Debate arises over Moon’s ‘socialist’ policies
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.”
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.