Equality is not our friend
For the Korean economy, the complexity of the so-called “carriage economy” in the 1960s dramatically increased in the 1990s and was transformed into the “automobile economy.” The increased economic complexity brought about incredible change in the economy such as the 8.5 percent average annual increase in gross domestic product over three decades and the 80-times increase in per capita income. It was the experience of a dramatic emergence of a creative economy.
Over the past 20 years, however, the change in industrial structure and the growth in economic complexity have slowed down. The potential growth rate of the economy also fell below 3 percent and the increase in per capita income remained idle at about 300 percent.
The Korean economy has not made the leap to a spaceship economy and that is the background of the ongoing discussion about a creative economy.
We have already achieved the process of a creative economy once and other countries are trying to learn from our experience, but we have disregarded that experience of success and made vain efforts to find an answer from outside the country.
Companies that create new goods and services based on creative manpower and innovative technology can bring about a creative economy. What policies can help this process? Education programs providing preferred treatment to talented students, scientists and researchers; policies tailored to promoting science and technology; and support for companies - regardless of their size - when they create new goods and services.
Furthermore, society must respect excellence and be able to accept the enterprising spirit of successful people and companies. A society that can respect neighbors who succeed with creative efforts can produce more creative businessmen, scientists and companies. A society that actively accepts economic differences can find a road to a creative economy, but a society that is obsessed with economic equality will block the motivation to become more creative.
During modernization, Korea implemented a discriminatory assistance policy to provide special benefits to creative minds, scientists and companies. Companies and workers who achieved great outcomes were treated highly and that served as the motivation to become more creative. By doing so, society moved forward more dynamically to create a new economy. And the spirit of “We can do it” was naturally accepted within society. More creative small enterprises grew to become conglomerates with the government’s support, and so the miracle of a creative economy was possible in the past.
But over the last 20 years, we’ve walked the opposite path. As a result, all economic and social policies are now centered on stressing equality and balance rather than supporting distinguished talent and creativity. Under the political ideology of democracy, the system was to provide “equal” support - disregarding outcomes - and the talented people and companies were relatively discounted.
The egalitarian economic and social policies weakened dynamism in the Korean economy and encouraged the economy to be downgraded all together, stopping it from making another leap from an automobile economy to a spaceship economy. Policies to support technology start-ups, advanced growth engines and green growth all failed to see great success. They failed because of the egalitarian distribution of resources with no consideration of creative minds of individuals and companies.
Inequality in economic outcome can be a friend of a creative economy, but economic egalitarianism is a foe. We must never forget this inconvenient truth. Right now, the Park Geun-hye creative economy must choose between the experience of success and the experience of failure. The political distribution of resources based on egalitarianism will comfort everyone for now, but it won’t bring about bigger success.
Translation by the Korea JoongAng Daily staff.
* The author is a visiting professor of the Korea Development Institute’s School of Public Policy and Management.
by Jwa Sung-hee