You call this ‘Inclusive growth’?The government has a new slogan for its economic policy — “inclusive growth” — in pursuit of even growth recommended by global economic organizations. The course was foreseeable when President Moon Jae-in seated Yoon Jong-won, former head of Korea’s mission to the Organization for Economic Cooperation and Development (OECD) — in place of Hong Jang-pyo, architect for the wage- or income-led growth policy that had been the keystone of Moon’s economic agenda.
Moon used the new term during a secretariat meeting on Thursday. His turn to the more mainstream “inclusive growth” may have come from serious deliberation on the ill effects from the income-engrossed policy. But if actions do not follow, his administration will face criticism for propaganda packaging to appease public complaint.
The OECD’s inclusive growth initiative launched calls upon governments of all levels to address the challenges from inequalities and put people’s well-being at the heart of policy-making in 2017. It demands more government action on income redistribution and social welfare, but says that distribution cannot be possible without sustainable growth. In its 2009 report on inclusive growth, the World Bank stressed productive hiring would be more effective than income redistribution to reach the goal of the policy. The government should interfere to correct market failures, but refrain from direct interference that could hamper market vitality, it advised.
The income-led growth initiative was a risky experiment with the government overstepping to tame and direct the market. The steep increase in the minimum wage and a sharp cut in working hours have ended up reducing hiring, worsening income disparities and endangering the livelihoods of small merchants regardless of their good intentions. To stay faithful to the original inclusive growth concept, it must stop with ideology-guided policy experiments and endeavor to restore the sovereignty of the market.
While improving distribution, the government must not meddle excessively in market activities as to destabilize its mechanism. Instead of rhetoric on aiding companies and removing barriers, it must act out specific measures to promote growth. To realize inclusive growth, it must show wisdom and courage to prevail over opponents among its voting base.
JoongAng Ilbo, July 25, Page 30