What Can Korea Learn from Germans’ Choice of Reform?

Day after day, the media is filled with talk of Korea’s economic crisis. Domestic demand has been seriously weak since the start of the year, and with household debt and the political turmoil surrounding impeachment overlapping, many say it is difficult to expect a visible rebound. The construction sector is also frigid. Following last year, construction investment is again likely to remain negative this year. The number of companies applying to the courts for rehabilitation or bankruptcy is also rising to an all-time high. Naturally, unemployment is surging as well, and there are even reports that the number of unemployment benefit recipients has reached a record high.

On top of that, we are now facing external troubles as well. Not only is it hard to count on exports, but we must also navigate the wave of powerful protectionist policies, including the tariff bombshells of the newly launched second Trump administration in the United States. China’s advanced technology, which we once thought far behind ours, has already surpassed us or is now at a level on the verge of doing so. It is often said that the time when we worried about China catching up in the global market has already passed, and that we now have to struggle desperately just to avoid falling behind. In every sense, we are facing major challenges both at home and abroad. The Bank of Korea sharply lowered this year’s economic growth forecast from 1.9% to 1.5%.

Despite all this, “Yeouido’s gaze” seems fixed on something entirely different. The major opposition party is forcing through the Revised Commercial Act, which domestic business groups consider so urgent that they mobilized en masse to issue an emergency statement of opposition on a Sunday. Business groups and economic experts warn that the Revised Commercial Act, which expands directors’ fiduciary duty to include shareholders, will lead to excessive litigation, threats to management control, and reduced investment, ultimately harming the economy as a whole. But to them, such warnings are like casting pearls before swine.

The same is true of working-hours regulations that serve only the unionized workers of entrenched large corporations and public enterprises. Politicians turn a deaf ear to the cries of businesses and workers saying, “We want to work more,” even when doing so is necessary for further growth or even mere survival. They say they will allow no exceptions whatsoever to the 52-hour workweek regulations. It seems politicians’ heads are full of the arrogance of saying, “You should be resting.” Then again, are these not the very people arrogant enough to claim that they themselves will take responsibility for the retirement and health of the entire nation? And yet, in reality, there are far too many politicians to whom one would like to throw back that famous movie line: “Mind your own business.”

Even so, one cannot ignore the fact that they are “politicians who make a living only by selling votes.” As we all know, if a policy is liked and applauded by voters, most politicians will push for it regardless of whether it ruins the national economy and impoverishes the people. Most such politicians are called “populists,” “populist politicians,” or mere “political hacks.” The truth is that genuinely different “true statesmen” are hard to find in history.

Politicians are “sellers in the political market” who react sensitively to public opinion—that is, to the direction of votes. In the end, what can move them is only public opinion, the social mood, and a shift in the direction in which votes are moving. If this is the fate of mass democracy, then so be it. That is why, whether we look at foreign cases or our own, reform remains a distant prospect unless public opinion forms around the conviction that reform is unavoidable. Even the reforms of British Prime Minister Margaret Thatcher, which came to be known as Thatcherism, would have been impossible without public support grounded in the belief that “things cannot go on like this.”

In our case as well, would it even have been possible to overcome the crisis through reform during the IMF economic crisis without nationwide participation such as the gold collection campaign? Likewise, unless public opinion forms around the view that “things cannot go on like this” in response to the current economic crisis—and unless “the people in Yeouido” recognize that these policies “do not sell votes”—they will continue their current behavior.

In Germany’s recent general election, the ruling Social Democratic Party (SPD) suffered the worst crushing defeat in its history, while the Christian Democratic Union (CDU)-Christian Social Union (CSU) alliance won an overwhelming victory. This, too, was a clear expression by the German people that “things cannot go on like this.” Germany chose “small government, big market” policies: deregulation, tax cuts, and reductions in welfare spending. What choice will we make? That choice will determine whether we continue falling into the abyss or seize a chance for recovery.

Hyukchul Kwon, Director, Free Market Institute

---

Original title: '개혁' 선택한 獨 국민 , 한국은 무엇을 배울 것인가

Author: Hyeok-cheol Kwon

Date: 2025-02-28

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=1&idx=27375