Bahk criticizes chaebol bashing

Finance Minister Bahk Jae-wan

Strategy and Finance Minister Bahk Jae-wan expressed concerns Tuesday over the deafening chaebol bashing and welfare speechifying ahead of the December presidential poll. Bahk accused political parties of myopia and backwardness, and defending the country’s economic policies in support of big businesses.

Talking to reporters on the sidelines of the Yeosu World Exposition, Bahk said strengthened regulations against chaebol, Korea’s family-owned conglomerates, would hurt them in their competition against foreign corporate rivals. And while “economic democracy’’ has become a buzz phrase for politicians from left and right, Bahk claimed the discussions run against the limits of acceptability, even using the North Korea card to stress his disapproval.

The idea of economic democracy describes a socio-economic arrangement in which businesses are democratically managed and worker-owned. But the term has been used more loosely in Korea where politicians debate ways to combat inequality, improve social mobility and restore a sense of parity in the increasingly Darwinist business sector.

The concentration of economic power in the hands of a few top-tier chaebol has been raising increasing concern that the lack of competitive balance in the business sector is hurting the country’s growth potential and vibrancy.

But Bahk believes this is the wrong time to talk about business sector parity when the country needs its corporate big guns to navigate out of the current economic uncertainty.

“Government policies will have to be consistent with global standards, especially for a country like us that relies much on diplomacy and trade. No one will reject the basic spirit behind economic democracy, but excessive action could lead to problems like discouraging foreign investment and trade disputes,’’ Bahk said.

“While increasing taxes (on business groups) on transactions between affiliates is acceptable, it’s hard to think that any other country would tolerate stronger action than that. We are a country that relies on trade and can’t afford to become a frog in a well like North Korea.
“Our rival economies are pouring in public funds to back their corporations in the renewed world competition and we could lose this race if we keep talking about other things.’’

The finance ministry has also been consistently critical about the long list of welfare policies and reforms promised by political parties ahead of the election, saying that the proposals will threaten to bankrupt the government should they be pushed through word-for-word.
The chaebol’s accumulation of wealth and income has also intensified, with economic downturns accelerating the concentration of the proceeds of growth into the hands of the corporate elite.

The 754 trillion won (about $660 billion) of assets controlled by the five biggest conglomerates ― Samsung, Hyundai-Kia, SK, LG and Lotte ― accounted for 52 percent of the total held by the top-100 firms last year.

While chaebol have provided the thumping heart of Korea’s export engine, an increasing school of critics say that their dominant presence is preventing the Korean economy from taking the next step in its evolution.

The most critical issue for the economy is that it needs an alternative growth engine other than exports. With the deterioration of family finances induced by unemployment and stagnant income severing the country from an important tie to growth ― consumption ― it becomes ever more essential.

Thus, supporting small- and medium-sized companies and inspiring entrepreneurship can be the more reasonable avenue. But this is difficult to do with the financial might and influence of chaebol depriving the business sector of a sense of parity, critics say. <The Korea Times/Kim Tong-hyung>

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