The slippery slope of subsidies

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The slippery slope of subsidies


Lee Sang-eon
The author is an editorial writer at the JoongAng Ilbo.

According to its website, Cairo University has 260,000 enrolled students. The number of students is ten times that of Seoul National University, but the SNU campus is 40 percent bigger. Naturally, classes don’t go smoothly. It is not hard to meet young people in Cairo who claim to be a student there but do not attend classes. They say they can get credits by submitting one or two projects. The explosive increase of students is a result of the Mubarak administration accepting “people’s desire for higher education” in the 1990s.

There are so many cars in Cairo. You can find many cars that are so old that you would wonder how they still run. The public transportation is subpar. Cairo is similar in size to Seoul, but there are only 61 subway stations in the whole city. In Seoul, the No. 2 line has 51 stations. Gasoline is cheap, 400 won ($0.36) per liter, even after a considerable hike. Eight years ago, it used to be 150 won per liter. The government used state funds to lower the cost. The Mubarak administration, which was in power for thirty years until 2011, boasted that it opened the “my car” era.

So many people get to go to the prestigious college and drive their own car, so has Egypt become a country where everyone is prosperous? Cairo University, which used to be the best in the Arab world, has been ranked in the 800th to 1,000th range by the Times. A diploma is useless. Children of very wealthy families go to college abroad and children of well-off families go to foreign universities in Egypt. Old cars made Cairo traffic a nightmare, and the quality of the air is worse. Egyptian politicians know the problems, but they cannot reduce Cairo University admission or increase the oil price. Such attempts could lead to a riot.

Greece is another ancient civilization as rich as Egypt. Greece is richer than Egypt but a poor country in Europe. Without help from the EU and the International Monetary Fund, it would have gone bankrupt. Scholars often say that excessive spending in the public sector drained the state budget. However, it cannot explain the situation entirely. To much spending means too little tax revenue. More precisely, the economy was struggling and not enough tax was raised.

Olive farming are Greece’s major industry. Thirty percent of olives in the world are from Greece, but it is hard to find Greek olives. About 3 percent of the extra virgin olive oils in the world is Greek. It is not because Greek olives are not of good quality. Olives are exported in unprocessed form and turned into made-in-Italy olive oil or canned olives.



So the EU prepared a fund two years ago to help processing and distributing Greek olives. Increasing the income of Greek farmers would help reduce EU subsidies. Greek olive farmers’ groups also started to raise funding to set up a research and development center. It is something that the Greek government should have done long ago.

France is much better off than Egypt and Greece. Among dozens of government subsidies is the new school year benefit. It is paid in early September, right before a new school year. Last fall, low-income families received 367 euros ($416) per elementary school student, 388 euros for each middle school student and 401 euros for each high school student. A family with three children would receive about 1.5 million won in cash. Three million households received the benefit.

The benefit was created in 1974 so that the state provides school supplies for the year. As many parents use it as an allowance, the government considered reducing it or abolishing it, but could not follow through. Politicians claim that the money should be used to renovate old schools, but they remained silent during elections. Other subsidy issues are similar.

As France is offering so many benefits, its state research and development spending is under pressure. The R&D spending per GDP is 25 percent less than Germany. French President Emmanuel Macron said during the campaign that France was a country of creation, invention and innovation, but the industrial sector’s portion in GDP declined from 17 percent to 12 percent since the 2000s. Yet, politicians only pursued increased public spending.

No politician would admit to advocating for him or herself or for a certain group. They will say they work for everyone, but the method is the problem.

The Korean government and local governments offer various subsidies. Some give gift certificates for those who borrow books from libraries. I feel like a new allowance is created every day. But the investment for the future such as expanding child care facilities or science and technology researches is a priority. Which country is Korea going to become?

JoongAng Ilbo, Feb. 7, Page 28
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