[Viewpoint] The welfare conundrum

A shabbily dressed woman walked into a regional unemployment office in Nuremberg one frigid winter morning six years ago. She was among 5 million who were jobless in Germany. The opposition Christian Democrats had defeated the ruling Social Democratic Party amid record-high unemployment and mounting public anger over the government’s labor and welfare reforms. The opposition party’s slogan went “Leave the earth, Chancellor Gerhard Schroder.”

And that was what happened in federal elections, creating a centrist-right coalition government led by Chancellor Angela Merkel. But once in office, the first thing Merkel did was to shave unemployment benefits to reduce the fiscal deficit. As a result, the unemployment check the jobless woman received shrunk to 700 euros ($935) instead of the 1,200 euros she received previously.

On the other side of the Atlantic, 40 million Americans live without health insurance. Unemployment benefits hardly cover basic necessities. Some couples even feign divorce to qualify for grants for single parents. And this is the state of the world’s wealthiest country.

New York Times columnist Paul Krugman in 2007 published “The Conscience of a Liberal,” underscoring the widening wealth gap in American society. He called for a new New Deal to reduce the gap between the rich and the poor by expanding social and health programs while reducing defense spending. He demanded the nation build a bigger and better safety net covering health, pensions and unemployment. He must have taken comfort in the extended health coverage contained in U.S. President Barack Obama’s health care reform.

Political reforms in Germany targeted its bloated welfare system and, in the U.S., the reverse. What direction should Korea take? Which path is the best to join the ranks of advanced societies? Is the free-for-all welfare system advocated by the main opposition Democratic Party the answer, or is it a deadly formula that could ruin our entire welfare system? The voters are confused and will likely have to choose a side in the next elections.

That Korean politicians finally got around to addressing welfare is, actually, good news. Our politics may at last have matured from pure self-aggrandizement to a concern for the common weal. The more the DP’s populist and socialist ideas on extensive welfare get notice - and censure - the more a discussion will begin on social welfare that helps people but doesn’t send the country into a European-like spiral into spending and debt.

We have seen it happen in advanced societies in the past. The liberals call for expanded programs while the conservatives oppose, citing the fiscal burden. Social programs eventually get better. That explains the adage that welfare flies on both wings - right and left.

We should be happy that the concept of free-for-all welfare emerged in our society two decades into democracy. Expansion of social welfare is possible only with the consent of the taxpayers. Social democratic societies in Europe upped taxes to pursue “equality and coalition.” Taxpayers, for the sake of a more fair and unified society, agreed to staggering corporate taxes of 60 percent and equally unpleasant income taxes of 40 percent.

But the DP’s welfare platform, which it says will cost 16 trillion won ($14.3 billion), doesn’t say anything about tax hikes. The party may think it can raise the funds by reducing excessive budget spending and nullifying the plan to cut taxes for the higher-income bracket. But that kind of financing cannot be sustained for long.

The bill for blanket welfare programs could reach as high as 50 trillion won. If voters are willing to pay the cost, there is no problem. But many will not when it means an extra tax of 4 million won for each household and 2.5 million won for each working individual.

About 10 million Koreans - 2.5 million extremely poor, 4.1 million working poor, and 4 million low-income - are fighting poverty, illness and job insecurity.

These people - 20 percent of the country’s population - were neglected in the wake of economic success. Because most cannot find decent jobs, they are denied pensions, employment insurance and industrial accident insurance. Arguing over broad welfare for the entire population without tending to these needy 10 million people who never had decent protection in the first place is ludicrous.

We’ve gotten the priorities all wrong. Before voting for free school lunches, we should be thinking about making mandatory secondary education free. Proposing free medical care when the national insurance is already saddled with a 1.3 trillion won deficit and offering college tuition subsidies for the low-income class when they have the bigger worry of affording day-to-day living are all half-baked ideas.

The only feasible idea is free child care. We hope politicians come up with appropriate and affordable welfare solutions for our society.

*The writer is a professor of sociology at Seoul National University.

By Song Ho-keun