Biden’s America, Moon’s Korea
The author is the economic news editor of the JoongAng Ilbo.
President Moon Jae-in was sworn into office in May 2017 after winning 41 percent of the total votes cast in the snap election, outstripping the runner-up by nearly 5.58 million votes, the largest margin ever recorded in a Korean presidential race. At the time, the country was in the midst of turmoil as people flooded to Gwanghwamun Square every weekend with candles in their hands, demanding justice in the massive corruption scandal surrounding the Park Geun-hye administration. Moon entered the Blue House promising to create a “country worth living in.” People had high hopes for him.
In the first national survey on his job performance by Gallup Korea, 84 percent supported him, the highest approval rating from the pollster. It was way above the ratings of President Kim Young-sam (71 percent), President Kim Dae-jung (71 percent) and President Roh Moo-hyun (60 percent). Many people said they liked Moon because of his communication skills and personnel decisions.
When Moon began his five-year term, the Democratic Party (DP) did not occupy more than half of all seats in the National Assembly. But it still had the highest number of lawmakers, which offered Moon a good opportunity to use his popularity for a good cause. But the downside was the economy. Economic growth rate in the second quarter in 2017 was a meager 0.7 percent, while nearly 21 percent of young people was jobless or between jobs.
When Moon was elected, it seemed as if he had a rosy future awaiting him. But what happened to Korea three and a half years later? The country is deeply split, and its quarterly economic growth rate is going back and forth between a negative and barely above 1 percent. The real jobless rate among youth has reached 25 to 26 percent. When Moon took office three years ago, nearly one in five young people did not have a job, but nearly one in four young people do not have a job now.
Housing prices have soared since the administration introduced a web of new regulations without supply. The new Tenant Act led jeonse prices to peak to new heights. Yet other than increasing government spending, the Moon administration has failed to roll out any effective countermeasures to solve the crisis, such as a drastic easing of regulations. Companies that are supposed to stand on the frontlines are remaining low key, muzzled by tightened regulations. It’s like the entire economy is in a rut. Moon’s approval rating has sunk to the mid-40 percent range.
Biden is a fan of regulations and is going hard on Big Tech. The foundation of his economic policy lies in increasing federal spending and raising taxes. His campaign promises were to increase the corporate tax rate from 21 percent to 28 percent, pursue an aggressive antitrust policy and strengthen workers’ ability to unionize. Still, the American business sector welcomed his election. Donations to the Biden campaign from Silicon Valley were nine times higher than those to the Trump campaign. Amazon CEO Jeff Bezos congratulated Biden’s victory, saying, “Unity, empathy, and decency are not characteristics of a bygone era.”
Moon’s policies are similar to Biden’s in the sense that tax hikes and strengthening labor unions are disadvantageous for companies. But how come the corporate sectors of each country react differently?
It all comes down to predictability.
American businesses tend to see the Biden administration as predictable. Korean businesses often complain about not knowing what regulation the DP might approve of next.