No such thing as a free lunch

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No such thing as a free lunch

The government has long made the pursuit of economic growth a top priority, guided by the belief that creating jobs is the best means of public welfare, and society has acclimatized to the benefits and burdens associated with this.

But the world is changing in such a way that rapid growth is no longer feasible, and people in mature democracies long for welfare systems that can better provide for them, while also decrying the rising polarization of wealth. As such inequality continues to grow, liberal forces took the initiative recently by campaigning for cheaper education fees and free school meals. Conservative forces have also voiced their support for these populist moves.

Meanwhile, President Lee Myung-bak said recently that the state should be responsible for child care for infants aged five years and younger, which would require a tax-financed budget of 500 billion won ($444 million). The ruling Grand National Party is proposing that the welfare budget be raised by 3 trillion won, and the main opposition Democratic Party is calling for a larger 10 trillion won increase. As such, welfare-related overtures have become too intense and commonplace to be brushed aside as mere populist measures ahead of next year’s general and presidential elections.

But unless strict rules and guidelines are laid down and followed, Korea may end up going down the same disastrous road as Greece. The argument that welfare spending represents an investment in the future is as illusory as the belief that economic growth automatically translates into a better welfare system. Korea cannot suddenly adopt the model of a northern European country, complete with a sophisticated welfare system and benefits paid for by high taxes.

Welfare spending should be increased incrementally based on the rules of equality and efficacy, guided by a long-term plan that can be revised in response to urgent needs. The public does not want to hear half-baked ideas during the campaign season or meaningless arguments about blanket versus selective spending. A blanket system would work better in a field like education, which calls for and relies on equal opportunities, while selectively applied welfare would be more effective in terms of providing aid programs for low-income households.

But as reckless spending would wreak havoc on the state’s finances, the nation must brace itself for the prospect of higher taxes while negotiating the fairness of staggered tax levels. This is the price to pay for improving the nation’s welfare system.
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