The decline in South Korea's saving rate, which is the main issue in the story, turns out to be much less of a story when you read through it. According to the article, one reason for the low saving rate is the large amount of money that Koreans spend on education in the form of private schools, tutors, and other expenditures to ensure that children do well in school.This is theoretically plausible, but I don't think it matches the facts on the ground. Education in Korea is essentially a desperate struggle for admission to prestigious universities, where acing the test and getting in is much more important than the actual education that comes afterward. You see some of the same tendencies in America, but they're taken to an extreme in Korea: high school students stay in private cram schools until after midnight, and then wake up early to study the next morning. Once they manage to get into college, most students don't try nearly as hard—the name of the university, not their record once there, is the credential that will define their working lives.
In GDP accounts, education spending by households is counted as consumption. In reality, it is a form of investment. More educated workers are more productive workers. If the next generation of South Koreans all have the equivalent of medical degrees or PhDs, they will not have to worry about their lack of saving.
It's hard to imagine that a system with such bizarre extremes is really a productive way of educating people, and indeed it bears all the hallmarks of a signaling equilibrium run amok. Education is prized not for its productive value but as a means to societal prestige, and as the level of competition rachets ever upward, the wasted resources from the struggle to climb to the top grow vast. Baker is right that spending on education can be a useful form of investment, but just as I don't think he would say that billions spent on test prep courses in the US are accomplishing anything societally useful, it's wrong to assume that similar spending in Korea will pay dividends for the economy.