Debating Housing Welfare for Newlyweds While Ignoring Citizens’ Lives

The outdated welfare debate has returned as election season approaches. Following youth welfare stipends, the Seoul Metropolitan Government has now sparked another debate over housing welfare, saying it will increase the housing support budget. Seoul Mayor Park Won-soon announced that 3 trillion won would be spent on housing welfare over the next three years. The plan is to expand existing housing assistance for newlywed couples and broaden the range of beneficiaries.

The core of the expanded support for newlywed couples is to include those in their 5th to 7th years of marriage and to increase subsidies for newlyweds earning between 80 million won and 100 million won annually. However, directing welfare resources toward upper-middle-income, high-earning households has the side effect of deepening polarization.

Welfare funds financed by taxes should, by all rights, be spent on the poor. Trying to concentrate benefits on high-income groups, as Seoul is doing, cannot be called welfare policy; it is merely vote-buying administration. If such reckless welfare spending accumulates, there is a high risk that government finances will collapse.

As government spending continues to grow, the vitality of our economy is declining, and tax revenue is falling as well. As the corporate sector contracts, even corporate tax revenue is expected to fall by more than 8 trillion won next year. If reckless government spending continues, government debt will rise rapidly, and this will damage future growth potential.

Our corporate economy is losing vitality. As labor-union-biased policies continue, businesspeople are giving up their businesses or moving overseas. Young people are struggling even to find temporary jobs, let alone good jobs. Despite this reality, the political establishment has turned its back on reviving the economy and become obsessed with giveaway programs.

Those with high-income jobs can buy homes on their own. Encouraging them to rely on the government is bad policy. It is wrong for Seoul to classify even those who should be living responsibly on their own as recipients of government benefits, thereby undermining their self-reliance.

Seoul’s giveaway-style welfare spending not only creates a sense of relative deprivation among citizens in other regions with weaker fiscal conditions, but may also distort the Seoul housing market and reduce its competitiveness. Rather than simply thinking in terms of subsidizing housing costs, Seoul would be better advised to pursue urban administration that can lower housing costs themselves. It should allow redevelopment in the city center to proceed smoothly, easing housing shortages in areas dense with commercial facilities, and carry out urban regeneration projects that restore the competitiveness of deteriorated downtown districts.

For a long time, Seoul’s urban competitiveness has been falling behind. Repeated policy failures have made the real estate market highly unstable. Moreover, because social infrastructure has not been improved and deteriorated conditions have been left unattended, the reality is that Seoul is being overtaken by other metropolitan areas around the country.

A city with declining competitiveness loses vitality. Capital turns away, and businesses stop investing. In the end, it loses talented people and good jobs to other cities. If Seoul can be reborn as a city that is favorable for business, it can solve not only the jobs problem but also the housing problem through income creation. There would then be no reason for the government to step in claiming it will solve housing problems.

Seoul should move away from the political approach of granting benefits to specific groups and instead work to freely expand the space for citizens’ activities. Only then can Seoul be transformed into a dynamic city where good jobs are created.

Problems are not solved simply by packaging things as though the government can step in and resolve housing. The right path is not patronage-driven welfare policies that promise housing subsidies, but practical welfare policies that create an environment where jobs can be generated so that citizens can take responsibility for their own lives.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 시민의 삶 외면한 신혼부부 주거복지 논쟁

Author: Sung-no Choi

Date: 2019-10-31

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=24&idx=22011