Bahk leaps to defense of pro-chaebol policies as debate rages

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Bahk leaps to defense of pro-chaebol policies as debate rages

Finance Minister Bahk Jae-wan defended the government’s moves to favor conglomerates at the expense of small businesses on Monday as he clarified his stance on the issue for the first time amid a growing controversy.

“Economic democratization would only serve to narrow our country’s economic outlook,” said Bahk, using an antiquated catchphrase that has recently caused a stir in Korea’s political circle.

Bahk has riled more populist lawmakers as he opposes overburdening the nation’s chaebol with restrictions for fear of blunting their effectiveness as major engines of industry.

The Korean constitution defines economic democratization as “the achievement of harmony among economic parties” by chasing “balanced economic growth, stabilization and an adequate distribution of incomes.”

It adds that this can be helped by preventing “abuses of economic dominance and power,” which may require the imposition of “restrictions and adjustments on the market.”

The controversy over the definition and validity of the term, and policies related to it, erupted in April when Kim Jong-in of the Saenuri Party’s leadership council criticized the economic advisors of presidential hopeful Park Geun-hye.

In an interview with the CBS radio, Kim said Park’s advisors clearly do not fully understand the meaning of the term, as favoring conglomerates runs counter to it.

Saenuri Party floor leader Lee Hahn-koo hit back by saying the term is not even used in mainstream economics these days, but is the purview of “social economists.”

Ahead of December’s presidential election, the ruling and opposition camps have become embroiled in an escalating war of words concerning what economic direction the next administration should move in.

Politicians have with increasing frequency been quoting from the constitution like preachers quoting scripture in a bid to back up their arguments; and like theologians, they each draw their own interpretation of what economic democratization actually means.

In his comments earlier this week, Bahk stressed that a country’s economic policies should be in line with global standards. “An export-driven economy like Korea cannot resort to the same policies as those adopted by North Korea,” he said.

He also provided a simplified explanation of what the economic buzzword means for him. “From what I understand about economic democratization, the aim is the harmonious development of each economic player. Who wouldn’t agree with that?” he said.

He also expressed concern that the downsides of demonizing the chaebol, which have taken flak lately for encroaching on the traditional territory of SMEs and local neighborhood mom-and-pop stores.

He said that applying excessive restrictions on conglomerates would benefit foreign companies instead of small local businesses.

“In other countries, governments provide public funds to support them and make them more globally competitive. We might lose to these large foreign rivals [if we hinder the chaebol’s operations],” he said.

The minister cited the recent imposition of mandatory two-day-a-month holidays on seven discount chain stores and 48 super supermarkets (SSMs) in the country as a case in point.

“As local discount stores have been forced to close down on some days by law, foreign retailers are benefiting,” he said.

As for the recent penalty imposed by the Fair Trade Commission on the country’s third-largest conglomerate, SK Group, on charges of giving unfair work to one of its affiliates, Bahk said it was right to impose financial punishments in such cases.

“Slapping conglomerates with fines for engaging in shady internal transactions is acceptable, but further measures would not be pursued by other countries,” he said.

By Song Su-hyun []
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