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[Editorial] Improvement of Distribution Cannot Be Done by Just “Giving Out Money”

[Editorial] Improvement of Distribution Cannot Be Done by Just “Giving Out Money”

Posted October. 06, 2005 07:16,   


In the inspection of the administration two days ago, Grand National Party Representative Yun Kun-young presented statistics that show the Roh Moo-hyun administration is at the bottom among Korean governments not only in economic growth but also in distribution on which it has put particular emphasis. While the middle class makes up 48.0 percent of the population, which is the smallest proportion in history, people mired in abject poverty account for 5.1 percent, which is the largest proportion.

Under the existing administration, those who said, “Let’s focus on growth,” was accused of wanting to live an affluent life without consideration for others, while only those who argue, “We should put distribution first,” were respected as realizing value of the day. The result was a shrinking growth engine and worsening distribution in parallel. Life became tougher for people in the lower income bracket. Crimes for economic reasons increased from 230,000 to 310,000 cases from 2002 to 2004, while suicide cases over difficulties of livelihoods grew from 968 to 1,197 and credit delinquents from 2.63 million to 3.61 million people during the same period.

The government put forward a plan to increase the social welfare budget to 54.7 trillion won next year from 49.3 trillion won of this year. This might make the country look like a welfare state. However, this amount is the sum of costs of welfare-related administration expenses, labor costs, and research costs. The budget even flowed to rich people with abundant capital assets due to a poorly functioning system.

A more fundamental problem is that “wasting welfare,” in which the government squeezes tax money from people, has the money in its own hands and distributes it to the public but cannot realize the lasting improvement of distribution. The government cannot expect “improvement of distribution by the market” by shrinking investment and consumption through bashing large conglomerates and the rich and killing the market under the pretext of curbing speculation after it fueled real estate speculation with reckless development policies. If it sticks to its current way of distribution in which it feeds the public with a patronizing manner, how much would it cost to eliminate absolute poverty from society?

Demand for welfare increases with the passage of time. A social security net is not something that the government is solely responsible for. The government has neither money nor capability for that. It should revitalize the market economy. Creation of more jobs is the answer to modern welfare and healthy distribution. The first step toward improvement of distribution is stimulation of corporate activities and consumption by easing market regulations and scrapping populism politics which fuels anti-rich sentiment by dividing the rich and the poor.