[Viewpoint] Chaebol are a price worth paying

There is a pop quiz I like to ask politicians based on a scene from a movie I once watched. A cruise boat is going under when a dog suddenly jumps into one of the few lifeboats available and takes up precious space that could be used by a passenger.

If you were the captain, what would you do?

Most people would advocate throwing the dog overboard in order to save a human life, but in the movie, the captain spares the dog - not because he is an animal lover, but because dogs can be eaten, and nobody knows when the rescue team will show up.

The point is that, while the captain wants to save as many lives as possible, he realizes that measures must sometimes be taken, however painful, to ensure people survive the whole ordeal. And in this respect, there are parallels with the problems being faced by Korea.

In the political lifeboat these days, the future of the economy is being completely ignored. In nominating candidates for the parliamentary elections in April, the opposition Democratic United Party will ask contenders - and later, presumably, voters - to choose between the economy and human rights. In other words, do the richest conglomerates, which push the economy forward, deserve support, or should they be reformed to allow wealth to be spread more fairly among smaller businesses? According to nomination committee chairman Kang Chul-kyu, there is no choice, and the economy must play second fiddle to people’s rights. The ruling Saenuri Party is no different in emphasizing the need for economic justice and the reform of the chaebol.

Of course, I also think people must take priority. I dream of a society where people can live a decent life without worrying about where their next paycheck is coming from, and where there are no inequalities of wealth or other comforts. I hope to see the chaebol share their wealth and work together with smaller companies.

Unfortunately, however, that remains a pipe dream, especially for a society known for acting in a rash and emotional manner, rather than with a cool head.

Furthermore, we don’t have to look that far back to see the pitfalls of targeting the rich and bashing the chaebol. Such a policy was adopted by the former Roh Moo-hyun administration, and it almost ruined the economy. Roh learned the lesson that the economy does not operate effectively unless the fortunate few contribute some of their massive wealth, and that creativity and vitality require capital funding, and the government paid the price by losing its grip on power.

While it is easy to knock the chaebol, they are irreplaceable. The problem is that even if granted very generous interest rates, smaller companies do not invest on anywhere near the same scale as large conglomerates. This was evident under the previous government, when the economy slowed and jobs thinned out.

We need to be practical about the economy, which ranks as the world’s 15th-largest by gross domestic product, but is only 35th in terms of per capita income. If the U.S. or Europe sneezes, Korea immediately catches a cold. If the global economy shakes a little, we fret over a liquidity crisis. Furthermore, Korea may soon have to worry more about China’s growing economic clout. Korea still has a long way to go to before it becomes an advanced economy, yet the nation’s potential growth rate has been slowing. Worse still, economic growth cannot keep up with the potential growth rate.

How can Korea steer its way through these stormy seas? The first task is to enlarge the economy, and for this, Germany serves as a good benchmark. If Korea’s economy were to grow into the world’s fourth or fifth largest, it would be less vulnerable to shocks from the U.S. and Europe. We would not have to look over our shoulders for signs of financial crisis, and China would not pose such a threat. For the time being, we may have to concentrate on economic growth ahead of distribution and welfare - or the economy rather than human rights - but it is a price worth paying.

by Kim Yeong-ook

* The author is the chief editorial writer of the JoongAng Ilbo.