[VIEWPOINT]Interest Dependents Face a Quiet Death

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[VIEWPOINT]Interest Dependents Face a Quiet Death

The legalization of euthanasia is a hot issue in Europe these days.

For some, the sacredness of life means euthanasia is a sin that cannot be forgiven, but for someone in a coma, whose life is devoid of human dignity, mercy killing can be a humane measure.

In a few countries we find movements to legalize "positive" euthanasia, which takes place with the clear consent of the individual or family concerned, and under the supervision of a medical doctor. In many more countries "passive" or "half-hearted" euthanasia is practiced. Patients are deprived of life support devices because of the heavy cost of keeping them alive or their old age. This is a quiet form of euthanasia. It is a form of silent killing.

And now, another form of quiet murder is spreading across our society.

This slow death begins when those who live on the interest earned from their financial assets become too worried to sleep.

Some socialists believe that the sole indicator of the value of a product is the labor that went into it. According to this view, profit, interest and rent are all unearned income. Only a wage is "earned."

If we see in this way, the income derived from intellectual property - an increasingly valuable form of property in today's "knowledge-based" society - is also unearned.

To these "progressive" thinkers, the convenient, quiet killing off of those who live off the interest on their assets is a long-cherished dream.

In the era of high interest rates after the foreign exchange crisis, owners of financial assets enjoyed the fruits of two-digit interest rates. These high rates were some compensation for those pensioned off from the companies they had given their lives to. And consumption by those owners of financial assets accelerated the recovery of the local economy from the crisis.

These days, interest rates bob around the single-digit level. The sinking of rates now threatens the livelihoods of those who live on their interest.

There are businessmen who happily accept lower interest rates on loans to run their companies. If there are others who welcome this era of low interest rates, it is the "progressive" crowd, because the quiet death of interest dependents is near at hand.

Compared to the era of two-digit interest rates after the crisis, we can see that yields from financial assets these days - when interest rates hover around the one-digit level - have decreased by about 10 percentage points. As an economist, I roughly calculated that as of the end of last year the total financial assets of this country came to about 1,200 trillion won ($923 billion). From this, we can estimate that about 120 trillion won worth of income from financial assets has disappeared into the air. For those who rejoice in inflicting pain on the haves, this situation will be applauded, but to the retired it is a bitter day.

If there is no investment, there is no production. Investment comes from savings - financial assets are accumulated savings. The accumulation of financial assets is the key factor for economic growth.

This quiet form of killing, unlike positive euthanasia, comes not at the request of the individual or family concerned, but threatens those who want to live. In our society those who live off interest income are not Shylocks. They have suffered; they have the wrinkles to show for it.

High interest rates are not desirable as they cost companies dear. However, a rapid decrease of interest rates can shrink financial assets and dampen speculative investment in real estate.

There is currently controversy over interest rates, which affects businesses' ability to reinflate and price stabilization. But the hidden debate is whether someone who lives on interest is a parasite of our society or a crucial foundation for economic growth. We need an economic policy that protects the poor and relieves those in the middle class anxious about reaching old age.


The writer is a professor of economics at Sogang University.

by Kim Pyung-joo

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