[Open Forum] Three Unfair Value Policies in 2022

I would like to highlight three representative unfair policies from 2022 in which excessive benefits were given to certain groups, resulting in disadvantages for others. Examining these cases will help us understand the direction future policy should take and assist in designing better policies.

The first policy is the Fast-Track Debt Restructuring Special Program. The so-called youth special program targets young people aged 34 or younger whose credit scores fall in the bottom 20%, and provides a 30–50% reduction in interest depending on the amount of debt, a deferment of principal repayment for up to three years, and an interest rate of 3.25% during that period. However, the core of the controversy is that this is an unfair policy that benefits only young people who took out excessive loans to invest in stocks and cryptocurrencies and then suffered heavy losses. As the stock market has undergone a sharp correction this year, many people have suffered investment losses, yet only those in their 20s and 30s are being helped. This seems unfair to those who, despite financial hardship, have repaid their debts faithfully. In addition, just as being aged 34 or younger is one of the eligibility criteria for the youth special program, most youth policies use “age” as the standard for defining youth. Most policies regard those “34 or younger” as youth, but some define youth as “29 or younger” or “39 or younger.” Since eligibility for benefits can be determined by a difference of just one year, can such standards really be called reasonable?

The second policy concerns measures for semi-basement residents. This refers to the Seoul Metropolitan Government’s announcement last August that it would help people living in semi-basement housing move into high-quality rental housing without any additional financial burden. Public rental housing is often located in highly desirable areas of Seoul, such as near subway stations, and rents are much lower than the surrounding market rate. As a result, this created a reverse discrimination problem in that only a particular group was granted the benefits of living in Seoul. Helping the housing vulnerable is necessary, but just as there are people who barely managed to escape semi-basement housing through painstaking savings and loans, this can be seen as an unfair policy that gives excessively generous benefits to semi-basement residents.

The third policy is the COVID-19 National Relief Fund. This refers to last July’s plan to provide the COVID-19 Win-Win National Relief Fund to the bottom 80% of income earners based on health insurance premiums. Under the support criteria, a person at the 79.9th income percentile receives the subsidy, while a person at the 80.1st percentile does not. Is there really such a great difference between those two groups? This situation shows that the standard used to distinguish beneficiaries from non-beneficiaries is also vague.

I agree that welfare is needed to help the socially vulnerable, but these three policies show that excessive benefits can be unfair to others. Such unfair policies also stem from vote-buying measures—campaign promises put forward by the government during last year’s presidential election process in order to win voter support. In fact, many of the youth policies currently being pursued are aimed at winning over younger voters, and in trying to favor one generation with limited resources, people in their 40s and 50s have been neglected. Among some in the 40–50 age group, extreme arguments have even emerged calling for a tax refusal movement.

Policies should not be populist handouts; they must be measures that everyone can sympathize with and that members of society can willingly agree to fund through taxes. Therefore, policy should move toward universal and valid approaches that are fair and proper, taking into account equity and efficiency.

Yebin Lim, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [자유발언대] 2022년 불공정한 가치 3가지 정책

Author: Ye-bin Im

Date: 2023-01-26

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=7&idx=25298