Economics of survival

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Economics of survival

Korean Ambassador to the United States Cho Yoon-je recently published “Economics of Survival,” summing up the economic, social and political reform tasks ahead of Korea. He has worked on the book for over two years before retiring from his tenure at Sogang University. As he wrapped up the manuscript, he was chosen as ambassador to the United States, and considering the timely significance of the contents, he decided to publish the book as planned. So the book contains Cho’s ideas not as a diplomat but as an economist.

Last year, the author served as the director of The Policy Space for People’s Growth, a think tank for presidential candidate Moon Jae-in, and was involved in the economic policy of the Moon administration. Therefore, the book deals with the background and ideas of the “people-oriented economy” that Moon advocates. Many of the policies or top 100 administrative priorities — such as conglomerate reform, reinforcing social security networks, and income and corporate tax increases, to name a few — coincide with Cho’s ideas. Aside from the overlapping contents, Cho advises the following seven points that the Korean society should work on:

First, Korean society needs a major innovation, as partial reforms won’t address the core of its problems. The problems we face today are complicated, interconnected and cannot be resolved at once. The leader of the nation and both ruling and opposition politicians should work with citizens with a long-term vision on international situations and consistently pursue system reform and policy changes for at least 10 years. The social reward and motivation system also must change.

Second, as the administration changes every five years in our current single-term presidency, the visibility of the society as a whole has become opaque. When an administration changes, not just the public officials, public corporation heads and organization leaders but also the heads of state-run research institutes, who should have long-term visions for state policies, are replaced. As they pursue tangible accomplishments within the term, they mostly focus on short-term projects. It is about time we transcend conservative and liberal values and reach a grand accord to establish a new state administrative structure.

Third, putting a number of disadvantaged contract workers to the permanent payroll may be possible in the public sector with fiscal assistance, but it may not be easy in the private sector. Incentives should be offered to motivate companies to voluntarily participate by enhancing employment flexibility. When companies are allowed to fire low-performing workers, regular employment of irregular positions will become more likely through market mechanisms.

The government may need to consider relaxing the standards for allowing alternative labor during strikes in order to help companies secure negotiating power with labor unions. Some hard-line unions of the conglomerates use excessive influence, but some users also have slack management of labor relations or lack ethical authority.

Fourth, policies for small and mid-sized companies should be redrafted. Policies focusing on assistance and protection do not encourage innovation and actually interfere with restructuring. The policies should shift toward assisting employees of small and medium-sized enterprises, not the companies themselves. Small and mid-sized companies are also businesses, and their owners and managers are not socially vulnerable.

Fifth, the government must end the practice of demanding contributions from the private sector when promoting national events or major policies. A notable failure was the Park Geun-hye administration’s Creative Innovation Centers. The government must make transparent and dignified promotion of state-funded projects by increasing corporate taxes rather than burdening the private sector with such quasi-taxes.

Sixth, competitiveness cannot be improved without competition. In Korea, people value academic and regional connections rather than competing on competency and professionalism. It is a society in which some people enjoy lifelong status and good incomes for passing an exam in their teens or 20s. A society where someone with wide personal networks succeeds cannot grow as it damages the creativity and dynamics of the economy.

Seventh, productivity will only improve when we change the way we work. Koreans work long hours, but have low concentration. Excessive and frequent after-work outings are also a problem. In a culture where drinking and outings are common, women who seek a work-life balance find it hard. Korea will grow when bureaucrats, journalists, politicians and intellectuals invest more time in their professional fields rather than drinking with clients. The seven points made by Cho Yoon-je are painful yet precise pieces of advice for Korea.

JoongAng Ilbo, Nov. 9, Page 28

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

Suh Kyoung-ho
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