[Viewpoint] Boosting the middle class

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[Viewpoint] Boosting the middle class

In most cases the right answers can be found in the ordinary.

That is probably why President Lee Myung-bak now works hard to integrate moderates and the middle class.

There is no instant remedy to cure intensified conflicts and a shrunken economy all at once. To increase the size of the middle class is a relatively good prescription, and it feels like the Blue House has finally established the right goal.

But people nonetheless express their discontent and criticism.

One former president denounced the plan, saying it is nothing but a desperate move. The opposition party is upset, saying that conservatives are trespassing on its territory. Progressives say conservatives always side with the rich and rarely try to win over the working and the middle classes.

Restoring and nurturing the middle class was actually a task the past two administrations set themselves. They were in office for 10 years and talked about the middle class all the time. They came up with ideas pertaining to justice in the distribution of wealth, welfare for the working classes and the comprehensive real estate tax to boost the middle class.

As we know, these policies didn’t reap rich rewards. In fact, the income gap between the rich and poor has widened and the middle class has shrunk instead of increasing. That was because the administrations promulgated populist policies for the working and middle classes and worked against market principles.

Their efforts underscored that restoring the middle class is a difficult task, and that motivation alone is not sufficient.

When something is urgent and confusing, one must be faithful to principles. First, the Blue House must prioritize moderates and the middle class. It must not try to embrace the middle class in order to enhance moderates; reviving the middle class must be an objective itself. To do so, the definition of moderates must first be clarified. Drawing a line somewhere in the middle does not define moderates.

It will be a good idea to define the middle class as well. The middle class is not an academically established term. It is just a term commonly used. A class of people who own an average amount of assets and small capital in political and economic terms is the basis of the middle class.

In economics, there is a specific method that defines average income earners as middle class. But what should be increased in our country is not the number of these people. Those who think they actually belong to the middle class must increase.

To do that, the economy alone is not enough. Of course, employment and a fair distribution of wealth are basic conditions. But there has to be more. People should be content and happy when they compare themselves to other people. That’s fundamental.

This means that we have to resolve conflicts first, which is virtually impossible when politics are so contentious, people only try to find flaws in each other and labor and management never seem to reach a compromise.

Objectives must be clarified, too. At one point before the financial crisis in the late 1990s, more than 70 percent of people felt they belonged to the middle class. Nowadays, the figure has dropped to 40 percent. Pulling the figure back to 70 percent again can be set as an objective.

It is worth examining ways of devising an index that indicates how many people feel they belong to the middle class. The index can have parity in incomes as the denominator, and conflict for the numerator.

To increase the numerator, economic growth and employment are absolutely necessary. The denominator decreases when wealth is distributed fairly and democracy and government policies are well established. Such an index will help implement policies.

An economy is meant to help a nation rule and save people from poverty. That is, an economy is truly meaningful when the middle class is revived. That is a task that the president, who is proud to be a good economist, should set for himself.

*The writer is the economic news editor of the JoongAng Sunday.

by Yi Jung-jae

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