Sabrina Maddeaux: Given Canada’s crushing consumer debt, Squid Game should have been set here

, Sabrina Maddeaux: Given Canada’s crushing consumer debt, Squid Game should have been set here, Nzuchi Times National News

Canada’s consumer debt crisis is much worse than South Korea’s by just about every measure

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Everyone’s talking about South Korea’s massive consumer debt crisis. The topic, normally relegated to more niche economic and political circles, is suddenly a pop culture lightning rod thanks to Netflix’s mega hit Squid Game. For weeks, the South Korean horror series has been the most popular show in more than 90 countries and it’s set to be the most-viewed series in Netflix history.

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Here’s what people aren’t talking about, though: Canada’s consumer debt crisis is much worse than South Korea’s by just about every measure. Moreover, we’re still in such high-level denial about it that, unlike in South Korea, our politicians and banks aren’t even trying to curb rising debt levels. Rather, many are doing the exact opposite.

In many ways, Squid Game could have been a show set in Canada. Perhaps it would be called Beaver Game. The contestants would still play a deadly version of Red Light, Green Light, but instead of being overseen by a creepy version of a character found in many Korean textbooks, ours would be refereed by a giant laser-eyed Polkaroo. Instead of the dalgona candy game, players would find themselves in a field of Roll Up The Rim cups, racing to find a winner as their fingers blister and bleed.

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Players would find themselves in a field of Roll Up The Rim cups

For the remaining few who haven’t watched the series, here’s the spoiler-free gist. Hundreds of Koreans from all walks of life, but all deeply indebted, agree to compete for a cash prize of 45.6 billion won (about $47 million Canadian) via a series of common Korean children’s games turned deadly. It’s basically The Hunger Games with more blood and willing participants driven by the desperation that pervades a society steeped in massive debt with few prospects of paying it off.

And here’s where we differ. Many South Koreans know their nation has a crippling debt problem and are mad as hell about it while most Canadians are still blissfully and wilfully blind to ours. A Canadian version of Squid Game would never get made because it would be considered too outlandish, too depressing.

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Yet here are the hard numbers. South Korea’s household debt is the highest in Asia at approximately $1.8 trillion CAD, which is about 104 per cent of its GDP. Canada’s household debt is approximately $2.5 trillion or over 110 per cent of our GDP. This is despite the fact we have a much smaller population than South Korea, which counts 51.78 million people. At just 38.01 million people in Canada, that’s a lot more debt per person.

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There’s an effort in South Korea to clamp down on illegal private lenders and loan sharks who charge exorbitant interest rates. There, the maximum legal lending rate is 20 per cent, recently cut down from 24 per cent. In Canada, the maximum legal lending rate is a staggering 60 per cent, with many payday lenders and even big banks engaging in lending practices that would be considered loan sharking not just in South Korea, but in places like Australia, which caps lending rates at 48 per cent.

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In fact, Canada’s payday lenders often legally charge more than 60 per cent interest thanks to a 2007 amendment that allows an exception if provinces bring in their own regulations for the industry.

In South Korea, the rising cost of housing has been a longtime topic, with President Moon Jae-in saying runaway home costs should be the National Assembly’s No. 1 priority after his re-election in 2020. In 2019, he implemented a cap on the price of units at newly constructed properties and proposed higher taxes on owners of luxury and multiple apartments.

Canada’s payday lenders often legally charge more than 60 per cent interest

In Canada, Justin Trudeau’s Liberals refused to even utter the words “housing crisis” until this summer’s election call and spent the past two years looking on as the average Canadian house price soared by 38 per cent in a year. The parliamentary secretary for housing actually went on TV and said his government wouldn’t accept a 10 per cent decline in home prices.

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It remains to be seen if the newly elected Liberal government follows through on such measures as temporarily banning foreign buyers. More worryingly, several of their proposed housing measures involve actually making it easier for young people to take on more debt while stoking demand. Meanwhile, South Korea just became the first major Asian economy to raise its interest rate since COVID-19 began, with the explicit goal of curbing household debt and stopping the nation’s millennial debt binge.

If Canadians think Squid Game paints a dystopian picture of South Korea, it’s time they take a good hard look in the mirror. We’re not only on the same path, we’re further along, except many of us don’t even know it and our politicians are too craven to tell it to us straight. As such, the odds of avoiding economic and social disaster are very much not in our favour.

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