[Editorial] Does Distribution Really Matter?

The government released its budgetary plan for next year, which weighed heavily on distribution rather than economic growth. The aggregate amount of the general budget only grew by 2.1% and the volume declined 2% when the special budget added. Yet, the government increased the social welfare budget by 9.2% including the exceptional accounts. In the meantime, the SOC investment, which contributes to the nation`s economy and growth, was cut by 6.1% and budgets for industries and small-and-medium-sized enterprises shrank by as much as 11.2%. Does this explain that the national budgetary plans also reflect the Roh administration`s “Code” of emphasizing distribution over growth?

Supporting those in poverty and strengthening the social safety net are important. Yet, the increase in government expenditure is not enough to improve the social welfare. Over the past seven years, the welfare expenditure almost tripled, but the livings for the poor have yet to be eased. The government may have succeeded in exercising the populism by boosting the welfare budget, however, it failed in spending the tax money in an effective way.

Like household budgets, a nation should also sacrifice other expenditures if it squanders on a plan. The government, in other words, drastically increased its budgetary plans in welfare and national defense, thereby becoming financially strapped in economic stimulation.

The government plans, released yesterday, can be viable at a time of sustained and robust economic growth. In reality, however, Korean economy is not in such a good shape with investor and consumer sentiments frozen hard. Exporters are hit by the rising won. Economic prospects are not brighter for the nest year. In this economic hardship, the government role is in desperate need to revitalize the ailing economy. In this context, a reduced budget in the needing sector looks hard to sell.

An excellent welfare, provided by the government, cannot generate the public applaude as much as the reinvigorated economy and more jobs. Improving distribution at the expense of economic growth is shortsighted. When the economy ails, the government`s revenue will decline and finally, it won`t be able to afford welfare enhancement. It is absurd that the government expects a 8% growth next year with the misguided budgetary plans. History tells us that improved distribution goes nowhere when the economic growth is neglected.