[Viewpoint] Chaebol-bashing is pure populism

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[Viewpoint] Chaebol-bashing is pure populism

One of the easiest ways to solve a social problem is to oversimplify the cause. For example, if a social phenomenon occurs, whether good or bad, we rush to find the cause by burrowing our way into the phenomenon instead of stepping back to get the bigger picture. And if the central figure in the situation has been an object of envy or hatred, he or she can rarely escape a whole lot of finger-pointing.

But in this type of situation, a person can be wrongly accused while still being the victim of mob justice. In those cases, a fair resolution is rarely seen, and the victim can be irreversibly scarred.

Corporate bashing, which usually targets the so-called chaebols, has started up all over again. Prompted by our businessman-turned-president, senior government officials are trying to win points with their boss by piling on the conglomerates. These large, profit-making business groups are being blamed for the hardships of ordinary citizens, the glacial pace of improvement in the job market and the financial troubles of small- and mid-sized companies.

The conglomerates are portrayed as greedy and stingy, sitting on piles of cash but investing little of it. They squeeze their subcontractors, and their consumer loan subsidiaries pick the pockets of ordinary Koreans by charging inflated interest rates. Is this all true?

Political commentator Robert Reich, who served as Labor Secretary for U.S. President Bill Clinton, shared his insights on a similar phenomenon in the U.S. - the decoupling of corporate profits from job creation. The 500 largest American non-financial companies raked in trillions of dollars in profits in the second quarter and will likely do better this quarter. But their improved P&L statements will not likely lead to a drop in unemployment in the U.S. in the near future.

The seasoned economic analyst, however, didn’t lash out at big companies. It can’t be helped, he said, because high profits largely come from American companies’ overseas operations. New investment, therefore, will go overseas instead of coming to domestic production lines. Companies will also continue to invest in labor-saving technologies to boost productivity and shrink their payrolls.

These companies are spending their extra cash by paying dividends and buying back their shares in order to raise their corporate valuation. They aren’t likely to start hiring until American consumers start buying their products. But sadly, American consumers aren’t spending enough because they lack job security.

The situation is similar for big Korean companies. One government official recently said, “SK Telecom has revenues of 12 trillion won [$10.2 billion], but has just 4,500 employees. A company of this size should have about 60,000 staff on its payroll.” But what about the company’s productivity? Will any government take responsibility for a company’s low profitability because of high labor costs?

Consumer-lending affiliates of large conglomerates are slashing interest rates after the president accused them of loan-sharking. But these firms are the only legitimate source of capital for low-credit consumers in need of a loan. Those borrowers will now have to go to illegitimate, black-market lenders if they are turned down by legitimate lenders because of their poor credit history. Can we call ourselves an advanced economy when lenders’ interest rates change after one comment from the president?

The government is merely evading responsibility by blaming public unhappiness on the chaebols. A member of the ruling Grand National Party said the conservatives, too, should take a more populist approach, just as the liberals have done. But what do they stand to gain? Is it a game of political survival? Or is there some benefit for the country? Do they seriously believe that clinging to power is more important than the country’s future?

Sensible leaders should be able to tell the truth to the public. Let’s be frank: Where would our economy be without leading companies like Samsung Electronics, Hyundai Motor and Posco? Who are the biggest taxpayers in the country?

If big business does wrong, it must be punished. However, the economy should be governed by the rule of law. Law enforcement is not only applicable to illegal strikes and protests. If the lives of ordinary citizens are difficult, action should be taken, but through laws and regulations.

The ruling party occupies more than half of the seats in the National Assembly. But what we are witnessing is the president’s authority overriding the legislature in a manner reminiscent of how business was done decades ago.

Of course, some members of the “royal” chaebol families are public eyesores with their obnoxious behavior and attitudes. They must display high moral standards and a sense of noblesse oblige befitting their status. While they may not be lovable, we need them nonetheless. We should accept this condition and ward off the temptation of populism.

*The writer is a senior columnist of the JoongAng Ilbo.
Translation by the JoongAng Daily staff.


By Moon Chang-keuk
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