Welcome to Moon Jae-in’s hell.

South Korea’s new president didn’t expect a honeymoon when he moved into the Blue House last month, but then neither does the old baptism-by-fire adage capture the magnitude of the task before him.

Between Kim Jong-un’s provocations from North Korea, China’s angst over missile shields, Japan trying to win his favor and Donald Trump’s erratic behavior in Washington, Moon could be forgiven for having trouble focusing.

His biggest nemesis, though, may be an economic system that’s facing its biggest headwinds in 20 years.

Two decades ago, the problem was an Asian contagion devastating global markets and forcing Seoul to go hat-in-hand to the International Monetary Fund for a bailout.

Today’s crisis is far less dramatic, but daunting all the same: chronic youth unemployment that has its roots in the fallout from the events of 1997.

Anger about that dearth of job opportunities and stagnant wages has millennials buzzing about “Hell Joseon,” a reference to the five-century-long feudalist dynasty that chose who got ahead and who didn’t.

Anger about that dearth of job opportunities and stagnant wages has millennials buzzing about “Hell Joseon,” a reference to the five-century-long feudalist dynasty that chose who got ahead and who didn’t.

These days, the masters young Koreans serve are the family dynasties that dominate the economy — names like Samsung, LG, Hyundai and Daewoo.

While Korea has come a long way since 1997, these closely-held conglomerates still wield vast power with the full support of a government relying on them as growth engines.

Why? Tradition, mostly.

These family juggernauts, or chaebol, led Korea’s rise from the ashes of war in the 1960s and 1970s, making them both heroes of the nation’s past and villains of today’s deepening inequality.

Government after government pledged to curb the chaebols’ monopolistic ways only to bow to their primacy.

Case in point: Moon’s predecessor Park Geun-hye, who’s sitting in a jail
awaiting trial for allegedly shaking down chaebol leaders for tens of millions of dollars.

One of those leaders, Samsung’s Lee Jae-yong, is being tried in connection with Park’s downfall, a reminder of how hard it is to know where the public sector ends and the private begins.

It now falls on Moon to untangle this web without killing growth and shaking markets. And yet, déjà vu abounds.

I first met Moon in 2003, when I interviewed his boss, then-President Roh Moo-hyun, at the Blue House.

Moon was chief of staff to Roh, a former human-rights lawyer who championed the Fair Trade Act to rein in the chaebol and empower consumers and small businesses.

Here we are, 14 years later, and a Roh mentee is still grappling with the oligarchic nature of Asia’s No. 4 economy. The path to more jobs and improved competitiveness is as clear today as it was in 2003.

Seoul must tighten anti-trust laws to take the chaebol down a few pegs, incentivize a startup boom, rejigger taxes to advantage small-to-midsize enterprises over the giants, crack down on shareholder-unfriendly behavior by dynastic families and change education and training to encourage risk-taking.

South Korean President Moon Jae-in. Photo: Flickr
South Korean President Moon Jae-in. Photo: Flickr

In other words, turn a dangerously top-heavy economy upside down.

Moon also must address a bubble in household debt. It was an extreme concentration of corporate IOUs among the chaebol that toppled Korea in 1997.

Today, that income/debt imbalance exists among consumers. The record $1.2 trillion debt load is a powerful headwind bearing down on retail spending patterns. At the end of 2016, the ratio of household debt to disposable income was an eye-popping 153%.

Potential side effects abound. If Moon prods banks to tighten loan assessment metrics, then the already marginalized lower-income bracket may fall further behind.

If his team strongarms the central bank to lower borrowing costs, Seoul’s risk profile could worsen.

Franky, without getting Korea Inc. to raise wages, it’s not clear how debt can be reduced without public help. That, it goes without saying, would prove politically contentious.

Again, Korea has come a long, long way from 1997 and its potential is huge. Reaching it, though, requires a leader with the courage to take on the elite hogging prosperity. Hell, indeed, but the rewards are well worth Moon taking the heat.

(William Pesek is a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” Twitter: @williampesek)