New jobs will drive growthEvery poll shows that what the people want most from the next president is a boost to the economy. But how can this be achieved? The Roh Moo-hyun administration has talked about social welfare and an equitable distribution of wealth as measures to help the finances of working people. The administration worked to increase assistance for the socially and financially underprivileged people in society, even though it meant curbed economic growth. It believed that narrowing the gap between the rich and the poor was more important than increasing the entire wealth of the country. It worked to take more from the haves and give it to the have-nots in order to make our society more equal in terms of financial well-being.
But this experiment has failed. Social polarization has worsened in the incumbent administration and the economy has lost its drive for growth. Many young people can’t find jobs, and the country has lost its competitive edge, sandwiched as it is between China and Japan.
The key to economic salvation is to create jobs. We need to establish as many job positions as possible to prevent young people from starting their adult lives jobless. More than 400,000 positions are needed to absorb the people who enter the job market each year.
Who creates jobs, then? Companies do. More positions are created when companies invest, expand their business and implement new projects. Added value is created and household incomes are made in this process. If incomes increase, consumption and investment also increase. The process of more investment, job creation, increased incomes and expanded consumption and investment is the virtuous circle of growth. The most urgent task for the next president is to repair this process. Social welfare is a safety net to support growth, not a measure to create jobs. Growth is a precondition for welfare and a better quality of life.
Then how can the drive for growth be revived? The most certain and easiest way is to lift regulations on companies. If regulations that tie companies down for all kinds of reasons are lifted, the growth rate will surge immediately. Companies have a huge amount of cash and are looking for new investment opportunities. We should stop them from moving to China, India and Vietnam in order to have more jobs inside the country.
Another way is to find a possible growth drive for the future and nurture it. The main industries of today have reached their limits. Even during a boom, these industries do not need many more new employees. That is growth without employment.
We need to develop industries that can become major industries in one or two decades. Otherwise, there is no hope for the future.
Thus, we must foster the information technology, biotechnology and the culture and service industries, which can create many more positions.