Abuse of economic democratization
The ruling and opposition parties have picked “democratization of the economy” as one of their key campaign themes.
The catchphrase seems politically sexy but economically unattractive; and despite their hoopla, they lack in details on ways of democratizing the economy. They only feature the joint prospering of small and large firms, the easing of income inequality and the retooling of chaebol.
What is puzzling is whether an economy can be democratized in a capitalist society. Has anyone heard about economic democratization in any other OECD country? Even Korea’s Constitution narrowly, passively and carefully defines the concept of the economic democratization, to prevent its abuse and overuse.
Should all adults vote for Samsung’s decision to start a business? If so, should Samsung scrap a profitable project just because the people on the street oppose it?
In a capitalist economy, only shareholders can decide what projects they will initiate at their own risk. If non-shareholders decide which projects Samsung should and should not launch, will these non-shareholders be ready to assume the business risk?
In a market economy, only consumers and shareholders, not ordinary people, can influence companies.
The Lone Star case shows the fallacy of economic democratization and justice.
Korea underwent a traumatic experience through the Lone Star saga. If it had been framed as a business issue, the Lone Star case might not have sensationalized the country in such a disproportionate way.
Lone Star had come here to earn profits for its investors. Unless it had violated the rules, it should have had the freedom to quit Korea at its own discretion, but this was not the case. After years of public humiliation, Lone Star quit Korea this year dishonorably. Lone Star had been made a political football for those seeking to realize economic justice and democratization.
The Korea-U.S. free trade agreement is also a bread-and-butter issue for maximizing welfare of Koreans and Americans. However, the economic issue has become highly politicized. Opponents argue that the deal needs renegotiation or scrapping for two reasons. First, it has “serious procedural flaws” as the ruling party passed the deal without public consent. Second, they argue that purported gains from the accord do not benefit all “democratically.”
Democratizing the economy sometimes smacks of ideological overtones. Democracy is intrinsically a political word denoting one vote for one person.
Foreign investors might hesitate to invest in Korea if lawmakers try to break market principles in the name of economic democratization.
The Saenuri Party’s campaign slogan came out apparently to soothe public anger over the economic hardship ordinary citizens have been enduring.
The Lee Myung-bak administration made a series of mistakes in its economic policy. It alienated small-and medium-sized companies and irregular workers; growth was below the potential rate, with a high jobless rate; and it did not get support even from chaebol although they were the biggest beneficiaries of the economic policy. The opposition Democratic United Party also seems to have adopted the slogan in order to highlight the Lee administration’s chaebol-oriented growth policy.
Despite the public disillusionment over the current economic situation, one thing is clear ― the country has a trade surplus which enabled it to overcome another potential currency crisis.
Whoever wins the parliamentary and presidential elections this year, the Korean economy might not undergo a dramatic upturn. Many economists signal that the economy will become worse before getting better in view of the populist economic pledges the parties have unveiled.
Candidates use ideologically-charged political expressions in portraying the economy. For example, they vow to ease economic polarization. In fact, polarization is a sociopolitical expression, not an economic term. They should campaign to ease stumbling blocks to income equality, not wage a war to remove polarization.
The opposition DUP adopted a campaign theme of 99 percent versus 1 percent in order to dramatize the income inequality. The 99-1 concept came from the United States. Korea is now better than the United States in income distribution. Thus, the dichotomous expression sends an ominous signal to voters as the party indicates punishing the rich 1 percent for the benefit of the other 99 percent. It means tax hikes, penalizing conglomerates, and the expansion of welfare benefits at the risk of incurring a national debt that would be beyond control.
Despite growing skepticism over capitalism, no magic alternative has emerged. Capitalism is still the best ideology for the sustained economic prosperity of Koreans. Yes, capitalism should undergo retooling. Without tampering with capitalism, Korea must seek ways of narrowing income inequality, check chaebol’s economic domination and expand welfare coverage to the less privileged. But it is dangerous to penalize the rich, scare foreign investors and oppose free trade agreements in the name of economic democratization.
The economy will encounter trouble if economic democratization is abused or misused to penalize the rich and large companies. Economic democratization frequently clashes with market principles, a sure way of socializing the economy.
Lee Chang-sup is the chief editorial writer of The Korea Times. Contact him at firstname.lastname@example.org.