Are reforms missing the target?When the aim is wrong, the arrow can never hit the target. No matter how hard you pull the bow and how skilled you are, when your aim is not right, you will miss the target. The same goes for state policies. If there are obstacles that hinder changes that citizens want or happiness that people pursue, the causes should be investigated and policies need to address them. Otherwise, executing various policies and investing a large budget will not improve the lives of the people. When discontent and discord accumulates, the country and the society will have heavier burdens.
The government and the ruling party is promoting reform in labor, public service, education and finance. If Koreans become happier as a result of the four reforms, we cannot ask for more. But the attitude of the government and the ruling party makes us wonder if they are aiming at the right target.
The awareness of the ruling party and the administration was verified by comments made in the course of reaching an agreement among labor, management and government. Among the comments were, “Jobs are not added because of labor aristocracy,” “Peak wage system would give more jobs to young people” and “The national income would be well over 30,000 dollars if it weren’t for the illegal activities of militant unions.”
They held the workers accountable for low growth. Also, the government revealed an intention to revise the taxation system by easing the inheritance and transfer tax to help wealth transfer from the older generation to younger generation smoothly.
While these remarks were made to facilitate the tripartite negotiation, various research results -- such as 10.2 percent union density, growth without adding jobs, growth without wage increase and conglomerates with hundreds of trillions won in internal reserve without hiring -- show that not just the workers are responsible for unemployment and national income stagnation. Since most of the wealthy Koreans became rich through inheritance, their claims on obstacles in transfer of wealth are far from reality. In fact, the inheritance of class, parents’ wealth and social status determining the future of the children, is becoming structuralized. People cynically say we are born with a gold spoon, a silver spoon or a clay spoon.
The change in inheritance tax will only accelerate expansion of inequality and succession of disparity. Therefore, to attain a reform that can make all citizens happy, we need structural changes by taking joint accountability. Money that goes into conglomerates should flow out to small and medium sized companies and households. Koreans should be able to move up in social class with individual’s diligence and efforts. A fair reward system should allow people a stable, if not affluent, life. However, the government and ruling party’s reforms don’t reflect these concerns.
Let’s look at the recent comments by the President of the United States and presidential candidates. In the State of the Union address, President Obama advocated an increase in the minimum wage. On Labor Day, he urged workers to join the union, as unions made many rights that Americans enjoy today. Democratic presidential candidate Hillary Clinton’s prime campaign promise is the profit-sharing plan. When I was the head of the Korea Commission for Corporate Partnership in 2011, I proposed the profit-sharing plan, but it was never discussed publically due to the fierce resistance of the conglomerates.
The profit-sharing plan is a distribution model used in Hollywood film industry since 1920s and in leading manufacturers lately. Hillary Clinton proposed it as a campaign promise to systematically apply it to all companies. Democratic candidate Bernie Sanders, who is closely chasing Clinton, said, “Nobody who works 40 hours a week should be living in poverty.” He focuses on resolving financial inequality through tax reform and redistribution of the top 1 percent of wealth. Resolving concentrated wealth will be a driving force of social integration and national development, they say.
Moreover, Warren Buffet and many other wealthy Americans promote raising taxes on the wealthy and oppose abolition of the inheritance tax to resolve disparity through redistribution. We presume that the establishment in the United States has acknowledged the limits of neo-liberalist economic order and is likely to lead American society in the direction of fair redistribution of wealth.
We hope the government’s four reforms and all policies succeed and make all members of society free and happy. But the government shows little consideration for the concentration of economic capacity and a lack of a good production cycle, income distribution and spending within the country. The lack of insight gives us more worries than hopes.
It is not too late to clarify the target. The target we need to be aiming for is not a society with 30,000 dollars in per-capita national income and 1.1 quadrillion won in household debt. We should aim for a society where hardworking people can enjoy a stable life, dream of success and plan for a future where individual efforts and ability are rewarded.
Translation by the Korea JoongAng Daily staff.
JoongAng Ilbo, Sept. 26, Page 27
*The author is the director of the Korea Institute for Shared Growth and former Prime Minister.
by Chung Un-chan