[Editorial] No Economic Shortcuts

The day before yesterday, the Uri Party made a suggestion to use the 3.2 trillion won appropriated as recovered public funds as Social Overhead Capital (SOC) investment at the government-party council on budgets for next year. The government said that it would give positive thoughts to the suggestion. The intention is to revive the conditions of construction businesses, which have strong stimulation effects on the economy.

It is without doubt that the governing party should intend to revive the economy, but when the government liabilities are increasing rapidly, the attempts to stimulate the economy by spending money to be used for returning debts doesn’t seem trustworthy and can end up raising the tax burden for the next generation.

The government adheres to a two-digit growth rate in its welfare budgets while cutting SOC budgets by one trillion won each year. If the governing party is to increase the SOC budget, it should first examine the productivity of the welfare budget and cut the generosity-bred welfare budgets that do not really help with reducing the gap between the haves and the have-nots. A more authentic welfare policy is to transfer the spared budget money into SOC investments and create jobs.

At the same time, the reckless organization and expenditure of the public sector, including the government, should be restructured so that the money spared by doing so can be transferred to SOC investments.

Raising taxes to start constructing public buildings might temporarily stimulate construction business conditions but cannot solve the basic problems. This will strengthen the expulsion effect that will deprive the private sector of investment sources. The more effective way to revive the construction business is to vitalize the private construction market by altering the anti-market real estate policy consisting of tax bomb burdens and regulations.

The ongoing real estate policy is only hurting the poor population by reducing jobs in the private construction market and not quite effectively settling the house prices. This in turn acts as a spell for increasing the welfare budget and leads to tax raises and a big government, thus forming a vicious cycle.

If the governing party truly intends to revive the economy, it has to begin the fundamental surgery on systems, starting from relieving regulations. In order to clear the anti-market code, the utilitarians should speak out in true words without caring for the president’s moods. Relieving the regulations in metropolitan areas and the ceiling on equity investment will create jobs. It is pitiful to look at the ruling party seeking short-term steps to stimulate the economy by misappropriating the budget.