Trapped in fairness
The author is an editorial writer at the JoongAng Ilbo.
Two key Moon Jae-in administration officials handling economic affairs have been replaced. One of them, outgoing Deputy Prime Minister for the Economy Kim Dong-yeon, delivered a parting shot as he stepped down. “This is not an economic crisis, but a crisis of political decision making,” he said. He seemed to fume at the reversed order of the government’s economic policy which put the income cart before the growth horse. Kim’s remarks seemed to target the owner of the horse.
The three pillars of the Moon administration’s management of the economy are: income-led growth, innovative growth and fair economy. “With a policy of economic fairness, we want to ease the concentration of resources on conglomerates to distribute benefits to small and medium companies, the self-employed and laborers. That won’t be enough, so we want to increase investment and jobs with innovative growth,” Rep. Hong Young-pyo, floor leader of the ruling Democratic Party, said in a podcast a few months ago. It sounds nice, but it lacks logics. It could be just wishful thinking as the reality is totally going in the opposite direction.
Wage-driven growth and innovation are almost opposite. While one is based on equality, the other calls for a difference in rewards. The conflict between the two — Kim and now outgoing Jang Ha-sung, President Moon’s policy chief — was actually the conflict between the two economic pillars. It reminds me of the sharp conflict between “Reds” and “Experts” when China was establishing socialism.
Fair economy was the glue that linked the two conflicting pillars, but ironically, the Moon administration’s weakness was fairness. Fairness was questioned in major issues such as the controversial creation of a unified Korean team for the PyeongChang Winter Olympics, the upgrading of contract workers to full-time workers and job at public corporations. The government’s decisions in these matters helped make the supporters of the administration to turn away. Why?
Perhaps it is because the administration has never fundamentally explored what fairness is. Is fairness when one gets properly compensated for his or her effort? Or is it when everyone enjoys universal and equal rights? Is it a priority to benefit jobseekers who are preparing for tests to get full-time jobs or is it a priority to offer full-time jobs to contract workers?
In his book, “The Righteous Mind,” Jonathan Haidt, an American social psychologist, discussed the principle of proportionality and the principle of equality. While the conservatives or the rightists see things are fair when the principle of proportionality is applied, the liberals or the leftists use the principle of equality.
In the government’s campaign for fairness, the two principles continuously conflicted. The controversies surrounding the creation of a unified women’s ice hockey team for the Winter Olympics and job successions at public companies arose because of public outrage at the violation of principle of proportionality.
On the other hand, demands are increasing for equality, such as welfare benefits for all, an offering of permanent jobs for contract workers and labor-friendly policies.
Yet the government is acting ambiguously toward the conflicting points.
Furthermore, what is the cooperative profit sharing system really for? When a company makes a profit over a certain level, it is required to share it with subcontractors, according to the plan. Is this really fair?
Of the 100 national agendas presented by the administration last year, 51 were about fair economy. And yet, the definition of fairness is not clear and the market is feeling uneasy. In the meantime, innovation is withering. Promising businesses such as telemedicine and car- and accommodation-sharing services are making no progress as they are trapped in the framework of fairness.
When the concept of fairness ― located somewhere in between the income-led growth and innovation ― is vague, conflicts are unavoidable no matter who drives economic priorities. The government must find a term that can clarify fairness. It should be something that can clearly define the direction of the policy and avoid sugar-coated ambiguity.
One thing is clear. When you have fewer resources to distribute, the principle of proportionality should be respected more. In other words, the conflict over fairness will only deepen as our economic situation worsens.
JoongAng Ilbo, Nov. 9, Page 34