Park Geun-hye gov’t asked to prepare for welfare policy of unified Korea

The election of Park Geun-hye as the new President of the ROK has attracted much attention internationally. Some observers have emphasised the fact that she is the first woman to become the leader of South Korea, while others prefer to dwell on her being the daughter of former South Korean strongman, Park Chung-hee.

It seems that most important of all coming changes is the dramatic increase in welfare spending which South Korea is likely to experience after she becomes president. Turning South Korea into a European-style welfare state was one of her major campaign promises, and the first steps of the president-elect show she is serious about this promise.

Preschool education is to be made free, university tuition fees will be cut in half for all but 30 percent of the richest students, and free afterschool day-care facilities will become available to most parents. Medical care – already subsidized – is going to become cheaper, and old age pensions are set to rise.

This is an ambitious program which will in due time will lead to a significant increase in the rate of taxation. Currently at least it appears that a majority of South Koreans are willing to accept this bargain, since most of them prefer Swedish-style social democracy to American frontier capitalism. Perhaps they will change their minds when the rising tax rates start to bite, but this moment is still far away.

Amidst this dramatic if somewhat overlooked shift in South Korean politics and society though, it is remarkable that few think about the repercussions that the new South Korean social welfare policies are likely to have on the future of unified Korea (if such a country is to emerge).

The eligibility for welfare is conditioned above all on one’s individual income – indeed, as it should be. However, taking into consideration the huge income gap between North and South Korea, one should not be surprised if in the post-unification future the vast majority of North Koreans become eligible for virtually all kinds of welfare payments and benefits, which are shortly to be introduced into the South. At the same time, North Koreans will not have or rather will not be able to pay any sizable amount of money in the form of tax to sustain the welfare system.

One can express doubts about the sustainability of these new welfare systems – probably they are, but if the number of recipients suddenly double while the number of people funding them remains static such programs stand little chance of surviving. Concurrently, it is virtually unimaginable that the South Korean public will accept a dramatic reduction in social welfare programs after unification. As world history has demonstrated, welfare programs are virtually impossible to scale back – due to the powers of the constituencies and vested interests involved.

Therefore, the current explosion of welfare once again makes a perceptive observer even more sceptical about the possibility of a unitary post-unification state on the Korean peninsula. If such a state is ever to emerge, it might and should remain a confederation with the two Koreas maintaining their own administrative, legal and financial systems, their own tax rates and their own currencies, too

This idea is actually quite popular among supporters of South Korea’s radical left whose admiration for North Korea’s regime has remained remarkably resilient. Most of these people believe that Kim Il Sung’s Juche Socialism has at least some hidden advantages which should be preserved in a post-unification future. They also believe that the only way to achieve unification is via negotiated settlement between the two Korean governments, a gradual process perhaps taking decades.

The present author agrees with neither of these two ideas. While state socialism was generally a failure everywhere, its North Korean version was a near perfect failure, so one needs a really powerful microscope to find its hidden advantages, if such actually exist. Gradualist unification itself is desirable enough, but is by no means realistic. If unification is ever to occur on the Korean peninsula, it will be heralded by cataclysmic events, probably triggered by an implosion of the current North Korean regime.

A confederation is therefore likely to arise not from negotiations between the Kim family monarchy and the South Korean state, but rather with a new regime which will eventually hopefully replace the current North Korean government (the latter has every reason to see gradual unification as mortally dangerous and is hell bent on maintaining the status quo, i.e. division). Nonetheless, a confederative state will be necessary to deal with the vastly different circumstances of the two Koreas, socially, economically and politically.

Indeed, even if unification happens in the near future, the economic and social gap between the two Koreas will be tremendous – and the gap keeps growing as time goes by. South Korea is increasingly a post-industrial welfare society whose economy is increasingly based on knowledge and cutting-edge technology, and whose population is one of the most educated in the world. Meanwhile, the North has economy which is rather similar to that of the more advanced parts of China in the last days of Chairman Mao. Admittedly, the North has a relatively high literacy rate, but the general education of its population leads much to be desired and in many regards, the vast majority of the North Koreans are completely divorced from the realities of the modern world.

A confederation will help to mitigate many problems that are bound to develop in the post-unification Korea. Among other things, a confederative regime may help to control migration of North Koreans to the South while also keeping at bay the greedy real estate agents and speculators (let alone conmen) who are likely to flock to the North in order to take advantages of the Northerners’ naivety and inexperience. It will also ensure that the legal regimes in the two Koreas will take into account the vastly different local conditions.

It is necessary to create a welfare system in North Korea as well. It goes without saying, though, that this system cannot be an exact copy of its South Korean equivalent. It will necessarily be less generous, and will also have rather different definitions of high and low incomes, not to mention different understandings of basic human needs. It will also be necessary to emphasize vastly different set of priorities.

A confederation should of course not become a way for the rich South to shamelessly exploit the poor North, it might (and indeed should) become quite the opposite – a means to protect North Koreans from the less worthy of their South Korean brethren. It will also ensure that decision making in North Korea will remain in the hands of North Koreans themselves. Of course, there is clearly a shortage of sufficiently trained people in the North, but it probably still makes sense to allow future North Korean politicians and voters to make mistakes, suffer the consequences and learn from the experience.

The confederation need not continue indefinitely. It should be a provisional measure necessary to bridge the yawning economic and social gap between the two countries in the shortest possible time. Once the transition period is over it should be left to Koreans in both parts of the country to decide whether they would like to live in a unitary or federal state. However, it seems that a confederation would make an excellent transition device, and with the passage of time as the two Koreas drift further and further away from each other, the need for such a device is becoming larger and larger.