“No Scarlet Letter for Baekjae High.”.

• Gwangju Ilbo High School held a press conference and requested leniency for Baekjae High students. Lee Kyu-yeon (Gwangju Ilbo High School principal) said, “We ask that every possible administrative effort and wisdom be gathered so that the Baekjae High baseball team students can start anew within the stadium.”
• Hong Kyung-pyo (Gwangju Ilbo High School alumni association president) emphasized, “The ultimate and non-negotiable goal is not to condemn young students but to restore proper education and justice.”
• “The most dangerous thing now is attempting to impose contrived political meaning on this incident, divide sides, and incite public anger,” he warned, urging, “Please stop wielding the sword of private judgment or conversely defending and amplifying hatred.”
• The Seoul Metropolitan Office of Education is discussing a re-examination request for Baekjae High’s disciplinary action. Today (8th) is the deadline for the request.
• Related Link.

What Matters Now.

World’s Top Operating Profit, But Samsung’s Stock Drops.

• Samsung Electronics’ Q2 operating profit hit 89.4 trillion won. Though it beat market expectations with an earnings surprise, its stock fell 6.9%.
• Globally, only Aramco’s $86.5 billion in Q2 2022 has surpassed this record.
• The operating margin was 52%.
• Combining brokerage consensus, annual operating profit is expected to reach 380 trillion won this year and 570 trillion won next year. While some advise “buy on rumors, sell on news,” profit-taking dominated. Long-term forecasts suggest the semiconductor cycle will extend, but for now, it’s a pause.
• The Wall Street Journal assessed, “KOSPI volatility is as wild as Squid Game.”
• All three major US indices dropped yesterday: S&P 500 (-0.45%), Dow (-0.25%), and Nasdaq (-1.16%).
• Related Link.
• Related Link.

Market Expectations Have Risen.

• Few doubt that the memory supply shortage will persist until 2028. South Korea accounts for 60% of the global memory market.
• Still, why are stock prices falling? The Financial Times interpreted this as “a sign that market expectations have risen.”
• There are two concerns.
• First, reports that Meta plans to sell excess computing capacity have already sparked fears of oversupply.
• Second, JP Morgan questioned whether it’s sustainable for AI memory to account for up to 70% of hyperscalers’ capital expenditure next year.
• Related Link.

SK Hynix ADR Draws Investor Attention.

• Hedge funds and large institutional investors are showing interest. Firms like Citadel, Bailie Gifford, and Coatue are speculated to absorb up to $7 billion in shares.
• SK Hynix’s ADR issuance amounts to $28 billion—2.5% of total shares.
• Trading begins on the 9th. Some speculate foreign investors are intentionally depressing Korean stock prices to profit from post-ADR listing price gaps.
• Related Link.

2.47 Million Ballots to Be Recounted at Olympic Park Counting Station.

• It holds little significance. Election results won’t change, and this is a separate issue from the ballot paper controversy.
• The key question is whether it can fundamentally dispel suspicions of election fraud.
• Wi Cheol-hwan (acting NEC chairperson) remarked, “In a small Japanese town, recounts conducted through three legal procedures still showed differing counts each time,” adding, “While this recount is intended for good purposes, I’m concerned it might ultimately yield worse outcomes.”
• Kim Nam-hee (Democratic Party lawmaker) stated, “We must not fear backlash or verification.”
• Related Link.

Deep Dive.

“Senior, They Told Me to Keep Quiet About Being a Police Family.”.

• The Jang Yun-gi case is escalating into a debate over prosecutors’ supplementary investigative authority.
• Jang Yun-gi’s father, a senior police officer, and the lead detective who concealed evidence in the murder of a high school student have been arrested.
• According to Chosun Ilbo, a recording surfaced of an investigator calling Jang’s father to say, “They told me to keep quiet about Jang being from a police family.”
• Critics warn that if prosecutors’ supplementary investigations are blocked, more cases could be buried.
• In an editorial, Chosun Ilbo criticized, “The Democratic Party is siding with murderer Jang Yun-gi.”
• The Hankyoreh pointed out, “The Democratic Party is trapped in the dogma of abolishing prosecutorial investigative power.” In its editorial, it warned, “Should they not reflect on whether their deep distrust of prosecutors is blinding them to the widespread harm of rushed reforms?”
• Kim Gi-pyo (Democratic Party lawmaker) stated, “If supplementary investigative authority is abolished, we need to address how such issues will be screened.”
• Related Link.
• Related Link.
• Related Link.

Where Are the Muzzle Laws and Dictatorship?

• The People Power Party has decided to file a constitutional appeal against the Information and Communications Network Act.
• It imposes punitive damages of up to five times the actual harm for intentionally distributing false or manipulated information.
• Concerns arise that it could shrink press and freedom of expression.
• Jeong Jeom-sik (People Power Party floor leader) argued, “The biggest issue is that the state directly determines and punishes what is true or false, hateful or not.”
• “Where are the muzzle laws and dictatorship?” retorted Han Byung-do (Democratic Party floor leader). Han countered, “It’s a minimal institutional device to prevent the production and spread of false or manipulated information and hold responsible parties accountable.”
• The law is not without issues, but there is also much misunderstanding and exaggeration.
• Media Today pointed out, “The judiciary is the ultimate arbiter of false or manipulated information,” and “ordinary community users are highly unlikely to face aggravated punishment under this law.”
• The criticism that it’s a ‘muzzle law’ akin to a dictatorship is excessive.
• Related Link.
• Related Link.

NATO 3.0.

• NATO 1.0 confronted Soviet invasion and expansionism,
• NATO 2.0 sought new purposes after the Cold War.
• NATO 3.0 will likely see Europe bearing greater responsibility for conventional defense, while the U.S. steps back as an ally akin to cavalry beyond the hill.
• Europe wants to retain the U.S. while reducing dependence on it.
• American attention is fixed on China, turning a blind eye to Russia’s designs on Europe. Ahead of the NATO summit, China test-fired long-range ballistic missiles and Russia attacked Ukraine’s capital, Kyiv. There are even projections that Russia will complete preparations for war with NATO by 2029.
• Trump dismissed NATO as a “paper tiger,” but since Germany, France, and Britain refused to deploy troops to Iran, he has been determined to withdraw.
• Can NATO exist without the U.S.? The EU military commander has been an American general since 1951. No one is ready to replace that role.
• Related Link.

Can Europe Fight Without the U.S.?

• It’s a question unthinkable a year ago, but this year’s NATO summit mood is different.
• Trust in Trump is gone. The U.S. keeps pulling troops from NATO.
• It withdrew an infantry brigade from Romania and long-range missiles from Germany.
• There’s also a lesson learned: conventional superiority doesn’t guarantee victory. The Financial Times noted, “The question is how to fight if we don’t need to fight the American way.”
• Mark Rutte (NATO Secretary-General) said, “Europe is already filling gaps the U.S. cannot promise to cover.” European nations are deploying new fighter jets to NATO defense instead of reserving them for domestic missions.
• Only the U.S. has long-range strategic bombers. Plans to expand ground-based long-range missiles and fighters are under review, but Europe still needs U.S. help to counter Russia.
• Weaker conventional forces mean higher reliance on nuclear weapons.
• The U.S. umbrella remains vast. Its 2025 defense budget—$921 billion—matches the combined spending of the next 15 countries. China and Russia spend $251.3 billion and $186.2 billion, respectively.
• Trump pressures allies to raise defense spending to 5% of GDP. “Defend yourselves,” he says. Germany plans 3.5% by 2029, while France and the UK aim for 2.5% and 2.7% by 2030.
• Europe isn’t breaking with the U.S. but trying to save NATO by making it less American.
• Yana Puglierin (European Council on Foreign Relations fellow) said, “NATO must decide whether it’s a Europe-funded organization or a Europe-led one. Just increasing spending is like attaching European muscles to a body still tethered to an unreliable American brain.”
• “Trust is the biggest issue,” others warn. “Many countries trusted the U.S. more than European partners, and that trust is gone—but they don’t trust each other more either.”
• Related Link.

Is Now the Time to Buy Tanks and Fighters?

• NATO is also a weapons sales arena. Perspectives clash over which weapons are needed as drones and AI-guided autonomous systems push warfare toward a technological inflection point.
• The U.S. completely dominated Iranian airspace with F-35s yet failed to stop Iranian drone attacks.
• Russia has begun deploying AI-guided drones that operate without human intervention.
• A military technological revolution akin to the invention of gunpowder is underway. Non-warring nations struggle to keep pace. Mauro Gilli (Hertie School professor) noted, “Millions of Ukraine-style short-range drones could become obsolete within eight months.” “You can’t tell the enemy to come back in 2039.”
• The Swedish military recently suffered a crushing defeat against Ukraine’s drone units in training. Some argue, “The question isn’t tanks vs. drones—it’s securing both and hybridizing capabilities.”
• Michael Kofman (Carnegie Endowment for International Peace researcher) observed, “Gunpowder coexisted with infantry for centuries.” Mikael Claeson (Swedish Armed Forces Commander) added, “Legacy systems must partially remain part of the future.”
• NATO accounts for 55% of global defense spending. While defense budgets are rising worldwide, the industry faces production bottlenecks. This is when South Korea’s role becomes critical.
• Related Link.

Beyond Arms Diplomacy.

• Europe’s defense bloc remains solid. Canada’s choice of Germany over South Korea may ultimately reflect a prioritization of security alliances.
• The Kyunghyang Shinmun editorial noted, “Arms sales should not become the top priority of South Korean diplomacy.”
• “It is also a warning against unilaterally siding with Europe and confronting Russia.”
• The time has come for a higher-order equation where interest-driven pragmatic diplomacy and the Korean Peninsula peace policy do not collide.
• Related Link.

Another Take.

Korea’s Labor Market Dualism: A Shocking Polarization.

• Seniority-based wage systems, where salaries automatically rise with tenure, remain only in South Korea and Japan—and even then, apply only to regular workers in select large corporations or public enterprises.
• The Financial Times pointed out Korea’s “seniority-biased hiring pattern.” While 211,000 jobs for youth aged 15–29 vanished over three years, employment for those in their 50s increased by 209,000.
• “AI easily replaces entry-level tasks reliant on standardized, textbook knowledge, but reinforces roles requiring the tacit knowledge and social skills developed through experience,” the analysis noted.
• Jang Ji-yeon (Research Fellow, Korea Labor Institute) observed, “Strong job protections for large-company employees lead firms to reduce new hiring as they adapt to new technologies.”
• The OECD’s Korea report warned, “Large corporations shift toward capital- and technology-intensive production and outsourcing, leaving youth as ‘NEETs’ (Not in Education, Employment, or Training) and SMEs trapped in a low-productivity, low-wage cycle.”
• A Pew Research Center survey found Korea one of the few large countries where AI optimism outweighs pessimism—possibly skewed by regular workers’ optimism pulling up the average.
• Related Link.

Stop the Distillation.

• AI teaches AI well. It also excels at learning by asking questions.
• Industry jargon for training AI by bombarding it with millions of questions from a smarter AI is called distillation. In other words, it’s copying.
• Anthropic claims Alibaba systematically conducted distillation attacks.
• Elon Musk (Tesla CEO) also admitted that xAI distilled other models. “AI companies distill each other,” he remarked.
• Is distillation illegal? Since it mimics behavior rather than copying text, some argue it doesn’t violate copyright law.
• Can distillation be stopped? Suspicious patterns could be blocked, but boundaries are blurry. Applying U.S. law to activities outside the country is also challenging.
• After all, being good at distillation doesn’t guarantee the best AI, and some analysis suggests distillation has become less relevant with the rise of agentic AI.
• Related Link.

Sam Altman’s Faustian Bargain.

• This refers to Sam Altman’s proposal that the U.S. government buy a stake in OpenAI. If corporate demands in the past were to be left alone, now they are asking for regulations to be created—or even proposing government ownership.
• OpenAI plans to spend $600 billion on AI infrastructure by 2030, yet its monthly revenue is only around $2 billion. It is not cash-rich. Unlike competitors, it has no accumulated cash or profits. Altman’s overture to Trump could be a move to lower borrowing costs through government equity, while seeking regulatory favors and the implicit guarantee of being “too big to fail.”
• The Wall Street Journal noted, “The price of government equity is political interference.” It assessed, “Corporate equity purchases could become one of Trump’s worst legacies.”
• Related Link.

Can We Compete with Chinese AI?

• Time is short, but low-cost Chinese AI is tripping up progress. Many companies are now pairing full-time use of Claude or ChatGPT with cheaper models like Alibaba’s or DeepSeek.
• According to the Wall Street Journal, among top-spending customers, open-source token usage grew four times faster than closed-source between last fall and this spring. The price gap is stark: Anthropic’s Claude 5 costs over 50 times more per token than DeepSeek V4 Pro. For businesses, this means millions of dollars in fluctuating costs.
• Sam Altman (OpenAI CEO) remarked, “Cost suddenly became a massive problem.”
• OpenAI and Anthropic are already bleeding billions annually in computing costs. While their models are still rated 4–6 months ahead of open-source alternatives, the gap is narrowing. With IPOs on the horizon, if subscription fees can’t rise, the crisis will deepen.
• A counterargument claims top-tier models reduce overall costs by completing complex tasks in fewer tokens. The debate shifts to evaluating “price per task” rather than per-token pricing.
• Related Link.

The AI World Runs on OpenAI and Anthropic’s Money.

• OpenAI and Anthropic are scattering millions of dollars in free computing credits.
• Promotions have also increased: the $200/month Claude Max plan allows burning $8,000 worth of API tokens.
• It’s a lock-in strategy, but is it sustainable? The Wall Street Journal noted, “Both OpenAI and Anthropic are under pressure to improve margins ahead of IPOs, yet they’re flooding the market with discounts and one-time bonuses,” adding, “It’s unclear whether startups will remain once the free credits dry up.”
• Related Link.

Gen Z Socialist Fever.

• Generation Z is raving about radical leftism. Not in Korea.
• Trump’s “communism is like cancer” remark during his 250th Independence Day speech targeted Democratic Socialists of America (DSA) figures like Eric Adams (New York Mayor).
• Support for the UK Greens, Germany’s Left Party, and France’s ‘France Unbowed’ (LFI) is surging. Some analysts argue millennial socialists are becoming mainstream.
• The Economist assessed, “Unlike past socialism that appealed to the common good, this is retail politics—pitching rent cuts and job protection to individual interests.”
• Critics view traditional leftist megadiscourses like political correctness (PC), diversity-equity-inclusion (DEI), or environmentalism as ideological utopianism, while young voters demand immediate relief: “Lower my rent, save my job.”
• Some analyze this as mirroring the radical right’s rise. Where MAGA represents declining white middle classes, DSA champions disillusioned 20–30-somethings. The JoongAng Ilbo framed this with the headline: “Skip the righteous talk—cut my rent.”
• Related Link.
• Related Link.

The Fix.

Delivery Riders Are Workers Too.

• In an appeal ruling on a wrongful termination lawsuit filed by delivery riders against a platform, the court partially sided with the riders. The decision stated, “If workers provide labor under a subordinate relationship, receiving instructions and orders from the company while logged into the delivery app, they qualify as workers protected under the Labor Standards Act.”
• Park Jeong-hoon (Vice Chairman of the Public Transport Service and Workers’ Union) assessed, “This ruling is significant for recognizing not only direct supervision by humans but also indirect oversight through digital devices and algorithms.”
• Related Link.

Where Should Motorcycles Park?

• There are 2.3 million motorcycles, yet only 1,700 parking spaces exist.
• The National Police Agency has announced stricter fines for illegal parking, but critics argue the system itself makes compliance impossible.

Maternity Care Facilities Drop from 675 to 445.

• 230 facilities have closed over the past decade.
• High-risk pregnancies are rising while obstetricians dwindle. The share of mothers aged 35+ rose from 22% in 2014 to 36% in 2024.
• Specialized obstetricians fell 21% during the same period. Only 228 neonatal specialists exist, with 149 concentrated in the capital region.

A Neonatal ICU Doctor Working 136 Hours a Week.

• Arrives at 6 AM Monday, leaves at 10 PM Saturday. Returns to the hospital on Sundays if patient numbers are high.
• Park Chan-hoo (Professor at Changwon Gyeongsang National University Hospital) took one vacation over six years—a two-week trip for his 60th birthday celebration.
• The hospital’s neonatal ICU has only one doctor: Park Chan-hoo.
• Related Link.

ICYMI.

A Han River Bookstore Closes Too.

• The bookstore gained fame, driving up local rents and forcing the entire building’s sale. Han Kang (author), who operated the bookstore Chaekbang Oneul, announced its closure.
• Han Kang said, “I’m deeply grateful that we managed to keep it running for eight years—it feels like a miracle.”
• Even a Nobel Prize-winning author couldn’t escape gentrification.
• In an interview with Kyunghyang Shinmun, she reflected:
• “Opening the bookstore remains vivid in my memory. We were so passionate, we’d make newsletters and leave free copies outside, and neighbors would take them, pass them around, and even bring friends. The bookstore became a part of life for people living within a few kilometers—or seven bus stops away. Every moment of that felt profoundly moving.”
• Related Link.

Incheon Airport Tops Global Passenger Rankings.

• 19.78 million passengers in the first quarter of this year.
• Dubai Airport followed with 18.58 million, Heathrow with 17.85 million.
• Second-quarter numbers dipped slightly to 18.73 million.
• Cumulative passenger count has surpassed 1 billion—25 years after opening.
• Transit passengers also surged: 8.05 million last year.
• 101 airlines connect 183 cities across 53 countries.

Incheon Airport Corp + Korea Airports Corp?

• Discussions are underway to merge the two airport operators, but concerns arise that it could hinder Incheon International Airport Corporation.
• Incheon Airport Corp reported revenue of 2.5481 trillion won with an operating profit of 480.5 billion won.
• Korea Airports Corp recorded revenue of 976.8 billion won and an operating loss of 22.3 billion won.
• Critics argue that merging the two entities would divert profits from Incheon Airport to regional airports. Others worry it could disrupt the fifth-phase expansion plans.

64% of Jeju’s Foreign Tourists Are Chinese.

• Group tours account for only 10%, with the rest traveling independently. 60-70% are in their 20s and 30s.
• A recent proposal at the Jeju Council to allow Chinese tourists to rent cars sparked debate. Since China isn’t part of the international driving convention, its licenses aren’t valid abroad. Suggestions for temporary permits emerged, but would require legal revisions.
• Illegal paid transportation—costing 50,000 won per person daily—is thriving.
• Related Link.

Better to Keep the Air Conditioner Running All Day.

• Advice from the New York Times’ Wirecutter. Maintaining a steady temperature all day may cost less than repeatedly cooling a hot house. Inverter air conditioners don’t consume much energy when maintaining temperature.
• The U.S. Department of Energy also advises setting the thermostat as high as comfortably possible while still feeling comfortable.
• Related Link.

CJ Holdings’ Revenue: 55% Comes From Brand Fees.

• It received 134.7 billion won in trademark royalties from 14 affiliates.
• The Fair Trade Commission has launched an investigation.
• It is reviewing whether the fees provided unfair benefits to the founding family.
• CJ is 45% owned by the founding family, including Lee Jae-hyun (CJ Chairman).
• The largest trademark royalty payer among holding companies is LG, at 354.5 billion won.
• SK ranks second at 31.09 billion won, Hanwha third at 179.6 billion won, and CJ fourth.

Worth Reading.

True Wealth Means No Fear of Taxes.

• Because paying taxes and waiting allows recovery through rising home prices and passed-on jeonse costs.
• According to Seon Woo-jung (Chosun Ilbo Senior Columnist), Han Sang-sook (Prime Minister), who held real estate worth 10 billion won, may have paid over 100 million won monthly in property taxes. Ahead of her confirmation hearing, she sold one apartment, reaping a 3 billion won capital gain.
• Seon Woo-jung criticized, “Policymakers pull out tax hikes as a universal solution whenever home prices rise,” adding, “It’s even stranger that those bearing the heaviest tax burdens applaud such policies.”
• Related Link.

Voluntary Recruitment? The Core Issue Is Coerced Choice.

• Raising soldiers’ salaries is fine. The government is considering a voluntary recruitment system that shortens service periods while improving conditions for professional soldiers.
• Lee Jin-woo (POSTECH Professor) pointed out, “Children of wealthy families are likely to choose conscription, serving shorter terms for lower pay,” and “voluntary recruitment—serving longer for higher pay—may effectively be a coerced choice.”
• “A just political community need not demand identical service from all citizens, but must design systems so the burden of maintaining the community isn’t structurally concentrated on specific groups. Military service isn’t just about who holds the gun—it’s a test of political justice, revealing how a community upholds public goods like freedom and security. If this issue is ignored and military service is treated as a financial transaction, the community’s security will face serious risks.”
• Related Link.

Benevolent Correctivism.

• Why must victims first prepare to forgive and reconcile?
• Lee Se-young (Hankyoreh Columnist) noted, “The reconciliation between Gwangju Ilbo and Baejai High created a perfect mise-en-scène of harmony, likely due in large part to the subtle pressure from dignified commentators rather than the inflammatory remarks and distractions of conservative politicians.”
• What benevolent correctivism overlooks is the enforced tolerance imposed on Gwangju and the May 18th Uprising.
• Lee Se-young pointed out, “The advice that Gwangju generously embrace and forgive the Baejai students is not far from reproaching Gwangju and Honam for their narrow-mindedness and victim mentality.” The critique continues: “Thus, the solution leans toward optimistic gradualism—forgiveness, inclusion, and more education and enlightenment.”
• Related Link.

Do We Only Care About the Perpetrator’s Bright Future?

• When people say, “Let’s give them a chance, thinking of their bright future,” the victim’s pain is swept aside.
• A #MeToo survivor interviewed by Segye Ilbo said, “I was the victim, yet somehow I became ‘the woman who blocked a young, promising man’s future.’”
• Choi Moon-seon (Hankook Ilbo Senior Columnist) noted, “It’s hardly surprising that many people talked about ‘the bright future of these boys’ when Baejai High’s baseball team received a six-month suspension.”
• Related Link.