Welfare splurge not the answerPresidential hopefuls in the ruling Democratic Party (DP) are competitively proposing hefty welfare programs even before they officially announce their bid for presidency. Former Prime Minister Chung Sye-kyun came up with a revolutionary idea of offering 100 million won ($89,485) to each person 20 years from their birth. His proposal is based on the concept of the so-called “social inheritance” administered by a state for the young with no assets inherited from their parents. Chung reportedly borrowed the idea from the “basic asset” championed by French economist Thomas Piketty to help address fundamental inequality from birth.
But that’s theory no country has adopted to ease a deepening wealth gap. No one can dispute the need to resolve the wealth polarization, but the concept is unrealistic. The Moon Jae-in administration’s “income-led” growth also borrowed the concept from the International Labor Organization, but it turned out one of the worst policy experiments of the liberal government as it ended up exacerbating the wealth disparity between the haves and have-nots. We cannot afford a repeat.
Gyeonggi Gov. Lee Jae-myung has suggested the idea of providing the young with a universal “basic income” starting with 200,000 won a month and ending with 500,000 won a month through an incremental increase of the handout. Lee Nak-yon, former chairman of the DP, presented his “new welfare initiative” aimed at achieving appropriate levels of income, housing, education and other five categories.
We cannot but wonder what difference is there between their proposals and those of Huh Kyung-young, chairman of the National Revolutionary Dividends Party and a perennial presidential candidate. Welfare programs must rely on fiscal affordability and a rational selection process of beneficiaries. But they keep mum about how to find revenues for such programs. Due to the government’s welfare splurge over the last four years, our national coffers have become empty. The government’s welfare budget for this year already broke 200 trillion won.
We are dumbfounded at their competition for more welfare spending under such circumstances only to win the next presidential election. They must learn lessons from former Greek Prime Minister George Papandreou who helped thrust the country into a national default after promising to give the people all they wanted. Political leaders must revitalize corporate investments and create quality jobs for the young if they really care for their future and the country’s.
If they want to become a leader, their judgment should be balanced. They may find a cue from a book titled “Economic Policy Agenda 2022” coauthored by five former economic officials. They proposed that the government collect tax from high income earners on today’s levels and provide subsidies to the lower income groups. The presidential aspirants need to pay heed to their advice as they stressed the need to streamline the current welfare system to find fiscal resources and also emphasized justice in distribution. We hope the presidential hopefuls listen to their suggestions before it’s too late.