ed Democratizing economy?
Parties seek to socialize country
Ahead of this year’s elections, parties feel the temptation to do everything imaginable to win. The governing and opposition parties have adopted economic democratization as the key campaign theme. The misnomer, however, contracts the basic tenet of capitalism.
Democracy means equality and egalitarianism, with one vote for one adult regardless of status and income. In capitalism, all people are not necessarily equal. Inequality can be eased, not irradicated, through taxation and regulation.
They campaign for balanced growth, income redistribution and harmonious growth between small and large firms in the name of economic democratization.
The governing Grand National Party has pledged to realize a fair society. It plans to provide free high school education. The opposition Democratic United Party (DUP) advocates universal welfare and a tax hike for the rich.
They are right in rolling back pro-conglomerate policies for the survival of small- and medium-size companies. It is true chaebol can grow without support from the government. Many side effects trouble the economy as business groups have been investing in other sectors seemingly without limit. They have even penetrated bakeries, wine shops and traditional markets at the risk of driving out small firms and the self-employed.
Chaebol reform should be made within rules and laws, not through emotional knee-jerk populist and socialistic tools. The opposition DUP has proposed the introduction of a chaebol tax. It must be prudent in creating new taxes. Korea’s corporate tax is still high by OECD standards. The Roh Moo-hyun administration’s imposition of a penalty tax on property owners backfired in 2007 as the levy was unbearable. The opposition lost the presidential election partly because of the revolt of the middle-class homeowners in the face of a steep hike in taxes.
The parties have yet to outline a growth strategy. Without growth, no tax increase, income redistribution or welfare is possible. Penalizing entrepreneurs would not lead to economic democratization and a fair society.
The parties have yet to show vision on how they can narrow economic polarization and create extra jobs.
Growth and welfare are two sides of a coin. Without growth, no meaningful welfare is possible. Without welfare, growth becomes meaningless.
The parties should provide alternative proposals to economic and social ills so that voters will decide which party and candidate they will choose. Their only difference is the ruling party’s carrot approach and the opposition party’s stick.
They do not say what they will do for economic prosperity after the election. They falsely believe that the economy will be on the right track without any effort.
Democratizing the economy means socializing profits and income. There will be no room for a market economy when tycoons and ordinary workers become equals.
The parties should learn the basics of capitalism. Democratization of the economy is a dangerous, radical and ill-conceived attempt that might scare away even foreign investors. The misnomer is politically sexy but economically unattractive. It is a sure road to failed socialism.