact is that without central banks, the easy money experience of many of these people would simply not be possible. Unending, free flowing credit would not be there for them to take advantage of in the first place. Far from being detrimental, however, this would cause people to focus on the reality of what they are able to do and aren’t able to do and to grow their skills and ability to serve other people better and, by doing this, then be able to spend and save more.

The Mafia

The other major lender in this series is the mafia. These loan sharks hand out loans and use a much more ruffian approach to collecting their contracts: they beat you up and threaten to kill you for repeated non-payment. This seems a bit worse than the banks taking your property for loans you can’t pay back.

The mafia, however, makes it’s money almost exclusively in black market operations that the government has forbidden. Similar to drug cartels, the money that mafias use for loans is made via prostitution, gambling, and other illicit / illegal goods and services. It’s important to realize that this income stream is only possible because the government has forbidden these things and created the black markets in the first place; it is the act of banning the services that people demand that creates the power of mafias.

The drug cartels in Mexico get all their money from the drug war that the US has put in place. The war does nothing to decrease demand; people want drugs and are willing to turn to the black market absent any legal channels of acquiring them. This causes massive amounts of money to flow to the drug cartels with which they can purchase local police agents with bribes, weapons, friends, anything they want.

Moreover, because cartels and organized crime rings operate in opposition to governments, who are constantly trying to use violence to subdue and destroy the cartels, only those who are extremely capable at violence, deception, and other dastardly skill sets will succeed in this field. Hence, violence follows cartels around everywhere they go.

As more and more states are accepting legal transactions for recreational marijuana, much of the violence and gang operations has disappeared from this area. Sure, governments keep the costs of these industries up by all the regulations and taxes they put in place there causing many to still turn back to the black market, but much of the demand has been satisfied by legal means. This is desirable from a customer and producer perspective; the mafias, however, hate it.

It should be noted that the two groups most in favor of the Prohibition of the 1920’s were the anti-saloon league and the mafia. The elimination of the black market of alcohol by FDR removed the mafia’s veritable monopoly on bootlegging whiskey and opened the market up to peaceful transactions.

If we want to get mafias out of the lending and “pay up or die” business, we would do well do remove the prohibitions that directly finance their operations.

Fairness / Equality

One thing I wanted to touch on with regard to this show was the focus it made on fairness and equality. When one person “broke the rules”, they were made an example of. But is the concept of this show really based on fairness?

During the “contract” phase of the show, people signed a contract that stated that they would be “eliminated” if they were not successful in winning the games or if they violate any rules. Specifically:

Clause 2. A player who refuses to play will be eliminated.

This contract is ambiguous on so many levels. A contract that is not clear and does not explain every portion of the experience that a person will have, especially if it involves the risk of their own death, is an inherently unfair and unjust contract. A much more clear clause would be: anyone who violates the rules of the current game or does not succeed in accomplishing the goal of the game will be killed in various ways: bullets, falling to your death, knives, etc.

A refining clause of this would be: Squid Games will not supply any DRO (dispute resolution organization) services between any of the players should any dispute arise. If a player kills another player accidentally or on purpose, this is completely valid within the rules of the game.

People who signed this contract would have far more of an idea of what they are signing up for. This additional clarification does not require pages and pages of explanation; I summed it up in a few sentences. As it stands, I don’t think the document the contestants signed was fair or even valid in any contractual sense.

Some people might say: well, they knew what being “eliminated” meant! This is just a matter of translation. It’s clear from the first game, however, that none of them were expecting to be killed. When the first person dies, someone comes over to them to see if they are all right. Once they realize that they heard guns and people were actually dying, many of them ran in fear to the doors to try to get out. These are not the actions of people who had “full knowledge” of what they are getting into.

Other people might say, who cares! They’re just bums living off society (see above). I don’t blame the individuals who get into debt, while they do need to take responsibility for their actions. The central banks that destroy the market mechanisms and incentives that encourage people to save and discourage profligacy are far more culpable, however.

As for the games themselves: I don’t personally think the games were fair. The prison fight, I mean ahem, the contestant fight in the middle of the night was particularly unfair, especially to those who don’t specialize in physical violence. Women generally have less strength than men; putting them in a cage fight to the death with their male counterparts can hardly be considered fair. Nor is setting people up for a tug of war for the same reasons. Nor is the part where the person who had the background of glass manufacturing a “fair” situation; he had special advantages that no other person had. Nor is being deceptive about what the game is while assembling teams or partners or choosing positions; these are, at best, random chance.

Which is perhaps the point of highlighting these things, as there is no such thing as equality of people. The same person is not equal to himself even sometimes in the same day, so it’s absurd to think that people would ever be equal to each other. There is always a disparity of skill, ability, and intellect in any game or even in any life situation, so we should celebrate that diversity instead of trying to make equality our goal.

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