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Pampered policy makers

Making money is as hard as achieving democracy.
Jan 26,2018
The generation that was born in the 1960s and entered college in the ’80s at the peak of Korea’s democracy movement became a powerful political force in their 30s. This so-called “386 Generation” was emboldened during the administration of dissident-turned-president Kim Dae-jung.

Now, after spending a decade on the political periphery, they have moved back to center stage in their 50s under President Moon Jae-in. They are now called the “586 Generation,” and they have made their comeback with style and resolve. They are no longer hot-blooded, and their language has become refined. They seem unstoppable with the backing of over 70 percent of the population.

However, they are starting their second year on uneven footing. The economic front is shaky from their confusing and questionable policies on the minimum wage, jobs, housing and cryptocurrencies.

The 586 Generation’s political roots are in the student movements of the 1980s. They formed a joint front against the military regime of Chun Doo Hwan. In 1987, Chun gave into the nationwide movement and allowed a constitutional amendment to pass, establishing Korea’s single-term, five-year presidency.

Although these students spent more time on the streets than in classes, they needed not fret about finding a job. Jobs were abundant. Companies visited campuses to recruit students. Ironically, the economy boomed under Chun.

The students were then lucky to avoid the layoff wave of the late 1990s as a result of the Asian financial crisis. They were still young. The axe did not touch them.

Making money is a hard struggle. At a young age, finding a job is agonizing. And once there, people fear getting the layoff notice during an economic downturn or crisis. But the 586 Generation was blessed to be relatively free from such excruciating experiences. They are an educated bunch. Yet their learning came from books rather than experience. It may be why the policies they have come up with a lack of dexterity.

The Moon Jae-in administration’s economic slogan is people-oriented growth. Its language is full of compassion. Benevolent policy begins with good intentions, but its funding must come from taxpayers. That is why his policies have become controversial.

Moon’s plan to grow the public sector requires heavy funding. The same goes for his minimum wage increase. The government has offered small business 130,000 won ($120) per employee to ease the burden of higher labor costs, but to be eligible for the aid, the employers and employees must subscribe to four kinds of government-run insurance. Tax is collected from salaried workers, while the government takes credit for digging into their pockets.

Many business owners resent the higher minimum wage. They criticize the government for being out of tune with reality. The world of money is cruel and has no room for goodwill. In its economic forecast for 2018, the Bank of Korea estimated that the 16.4 percent jump in minimum wage this year could reduce hiring by 20,000.

The 586 Generation is highly proud of their democratic legacy. Their pride is reflected in their policies. They apply moral judgment when forming policies. The best example is on cryptocurrencies. The young generation is infatuated with cryptocurrencies because of the appeal of innovative blockchain technology. In the world of digital ledgers where traditional regulations cannot reach, the line between speculation and investment is blurred.

But the government has black-and-white views. It has defined the trade as gambling and speculation. An ethical yardstick overruled its judgment. In his political treatise “The Prince,” Niccolo Machiavelli strongly advises the state “abstain from taking the property of others, for men forget more easily the death of their father than the loss of their patrimony.”

Machiavelli hit the nail on the head when it comes to the relationship between the ruling power and the masses. The plunge in value of cryptocurrencies brought losses to investors. It should have been up to the market to decide whether it was swayed by speculation or investment.

The government overreached. It raided the market without giving it room for procedural correction. Its action stems from obliviousness to the pain of making money. The sense of grievance can turn into resentment toward policy makers. Koreans in their 20s and 30s could bear disgruntlement and despair for a long time.

The government is going all-out in its campaign to clamp down on runaway prices of homes in hot neighborhoods south of the Han River. It is mulling every possible action: increasing the financial burden of redevelopment, extending the period for redevelopment and raising the property taxes. The early-2000s nightmare of a property market crash from a rigorous crackdown on southern Seoul landlords under President Roh Moo-hyun is creeping back.

The outlook is murky. Apartment values are determined by various factors. Education is a key determinant, and the ministry is out to scrap elite high schools. If the elite schools become no more, parents will flock to the eight Gangnam neighborhoods famous for their schools in their success rate of sending students to good universities. The demand for education prevents home prices from falling, regardless of government action.

Kim Hyun-mee, minister of land, infrastructure and transport, has been skilled in his campaign against redevelopment in Gangnam. But the property market is multifaceted. It is a complicated world of greed and envy. It refuses to be tamed.

Kim Soo-hyun, presidential senior secretary for social affairs, is the architect behind the government’s real estate policy. Under him is the secretary of education and culture. His office is engrossed with its campaign to rein in home prices and scrap elite high schools. The contradictory factors cannot make real estate policy work.

Moon has vowed to remove regulations. He has called for a radical and revolutionary approach to attempt new policies. Making money is hard in Korea because of its heavy regulations. It is as hard as achieving democracy. Moon’s people-oriented policies should find their starting point in industrialization. The 586 Generation needs to break out of their ideological box if they want to come up with mature economic policy.

JoongAng Ilbo, Jan. 25, Page 31

*The author is a senior columnist at the JoongAng Ilbo.

Park Bo-gyoon