hankyoreh

The Korea Economic Research Institute, a think tank affiliated with the Federation of Korean Industries (FKI), on Oct. 24 released a list of economic policy tasks for the next administration. Every last one of them bucked the tide of economic democracy: prioritizing growth, slashing welfare spending, promoting labor market flexibility, and lowering the corporate tax. The institute has a tradition of making election-time proposals, but it’s not a pretty picture to see the business community running in reverse at a time when economic democracy is a major contemporary concern that all three presidential candidates have included in their pledges.

The FKI previously issued a statement of opposition when the three candidates promised measures to work for economic democracy in their platforms - first the New Frontier Party’s Park Geun-hye and the Democratic United Party’s Moon Jae-in, then independent Ahn Cheol-soo. It took issue with them presenting “chaebol-bashing” policies without offering their own visions for getting through economic crisis or achieving growth at a time of continued concern about economic uncertainty. The executive board at the Korea Chamber of Commerce and Industry likewise complained that an economic crisis like the present one requires investment and hiring, and that corporations needed to be encouraged to do this.

Ironically, the business community has organized a backlash with a single-minded focus on corporate interests without a thought for the national or working class economies. This shows exactly why we need economic democracy in the first place.

In its basic formulation, economic democracy entails promoting transparency and responsibility in chaebol management and developing socioeconomic structures that allow everyone to thrive. Time and again, chaebol have shown that they don’t play by the rules, as we saw just a few days ago with the Shinsegae clan and their illicit internal transactions, or with Lotte, which ended cigarette selling rights at mom-and-pop stores.

The global economy is suffering right now, and it is inevitable that we will have to increase spending on social services to boost the incomes of low earners, while also assisting SMEs to create jobs. It is petty to level “populism” charges over increased welfare spending in a country that currently ranks dead last in the OECD in that area. These calls to concentrate first on promoting growth by lowering the corporate tax, then using the benefits to pay for increased social service spending, are the same broken record we’ve heard in the past. Thanks to various tax deductions, corporations continue to enjoy a very low effective tax rate as it is.

The FKI’s short-sighted insistence on using economic crisis as an excuse to put off needed structural reforms triggered the economic democracy wave in the first place. Economic policies come in two forms: short-term ones in response to economic fluctuations, and mid- to long-term ones geared to solving structural issues like overly concentrated wealth and worsening polarization. We cannot allow those fluctuations to rob structural reforms of their consistency. In Japan, the Japan Business Federation gained a new identity as a think tank working to offer a vision for the future and solve that country‘s aging society problem. It would be nice to see South Korea’s business community likewise viewing economic democracy as a healthy tonic that can benefit not just the national economy but corporations as well.

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