Economic democratization

Bipartisan effort needed for fairer, more vital system

As in most elections, “it’s the economy, stupid,” too, in this country’s nascent presidential campaign. What sets Korea’s 2012 polls apart from most others, however, is the direction of the debate: how to change its economy to a more just and fair system instead of just making it grow bigger and faster.

What high and mighty talk, south Europeans might think. But so-called “economic democratization” ― how to make corporate governance more transparent and ensure fair trade between big and small businesses ― is the issue that will apparently decide Korea’s economic future.

Income polarization here is second widest among OECD member countries after only the United States, while the nation’s social safety net is looser than any other major countries in the world.

Little wonder all presidential hopefuls, in the ruling or opposition camps, liberals or conservatives, are making it their foremost campaign slogan.

Yet, as these politicians move from generals to particulars, the differences become so wide, ranging from their views on what economic democratization actually means ― one says it is reforming family-controlled conglomerates, the other maintains it is fair redistribution of income and still another argues it is employee participation in corporate management ― to the methodology of how to realize it.

The correct answer may probably be a mixture of all these in proper proportion. If they are forced to narrow the focus for the sake of the effectiveness of reforms, however, the single most important issue should be how to change the family-owned chaebol, which currently represent an A-to-Z of the Korean economy as the source of all of its advantages and disadvantages, good and evil. Chaebol reform may not be all there is to economic democratization, but without it, discussion about all others becomes quite meaningless.

Like most other remnants of the past authoritarian rule, these corporate behemoths are also the subjects of both love and hatred among the Korean public. Even those who hate the group of companies controlled by tycoons and their families, with just less than 5 percent of equity, admit to their efficiency and competitiveness, especially against their foreign rivals.

Yet, however efficient a system may be, it needs to undergo a major overhaul if the harm overwhelms the good. Aside from the extreme gap in income and wealth, the chaebol-oriented economic system is distorting not just the nation’s economic order but also its social and even political value systems with its ends-justifies-the-means opaqueness and corruption. In a country with per capita income surpassing $20,000, materials should also not be allowed to always dominate spirits. Up to 90 percent ― if not 99 percent as is the case among Americans ― of Koreans are suffering from an extreme sense of relative deprivation and even the 10 percent are increasingly tired of being labeled as shallow nouveau riche.

The biggest danger in this economic polarization is its erosion of the nation’s growth potential by sapping economic vigor, depriving the people of the will to positively develop their own path. Defenders of chaebol emphasize the freedom and creativeness of the private sector, but these are the very values only the giant corporations enjoy, from which the rest of the society feels increasingly excluded.

Currently, liberals call for relatively bolder reform by touching on chaebol governance structure through banning cross or circular shareholding practices, while conservatives say stricter enforcement of fair trade rules would be sufficient. The former has the risk of proverbially burning the house to roast pigs, while the latter is feared to remain content with the status quo, especially after the polls are over.

Politics is the best, if not the only, means of changing undesirable reality, but politicians, more often than not, aggravate matters rather than improving them, through competition for competition’s sake. Which is why we think chaebol reform should not end as a campaign issue but a problem requiring bipartisan efforts whichever side wins the election.

The ongoing election will have served its best purpose if it can draw at least a consensus on the need for such a change. The next step should be to find ways to let the people decide its scope and speed. <The Korea Times>

news@theasian.asia