Laid-back politics, invisible government

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Laid-back politics, invisible government

Published: 30 Jul. 2024, 20:26

Cho Min-geun
The author is the business and industry news director of the JoongAng Ilbo.

It has been woeful to witness the drawn-out confirmation hearing on the nominee to head the Korea Communications Commission (KCC), not just because of the sad sight of the never-ending, meandering acrimony, but also because of the toll on lawmaking. The questioning of the motive to seat a former president of a regional MBC outlet as the top supervisor for the communications policy is understandable. But MBC is just a part of the media industry. Can it be that important to push out all other urgent legislative schedules and tasks?

Among a pile of bills gathering dust in the National Assembly is the Basic Act on Artificial Intelligence which has been sitting idly at the Science, ICT, Broadcasting and Communications Committee. Governments of the European Union, the United States and other major countries are busy mapping regulations and legal grounds for the technology that can shape our future. AI-related bills were put forward from the last Assembly, but could never see daylight as the Science and ICT committee members were engrossed in fighting over broadcasting-related bills. Six AI-related bills were motioned since the 22nd legislature opened in June, but they are yet to be tabled for discussion.

Companies meanwhile are abandoned at sea. They are forced to sit on their hands and watch global big-tech majors leap ahead, as they cannot know what would be prohibited, sanctioned or promoted. The industry is petitioning to separate science/ICT and broadcasting in the legislative committee. Of the 20 members on the committee, only five came from the science and technology field. Most are former journalists or career politicians.

Since they cannot rely on the legislature, companies are looking to the government. But the government shows neither the initiative nor fortitude to fight the opposition-dominant legislature. It is merely waiting for cues either from the behemoth opposition or the presidential office.

The amendments to the tax code the government proposed last week are the latest examples. The keystone of the proposed outline is to revisit the inheritance tax system for the first time in 28 years. The government proposes lowering the maximum tax rate from 50 percent to 40 percent and scrapping the surcharge on heirs that make up the largest shareholders in a company. The Ministry of Economy and Finance initially objected to the presidential office’s idea of shaving the maximum tax rate to 30 percent and instead argued for the removal of the surcharge from the inheritance tax code for the time being.

If the government was strong-willed on the issue, it should have been able to explain itself in detail and provide a convincing pitch to the public. But the ministry gave a dry and simple reason — to facilitate hereditary succession in family-owned businesses and enable a benign cycle in the economy — for fixing the inheritance tax system. Why the inheritance tax ceiling was reset at 40 percent also was not fully explained. The ministry only said that it referenced the average maximum rate of 26 percent among OECD members and other countries. It is wondrous how it expects to convince the main opposition which rejects any favors to the rich.

Instead of refereeing and easing uncertainties, the government often becomes the source of confusion. The government held a cabinet meeting earlier this month on the renewed heat in the housing market in Seoul. It should have sent a strong message to contain the simmering fever. Finance Minister Choi Sang-mok presiding the meeting pointed to the increasing volatility in the market due to the fever in some areas in Seoul. He promised to increase housing supplies when necessary. But the Ministry of Land, Infrastructure and Transport in charge of housing policy said that existing supplies were sufficient.

Government offices can differ in views. That’s why a cabinet meeting is held to coordinate differences and unify policy direction. Mixed signals can only confuse the market. The government hurriedly issued a statement last week vowing to mobilize “all possible policy means” to “radically expand housing supplies” after apartment prices in Seoul rose for 18 straight weeks.

The business environment is already tough and murky. Few can fathom the impact on the global economy from the result of the U.S. presidential election in November and the extent of the repercussions of the AI revolution. The CEO of a financial company that had raked in its best-ever earnings in the second quarter said it is hard to plan for the next year as it is uncertain what can happen six months later. The government and the legislature have the responsibility to draw a social consensus on urgent issues and build readiness for future challenges to help clear up the fog. Instead of merely chanting about bettering people’s well-being, both branches of the government must take real action.