ed Economic democratization
Can Korea tame chaebol without crippling them?
The Federation of Korean Industries boycotted a presidential panel’s meeting to discuss the co-prosperity of large and small firms Tuesday. The reason: the lobby group for family-controlled conglomerates didn’t like the subject of sharing excessive profits with small suppliers.
FKI officials cited technical problems to justify their absence, such as the working-group meeting’s failure to agree on agenda items. It is no secret that the chaebol lobby has a strong aversion to the panel’s activities or its very existence. Their biggest complaint was the commission on shared growth was becoming like another regulatory organ with binding power.
Chaebol dislike everything about the panel ― its nature, agenda and operation. Asked about the profit-sharing system, Samsung Group Chairman Lee Kun-hee said, ``Who devised the concept, a communist or a socialist?”
For chaebol, all this may be about the legal and technical precision. For numerous small businesses, self-employed and wage earners ― or the rest of the country ― what matters is the greed of businesses and their owners who constitute the 0.1 percent of the haves in this country. And their malpractices are getting worse day by day.
A case in point is the rapid disappearance of mom-and-pop bakeries in small neighborhoods, crowded out by the numerous franchise outlets run by large businesses. More recently, the business has become a battlefield, or a playground, for the daughters and granddaughters of chaebol owners. The public sentiment is brewing, watching what was once a matter of economic survival for numerous households has turned into a competition of pride and ego among the modern noble class.
Disappointing as it is, this is only a small part of regressive practices by chaebol as their ownership changes hands to second and third generations. Unlike their fathers and grandfathers who founded and expanded corporate empires by export and investing abroad, these offspring are bent on mastering ``financial techniques” and vying for the limited domestic consumer markets through both intra-group monopolies of related businesses and inter-group cartels, as shown by the price fixing by two local electronics giants, Samsung and LG.
The Lee Myung-bak administration, which contributed to widening the gulf with its big business-friendly policy of tax cuts and deregulation, is belatedly clamoring for co-prosperity and ``economic democratization.” In another Cheong Wa Dae meeting today, President Lee will once again call for chaebol chairman to make ``consciousness change” and ``voluntary donation.”
Lee should have realized a long time ago that it not corporate awareness or occasional charity but changes in laws and systems that can bring about corporate reforms. His Grand National Party must also know it will get nowhere without legal and institutional reform.
At stake is how to roast the pig named chaebol without burning the house of the national economy. There can be various ways of reforming chaebol and its principles need not be so. The process should be not political but economic, not partisan but bipartisan, not emotional but rational and not for class warfare but for national economic harmony.