Chaebol strike back

Don’t dash cold water on popular expectations

Whoever becomes the next president will likely put top priority on reforming chaebol in his or her first few years. Such might be the feeling most Korean voters had while watching a news conference Sunday by independent candidate Ahn Cheol-soo.

Ahn, a centrist regarded as less radical than other opposition candidates, unveiled the most sweeping plan to reform family-run conglomerates, including the forceful split-up of subsidiaries for the most unyielding ones. Though attached with a condition, it was a thinly-veiled threat to dismantle the sprawling business groups in a worst-case scenario.

The chaebol-reforming competition among opposition nominees will keep Park Geun-hye, standard-bearer of the conservative ruling camp, from putting forth a noticeably watered-down pledge later this month.

Admittedly, presidents don’t put all of their election pledges into action, at least not in their entirety. Even if the least radical Park takes power, however, a considerable change seems inevitable for the 30 or so corporate behemoths that hold sway on the nation’s economy. What all this means is that Korean voters will not tolerate the large companies’ unfair business practices and unwarranted market domination any longer.

Are chaebol ready to cope with the looming realignment or even aware of the rapidly aggravating sentiment among the public?

The answer appears negative, and to a lamentable degree.

An announcement by the Federation of Korean Industries, a chaebol lobby, said, “We can’t help but expressing serious concerns about the presidential candidates’ economic platforms, which focus on bashing large businesses instead of offering visions for overcoming the global economic crisis and maintaining growth.” Pro-chaebol economists and journalists also pointed out what they viewed as contradiction between attacking chaebol and asking them to make investments and create jobs.

These are the excuses and threats most Koreans have heard probably a thousand times before. The chaebol and their cronies are making a threat of an employers’ strike, taking the national economy hostage. This explains the need for candidates to develop counter-logic. The current crisis of the Korean economy is due to its reliance on export-led, debt-oriented growth, and its solution lies in domestic consumption-led, wage- and income-oriented growth. It was the growth model adopted by most industrial countries in the postwar boom era of 1945 and 1980.

The world is racking its brains to find a new brand of capitalism, or capitalism 4.0, different from neo-liberalistic model marked by market supremacy and financial capitalism. Now is the time for the Korean economy to start over, based on the virtuous circle of productivity growth, wage rises, demand increases, full employment and investment. Chaebol must change themselves by specializing in their best areas and competing in overseas markets instead of expanding into unrelated areas only for the sake of increasing their corporate size and crowding out smaller competitors at home.

We don’t think the candidates need to wait until after voting day. Major parties can start enacting laws based on common ground, while reinforcing existing ones more strictly to awaken these pitiably insensitive, or outrageously arrogant, tycoons, their families and cronies. Voters want to see action.

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