Revisiting opposition`s economic pledges

In the wake of Europe’s debt crisis evolving into a global financial crisis, Asian stock markets including Korea’s benchmark KOSPI plunged in opening trading Monday. In Seoul, Financial Services Commission Chairman Kim Seok-dong said, “The European debt crisis is the largest economic shock since the Great Depression of 1929.” Experts say the crisis will not be resolved over the short term. Korea, which heavily depends on exports, saw overseas shipments decline for three consecutive months as Europe, the U.S. and China showed weak growth. Seoul has cut its economic growth forecast from 3.7 percent to 3.5 percent. A lack of tax revenue due to weak growth will increase national debts and aggravate fiscal health.

Members of Korea`s newest National Assembly submitted piles of bills to democratize the economy, going against structural reform or cutting fiscal deficits. The ruling Saenuri Party is focused on fighting discrimination between permanent and temporary workers and unfair activities by conglomerates. The main opposition Democratic United Party stresses the expansion of welfare programs such as half-priced university tuition and raising the amount of basic retirement pension. Kim Ho-gi, a professor at Yonsei University, said at a dinner for opposition lawmakers Monday that the main opposition party should release drastic ideas that Saenuri cannot follow, saying, “We can differentiate ourselves from the Saenuri with economic democratization.”

Lee Seung-hoon, professor emeritus at Seoul National University, said in the Korea Forum for Progress last month that economic democratization based on Article 119.2 of the Constitution is democratic control by the market, saying, “It is about deciding market mechanisms and rules democratically for balanced growth, fair income distribution, and prevention of monopoly and abuse of market power.” Politicians, however, could recognize this as a panacea that grants legitimacy to state intervention in the market, which might lead to the failure of the government and accelerate the economic downturn. If the Democratic United Party and the minor opposition United Progressive Party disintegrate conglomerates or chaebols as pledged, it will deal a blow to job creation and business competitiveness. They should revisit and revise their presidential election pledges as well as those made ahead of the general elections.

Hongik University professor Kim Jong-seok told a policy panel discussion hosted by the Korea Economic Research Institute on Monday, “The core of economic democracy is consumer sovereignty and freedom of economic activities.” Kangwon National University professor Shin Joong-seop said, “Democratization always has a positive connotation as Koreans have a bad memory of dictatorship,” adding, “If politicians take economic democracy as a national principle, they will fail.” While Korea should seek growth with pro-market economic principles, it must alleviate the income gap and help the socially marginalized through social policies. Greece, Portugal and Spain, the three countries where Europe’s debt crisis originated, are in deep trouble because they stressed social solidarity instead of economic freedom. Korea must not go on the same path, knowing full well that it is the wrong way to go.