SEOUL, KOREA — As election season follows, people frequently speak of “welfare” and “free”. Lately, once hotly debated issue “free school meals“ finally elected a new Seoul major. And the newly elected leader of the Democratic Party Han Myeong-sook expressed her strong will to extend social welfare by taking over the political spirit of former president Roh Moo-hyun’s era. Park Geun-hae said that she would walk away from her conservative position toward progressive social welfare. This time, women rather than men are challenging to prove an old saying wrong, however, it teaches us that even the head of state becomes humbled before the poverty.
I have no taste for political ideology but feel uncomfortable when hearing election-wise stories about welfare and distribution. Recent issues like free-three set and half-tuition are part of such a hodgepodge, which never discriminates and attracts both the conservative and the liberal. I am sure that even those who are less into politics probably have thought of welfare once, especially free, and welfare below is what I make of it.
But first, we need to be familiar with the political definition of "free". “free” originated from the policies of socialist countries; Prime examples are “free allocation” and “free confiscation”. During the proletariat revolution, they were promoted in order to win the heart of commoners like farmers and laborers. Most of them gleefully shouted and praised “socialism”, but changed their tune later.
"Any nation that heavily depended on welfare populism either faced its own financial downfall
or retreated to join the league of the underdeveloped."
Here are some interesting cases. Argentina’s GDP once ranked 6th in the world. Even European emigrants then became hesitant between U.S. and Argentina. And now the GDP plummeted to 86th. What happened Peron Government’s welfare populism was to blame. He was desperate and concentrated on winning a popularity contest. The successful campaign was doomed and deluded with “free education” and “free medical”.
U.K’s “cradle to grave” is no exception. The British were fully supportive when the Labor party in the 1970s extended the social welfare. However, it was the green light for the rich and companies to escape into overseas tax heavens.
Among southern European countries, Greece might have reached the epitome of such populism. Spain suffers from the unemployment rate of 20% and is strike-prone. And the Greek government is facing financial collapse. Some quirky rumor was spreading and hurting social atmosphere, which decreased productivity. For Japan, welfare policies “children benefit” and “free high school education” resulted in the world’s worst ratio of national debt 200% and the downgrade of their credit rating.
People become near-sighted when they yearn for the free welfare. Here “balloon effect” works; if you put pressure from one side and the other one pops out. The same applies to the free welfare. Where does all necessary resources come from well, from our taxes, national budget, and borrowings.
Greece’s default took place months ago. The Greek government could not return the money back to her creditors. Where did the money go They poured all into the social welfare. A local crisis created domino effect across Europe and is now threatening the existence of the Euro zone.
Tax problem is more serious. Foreign debt could be dismissed in denial but the tax issue directly affects people. The free welfare is to help the low income, but not really. The rich and companies will find ways to avoid heavy taxes as witnessed in U.K. Domestic consumption, employment, and workers with their monthly paychecks will suffer once the free welfare extends. Look at some of Northern European countries “social welfare heavens” where the governments take away nearly 50% of people's income. Korea stands at 26.5% but, with such social welfare model that doubles the rate, and overspending is unavoidable.
The budget allocation for “free school meals” in Seoul is around USD 103 million targeting only few students. Though it is not at all a tiny portion, another extra budget share will be added this year. Certain social organizations and the media claim that the combination of free and paid school meals will cause friction among different social classes. But only “free school meals” welfare policy work There always have been social struggles between two classes. Would not it be better if the government can offer “free school meals” to only the real need and some educational opportunity like free extra academic courses to others instead
I grew up in poverty and can say it is not a shame, because many great people with poor background, we must remember, were able to become who they are by fighting personal difficulties and social rejection with hard working and sweats. Free medical is the center of the welfare populism. In Europe, a patient can never fully benefit from it until the patient’s condition becomes fatal. Korea’s aging generation is another issue. The Korean society is aging quickly into “aged society”. By 2022, it will be the fastest one among OECD members. If this rapid transition completes, the government will be forced to inject a record amount of money into “free medical“.
Korea’s social welfare budget for 2011 stood at USD 7 billion, which was the largest cut of 28%. On top of that, additional USD 5 billion will be available next year. These two combined constitutes almost a half of Korea’s total national budget. Then, how will the government allocate money for the future of unified Korea The Cambridge dictionary’s definition of “populism” betrays reality, since it always begets negative effects. It is just a political logic which is indiscriminately free and has no responsibility.
Now Korea is at critical crossroads and faces a number of different issues. And its national debt is at alert level. In the era of participating government, there was an interesting satirical hearsay which tells about how former presidents burned their rice. Its implication shows how confusing each of former presidents’ economic policy was.
The late Mr. Roh at the beginning of his presidency talked about growth based on distribution. Yet, in the mid, he emphasized both growth and distribution. And he said near the end of his term “When I went overseas, I realized that real patriots were our companies”
The only government that fell short of the growth rate of world economy belongs to Roh. And, noticeably, during only both Kim Young-sam and Roh Moo-hyun’s tenure, the low income bracket’s earning increased relatively little. Explanation for Kim was IMF, but what happened to Roh
I still respect the late Mr. Roh most. I think he was an honorable president who introduced true democracy. He bestowed power upon his people, which eventually cost his life. Controversy between growth and distribution, in particular, is about which comes first: focusing on growing or distributing the pie.
The Greek youth can take advantage of free education until university. But their free ride ends with graduation. And no job is up for grabs and the government cannot afford a quarter of Greek population that was put on national payroll in order to create more jobs. The pronoun of the distribution “welfare” destroys their dreams and makes them take to the street throwing rocks and fire bombs.
The concentration of wealth is a concern for the growth-oriented policy, but it is only a matter of how to distribute it; let us think of the pyramid structure built with cups, water keeps pouring from just above cup at top to fill up all the below ones in succession. So, it is about who gets first. As the wealth increases, all of us can benefit from it.
During the Joseon dynasty, Jeong-jo known as a revolutionary ruler came up with an idea of growth welfare theory saying “A king may not save his people in poverty, but he can nurture the rich that can use people, and this way, the poor can redeem themselves.”
The above anecdote gives us an important insight into the issue. Even in old days, their witty principle was well expressed; simply improving the cycle of gathering and sharing cannot be a solution. I am not against the welfare itself. I must say that it should be selective when it comes to directly benefiting the weak. And the distribution without the growth is baking bread without flour.
When speaking of evaluating the wealth, how much other people have in their pockets is a barometer, not what I have in mine, that is to say, sharing means creating the true wealth. What growth to distribution is what needle to thread. "Righteous growth comes first" isn’t this something that we are looking for
