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South Korean President Moon Jae-in shakes hands with Samsung Electronics Vice Chairman Lee Jae-yong at a production plant in Hwaseong

Progressive and reform-oriented scholars unanimously criticized as a “violation of the candlelight spirit” South Korean President Moon Jae-in’s recent meeting with Samsung Electronics Vice Chairman Lee Jae-yong – who is currently awaiting a Supreme Court ruling on a case involving corruption and embezzlement – during a system semiconductor vision declaration ceremony at a Samsung Electronics factory.

The group People’s Solidarity for Participatory Democracy (PSPD) also voiced “profound concerns.”

Worrying that the meeting between Moon and Lee “could impact the Supreme Court ruling,” Kim Tae-dong, an emeritus professor at Sungkyungkwan University, said on May 2 that it “was a betrayal of the candlelight spirit with its calls for eradicating deep-rooted vices and establishing a ‘country worthy of the name,’ and showed 100% disregard for the statement by intellectuals’ calling for an end to the vices of the chaebol system and the creation of an economic ecosystem where the ‘big fish’ and ‘small fry’ thrive together.”

The remarks came during a roundtable on the topic “Whatever Happened to Income-Led Growth, Innovation-Based Growth, and the Fair Economy?” held that day by the Intellectuals’ Statement Network for Social and Economic Reform – an organization jointly headed by Kim alongside fellow professors Lee Byeong-cheon and Cho Don-moon – at the Franciscan School in Seoul to assess the past two years of the Moon administration. The network, which includes many progressive and reform-oriented intellectuals, previously issued a July 2018 statement with 323 participants to call for more active social and economic reform measures by the Moon administration.

“Even if the president is not co-opted by the chaebols, his reforms will fail if associates with important positions are co-opted by the chaebols,” Kim warned.

“Numerous times, the administration has gone to the chaebols begging for large-scale investment and jobs, and all it has gotten in return is than a 10% decrease in facility investment and slack hiring,” he said. His remarks appeared to be a reference to Blue House Chief of Staff Noh Young-min, which is reported to have played a key role in the Blue House/Samsung “honeymoon.”

Many suggested the Moon administration has effectively given up on chaebol reform. Park Sang-in, a Seoul National University Professor and director of the Citizens’ Coalition for Economic Justice (CCEJ) policy committee, said the administration “is using its difficulties amending the Commercial Act and Fair Trade Act to improve chaebol governance structure as an excuse to basically abandon its chaebol reform efforts.”

“Since the local elections in 2018, [the administration] has changed course toward pro-chaebol policies like permissions on specialized internet banking, which undermines the principle of separating banking and industry, and the introduction of differential voting rights for venture enterprises,” Park noted.

Kim reserved some harsh words for Kim Sang-jo, who is responsible for chaebol reform as chairperson of the Fair Trade Commission (FTC).

“Kim Sang-jo has had meetings several times with large corporations since establishing a three-stage chaebol reform pursuit strategy of ‘communication with chaebols,’ ‘autonomous changes,’ and ‘enforcement of the law,’ but there have been no noteworthy results in terms of autonomous changes by chaebols apart from some reductions in circular shareholding, and almost no FTC legal enforcement results at all in terms of investigations and punishments against the top five groups,” he said.

Many expressed fears that the Moon administration’s key economic policy approach of “income-led growth” is now in jeopardy.

“The only way to support domestic demand, growth, and jobs is through relieving of polarization, yet the administration has gambled on achieving all of its different goals simply through the minimum wage,” said Kim Tae-dong.

“It was a serious misstep to replace Hong Jang-pyo as Blue House senior secretary to the president for economic affairs due to the controversy over the minimum wage, and while [the administration] did set up a Special Committee for Income-Led Growth, it’s pointless without the agreement of the Blue House senior economic affairs secretary or the Ministry of Economy and Finance, where the economic bureaucrats are in charge,” he added.

Park Sang-in said, “In its second year in office, the Moon Jae-in administration has more or less jettisoned its ‘income-led growth’ policies and is returning to the policies of the Park Geun-hye and Lee Myung-bak administrations under a slogan of ‘promoting innovation-based growth and economic vitality.’”

Others also commented on the “return to the past.” Hwang Seon-woong, a professor at Pukyong National University, said the administration had “responded inadequately to the economic downturn, the counteroffensive by anti-reform forces, and internal divisions while showing the limits to its policy planning and pursuit capabilities, and recently it’s been showing signs of abandoning its election pledges and returning to the past as the momentum tails off for institution reforms in terms of industry and labor.”

The attendees called on the administration to continue expanding its income-led growth policies. Ju Sang-young, a professor at Konkuk University, said it would be “preferable for income-led growth to be expanded and consistently pursued.”

“In terms of income-led growth, there needs to be harmony among the three ‘rhythms’ of increasing the minimum wage, strengthening unemployment insurance, and strengthening the earned income tax credit (EITC) system,” he said.

In a statement the same day, PSPD said, “It cannot be dismissed as sheer coincidence that corporations announce investment plans every time the president meets with a corporate leader who is on trial.”

“It is outrageous for the president to applaud this and support it with taxpayer money,” the statement said.

“The very fact that the president met personally with Lee in the name of ‘promoting economic validity’ must be seen as sending no small message to the judiciary.”

By Kwack Jung-soo, business correspondent

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