European Journal of Law and Economics
https://doi.org/10.1007/s10657-020-09682-2

Social capital and the problem of opportunistic leadership:
the example of Koreans in Japan
J. Mark Ramseyer1
Accepted: 30 December 2020
© The Author(s), under exclusive licence to Springer Science+Business Media, LLC part of Springer Nature 2021

Abstract
Through webs of cross-cutting ties, groups can build "social capital"—the information and informal collective punishment by which to mitigate collective action problems and enforce on each other norms of appropriate behavior. Yet not all minorities
maintain such networks. And minority groups without these cross-cutting ties sometimes find themselves hijacked by opportunistic entrepreneurs who capture private
benefits for themselves while generating statistical discrimination against the groupas a whole. The problem becomes acute when migration from the minority to themajority group is possible (at a cost). Inevitably, the most talented members of theminority will find the migration easiest and most rewarding. Necessarily, the resulting selective out-migration will reduce the average ability of the minority members
who remain and leave the group even more vulnerable to the opportunists. Consider
the Korean residents of Japan. Koreans had begun to migrate to Japan in the 1910s.
They were poor, single, male, young, uneducated, and did not intend to stay long.
As one might expect given those demographics, they maintained low levels of social
capital, and generated substantial (statistical) discrimination toward themselves.
After the Second World War, most Koreans returned to their homeland. Among
those who stayed, the low levels of social capital remained. Plagued by collective
action problems, the group could not prevent the communists among them from taking control and manipulating the group toward their private ends. Lacking the dense
networks that would let them constrain the opportunists, the resident Koreans could
not stop them. Those with the most talent, sophistication, and education simply left
the group and migrated into Japanese society.
Keywords Discrimination · Collective action · Social capital · Economic history
JEL Classification J12 · J15 · K38 · K42 · N35* J. Mark Ramseyer
ramseyer@law.harvard.edu
1

Harvard Law School, Cambridge, USA

13Vol.:(0123456789)

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1 Introduction
Members of some ethnic minorities develop among themselves dense webs ofcross-cutting social and economic ties. Through this network, they build what
scholars like Putnam and Coleman call "social capital"—the ability to use theresulting access to information and informal collective punishment to enforce oneach other their norms of appropriate behavior. Yet not all minorities maintainsuch networks. And groups without them sometimes find themselves commandeered by opportunistic entrepreneurs. In turn, those entrepreneurs then capture
private benefits while generating substantial hostility and Arrow–Phelps statistical discrimination against the group as a whole.
Social capital is the means by which socially coherent minorities mitigate thecollective action problems that otherwise plague any group. Minorities withoutthat social capital sometimes find that the resulting collective action problems
prevent them from controlling a self-appointed leadership. And without that control, they leave themselves vulnerable to leaders who manipulate the group totransfer private benefits to themselves—even as they generate large costs to thegroup as a whole. Sometimes, as one adage puts it, the worst enemy of a minority
group is its own leadership.
The problem is acute when migration from the minority to majority groupis costly but possible. As a large theoretical literature shows, the most talented
members of the minority will find any such migration easiest and most rewarding.
The resulting out-migration will be distinctly selective, reduce the average ability of the minority members who remain, and leave the group more vulnerable toopportunists than before.
Consider the Korean residents of Japan. Koreans had begun to migrate toJapan in the 1910s. Unemployment was lower in Japan than in Korea, and wages
were higher. The migrants were poor, single, male, young, illiterate, and did notintend to stay long. As one might expect given those demographics, they maintained only very low levels of social capital and generated substantial statistical
discrimination against themselves.
After the Second World War, most of these Koreans returned to their homeland.
Among those who chose to stay, however, the collective action problems remained,
and a self-appointed core of fringe-left opportunists soon took control and manipulated the group toward their private political ends. The most talented, sophisticated,and educated Koreans responded by leaving the group and merging into Japanesesociety. They had no reason to stay and try to restrain the opportunists.
The vulnerable Koreans who remained lacked the web of cross-cutting ties
among themselves by which they might have overcome their own collective
action problems and expelled the self-appointed leaders. Instead, the opportunists
exploited the vulnerable Koreans who remained, and captured private politicalbenefits for themselves—all the while generating hard-edged hostility and statistical discrimination against the remaining rank-and-file.
Consider this short essay a simple and informal extension of the law & economics of statistical discrimination—one that ties ethnic tension to the economics

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of information, the logic of collective action, the effect of social capital, andselective migration between groups. I illustrate the reasoning with an example
from one of the better known cases of ethnic tension in Japan. I first explain theeconomic logic tying together ethnic tensions, collective action, social capital,
statistical discrimination, opportunistic leadership, and inter-group migration(Sect. 2). I summarize the application to Japan-resident Koreans (Sect. 3). I thenapply the analysis to a short history of the Koreans before (Sect. 4) and after(Sect. 5) the Second World War.

2 The economics of ethnic bias
2.1 Gary Becker
Becker (1957) began the modern economic study of discrimination and ethnic bias.
He first posited a majority group whose members had a "taste" for discriminating
against members of the corresponding minority. From basic economic principles, hethen reasoned that majority members who choose not to trade with the corresponding minority will suffer an economic loss. What is more, given that the inter-racial
trade constituted a larger part of the minority’s economic activity than the majority’s, that drop in trade would hurt members of the minority group more than it hurt
those in the majority.
Becker did not explore how any discriminatory "taste" might have come about.
He took the taste as exogenous, and traced its economic consequences. Most writers outside of economics have been less careful. Most straightforwardly assume
that members of an ethnic majority discriminate because they hold an unreasoned
animus against the minority group; simultaneously, they argue that the discrimination demonstrates the animus. The argument, of course, is entirely tautological: they(1) purport to explain discriminatory behavior by suggesting an anti-minority animus, and then (2) prove the existence of that animus by citing the discriminatory
behavior.
2.2 Statistical discrimination
2.2.1 Why does a majority discriminate?
2.2.1.1 Arrow Positing exogenous "tastes" (like ethnic animus) does not itself explain
why people discriminate, and together with George Stigler Gary Becker would write
the classic manifesto against such an approach. Rather than suppose that differencesin "tastes" explain behavior, Stigler and Becker (1977, 76) urged scholars to adopt
as their working hypothesis "the proposition that one may usefully treat tastes asstable over time and similar among people." Anything else, they wrote, is "a convenient crutch to lean on when the analysis has bogged down" (id., 89). Indeed, they
continued (id., 89), "no significant behavior has been illuminated by assumptions ofdifferences in tastes."13

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Within economics, scholars most commonly explain ethnic discrimination inmodern democracies through a concept introduced by Arrow (1971) and Phelps(1972), and known as "statistical discrimination." Arrow noted that ethnic markers
can correlate with other relevant characteristics—whether labor productivity, criminal behavior, or anything else. Sometimes members of the majority will find it hardto observe those relevant characteristics. Faced with the correlation between theobservable group identity and the unobservable relevant characteristic, they rationally treat minority members by the mean value of the unobservable characteristic.
2.2.1.2 Economic competition Statistical discrimination is hardly the only source of
discrimination consistent with a rational-choice account. For example, some scholars
locate the source of some ethnic tension in economic competition: two groups competing in the same industry may use ethnic status as a proxy for economic rivalry. The
attacks on Chinese merchant communities in Indonesia (in 1965–1966) and Malaysia (1969) (Robinson 2018; Melvin and Pohlman 2018, 38–42; von Vorys 1975, ch.
13), the Hutu attacks on the Tutsi during the Rwandan civil war of 1990–1994 (Prunier 1995), even the Ottoman attacks on Armenian communities (Carlton 1995, 223)
seem to have had their roots in economic rivalry.
The Holocaust itself obviously goes far beyond the scope of this paper. Even here,
however, economic motives were not irrelevant. Aly (2015), for example, attributes
some of the German anti-Semitism to hostility toward successful Jewish entrepreneurs by their displaced Christian rivals in the wake of the early nineteenth century
emancipation (Aly 2015). Similarly, Becker and Pascali (2019) find the most intense
German anti-Semitic violence four centuries earlier in regions where Christians
competed in the same industry as Jewish merchants.
2.2.1.3 Phelps That said, to date statistical discrimination remains the focus formost economic research that looks to explain the source of ethnic discrimination. As
Phelps (1972, 659) put it:[T]he employer who seeks to maximize expected profit will discriminate
against blacks or women if he believes them to be less qualified, reliable, longterm, etc. on the average than whites and men, respectively, and if the cost ofgaining information about the individual applicants is excessive. Skin color orsex is taken as a proxy for relevant data not sampled.
In their respective discussions, Arrow and Phelps outline a logic behind a formof ethnic discrimination consistent with rational wealth-maximizing behavior. Theynever claimed their mechanism explained all discrimination. Rather, they suggested
that ethnic bias may sometimes represent a rational response to imperfect information. As Guryan and Charles (2013, F418) put it:
In the absence of perfect information, the employer’s optimal prediction of
productivity is a weighted average of the individual-specific signal he receives
and the average productivity of the workers in the same group as the applicant.
The more informative the signal of the individual applicant is – the more complete the information is – the greater the weight the employer places on that13

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information; the less informative the signal is, the more weight he places on
the average productivity of other workers from the same group. Fundamentally, it is a lack of information that leads the employer to treat individuals as
members of groups.
Note that employers may also engage in statistical discrimination if they can moreaccurately gauge people in one group than in the other. Guryan & Charles’ explanation addresses how an employer might respond to two groups of applicants withdifferent levels of average productivity. In fact, an employer may also discriminate
where two groups have the same average productivity, but the employer can better
judge the productivity of members his own group than of those in the other (Black
1995, 310). In such a world, the employer will evaluate each potential worker within
his own ethnic group by that particular worker’s ability. Unable to judge potential
workers in the other ethnic group, he will assign them the average productivity of
the group as a whole. He will treat other-ethnic members with above-average productivity less favorably than their ability warrants. He will treat below-averageother-ethnic members more favorably than that ability justifies.
2.2.2 Why does the minority invite the discrimination?
2.2.2.1 Minority choice Arrow and Phelps posited an employer who faced twogroups of applicants. He knew the average productivity of members of the minority,
but could not accurately gauge their individual ability. Unable to distinguish among
them, he treated all minority applicants by the group mean.
Yet most productivity differences among groups are not biologically hard-wired.
At least in part, most result from deliberate choice. To the extent that they do, a troubling question arises: why do the members of the less productive group make thechoices that they do?
For example, suppose that the productivity difference between two groups
resulted from differential investment in human capital (like education). If so, thenscholars then face the question of why members of the two groups would invest
in human capital at different rates. Wilson (1987), for example, explains the lower
investments in education among African Americans by the lack of job opportunities.
Steele (1998) traces the phenomenon back to welfare programs. Roland Fryer andothers explore social pressure from other minority members: e.g., pressures among
African Americans not to "act white" (e.g., Austen-Smith and Fryer 2005; Fryer andTorelli 2010). Other discussions of related phenomena include Lundberg and Startz(1983), Kim and Loury (2018), and the literature discussed in Chaudhuri and Sethi(2008).
2.2.2.2 Blaming the victim With reason, this is a path many scholars hesitate to tread.
Suppose members of a majority discriminate against minority members because theminority group exhibits lower levels of educational investment, higher violent crime
rates, or less cohesive families. Those levels reflect choices that the minority members deliberately made. The majority discriminates against the minority because

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minority members chose to invest less in education. They chose to engage in violent
crime. They chose to have children before marrying.
The logic obviously invites a blame-the-victim retort. The rhetorical exchange
dates to the early 1960s when the young Moynihan (1965) drafted a confidential
White House report on African–American family. He found it close to collapse, andpredicted severe consequences–consequences that soon came to be. With the highillegitimacy rates, wrote Moynihan, children grow up without a father. Without astable framework that includes both biological parents, they fail to internalize basicsocial norms.
The report promptly leaked, and Moynihan found himself attacked mercilessly.
He was "blaming the victim," and that his colleagues and journalists would notabide. As Moynihan (1968: 31) himself described it, he faced "a near-obsessive concern to locate the ’blame’ for poverty … on forces and institutions outside the community concerned."
2.2.3 Inter‑group migration
In a series of insightful extensions, Kim and Loury (2012, 2018, 2019) apply the
analysis of statistical discrimination to groups with porous boundaries. Take twogroups, H (with a high collective reputation) and L (a low reputation). Employers
have imperfect information about both, and judge members of both groups by thecollective reputation of each. When members of a group can migrate from one tothe other, the collective reputations of the groups are obviously endogenous. Suppose that members of H invest in their human capital at higher rates, and that people
differ in the cost that they incur to invest in that human capital. Kim and Loury(2012, 2019) show that the higher-ability members of L may earn a higher returnfrom investing in their human capital, and—consequently—may disproportionately
migrate into H.
In many ways, the account in this article tracks the analysis in Kim and Loury(2012, 2018, 2019). Indeed, Kim and Loury (2012, 2019, 50) suggest the case ofJapan-resident Koreans as "one of the ideal examples" to test their hypothesis ofability-based sorting. Note, however, that Kim and Loury (2019) model a situation where employers (and others) have imperfect information about both of thetwo groups. Employers, landlords, and merchants in pre-war Japan faced a situation
closer to that of the classical (Phelps) statistical discrimination studies: they had better information about one group than the other (see also Chaudhuri and Sethi 2008).
Many Korean applicants did not speak or read Japanese, and made no effort to integrate themselves into the local social networks. As a result, Japanese employers (andothers) could more accurately gauge the abilities of individual Japanese than of individual Koreans.
Given the greater level of information about Japanese than about Koreans, Japanese employers (and others) were more likely to judge each Japanese applicant
by his individual ability; they were more likely to judge each Korean applicant by
the group mean. Note the obvious implication for the selection into migration. As
Black (1995, 310; ital. added) put it more generally, in a world where employers
judge majority applicants individually but minority applicants by the group mean,

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European Journal of Law and Economics"minority workers with below-average ability … will have an expected wage thatis greater than nonminority workers of similar abilities." Conversely, those with"above-average ability will have an expected wage that is less than nonminority
workers of similar abilities." Necessarily, the higher-ability Koreans would have had
a greater incentive to migrate into Japanese society than those with lower ability.
2.2.4 Collective action and social capital
2.2.4.1 Collective action The obvious challenge is to explain why minority groupmembers sometimes make self-destructive choices: why minority members can findit rationally utility-maximizing to choose to behave in ways that generate broad-ranging statistical discrimination in response. Often, the answer lies in the classic logic ofcollective action: behavior that increases an individual’s welfare does not necessarilyraise his group’s collective welfare.
At the most basic level, the dilemma of collective action is straightforward: eachmember of a group can find it individually rational to behave in a way that generates
for the group a large collective cost that more than offsets the sum of the individual
gains. As an example, take theft. If a young man can successfully steal from a homeof a majority member, he himself earns a positive return. If all young men in his
group steal from homes of majority members, they may generate statistical discrimination against their group in response. The total loss from that statistical discrimination could be massive. To any one of the young men, however, the marginal costs(the incremental increase in the level of statistical discrimination) of one more theftwill be modest. The marginal returns to him from that single theft could be large.
Each young man will steal. The community collectively will suffer.
At a more sophisticated level, Tirole (1996, 2; orig. in ital.) models the way groupreputations can be hard to change: where "individual past behaviour is imperfectly
observed," that past behavior may be used to "predict the member’s individual
behavior." In equilibrium, "the behaviour of new members of a group [may depend]on the past behaviour of their elders." Kim and Loury (2014) model the shift withina group from a poverty equilibrium to one involving higher levels of human capital
investment as a coordination problem. Fang and Loury (2005, 104) characterize thephenomenon as "a tragedy of the commons."
2.2.4.2 Social capital Sometimes, tightly knit groups can prevent these collective
action disasters; chaotic groups seldom can. Tightly knit groups can monitor theirmembers. They can identify those who violate collective norms. And they can impose
a wide variety of painful yet extra-legal sanctions. Hit a malefactor hard enough, andhe will no longer find the discrimination-inducing behavior individually advantageous.
The term for the webs of cross-cutting ties that enable some groups to overcome
their collective action problems, and monitor and control their members is "social
capital." Political scientist Putnam (2000) popularized the concept, but the idea
has its roots in sociology. Groups can most effectively enforce their norms on theirmembers, wrote sociologist Coleman (1988, 1990) when they maintain cross-cutting
networks of relationships (Coleman 1988, S105–S107):13

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Norms arise as attempts to limit negative external effects [by some members]
or to encourage positive ones. But, in many social structures where these conditions exist, norms do not come into existence. The reason is what can be
described as lack of closure of the social structure.
Take, wrote Coleman (id.), a group in which the relationships that members maintain with each other do not overlap. A might know B and C, but B and C do notknow each other. Neither do B and C have any other common acquaintance. Without
those mutual relationships, they will have more trouble enforcing their norms oneach other:
In an open structure …, actor A, having relations with actors B and C, cancarry out actions that impose negative externalities on B or C or both. Since
they have no relations with one another, but with others instead (D and E),
they cannot combine forces to sanction A in order to constrain the actions.
Unless either B or C alone is sufficiently harmed and sufficiently powerful visa-vis A to sanction alone, A’s actions can continue unabated.
Should a group have a network of densely intertwined relationships, writes Coleman, it is “closed.” If anyone violates the group’s common norms, others in the network will know. “In a structure with closure”, continues Coleman (id.), “B and C
can combine to provide a collective sanction, or either can reward the other for sanctioning A”.
2.2.4.3 Variations In the wake of pioneering work by scholars like Coleman and
Putnam, others have detailed a variety of extensions. Some have noted that social
capital need not advance any broader social good. The concept refers to the ease withwhich a group can monitor and control its members. If the group collectively decides
to pursue social welfare broadly conceived, fine and good. But in inter-war Germany,
the tight webs of social capital actually facilitated the spread of Nazism (Berman
1997; Satyanath et al. 2013).
Given this welfare indeterminacy, Putnam suggests that scholars distinguishbetween "bridge" and "bond" civic associations. An association that connects themembers of multiple groups "bridges" a social divide. An association that more
tightly "bonds" together members of a group may cause the larger society to fragment (Stolle and Rochon 1998; Knack 2002; Knack and Keefer 1997; Patulny andSvendsen 2007).
Several scholars have explicitly explored the role that social capital can play inthe growth of businesses within ethnic groups—e.g., Deakins et al. (2007). Closely
related classic studies that did not use the term "social capital" include Landa(1981), Bernstein (1992), and Greif (2012).
2.2.5 Dysfunctional leadership
Leaders of a minority group potentially have the greatest ability to influence thescope of any responsive statistical discrimination. The point simply follows thedefinition of a "leader." These are the men and women who can most strongly

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influence the way others in the group behave. Through their influence over informal sanctions within the group, they can cause the others to behave in a way that
decreases statistical discrimination (e.g., invest in education, avoid violent crime,
marry before having children). Or they can cause them to behave in ways thatexacerbate that discrimination.
Leaders can also manipulate a group to personal ends. They can use the threatof minority violence to extort subsidies from the majority or to pursue their ideological goals. They can divert minority resources to their private accounts. They
can leverage their control over the group to increase their social standing moregenerally.
The ease with which an opportunistic leader will be able to manipulate aminority group toward his personal ends will rise as social capital within thegroup falls. With low levels of social capital, members find it hard to monitor
each other. They find it hard to punish members who violate broad social norms.
By definition, their group lacks the dense networks of information and reciprocal
favors and obligations necessary for members to overcome their collective action
problems and control each other.
As a result, opportunistic leaders will find it easiest to manipulate minorities
with the lowest levels of social capital. Where the group cannot stop them, they
can manipulate the group in a way that benefits them personally (sometimes economic, sometimes social, sometimes political), but in ways that simultaneously
generate intense hostility toward the group as a whole. To stop these opportunists, the other members of the group would need access to information and collective punishments. In groups with high levels of social capital, members may havethat information and means of collective punishment. In groups with low levels,
they do not.
Hence the popular observation that dysfunctional groups have leaders who are
the group’s own worst enemy. Groups with high levels of social capital can monitor
each other. They can control each other, and—potentially—stop opportunists frommanipulating the group to their private benefit but to the group’s collective loss.
Groups with low levels of social capital can do this only haphazardly. Necessarily,
low social capital groups will constitute an easier target for an opportunist intent on
self-promotion.

3 The argument applied
3.1 The exercise
In the article that follows, I illustrate these dynamics with a short history of theJapan-resident Korean community. Readers familiar with the country will observethat almost exactly the same dynamic applies to the tension between the Japanese
mainstream and the "burakumin" minority (Ramseyer 2019a; Ramseyer and Rasmusen 2018). The logic is simple, and provides a straightforward explanation for theethnic tension. I begin with a short summary of the argument.

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3.2 The inter‑war years
During the first four decades of the twentieth century, young Korean men
migrated from destitute agricultural villages to Japan. They came to work. Youngmen are a relatively high-crime demographic everywhere, and these young
Korean men committed crimes at high levels.
The young men made little effort to integrate themselves into Japanese society.
They did not even organize themselves into a stable Korean community. They
intended only to stay a few years and then go home. Most of them did exactly
that, and returned to Korea in short order.
The young men brought very little education. Many could not speak Japanese.
At a time when most Japanese attended school for at least 6 years, a majority of
the Korean men brought no education at all. Neither did they have experience
working in a job outside the home. Instead, they came straight off the farm.
Note the straightforward implications.
1. The young Korean men would have varied in their ability. They came to Japanbecause unemployment was low and wages were high. But the market within
Japan included both jobs that required high levels of ability and jobs that did not.
The Korean immigrants would have included high-ability young men and low-.
2. The Korean men comprised a group with low mean productivity. The Koreans
had low mean education levels and low mean experience in non-agricultural
employment. Although the young Korean men varied in their ability, their mean
productivity was lower than the mean productivity of Japanese men of the sameage.
3. Japanese would have found it extremely hard to distinguish individual ability
among the Koreans. Most of the Koreans arrived with no Japanese language ability, and and made little effort to integrate themselves into Japanese society. Unable
to speak with a Korean or to inquire into his reputation, a Japanese employer,
landlord, or merchant would have found it extraordinarily hard to gauge his ability.
4. The young Korean men made no effort to organize themselves. Intending soon
to return to Korea, they had no reason to build or maintain any network of social
capital beyond the minimum necessary to locate potential housing and employers.
5. Because of (4), the Korean men would have maintained only attenuated webs of
the ties necessary to monitor each other, and to enforce informally any norms ofappropriate behavior on each other.

3.3 After the war
At the close of the war, most of the Japan-resident Koreans returned to Korea.
Only a small minority stayed. Those who stayed faced circumstances that built on
the dynamic described above:

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A. Dominated by what had been a group of transient, poor, young men, the Japanresident Koreans presented opportunists within the group with an extraordinarily
vulnerable target. Koreans had little education ((2), above), were unorganized((4), above), and had little of the web of social connections (the social capital)
necessary to monitor or constrain each other ((5), above).
Communists immediately exploited the vulnerability created by the resulting
collective action problem. Within a year of the end of the war, they took complete control of the new association of Japan-resident Koreans. The group would
reorganize several times during the next several years, but would eventually takethe popular name of Soren.
B. The communists among the Koreans captured the encompassing organization ofJapan-resident Koreans; they then recruited group members toward their private
political goals, and opened a second front of the Korean War within Japan.
During the Korean war, Soren leaders recruited their members to fight a second front within Japan. For several years, they carried on a violent campaign ofbombings and sabotage. Obviously, this did not promote the social or economic
opportunities of Koreans within Japanese society. In other words:
C. By engineering the politically targeted violence, the Korean communists substantially increased the perceived cost to Japanese employers (or others) of hiring(or otherwise contracting with) a Korean. Necessarily, dramatically increased
statistical discrimination would have followed.
Later in the 1950s, Soren leaders encouraged members to emigrate to North
Korea. North Korea wanted men and women they could hold hostage in order
to extort foreign currency from family members still in Japan. Word quickly
travelled that the emigrants were simply volunteering for the gulags. But North
Korea was subsidizing the Soren, and the emigrants left their property with theorganization when they left. For years, Soren leaders steadfastly promoted theemigration.
Soren leaders continue to maintain a network of schools to which they encourage
members to send their children. They do not teach the students Japanese, mathematics, or sciences at the levels that they will need to succeed within Japanesesociety. Instead, they largely teach the quasi-religious North Korean ideology
centered on the Kim family. Effectively, they create a class of Koreans who cannot
leave the Soren orb. In effect:
D. The self-appointed communist leadership deliberately set out to raise the costamong Koreans of migrating into Japanese society.
The Soren leaders prey on the most vulnerable of the Japan-resident Koreans. To
leave the ethnic Korean community and merge into Japanese society, a Korean
will need to learn Japanese and obtain a serious education. Japanese schools offer
all residents (including Koreans) that education. Like everyone else, the Koreanswould have varied by intellectual ability—and the cost they incurred to learn alanguage and obtain an education.
E. If Japanese-resident Koreans had been a group with high levels of social capital,
they would have found it cost-effective to monitor and control the opportunists
among them; instead, Koreans (starting with the most talented) simply left thegroup and migrated into Japanese society.

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For all the dynamics nicely modeled by Kim and Loury (2019) and others, Koreans with the highest ability levels would have found it least costly to leave the group.
Migrating in Japan required learning Japanese. Obviously, some people find it easierto learn foreign languages than others. It also entailed obtaining basic literacy andnumeracy (which was standard in pre-war Japan but not Korea). Again, some findthis easier than others.
Given the statistical discrimination, the Koreans with abilities higher than thoseof the Korean group mean also could anticipate a higher return from migrating: as
Koreans, they were more likely to be judged by the group mean; should they migrate
into the Japanese mainstream, they would be more likely to be judged by their individual ability. Steadily, Japan-resident Koreans have mastered Japanese education,
married Japanese, and merged into the larger society.

4 Koreans in Japan before the war
4.1 The Japanese interest in Korea
As the nineteenth century drew to a close, the Korean peninsula was poor. The
northern half of the peninsula held more by way of a potential industrial base than
the south. But entrepreneurs had not yet made the investments necessary to exploit
those resources effectively. The southern half was better suited to agriculture. But
farmers had not yet made the technological changes that would double production
by 1940.1
The Joseon dynasty had governed the peninsula since the fourteenth century. Yet
the dynasty was weak, and presented an easy target to a rapidly modernizing Japan.
In 1894–1895, Japan fought China and won. In the ensuing treaty, it demanded that
China renounce any claims it had on Korean tribute. In 1904–1905, Japan fought
Russia and won. This time, it demanded that Russia recognize Japan’s influence
over Korea. Five years later (1910), it formally annexed the peninsula. Koreans were
now Japanese citizens, and the government in Tokyo would administer the peninsulathrough a Tokyo-appointed governor general.
4.2 Pre‑war immigration
4.2.1 Where Koreans went
With their new Japanese citizenship, Koreans began to emigrate to Japan. In 1910,
2200 Koreans lived in Japan (Table 1). By 1925, 130,000 lived there. By 1930
298,000 Koreans lived in Japan, and by 1940 the number had soared to 1.2 million.

1

Kanmei and Toshiyuki (2000, 28), Lee (1986), and Cumings (1984).

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Table 1  Korean residents inJapan. Source: Higuchi (2002,
23, 206), Homu sho (2018), andTonomura (2004, 42)

No. of residents
1910

2246

1915

3992

1920

30,149

1925

129,870

1930

298,091

1935

625,678

1940

1,190,444

1945

2,206,541

1950

535,236

1955

567,0531960

581,257

1965

583,537

1970

614,2021975

647,156

1980

664,536

1985

683,313

1990

687,940

1995

666,376

2000

635,2692006

486,6532010

453,3162015

411,5472017

395,912

Post-war figures total special and general permanent residents; prewar figures are based on the Ministry of Interior

Koreans moved to Japan for the money.2 There were jobs in Japan, and the jobs
paid well. In 1930, unemployment in Korea stood at 12.5%. Within Japan, it was
5.9%. By 1937, Korean unemployment had fallen to 10.1% in the cities and 7.3%
in the countryside. In Japan, it had fallen to 3.6% in the cities and 0.5% in the countryside (I 2018, 21). For this work, Japanese firms paid higher wages. In 1923. theaverage Osaka wage in 1923 was 1.54 yen per day. In Korea it was 0.91 yen (Miki
1933, 45).
The Korean migrants came overwhelmingly from the southern coastal provinces.
From the port of Pusan on the Korean southern coast to Fukuoka on the northern

2

Although Koreans were Japanese citizens before the war, the Japanese government did not draft
Korean men into the military. It did not start recruiting Koreans to work in Japan until 1939. This wasa restrictive recruiting effort—and a substantial minority of Koreans who applied for the jobs were not
hired. The government did not formally draft Koreans to work in Japanese factories and mines until thefall of 1944—when it did so as part of a general program of mobilizing all Japanese citizens, whether on
the Korean peninsula or on the Japanese mainland.

13

European Journal of Law and Economics

coast of the Japanese island of Kyushu was all of 120 miles. In Fukuoka, Koreanswould encounter a thriving industrial community with a large coal mining sector.
In these mines, the young men off the Korean farms found the work they could not
locate at home (Rekishi 2015, 33; I 2018, 50).
In 1922, a Japanese firm launched a ferry service to Osaka from Jeju, a large
island off the southern coast of Korea. The second largest city in Japan, Osaka washome to a booming commercial and industrial economy. Young men from Jeju now
began arriving in large numbers (Park 2017, 22; Rekishi 2015, 33). From these initial stops in northern Kyushu and Osaka, many of them would continue their eastward move in search of ever-better jobs (I 2018, 50–53).
Destitute Koreans did not move just to Japan. Instead, they fanned out widely
across northeast Asia. As of 1935, 626,000 Koreans lived in Japan, but 792,000
lived in northeast China (I 2018, 26). About 200,000 lived in the eastern USSR
(Chosen 1933, 290). Increasingly, Koreans also settled in Japanese-controlled Manchuria. With its own plans for the area, the Japanese government encouraged themoves. It subsidized the Korean migration, and actively taught Korean immigrants
modern farming techniques (Chosen 1933, 188).
4.2.2 What Koreans brought
Unfortunately, the young Korean men who moved to Japan brought neither thework skills nor the education required in the rapidly industrializing country. The
new factories needed workers who came to work every day. They needed workers
who arrived at the same time of day, who put in steady effort, and who moved the
product along expeditiously. These were not habits of life that pre-modern peasantsneeded on the farm, and they were not habits that the young Koreans (raised as they
were on premodern farms) necessarily brought with them (Miki 1933, 43).
What is more, many Koreans could neither read nor calculate. Even as late as
1939, 58% of the Korean immigrants were entirely illiterate.3 By contrast, alreadyin 1897 67% of Japanese elementary-age children were in school, and by 1902 thatfigure had reached 92% (Ogasawara 1979, 60).
Because of the Korean lack of work skills and education, Japanese employers
avoided Koreans when they could. Many larger factories found that they could not
profitably integrate Korean workers even at wages lower than those they paid their
Japanese employees. Smaller factories were willing to hire Koreans at those lower
wages, but still complained that the Koreans did not bring the work habits theyneeded of their workers (Miki 1933, 45).
The Koreans in Japan were not just young; they were also transient. Very few ofthem planned to settle in Japan. Instead, they came for the high wages, sent money
back to Korea, and returned after a few years. Necessarily, they did not try to adopt
Japanese norms, invest in the society, or integrate themselves into the local community. Instead, they earned what they could, and left.

3

Naimu sho (1939, 892); see also Naimu sho (1938, 933).

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European Journal of Law and Economics
Table 2  Movement of Koreans to Japan, and back to Korea, 1921–1930. Source: Miki (1933, 11), Chosen (1933, 190–192), and Tonomura (2004, 46)
(I)

(II)

(III)

(II)/(I)(II)/(III)

Korea to Japan

Japan to Korea

Total in Japan

(%)

(%)

1921

38,11825,55638,651

67.0

66.1

1922

70,462

49,32655,851

70.0

88.3

1923

97,39589,74580,617

92.1

111.3

1924

122,21575,427120,238

61.7

62.7

1925

131,273

112,471

133,710

85.7

84.1

1926

91,092

83,709148,503

91.9

56.4

1927

138,016

93,991

175,911

68.1

53.4

1928

166,286

117,522

243,328

70.7

48.3

1929

153,570

98,275

276,031

64.0

35.6

1930

95,491

107,706

298,091

112.8

36.1

Table 3  Arrests (all crimes) of Japan-resident Koreans, 1932–1938. Source: Naimu sho (1938, 1037–
1040)
Total Koreans

Korean arrests

Arrests per cap

Male/100 fem

Arrests percap (Japanese)

1932

390,542

35,411

9.06%

212

1.75%

1933

456,21749,471

10.84

204

1.72

1934

537,695

49,881

9.27

184

2.07

1935

625,678

45,022

7.19

166

2.37

1936

690,501

48,970

7.09

162

2.23

1937

735,674

45,342

6.16

155

1.73

1938

799,878

45,782

5.48

154

1.73

Although the total Japan-resident Korean population in Table 1 shows a steadyincrease, the total misleads. Turn instead to Table 2. In 1921, 38,000 Koreans moved
to Japan, but 26,000 returned to Korea; in 1925 131,000 Koreans moved to Japan,
but 112,000 returned to Korea; and so it continued throughout the pre-war period.
Over the course of the 1920s, the total in Japan rose from 39,000 to 298,000, but inany given year, somewhere between 62 and 113% of the number who came to Japanthat year left to go back.
4.2.3 What Koreans did
Young single men are a high-crime demographic in most societies, and they were ahigh-crime demographic in Japan. Overwhelmingly, the first Korean immigrants toJapan were male. Of the 148,000 Koreans in Japan in 1927, for example, 121,000
were men. In 1932, more than twice as many Korean men as women still lived in13European Journal of Law and Economics

Japan, and even in 1938 the ratio stood at 150%. At least when they initially arrived,
the Koreans were also young. Of the 36,000 Korean men in 1920, 5300 were age
15–19, 11,500 were 20–24, 8400 were 25–29, 5000 were 30–34, and only 2100 were
35–39 (Somu sho, Kokusei 1920).
Predictably given the preponderance of transient young men, the Koreansin Japan committed crimes at high rates. To consider the 1930s, take Table 3. In
1932, the arrest rate for Japan-resident Koreans (all crimes) was 9.06%. For Japanese, the rate was 1.75%. In 1938, the arrest rate among Koreans was 5.48%. AmongJapanese, it was 1.73%. For the generally more serious Criminal Code crimes, theKorean rate during the period ranged from 5.37 (1932) to 3.17% (1938). In 1937,
the Korean rate was 3.25 (1937); the Japanese rate was 0.43%.
The transient young Koreans engaged in a wide range of opportunistic behavior
beyond the crimes reflected in these rates. Within the housing market, they behavedin ways that soon caused Japanese to avoid renting units to Koreans whenever they
could. Some tensions were predictable, of course. One would expect urban Japaneselandlords to find the much poorer young Korean peasant men prone to habits they
considered unsanitary, and so they did. One would expect some young men surreptitiously to sublease their unit to a large number of other young men, and so they did.
And one would expect the young men to drink heavily, brawl, make massive noise,and so they did.4
But the Korean men also adopted straightforwardly opportunistic strategies inthis housing market. Sometimes, the young Korean men built shacks on land without permission. Ordered by the owner to leave, they refused.5 At other times, they
promised to pay rent, reneged, and refused to leave. Worse, they sometimes deliberately created a nuisance and still refused (Miki 1933, 55).
The Korean men agreed to leave only if the landlord paid massive amounts incash (Miki 1933, 58, 254, 213). The more ambitious even turned tenancy itself
into a job of sorts. They rented strings of apartments never intending to pay rent oreven to live long-term in any of them. Instead, they took each unit solely in order toextract a large cash payment in exchange for leaving. Toward that end, they mightdeliberately create a nuisance. They might sublease the unit to 10 or more other
Koreans. They might hang signs offering to lease the unit to other Koreans. If an
owner complained, they accused him of discrimination and demanded even morecash (Miki 1933, 217; Naimu sho 1938, 1024).
4.2.4 Terrorism
On March 1, 1919 and the days and weeks following, Koreans took to the (Korean)streets in large protests. They demanded independence from Japan. Within a month,self-proclaimed Korean leaders organized a government-in-exile in Shanghai.
The most militant of the anti-Japanese Koreans divided themselves into terrorist
and saboteur squads. Operating out of Beijing and elsewhere, they orchestrated a4
5

Miki (1933, 54, 211, 214–215), Naimu sho (1938, 931), and Chosen (1933, 203).
Naimu sho (1938, 1025) and Miki (1933, 57, 215).

13

European Journal of Law and Economics

series of bombings and attacks against Japan. Most of these they carried out on the
Korean peninsula. But not all. By the early 1920s, militantly anti-Japanese Koreans
were plotting in Japan with Japanese anarchists and communists (Miki 1933, 481;
Chosen 1933, 28). Over time, the Shanghai-based government-in-exile would itself
turn communist as well (Miki 1933, 445).
In 1920, militants tried to assassinate the Korean crown prince in Japan. They
thought him too pro-Japanese, and planned to kill his Japanese wife-to-be and theJapanese governor general of Korea too. Police foiled all three assassinations. In
1921, assassins did successfully kill Min Won-sik in Tokyo. The journalist and politician had pushed for Korean rights, but extremists thought him too moderate. In
1922, militants tried to assassinate Japanese army general (and eventual prime minister) Giichi Tanaka in Shanghai.
In mid-1923, Korean anarchist Pak yol and his Japanese lover Fumiko Kaneko
apparently (some historians dispute the charge) plotted to kill the Japanese crownprince (later Showa emperor). A Japanese anarchist would indeed shoot (but notkill) the crown prince in December 1923. But on September 3, the police arrested
Pak and Kaneko, and eventually charged them with attempted regicide.
4.3 The earthquake
On September 1, 1923, a massive earthquake hit the greater Tokyo area. At magnitude 7.9 (Richter scale), the shock toppled buildings and smashed homes. Together
with the resulting fires, the quake destroyed 40% of Tokyo and left 60% of its residents homeless. One hundred five thousand people died or disappeared across theplain. The death toll was particularly high within the crowded slums where most
Koreans lived.6
4.3.1 Korean sabotage?
Three hours after the earthquake, survivors began to hear rumors of marauding
Korean gangs.7 The Koreans torched buildings, people said. They planted bombs,
they poisoned water supplies, they murdered, they pillaged, they raped.
Korean militants had moved up a planned terrorist attack, reported the newspapers. The Kahoku shimpo newspaper detailed a confession taken from a Koreancaught carrying a bomb (Kahoku 1923a, b). He and other activists, he said, hadplanned a massive terrorist attack on the wedding of the crown prince (later theShowa emperor) scheduled for that fall. In the face of the earthquake, they had
accelerated their plans.
For the fires that broke out after the earthquake, Korean leftists took credit. In
Shanghai, they celebrated the disaster. "When told the theories about the violenceby anti-social Koreans," reported the Korean Governor General’s office (Chosen

6
7

Naikaku fu, Saigai (2005), Yoshida (2016, 205), and Tsuchida (2017, 61).
Yoshida (2016, 230–232); for details of the rumors, see, e.g., Naikaku fu (2005).

13

European Journal of Law and Economics

sotoku 1923a), the leftists "found the theories reasonable." Indeed, they forthrightly
claimed responsibility. According, again, to the Governor General’s office (Chosen
sotoku 1923b):
Communists, along with the various labor groups organized by the communists, observe that the harm from the disaster was caused less by the earthquake than by the accompanying fire. They then declare that their ideologicalcompatriots had lit the fires. Their brothers lit the fires for the sake of revolution, they explain. They rejoice in their heroic accomplishment, and look forward to the chance to participate themselves.
Newspapers reported a wide range of eyewitness accounts of Korean crime. To
be sure, they competed in a world of yellow journalism. But to take a few examples, on September 3 the Osaka Asahi (1923a) newspaper reported that Koreanmobs were advancing on Tokyo from neighboring Yokohama, torching houses as
they came. On September 4, it reported that the Korean mobs were carrying explosives and oil (probably kerosene) as they ran through the city (Asahi 1923b). Several
Koreans, wrote a Nagoya paper, upon their arrest confessed to planning to blow up
a train (Nagoya 1923). The Tokyo Nichi Nichi (1923) newspaper detailed first-handaccounts of Korean arson, dynamite, and general rampage.
In the end, the government concluded that some Koreans had used the chaos toloot, burn, rape and poison, but far fewer than claimed in the rumors (Keibi 1923;
Naito 1923). As the Korean Governor General’s office (Chosen sotoku 1923b) put it,
the reports "were not without some truth." They "had facts at their root," but became
exaggerated in the course of their repetition.
4.3.2 Japanese massacres?
Upon hearing these accounts of Korean sabotage, private security bands began toscour the Kanto plain for Koreans gangs. The same sensationalist newspapers thatdetailed rampant Korean violence also repeated accounts of widespread Japaneseslaughter.8
The newspapers report both Korean sabotage and Japanese slaughter. A century later, we have little reason to think either set of accounts more reliable thanthe other. On October 20, 1923, the Osaka Asahi newspaper actually reported bothphenomena: that day, it published two articles side by side—in one, it detailed Koreans looting burned buildings and beating and killing anyone who blocked their way(Asahi 1923c); in the second, it detailed Japanese security squads slaughtering 120
Koreans—laborers, male and female students alike (Asahi 1923d).

8Western scholars generally discount the reports of Korean violence, but take the newspaper accounts ofretaliatory Japanese violence nearly at face value. Bates (2006, 17), Lee (2008, 206), Abe (1983), Ishiguro (1998, 332), and Silverberg (2005) each suggest Japanese bands killed 6000–7000 Koreans. In one
article, anthropologist Sonia Ryang claims that the Japanese patrols may have killed 10,000 (2003: 746
n.2; also Neff 2016). Elsewhere, she suggests 20,000 (Ryang 2007).

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European Journal of Law and Economics

The evidentiary morass that plagues any attempt to determine the scope of
Korean sabotage also plagues any attempt to determine the scope of the retaliatory
murders. The earthquake and fire killed 100,000 people. Wherever they went, police
officers found piles of dead bodies, most of them badly burned.
The Ministry of Justice counted the Koreans it knew to have been murdered. In
November of 1923, it identified 231 Koreans murdered in the greater Tokyo area,and 59 Japanese mistaken for Koreans and killed. For these murders, it prosecuted
325 Japanese.9 In December that year, the police reported 422 killed in the general
metropolitan area.10 In one account, the Korean Governor General’s office estimatedthe number of Koreans killed by the Japanese private security squads at 300 (Zaikyo1923). In a second account (Chosen sotoku 1923b), it estimated the total Koreansdeaths from all causes at 832. It then suggested that 20–30% of those deaths werecaused by the security squads: a number in the range of 170–250.
"So," one lawyer dryly noted in 1924, "it seems we can be certain that it wasmore than 2 and fewer than 10,000" (Yamazaki 1924). Sarcastic as he surely was, hepoints to the only sensible approach: to try to calculate a plausible upper and lower
bound. The minimum number is easy. The Japanese government limited its countsof Korean sabotage to the most credible claims, and seems to have done the samewith the murders of Koreans. If the police in December 1923 reported 400 Koreanskilled, we can be reasonably sure that the security bands killed at least 400 Koreans.
The maximum is harder (I detail the calculations in Ramseyer 2019b). Start with
the number of Koreans in the greater Tokyo area at the time of the earthquake. Historian Shoji Yamada (2012–2013, 4) has done some of the most careful work on
the topic. He concludes that 8600 Koreans lived in Tokyo, 3600 in Kanagawa, andanother 1900 nearby—for a total 14,100 on the Kanto plain. Of the Tokyo Koreans,
1000–3000 were students. Some of them had not yet returned from vacation.
Many Koreans died in the earthquake and fire. According to the Director General, about 4000 Koreans laborers lived in the Honjo and Fukagawa wards (Chosen
sotoku 1923b). The areas suffered an extraordinary casualty rate: about 20% (Keishicho 1923). On a Honjo Korean population of 4000, that ratio yields a death toll of800.
Once the rumors of the killings by the Japanese security squads began to circulate, the police took 5000–9000 Koreans into protective custody.11
Shortly after the earthquake, the Japanese government helped about 7000 Koreans from the Tokyo area return to Korea.12
Now combine these numbers. Suppose 14,000 Koreans lived in the greater Tokyo
area, that 1000 students had not yet returned, and that 800 Koreans died in thefires. If police placed 7000 in protective custody and helped them return to Korea,
that leaves 5200 Koreans as potential murder victims. If the marauding gangs had

9

Shiho sho (1923, 9–363 to -64, 9–374).
Keiho (1923, 6–187, 6–188).
11
Chosen sotoku (1923b), Rikugun (1923), Shinkasai (1923), Koyagi (1923), and Naimu sho (1923).
12
Kaigun (1923, 3–38, 3–41, 3–45 to 3–48, 3–57), Chosen sotoku kanbo (1923a, b, 1924).
1013European Journal of Law and Economics

successfully identified and killed every surviving Korean not in police custody, inother words, they would have killed 5200.
Apparently, the mobs killed more than 400 Koreans, and fewer than 5200. Recall,however, the number of immigrants on Table 3. If Japanese mobs had slaughtered
thousands of Korean immigrants, one might expect fewer Koreans to travel to Japan.
In fact, however, after 1923 the number of Koreans coming to Japan does not fall,
and the number returning to Korea does not rise. Whatever happened in Tokyo, it
seems not to have affected the eagerness of Koreans to come to Japan.

5 War and post‑war
5.1 Ideological opportunism and elite control
5.1.1 Politically selected immigration
A quarter-century after the earthquake, Japan-resident Koreans would launch a
decidedly real campaign of sabotage and terror. A quarter century later, the exaggerated rumors of 1923 would start to come true.
The story begins with new, politically driven migration patterns. In South Korea,
the staunchly anti-communist Syngman Rhee came to power in 1948, and moved
quickly to eliminate his communist opposition. The steps he took would now drive a
distinctly political pattern of cross-cutting migratory waves. Japan and South Korea
were both capitalist regimes, but Japan tolerated leftist dissent while Korea did not.
Necessarily, apolitical Koreans in Japan were more likely than communists to return
to South Korea; communists in South Korea were more likely than their apoliticalcompatriots to leave (albeit illegally, since by 1948 Japan no longer allowed theimmigration) for Japan.
At the close of the war in August 1945, 1.9 million Koreans lived in Japan. Most
had come from the southern tip of the peninsula, and wanted to return. During thelast 4 months of the year, 100,000–200,000 Koreans left Japan every month.13 As
the months passed, however, Japan began a steady recovery. South Korea remained
mired in chaos, and Kim Il-sung launched his infamously brutal family dynasty inthe north.
The political tensions turned to war in 1948. The fighting started on the Jeju
island from which so many Japan-resident Koreans had come. The anti-Japanese
movement there had already turned far-left before the war (Fujinaga 1999). On April3, 1948, Jeju communists launched what they hoped would become a people’s revolution (Hyon 2016, 23–26). They attacked 12 police stations, killed several dozen
policemen, and then turned to families they thought sympathetic to the government(Hyon 2016, 12).
The South Korean government responded brutally. Over the course of the nextyear, according to modern accounts it slaughtered anyone on the island suspected
13

Sankei (2017, 109), Sasazaki (1955, 38–39), and Ri (1980, 182).

13

European Journal of Law and Economics

of communist ties. Estimates of the number it killed range from 15,000 to 60,000—
this on an island with a population of only 290,000.14 Almost immediately, however, surviving Jeju leftists began to leave surreptitiously for Japan. Given that theymigrated illegality, the number is hard to know. But by 1957, barely 30,000 people
still lived on the island (Zaishuto 2005).
5.1.2 The rise of the communist left
The communist refugees from Syngman Rhee’s South Korea soon took control overthe most destitute and vulnerable of the Japan-resident Koreans. The Japan-resident
Koreans constituted a group with very low levels of social capital—and with very
low levels of the information and control over group members that they would needto stop any self-appointed leaders. The communist refugees took over the group, andturned it to their own political agenda. They did so violently, and in a way that generated massive Japanese hostility.
Almost immediately upon the end of the war, communists commandeered the formal Korean organizations. Kim Chon-hae would play perhaps the most prominentrole. Kim had spent the war in a Japanese prison as a political prisoner, and upon
release joined the Central Committee of the Japan Communist Party (JCP; Ri 1980,
3). As representatives of the Koreans in Japan gathered in the fall of 1945 to form
an encompassing organization, Kim maneuvered himself into the role of "Supreme
Adviser." From there, he and his allies purged the non-communists from the group’s
leadership, and brought it under the direct control of the JCP.15
Over the next several years the groups through which the Korean communists
operated would shift structure and names. Eventually, however, the key group took
the name of Soren (Zai Nihon Chosenjin so rengo kai). This group focused on themost vulnerable of the Japan-resident Koreans, such as those who still spoke the
Korean language.
The violence began almost immediately. Police counted 5000 violent incidents
involving 50,000 Koreans in 1946—including violence against Japanese government agencies and the police. The brutality ebbed for a few years, but police again
counted massive violence in 1949—this time involving 20,000 Koreans (Sasazaki
1955, 198–99, 205).
In 1950, the fringe-left Korean violence turned more aggressive still. That January, Stalin ripped the JCP for insufficient militancy (Abe 2019, 31; Ko 2014, 154),
and in June the North Korean army invaded the south. Duly chastised, the JCP went
underground and embarked on a multi-year guerrilla campaign of terror and sabotage (Abe 2019, 32, 38). For its front line, it recruited Japan-resident Koreans.16
In effect, the JCP and its allied Japan-resident Koreans had started a second
front to the Korean War. The Koreans trained under surreptitiously infiltrated North
Korean military officers (Sasazaki 1955, 101–103). They then attacked government

14

Hyon (2016, 67), Choe (2019), and Ghosts (2000).
Sasazaki (1955, 50, 58), Ri (1980, 3), Ko (2014, 21), and Sankei (2017, 11).
16
Sasazaki (1955, 4–9, 49, 102), Ri (1980, 16–21), and Bando (2016, 47).
15

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European Journal of Law and Economics

offices. They set cars on fire with Molotov cocktails. They turned to American military installations and personnel. They disrupted munitions production for the Korean
front, and the transportation of those munitions to the Korean peninsula.17
5.1.3 Out‑migration
Those Koreans who had learned to make their way within Japan (those already integrated into Japanese social capital networks) would have none of this, of course.
They created a rival organization that in time would become the Mindan (Zai Nihon
Daikan minkoku mindan). The Communists found it easiest to dominate those Koreans who lacked the resources and talent to survive in Japan. The Mindan catered
to the Japan-resident Koreans who had largely forgotten their Korean (if they everknew it), and could weather Japan on their own (Ko 2014, 54, 59).
Necessarily, the Mindan constituted a way-station along the path to full assimilation. Any exclusively Soren-Mindan comparison ignores what in time would
become the largest Korean group of all: those who had merged into Japanese society
and disappeared from the ranks of Japan-resident Koreans. The Communists could
successfully dominate the low-social-capital Koreans who lacked the resources andinformation either to control them or to leave the group. Those who did acquire theresources and information joined the Mindan, but (for many of them) only temporarily. Instead, those Koreans with the intellectual and social skills necessary to merge
into Japanese mainstream society disappeared. Over time, they ceased to be Korean
at all.
As Table 1 shows, the number of Japan-resident Koreans has steadily declined.
The Japanese population itself rose steadily during the half century after the war.
During the same period, however, the number of Koreans fell. They did not havea lower birth rate. Instead, those with the tools that best prepared them for joining
Japanese society steadily left. Some naturalized and became Japanese citizens. From1952 to 1990, 156,000 Koreans became naturalized (Kim et al. 1995, 22). Morecommonly, they married Japanese. Their children acquire dual citizenship, and virtually all eventually choose to become Japanese. Some 80–90% of young Koreans
now marry Japanese.18
5.1.4 The Soren schools
Within this world, the Soren leadership designed a Korean school system that taught
hard-edged suspicion and hostility toward Japan. It taught less of the Japanese language and the scientific, economic, and mathematical skills that graduates would
need to thrive in modern Japan. They designed and maintained a school system, inshort, that kept Japan-resident Koreans unproductive (or even completely unemployable) and invited statistical discrimination.

17
18

Sasazaki (1955, 103), Bando (2016, 47), Suganuma (2015, 15, 24), and Abe (2019, 35).
Bando (2016, 87), Kim et al. (1995, 22).

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European Journal of Law and Economics

These Korean schools teach a curriculum ruthlessly tied to North Korean orthodoxy. Until the 1960s, they apparently taught standard Marxist scholarship, much
like many Japanese universities at the time. In mid-1960s, however, Kim Il-sung’s
heir Kim Jong-il began to consolidate his power by creating an ideology centered on
the Kim family. Soren and the North-Korean-allied schools followed suit. Orthodox
Marxists teaching at Soren’s university left the school. Their courses disappeared
from the curriculum, the library discarded non-conforming books, and the remaining students and faculty met regularly for self-criticism (Sankei 2017, 40–42).
For Koreans within the Soren orb, the school system continues to play a central
role. Should a child hesitate to attend Soren’s university, his family can face seriouspressure. The Soren might ostracize the entire family. Should someone in the family
work at Soren, he might find his very job in jeopardy (Sankei 2017, 86–87). Rather
than Japanese jobs, the Soren schools prepare students primarily for positions at theSoren schools or within Soren itself. That said, they do also train their students andteachers to spy for North Korea within Japan and South Korea (Sankei 2017, 131,
142–43).
5.2 The residual dysfunction
5.2.1 Introduction
To understand the dysfunctional nature of the post-war Korean community in Japan(because dysfunctional it was), bear in mind the historical context. The community
had begun in the 1910s, as uneducated young men off the farm came to Japan toearn money. They never intended to stay long, and never intended to integrate themselves into Japanese society. They never created the cross-cutting web of social networks that would give them access to information about each other and the means toenforce social norms on each other.
After 1945, the fiercely anti-communist Syngman Rhee gave the cross-cutting
repatriation patterns a distinctly ideological cast. Disproportionately, conservative
or apolitical Koreans returned to (or stayed in) South Korea. Communist Koreansstayed in (or moved to) Japan. To these hard-left entrepreneurs, the low-social-capital Japan-resident Korean society offered an easy target. They quickly commandeered the encompassing Korean organization in Japan, allied themselves with the
JCP, and opened a violent Japanese front to the conflict on the peninsula. In turn,Japanese responded to the Korean minority with suspicion and hostility.
Over the course of the next several decades, Japan-resident Koreans with thesocial, intellectual, and linguistic resources necessary to thrive in Japanese society would increasingly choose to merge into that society. Disproportionately, those
who remained were those without those resources. And just as those who remained
Korean lacked the resources necessary to thrive in competitive modern Japan, theyalso lacked the resources necessary to stop opportunistic political entrepreneurs
from within their own ranks. Much to the detriment of the collective Japan-resident
Korean community, the violently hard-left political opportunists would become theface of the Japan-resident Korean population.

13

13

165

17

7

6

10

1

5

444

Arrests are for 2015; population numbers are from 2012

Numbers give arrests

Mob includes those counted as quasi-members

Resident Koreans are those designated as "special long-term residents"

10,785

538

Meth related crimes

35

2187

Extortion

Prostitution

7

29

6

10

2321

2720

Intimidation

933

Rapes

239,355

913

Tot criminal code

Murders

33

44

7

19

9

6

2951

Chinese

5618

104

865

592

48

115

12,690

Mob

8.49

0.42

1.72

2.14

0.73

0.72

188.33

43.72

1.85

9.27

7.68

1.59

2.65

615.06

Resid Korean

All Japan

Other Korean

All Japan

Resid Korean

Rate per 100,000

Number arrested

Table 4  Crime numbers and rates by nationality, 2015. Source: Homu sho (2018) and Keisatsu cho (2015)

11.13

4.58

3.93

6.55

0.65

3.27

290.79Other Korean

5.14

6.85

1.09

2.96

1.40

0.93

459.23Chinese14,368.29

265.982212.281514.07122.76294.1232,455.24

Mob

European Journal of Law and Economics

European Journal of Law and Economics
Table 5  Japan-resident Koreans on public assistance. Sources: Bando (2016, 79) and Higuchi (2002)
Koreans

Total
population

A. Kanagawa residents (%) on welfare
1952

33.6

2.2

1953

41.0

2.2

1954

47.1

2.3

1955

49.1

2.5

1956

20.6

2.0

1957

18.9

1.6

Household total

Households on welfare% on welfare

B. Households on welfare in Japan, 2010
Japanese

50,857,365

1,321,120

2.6

Korean190,246

27,03512.2

38,5404234

10.9

1,093,139

40,029

3.6

Philipino
Other foreign
Welfare is "seikatsu hogo"

5.2.2 Dysfunction
As a reflection of that dysfunction, consider crime rates (measured by the number ofpeople sentenced by a court) by nationality in the late 1950s. The difference between
Japanese and Japan-resident Koreans was huge. Where the rate of sentencing forJapanese citizens for Criminal Code crimes was 63.6 per 100,000 population, therate for Koreans was 608. The murder rate for Japanese was 1.4. The rate for Koreans was 10.4.19 In 2015, Japan-resident Koreans still commit crimes at very highrates (see Table 4). Where the arrest rate for Japanese citizens for Criminal Codecrimes is 188 per 100,000, the rate for Japan-resident Koreans is 615. The murderrate for Japanese is 0.72. The rate for Japan-resident Koreans is 2.65 (see also Suganuma 2015, 5, 126).
Some of the pre-war real-estate problems have continued. The war devastatedmany urban areas, and into these neighborhoods Koreans sometimes moved as
squatters. When the owners reappeared and demanded their land back, some Koreans refused. They demanded money before they would leave (Umeda 2017; Osakaekimae 2008; Bando 2016, 39).
As the Japanese economy began to recover, Japanese voters also noticed a large
fraction of resident Koreans on public assistance. Indeed, as Table 5 shows, the fraction of Korean households on welfare could be twenty times the fraction for Japanese households.

19

Homu sho (1960); see Kaneda (2018, 42) and Bando (2016, 137).

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In truth, however, these were not phenomena that Japanese "noticed." Rather,during the 1950s, the resident Korean associations had aggressively demanded the
public assistance, and had sometimes negotiated applications as a group (Higuchi
2002, 183). The Ministry of Public Welfare attributed the resulting high Korean
dependency rate to "violent group-based intimidation." It counted close to 10,000
cases of intimidation connected to welfare applications (Higuchi 2002, 184). Indeed,in some cases the Japan-resident Koreans arrived in the welfare office en masse, andbeat officials who hesitated to enroll them in the program.20
5.2.3 Repatriation
During the 1960s and 1970s, Soren leaders displayed their opportunism most brutally in the way they encouraged their rank-and-file to emigrate to North Korea.
Recall that the Soren membership represented the most vulnerable and least socialized of the Japan-resident Koreans. Recall too that the Soren leaders had designed
the Korean schools precisely to prevent their socialization. This made its rank-andfile the most ill-informed of anyone, and a group with few good outside options.
Soren leaders encouraged these members to move to North Korea. When they
arrived, North Korea then used them to induce family members remaining in Japanto send foreign exchange. Once a Japan-resident Korean arrived in the North, hebegan writing a stream of letters to his family still Japan, pleading with them tosend him funds. He wrote the letters under duress—he was starving, after all, andescape was hard. Eventually, about 200 did manage to escape and return to Japan(Zai Nihon 2018, 83; Sankei 2017, 115), but the rest remained hostages for the restof their lives.
The first ship bound for North Korea with Japan-resident Koreans (and sometimes their Japanese spouses and children) left in December 1959. That year, 2942
people travelled from Japan to Korea. The number soared to 49,036 in 1960, and22,801 in 1961. Thereafter, the numbers fell to under 4000 per year. Still, in 1972
Soren leaders sent 200 of their university students to the North on one-way tickets.
North Korea had ordered them to send the students in honor of Kim Il-sung’s 60thbirthday, and school leaders had complied (Sankei 2017, 36, 43). The final boat for
North Korea—the 186th ship—did not leave until 1984. By then 93,339 Japan-resident Koreans and family members had moved to North Korea.21
After the first few trips, Soren leaders knew that the North Korean government
would consign the immigrants to lowest rungs of their social ladder and use themas hostages. The leaders sent their members anyway (Sankei 2017, 116). To them,
the benefit to sending their members was not just ideological. By the terms of theagreement between Japan and the North, each migrant could take only 45,000 yen in
English pounds. When they left Japan, the Soren rank-and-file entrusted the rest of
their assets to the Soren (Ko 2014, 171; Sankei 2017, 115).

20
21

Yomei (2016, 108–109); see Bando (2016), and Higuchi (2002, 185–186).
Zai Nihon (2018), Kim et al. (1995, 22), Ko (2014, 169–170), and Sankei (2017, 114).

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6 Conclusion
Some groups develop within themselves dense webs of cross-cutting social andeconomic ties. Through this network, members build "social capital"—the ability to use the resulting access to information and informal collective punishment
to enforce on each other their norms of appropriate behavior. Through the network, they create the means by which to mitigate the collective action problems
endemic to group behavior.
Minorities without this social capital sometimes find that those collective
action problems leave them vulnerable to opportunistic entrepreneurs within theirown group. By manipulating the group in privately advantageous ways, these
entrepreneurs can capture benefits for themselves. And sometimes, the ways thatthey do this involve tactics—e.g., encouraging violent crime, raising the costs to
education—that generate hostility and Arrow-Phelps statistical discrimination
against their group as a whole.
The problem becomes especially acute when migration from the minority tomajority group is costly but possible. The group members who might otherwise
most effectively challenge the opportunistic entrepreneurs are the members withthe most talent. Those are also the members who will find migration into themajority group easiest and most rewarding. In effect, the distinctly selective outmigration will reduce the average ability level of the minority and increase its
vulnerability to the opportunists within it.
The pre-war Koreans in Japan had constituted an extraordinarily vulnerable
group. They were extremely poor, they had no education, they knew nothing
about urban employment. They were young and male, they drank and fought andcommitted crimes (as unattached, transient young men are wont to do) and had
no intention of staying in Japan. They planned to work for a few years, save somemoney, and go home. Most did not even try to integrate themselves in Japanesesociety. They maintained little social capital, and generated significant statistical
discrimination against themselves.
After the war, most of the Japan-resident Koreans returned home. As the postwar South Korean government increased its pressure on the communist opposition, many of the Korean communists left for Japan. There, they commandeered
the Korean groups and preyed on the most destitute of their Japan-resident compatriots for ideological ends. Lacking the social capital by which to overcome
their own collective action problems, those compatriots were unable to stopthem. Instead, the communists used rank-and-file Koreans as their private military force, and opened a second front to the Korean War within Japan itself. In
the process, they generated even greater suspicion, hostility, and discrimination
against resident Koreans. And through this all, they drove the most talented members of the group out of the group itself. Over time, those resident-Koreans withthe education, economic resources, and social ties by which they might have kept
the communists in check found it simpler just to leave the group and merge into
Japanese society. Only the most vulnerable remained Korean.

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The story of Japan-resident Koreans is an object lesson in the common aphorism:
the leaders of a dysfunctional group are often its worst enemy. Koreans in Japan
were not a tightly knit group with cross-cutting ties and access to information about
each other. They were not a group—in the words of modern sociology and politicalscience—with high levels of social capital. Lacking that information and those ties,
they could not monitor and constrain group members who would designate themselves leaders. And so it is that opportunistic fringe-left entrepreneurs hijacked thegroup toward their private political ends, created enormous ethnic tension within
Japan, and generated hostility and discrimination against their fellow Koreans.
Acknowledgements Mitsubishi Professor of Japanese Legal Studies, Harvard University. I gratefully
acknowledge the helpful comments and suggestions of Jason Morgan, Eric Rasmusen, Sun-Joo Shin,
Daniel Smith, Henry Smith, and the editors and referees of this journal.

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