Money to spend freely

Kim Dong-yeon

I never get tired of the refined literary simplicity whenever I revisit the works of the late Korean writer and poet Pi Chun-deuk. I love the all-time Korean favorite essay “Karma,” in which he recalls his poignant first love with a Japanese girl, Asako.

But my personal favorite is “My Blessed Life.” It starts like this: “I love my life when I have 50,000 won [$47] in my pocket, which I can spend on whatever.” He then describes what he wishes to do with that money. The part where he says he would like to invite friends he hasn’t seen for awhile and could imagine his wife happily chopping away vegetables always makes me smile.

How much money does one need to be happy? A yearlong study on well-being that surveyed 450,000 Americans conducted by renowned scholars from Princeton University - economist Angus Deaton and Noble laureate-psychologist Daniel Kahneman - concluded that an income of $75,000 a year ensures happiness. An income of more than $75,000, however, didn’t correlate to greater happiness.

Some may not agree that the money - approximately 80 million won a year - is insufficient to meet the cost of living in Korea’s large cities. Why aren’t we happy with that much money? There may be many reasons. Some may cite unfairness of the rules in our society.

Some may cite a lack of opportunity to feel emotionally wealthy without enough money. Some also may say they just have no time to spend time with family or socialize in the intensely competitive culture.

From an economic perspective, it may have to do with the difference in attitude toward money and life. The revered poet is perfectly happy with just a little amount of money in his wallet to invite his friends over for dinner. Some people cannot be happy with only that. When fixed expenses and the cost of living increase, lessening disposable assets, people naturally don’t have enough to spend. It applies to the case of someone who has to take out a mortgage to buy a house and pay high interest every month.

Personal household debt has reached 1,000 trillion won. Of that sum, mortgage loans take up more than 500 trillion won. Life gets no easier even as one moves into the monthly rent category because the family cannot afford the increasing rent prices of long-term contract homes.

And what about the cost of education? In a society where decent university degrees matter, parents cannot give up paying for private tuition to get their children into good schools and universities. Monthly commitments to marriage, funerals and other family needs cannot be neglected. Because everyone uses smartphones, telecommunications fees also are a growing burden. All these expenditures are immediately shelled out from monthly income.

Various regulations also translate into heavy costs for consumers and companies. Someone has to pay for the regulations. Mostly, the bill from inefficiency falls into the laps of the common people.

There is no other solution but to generate growth and increase income. Households also have to strive to cut back on the fixed expenditures. The problem is that solving it is not easy.

Helping households beef up disposable assets cannot be supported through policies alone. We need a general shift in the overall system. Housing costs should be restructured through transformation in the rental and financing markets, education cost through reforms in the college admissions process and public school system, and regulation costs through fixes in public policy-making procedures that too often trot out regulations for convenience.

The social privileges and incentives that primarily go to the mainstream and elite should be balanced out. All the customary abnormalities need to be normalized. The task would be long and hard. But the government, politicians, companies and civilian communities must reach a consensus and work toward the goal.

The two Princeton economists opened up their research paper with this sentence: “Money buys happiness.” Happiness cannot be ensured purely through financial riches. Money, however, is essential to livelihood. But how much one can spend for one’s desires rather than how much one earns should be the sufficiency point. If I were liberal enough to tweak the poet’s phrase, it would go something like this: “I love my life when I have about 500,000 won in my pocket free to spend on whatever after paying all my expenses.”

Translation by the Korea JoongAng Daily staff.

JoongAng Sunday, March 9-10, Page 31

*The writer is minister of the Office for Government Policy Coordination.

By Kim Dong-yeon