Special favors only for the young
CHOI HYUN-JUThe author is a financial news team reporter of the JoongAng Ilbo.
A mother asked her son, “I’ve never seen this pencil before. Where did you get it?” The child hesitantly answered, “It’s my classmate’s, and I secretly took it.” The mother said, “It’s pretty.” The next day, the child stole grapes from the market, and the mother said, “The grapes are ripe.”
As the child grew up, he stole more things, and in the end, he was caught stealing jewelry. The son ended up in prison, and the mother cried. He told his mother, “If you had scolded me when I first stole something, I would not be like this.” This is the story of “The Thief and His Mother” in Aesop’s Fables.
The Yoon Suk-yeol administration’s “debt cancellation” policy is stirring the public. The center of the controversy is the recent “Special Debt Adjustment for the Youth” for people under the age of 34 with bad credit ratings in the bottom 20 percent. The young people with bad credit will benefit from up to a 50 percent cut in interest rates and a deferment of principle repayment for three years. The Financial Services Commission explained that “in the low-interest environment, many young people chose to borrow money and invest in risky assets such as stocks and virtual assets to create wealth instead of saving” and “this measure is aimed at preventing their investment failure from becoming a social stigma for a long time.” The government practically said it was rescuing young people who made investments with debt.
In response, people of all ages, including honest young people who have been saving earnestly, protested. Last year, investors in their 30s and younger made up 55 percent of the investment in virtual assets while 45 percent were in their 40s and above. The Yoon administration is pursuing a populist policy to make up for the plummeting rating by only canceling the debts of the young people.
Also, there are concerns about a moral hazard. President Yoon said on July 15, “It is essential to pre-emptively take an action to protect national assets rather than settling insolvency later.”
The purpose is good. The problem is that there is no teaching or stepping stone for recovery. The Park Geun-hye administration created the National Happiness Fund in 2013 and wrote off debts of 580,000 citizens over four years. However, about 106,000 of them became defaulters again. The young generation struggling with debt should be encouraged to earn money on their own. Only then can they learn that investing with debt is a terrible idea.
with the Korea JoongAng Daily
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