Caught off guard

Koh Hyun-kohn
The author is a senior editorial writer of the JoongAng Ilbo.

One of my friends who defines himself as a moderate conservative voted for a candidate from the left-leaning ruling Democratic Party (DP) in the April 15 parliamentary elections. He explained that his daughter is employed in a public corporation on a contract basis. President Moon Jae-in promised to place all contract workers in the public sector on the permanent payroll within his five-year term. My friend said, “I have to support the government and ruling party so that my daughter has a chance of even 1 percent. It’s better than the opposition, which offers zero.”

He is not interested in an ideological debate between the conservatives and progressives or controversy over populism. He is happy if his daughter gets a permanent job. He did not pay heed to the data that showed 870,000 were added in the irregular work force last year as conversion to regular status is not so easy. Over 7.5 million contract workers and their families are rooting for the government and ruling party.

The ruling party won the April elections in a big way, securing 177 seats out of 300 in the incoming legislature. Its triumph was attributed to the government’s successful handling of the Covid-19 outbreak and the poor performance of the opposition. But personal factors are the real determinants behind a vote. The practical question of what party can be beneficial to me and my family plays a decisive role.

On the property tax front, the government and ruling party want to raise the rates by 0.1-0.8 percentage points. The main opposition party promised to lower the tax rate for single householders. So who has the winning side? Last year, 590,000 paid the comprehensive property tax. Even when you count in their family members, about 2 million people would be affected by the reduction in the property tax. The greater 50 million would not care. Instead, many of them will be pleased to see people who live in richer houses pay more tax. The opposition’s tax pledge would only have won 2 million votes at best.

The ruling party has prevailed over the greater population. It enjoys a heyday in approval ratings through a populist agenda including disaster cash handouts. The proposal for national employment insurance would draw more of the socially weak to its side. Anyone warning of the side effects — more costs for extra unemployment coverage for an insecure work force — would be framed as a selfish prig. The progressive front has been portrayed as advocates for the weak. If the conservatives cannot break that framework, it has no chance of winning back power. When the economy weakens, more will become vulnerable. The governing front will not lose but gain more support if livelihoods become tougher. The ruling party swept last month’s election as a result.

The conservatives on the other hand have been pathetic, selling an outdated platform of neoliberalism. Neoliberalism favors a small government and a greater role for the markets. This approach gained ground in Western capitalist economies in the 1970s and 1980s when they had been wrecked by outsized unions and governments. That campaign even helped dismantle the Soviet bloc. But wealth polarization and inequalities have deepened since.

Governments stepped in when the markets failed because of the financial meltdown in 2008. Neo-liberalism was chucked away. The Occupy Wall Street campaign that spread in 2011-2012 was the 99 percent’s protest against the super rich 1 percent. The demonstrations closed the chapter on the neoliberalism era. Republican candidate Donald Trump saw through the trend and beat his liberal contestant in a presidential election by vowing to resurrect the Rust Belt and American manufacturing power with a protectionist policy toward imports.

The Covid-19 pandemic has reinforced the grounds for a bigger government role and less laissez-faire and globalization. Authorities have stepped in to extend lifelines in the market amid lockdowns and lockouts and encourage companies to come back home through reshoring incentives. Ominous signs of nationalism and dictatorship have emerged. Wealth polarization has aggravated, with the rich finding shelter in their luxury yachts or underground bunkers while the poor had to commute on crowded subway and worry about rent fees regardless of the virus threat. The blame would all go to neoliberalism.

But in Korea, only conservative politicians remained oblivious. They played the old song of stimuli for growth, tax cuts, pro-corporate policies and privatization. They are not wrong to argue for growth ahead of redistribution, a smaller government role to enhance free market principles, stimulation of the private sector and labor flexibility to increase jobs. But people have gotten weary and doubtful about the trickle-down theory. They have become skeptical about growth benefiting individual lives. They fear that winners will take all if things are left to the market and jobs will be lost if labor flexibility is enforced.

The ruling party has capitalized on their sense of insecurity and fear. It put all the blame on conservative-led neoliberalism for low growth, inequalities and a collapse of the middle class. Upon winning a supermajority, the ruling front is even floating the idea of private companies sharing their profits with the public and adopting public concepts on land, which both go against free market principles. Still, the people are drawn to the idea. The liberal front has once again captured the hearts of the masses.

Economist Chang Ha-joon has long criticized neoliberalism and was shunned by mainstay economists. Kim Chong-in, who designed the economic platform for conservative candidate Park Geun-hye in the 2012 presidential election, tried to break away from the neoliberalism framework. He argued for democratization in the economy to ease inequalities. Park’s election victory owes much to his strategy change.
The conservatives should have learned that they had to part from neoliberalism for good. If they had done so, they could have saved the free market and themselves.

JoongAng Ilbo, May 21, Page 35