De­bate arises over Moon’s ‘so­cial­ist’ poli­cies

The Korea Times - - FINANCE - By Kim Bo-eun [email protected]­re­atimes.co.kr

A de­bate is aris­ing over the Moon Jae-in ad­min­is­tra­tion’s eco­nomic poli­cies, with some con­ser­va­tives go­ing as far as call­ing them “so­cial­ist.”

The left­ist Moon ad­min­is­tra­tion’s in­come-led growth poli­cies have pri­or­i­tized dis­tri­bu­tion over growth. They have been try­ing to cre­ate more jobs in the pub­lic sec­tor with taxes and re­duc­ing in­come in­equal­ity among cit­i­zens.

How­ever, the busi­ness com­mu­nity has ac­cused many of the poli­cies, in­clud­ing the dras­tic min­i­mum wage hike, as be­ing anti-busi­ness. Crit­ics claim that such poli­cies have dis­torted the la­bor mar­ket, dispir­it­ing en­ter­prises and damp­en­ing do­mes­tic de­mand.

The main op­po­si­tion party has been ea­ger to de­nounce Moon’s poli­cies. “The Moon ad­min­is­tra­tion’s anti-mar­ket and anti-busi­ness poli­cies have dam­aged the busi­ness en­vi­ron­ment,” Hwang Kyo-ahn, chair­man of the main op­po­si­tion Lib­erty Korea Party, said at a rally held a week ago in Gwangh­wa­mun, cen­tral Seoul.

“For­eign busi­ness’ ex­o­dus from Korea con­tin­ues, and ma­jor in­dus­tries such as the semi­con­duc­tor and car in­dus­tries are suf­fer­ing, but the ad­min­is­tra­tion con­tin­ues to in­crease wel­fare ex­pen­di­tures which is lead­ing to se­ri­ous risks.”

Crit­ics point out that the Korean econ­omy is a cap­i­tal­ist econ­omy where com­pen­sa­tion is based on merit.

An opin­ion piece pub­lished by Bloomberg re­cently re­ferred to Moon’s poli­cies as mak­ing Korea even less at­trac­tive to in­vestors, in ad­di­tion to the ex­ist­ing “Korea dis­count.” The de­bate is de­vel­op­ing at a time the ex­port-ori­ented econ­omy is hit by the trade war be­tween the U.S. and China, two of its largest trad­ing part­ners. Based on fal­ter­ing ex­ports, growth is slow­ing, prompt­ing the gov­ern­ment and var­i­ous agen­cies to lower their fore­cast fig­ures mul­ti­ple times. It ap­pears it will be dif­fi­cult for Korea to achieve the Bank of Korea’s 2.2 per­cent growth fore­cast.

“The dis­tri­bu­tion-cen­tered poli­cies serve as a bur­den at a time Korea faces de­te­ri­o­rat­ing ex­ter­nal con­di­tions,” said Park Chong-hoon, head of eco­nomic re­search at Stan­dard Char­tered Bank Korea.

In con­trast, some econ­o­mists said that since Korea is now a de­vel­oped econ­omy, the coun­try should make more ef­forts to pre­vent eco­nomic po­lar­iza­tion.

Park Jae-ha, se­nior econ­o­mist at the Korea In­sti­tute of Fi­nance, said, “The tim­ing may not be so good for such poli­cies, but in­clu­sive growth is an im­por­tant pri­or­ity for de­vel­oped economies around the world.”

Yon­hap

Hwang Kyo-ahn, chief of the main op­po­si­tion Lib­erty Korea Party, and mem­bers of his party, protest the Moon Jae-in ad­min­is­tra­tion in Gwangh­wa­mun, cen­tral Seoul, Sept. 21.

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