Time to straighten out prioritiesPresident Lee Myung-bak called for a new economic model in his Liberation Day address on Monday, expanding on his call for a “fair society” during last year’s speech. He urged managers to move away from self-serving policies and chase the goal of coprosperity for small, medium and large businesses based on a stronger ethical code. This, he said, would entail shifting from capital freedom to capital responsibility, and from extremities of wealth to a new form of balanced cooperation in the corporate world.
It is easy to see why Lee is seeking out new ways forward as the neoliberal form of capitalism that champions competition and free trade, and which is predominant in the West, is coming under intense scrutiny now that many European countries are, like the U.S., experiencing hard times. But this does not justify jumping ship or abandoning the system.
If we look at Provision 119, Article 1 of the Korean Constitution, it clearly states that Korea respects economic freedom and the creativity of corporations and individuals. Our economic identity could be thrown into question if these tenets are disregarded. There is also a danger that Lee’s attempt to move away from this could be seen as a calculated political move to win votes in next year’s elections.
Lee was on stronger ground when he called for fiscal-tightening measures to keep the economy balanced and on track. This would trim the risk of us sharing the same fate as Greece, where the political race for populist welfare policies has left it verging on bankruptcy.
Lee has vowed to try and balance the nation’s fiscal affairs before his term ends in 2013, which is to be applauded. One of his aides interpreted the president’s latest message as a coded call to the government to keep populism out of budgetary issues ahead of next year’s elections.
Yet, the president has faltered by sending mixed messages, adding that he will also increase welfare spending for impoverished groups and move to improve living standards across the board. This would be extremely difficult to achieve, unless he raises taxes or otherwise cuts government expenditure
Among Lee’s policy targets, creating a deficit-free budget should take priority. But, he has also promised to reign in consumer prices, create better conditions for part-time workers, stabilize rent prices and protect the self-employed from larger companies, while advocating the creation of new jobs. These ideas all sound great, but they will only discredit the speaker unless backed by feasible action plans.