The Chaebol Returns To The Presidency 1967 [EN]: Chapter 118

118. The Origin of Foolish Young-gu

During Chairman Wang’s era, John Bogle founded Vanguard and entered the fund market with the ‘Vanguard 500,’ an index fund designed to mirror the performance of the S&P 500 index.

In those days, when actively managed funds (general equity funds) were the standard, Vanguard’s index fund didn’t garner much attention initially, raising only $11 million at its launch.

However, as its returns consistently outperformed those of active funds, its total assets under management soared, exceeding $1 trillion in 2009 and rapidly establishing it as the world’s largest asset management company.

Vanguard’s index fund, known for its low fees and diversified investments, surpassed the average annual return of active funds (10.0%) with an impressive 12.3% over 25 years, starting from 1980.

Bogle’s influence didn’t stop there; in the 1980s, he became the largest shareholder of Blackstone, the world’s largest private equity firm.

Blackstone engages in highly speculative investments, primarily focusing on real estate and logistics companies, with operating funds reaching 800 trillion won [approximately $600 billion USD].

Vanguard later spun off BlackRock, initially a subsidiary of Blackstone, as an independent entity.

BlackRock adopted a more conservative approach than Blackstone, managing stocks, bonds, short-term finance instruments, alternative investments, and ETFs (Exchange Traded Funds) globally for institutions and individuals. It also provided risk management and strategic advisory services. By 2019, its assets under management had reached a staggering 9,900 trillion won [approximately $7.4 trillion USD], solidifying its position as the world’s premier asset management company, offering ETF portfolios valued at over 17,000 trillion won [approximately $12.7 trillion USD].

To put this in perspective, South Korea’s largest investor, the National Pension Service, manages 600 trillion won [approximately $450 billion USD], making BlackRock’s scale equivalent to the combined assets of dozens of countries.

BlackRock eventually overtook Vanguard, its former parent company, in the race for the top spot, firmly establishing itself as the undisputed leader in global capital management.

However, the Vanguard Group ultimately owned all of this, effectively placing Wall Street under John Bogle’s influence.

The rationale behind establishing BlackRock and Blackstone as separate investment firms from Vanguard was primarily related to public perception.

BlackRock and Blackstone are publicly listed companies, whereas Vanguard remained a private company, wholly owned by its owner.

This separation was a strategic move to diversify ownership through publicly traded entities and enhance public appeal.

John pulled his chair closer, adopting a more proactive stance. “I’m planning to launch a fund company featuring the ‘Vanguard 500,’ an index fund that tracks the S&P 500 index. Would you be interested in investing in my fund?”

He knew President Chung as a client who invested in funds.

President Chung responded, “I’m interested in investing not only in the fund but also in the equity.”

“Equity?”

“How about co-founding it with Tiger Fund? We also have Korean oil money planning to invest in the fund.”

John was surprised to learn that President Chung was not only a fund client but also the president of Tiger Fund and the Korea Investment Corporation.

With a guaranteed influx of oil money, there was no reason to decline.

John asked in disbelief, “Are you serious about co-founding this with me, someone who only has $30,000?”

“Absolutely. Let’s start with a 50:50 split. And even if it becomes successful, let’s keep Vanguard private and spin off a separate subsidiary as a listed company.”

“Oh, that’s exactly what I was planning. Listing would compromise the owner’s originality. A separate public fund company must be created.”

“Hahaha, it seems we share similar perspectives in many ways.”

“So, you’re committing to starting this venture together.”

The two men shook hands firmly.

This secured the opportunity to dominate American finance.

*

Intel.

President Chung received a call and met with President Moore to finalize the equity issue that had been pending.

Moore stated, “Let’s proceed with a 40:30:30 split.”

This meant President Chung would hold 40% of the equity.

Later, if one of the co-founders decided to sell their stake, acquiring it would easily grant him majority shareholder status.

“Good. Let’s do that.”

A lawyer present at the meeting clarified the contract terms.

“This contract is valid only if the condition of being installed in IBM is met. It also includes the promised investment in the new factory.”

“Of course.”

*

LA Airport.

President Chung, who had maintained a poker face throughout the equity negotiations, immediately called Korea upon arriving at the airport. The recipient was, of course, His Excellency the President.

“Your Excellency, I’ve succeeded. We’ve secured a joint venture with Vanguard Fund, 40% of Intel’s shares, and 49% of IBM’s shares.”

– “Oh, congratulations. We now control American dollars and the electronics industry. We’ve tapped into the American economy, hahaha.”

“Hahaha-”

* * *

The President’s Office.

The President inquired of his Chief of Staff.

“Why are we scheduling cabinet meetings at 2 PM or 9 PM? Why not 7 PM?”

“That’s because of ‘Yeoro’ [a popular Korean drama]. The cabinet members need to watch the drama at that time.”

“Ah, ‘Yeoro’!”

‘Yeoro’ was a television drama that achieved unprecedented success, boasting a viewership rating of 70%.

During its broadcast, the streets were deserted, even in the early evening.

Taxis ceased operation, with drivers gathering in front of restaurants or electronics stores to watch the drama.

Tenants without televisions would brazenly sit on the floor of their landlord’s living room to watch TV in the main room.

Movie theaters were also affected during the broadcast of ‘Yeoro.’

A film operator, interrupting a movie screening, announced to the audience.

“Okay, we’ll take a 20-minute break and resume the screening.”

The audience protested.

“Where is it written that you can stop a movie in the middle of the screening!”

“I have to watch ‘Yeoro.’ Tonight’s episode is where Young-gu finally finds the young lady.”

Even some in the military issued an official directive to reinforce the border along the demilitarized zone, stating that if the North were to invade, it would be during the ‘Yeoro’ broadcast time.

In homes, housewives frequently burned rice or stew while engrossed in the drama.

Children gathered in alleys, mimicking Young-gu’s foolish acting, shaking their hands and legs, and giggling.

Viewers empathized deeply, crying and laughing as if the events were their own.

In scenes where the mother-in-law and sister-in-law mistreated the daughter-in-law (Young Lady, Bun-yi), viewers erupted in anger and cursed.

“That bitch! Why can’t that mother-in-law just leave the young lady alone! That kind of mother-in-law deserves Goryeo burial [an ancient Korean burial custom where people were buried alive]!”

“And that nasty sister-in-law? It would be satisfying to grab her by the hair.”

The same sentiment arose during the scene where Japanese detective Murakami arrested Bun-yi’s father-in-law and tortured him to reveal the whereabouts of the independence army.

“Murakami should shoot that bastard dead!”

“You can’t kill him with just one shot. He needs to be torn limb from limb with a dismemberment execution.”

“Why can’t Young-gu meet the young lady?”

“Oh, Young-gu heard about the young lady!”

In the scene where the foolish Young-gu finally meets the young lady, viewers wept alongside them.

Park Joo-ah, who played the role of the evil mother-in-law, received terrorist threats and was harassed by middle-aged women at the market or bathhouse, forcing her to stay indoors for a while.

Thieves also adjusted their business hours, switching from night to day to coincide with the ‘Yeoro’ broadcast time.

Televisions sold rapidly due to the popularity of ‘Yeoro.’

Despite criticisms that TV was a “fool’s box,” it became a central fixture in living rooms as leisure time increased, essentially becoming another family member.

As TV became ubiquitous, the President ordered the public service broadcasting of the state-run broadcasting station, which had previously functioned as a government public relations bureau.

*

Cabinet meeting.

The Minister of Culture and Public Information reported.

“Next week, the state-run broadcaster KBS will be reborn as the Korea Broadcasting Corporation. The era of public broadcasting is dawning, Your Excellency!”

Because it was a state-run broadcaster, a significant amount of national funds was allocated to it, and it served as a mouthpiece tailored to the regime’s preferences. Inefficiency was rampant, leading to initial discussions about transitioning to private broadcasting. However, the decision was made to shift to public broadcasting, funded by the people’s license fees.

The opposition party also welcomed this change.

However, the President harbored several concerns.

“The purpose of transitioning from state-run to public is not merely to avoid being a mouthpiece for the regime but to be genuinely public. I’m concerned that if the regime changes, they will be eager to exploit it as their own promotional tool.”

“Since it will be funded by the people’s viewing fees, rather than advertising or national funds, it will be fairer than ever, Your Excellency!”

“There is no inherently fair system. Because people operate it anyway. The people must remain vigilant. They must protest biased broadcasting and, if there is a problem, refuse to pay the license fee to ensure it becomes a true people’s broadcasting.”

“We will select executives from all walks of life and implement decisions through a consensus-based system.”

“Another concern is efficiency.”

“…….”

“If they become entrenched, they will lack competition and operate haphazardly, inevitably leading to a decline in the broadcasting company’s competitiveness. It’s similar to the difference in efficiency between private and public companies.”

“That’s a valid point. Therefore, public broadcasting will prioritize high-quality content such as documentaries, masterpieces, and cultural arts rather than focusing solely on viewership competition. Viewership may decline, but the current management’s goal is to establish it as a broadcast of culture and education.”

“That seems like a positive direction. Partner with and exchange ideas with broadcasting companies like the BBC to enhance its quality. We shouldn’t be a frog in a well, confined to the nation and our own perspectives, but rather adopt a global and cosmic perspective.”

“I understand. We will strive to provide a different dimension of culture.”

The President offered suggestions for program ideas, drawing inspiration from popular programs during Chairman Wang’s era.

When public broadcasting commenced, 1/4 of the broadcasting time was dedicated to documentaries, with the remaining time allocated to programs such as Scholarship Quiz, National Singing Contest, Time of the Armed Forces, Rural Diary, Laugh and Good Fortune Comes, Sunday Blue and White Match, A Word of English, World Art Travel, Walking to the World, Following the Road to Taste, I Also Say a Word of English, Healthy for 100 Years, and The World of Work.

Viewers surprisingly favored the American lunar exploration documentary the most.

A regular program focusing on cutting-edge science, inventions, and space exploration within the global community gained a strong following.

* * *

Panmunjom [the Joint Security Area between North and South Korea].

The world’s media gathered at the ‘Meeting House,’ constructed in South Korea at an accelerated pace.

This was due to the first inter-Korean separated family reunion since the division of the peninsula.

Prioritizing the elderly and blood ties between parents and children, 100 families were selected for this initial reunion.

“Jong-hoon!”

“Father~”

A father (80) from the South and a son (50) from the North embraced each other, shedding tears of emotion.

Two fathers, separated at the Hungnam pier during the January 4 retreat [a major evacuation during the Korean War], met again with wrinkled faces.

“Where is Mother?”

“Sob, she’s in the afterlife.”

“The afterlife?”

“Even as she passed away, she couldn’t close her eyes easily, constantly saying she wanted to see your face.”

“Mother!”

Raindrops began to fall from the cloudy sky.

As the earth grieved, the sky also wept.

Sharing stories of hardship and resilience, 100 families confirmed each other’s survival.

Parting proved even more difficult than meeting.

Those remaining in the South reached out to the North Korean bus, yearning to see their families for even a fleeting moment longer.

Separated families waved endlessly at the bus as it crossed the military demarcation line.

“Let’s see each other again next time! You must stay alive!”

A cry filled with heartfelt sincerity echoed in the air.

Three inter-Korean separated family reunions were held in this manner.

Then, without warning, North Korea announced an indefinite suspension.