[EDITORIALS]The poor get poorer

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[EDITORIALS]The poor get poorer

The livelihoods of ordinary people are being shaken to the roots as the economy reels under the prolonged recession. In the first half of this year, a record 13,931 people filed for bankruptcy. What is more, the breakup of families due to credit failure is posing a serious social problem. According to a survey by the Credit Rehabilitation Committee, some 8.8 percent of credit delinquents divorced their spouses, and some 7.5 percent separated from their family members.
A look at statistics on household income and spending during the second quarter of this year demonstrates that those in the lower income brackets have fallen into the vicious cycle of debt leading to more debt. Those in the top 20 percent income bracket are saving an average of 1.9 million won ($1,870) per month; those in the bottom 20 percent borrow 89,000 won every month. And while the income of those in the top bracket has gone up by 5.6 percent in the last year, in the bottom bracket the increase has been only 1.7 percent ― which, factoring in a 3-percent increase in consumer prices, amounts to a loss of actual purchasing power.
This polarization trend will not change soon. The recent surge in stock and real estate prices makes it evident that it will only worsen. Underemployment, meanwhile, is driving people to the brink. Only 262,000 jobs per month were being created in the first half of this year, half the rate in the first half of 2004.
The only answer is job creation through economic recovery. The present 3-percent growth rate will only maintain the status quo. Taking into account the recent “jobless growth” phenomenon, the rate needs to be over 5 percent. The Korea Development Institute has warned that even if 5-percent annual growth continues, job creation will fall to a third of the present rate by 2020.
The most important thing to guard against is the temptation to make use of this economic polarization for political gain. The fact that the rich are getting richer and the poor are getting poorer is the fault of the current government’s economic failures; it should not become a reason to “bash the rich.” In economic theory, there is such a thing as the trickle-down effect, in which low-income people eventually benefit from the spending of the well-off. One problem, clearly, is that the rich will spend their money overseas, but keep their purses closed at home.

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