[The Fountain] The people are not the monkeys
CHOI HYUN-JOOThe author is a stock market news reporter for the JoongAng Ilbo.
In the Song Dynasty in China, a man was raising monkeys. As he had too many, he could not afford to give enough food. He told the monkeys that they will receive three acorns in the morning and four in the evening. The monkeys got upset and resisted.
When the master told them they would receive four in the morning and three in the evening, the monkeys accepted the deal. They end up getting the same number of acorns, seven a day, but the anecdote points to the silliness of seeking immediate interests only.
Democratic Party Chair Lee Jae-myung has come up with a controversial idea. All citizens can borrow up to 10 million won ($7,500) at a low-interest rate for maximum of 20 years with the government’s guarantee. The biggest problem is the budget. The principal alone will be 300 trillion won if 30 million adult Koreans take out loans. Lee did not mention how to fund the proposal.
According to the Ministry of Economy and Finance, the combined national debt of central and local governments amounted to 1.07 quadrillion won last year. The national debt at 680.5 trillion won in 2018 has increased by 56 percent in four years. Despite the extraordinary factor of Covid-19, this is an unusual number.
According to this year’s budget plan finalized by the National Assembly, the national debt is expected to reach 1.13 quadrillion won, up 66.7 trillion won. In other words, the national debt increases by 130 million won per minute. The daily interest alone is 60.8 billion won.
On top of that, the government will guarantee against default. If individuals do not pay back their debts, the government will pay them back instead. This is widely criticized as a populist scheme just a year before the next parliamentary elections.
The governing People Power Party recently decided to withdraw a plan to raise gas and electricity bills. It has been only two months since the conservative administration criticized the previous Moon Jae-in administration for delaying the rate increase and resulting in the worsening of the financial health of the Korea Gas Corp. and the Korea Electric Power Corporation.
Last year, the national debt-to-GDP ratio was 49.6 percent, the highest ever. Economists are constantly raising concerns and warnings about a “second foreign exchange crisis.” But politicians are only making populist moves that will result in emptying taxpayers’ pockets rather than putting out the fire. The people are not monkeys.
with the Korea JoongAng Daily
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