Is the Moon Administration Still a Part of the Candlelight Revolution?

(Samsung Bioepis CEO Ko Han-seung to the left as Deputy Prime Minister Kim Dong-yeon shakes hands with Samsung Group Vice-Chairman Lee Jae-young. Source: Dailymedi.com)

By Park Jae-song (Planning Committee, ISC)

In a press conference on July 18, 2018, the Intellectuals Declaration Network, comprised of 323 professors and intellectuals, announced the “Intellectuals Declaration Demanding Bold Socio-Economic Reforms from the Moon Jae-in Administration.” “We couldn’t simply stand by and watch the Moon Jae-in administration’s economic policy,” they explained. Then, they affectionately but firmly “asked him [Moon] to return to the spirit of the candlelight uprising.” In a society that holds scholars in high-esteem, the declaration was a loud opening salvo by progressives against the Moon Administration, which had to that point been considered a positive force in carrying out the political and economic reforms demanded by the 2016-2017 candlelight revolution.

Moon’s rise to power is a fruit of the candlelight revolution’s protest against corruption and yearning for a better world. Thus, not only is Moon empowered to push fundamental reforms to Korea’s politico-economic structure, he is mandated to do so. Yet, the Moon Administration’s impatience and myopic economic vision are yielding timid and lukewarm economic policies. Furthermore, his actions point towards a dangerously comfortable and intimate relationship with chaebols[1] not different from the previously disgraced toppled Park administration. Extirpating the deep corruption in Korean society requires going down to its chaebol roots.

The Moon administration has stated its socio-economic principles as “income-driven growth[2],” “a fair economy[3],” and “innovation driven growth[4].” While these three principles require a fundamental shift in the socio-economic structure, the Moon administration’s limited view sees income driven growth as just an increase in the minimum wage balanced by a flexibilization of labor[5]; a fair economy as just a regulation of the most flagrant abuses of power; and innovation based growth as a deregulation of these sectors. Because this limited approach — a minimum wage increase and the implementation of a fair economy — has not immediately increased employment or GDP growth, the Moon administration is returning towards neoliberal policies deregulating innovative industries.

Moon’s policies deregulating innovative industries opens chaebol’s influence into new sectors. Recently, the Moon Administration’s push for deregulating online banking has created a potential backdoor by which chaebols can enter finance. Banking law restricts a non-financial company (NFC) to own no more than 4% of a bank’s voting shares[6]: Industrial capital’s influence on banks is restricted[7]. However, this limit was recently increased in the burgeoning innovation industry of online banks. On Sep. 20, the National Assembly passed the “Special Law for the Establishment and Operation of Internet Electronic Banking,” which expanded NFC ownership of online banks to 34%. While an accompanying implementation order was passed restricting ownership to information and communication technology (ICT) companies, and excluding chaebols from ownership, it was added as an implementation order rather than being written into the law. As an implementation order, the executive branch can potentially ignore this restriction[8]. In a direct reversal of campaign promises, Moon and his political party created an opening for future erosion in the division of finance and industry.

Ultimately, income-driven growth, a fair economy, and innovation driven growth require an economic restructuring that can weaken the economic dominance of chaebols and strengthen the rights and protections of workers, small merchants, and small and medium sized enterprises. Chaebol’s excessive economic power gives them too great a leverage in negotiating contracts and arrangements with their small and medium enterprise (SME) subcontractors and makes impossible the fair competition of a fair economy. This contributes to income polarization since the 24% of the workforce working in chaebols make far more than the 76% working in SMEs[9]. This counters the income redistribution necessary for income-driven growth. Furthermore, great leverage of a few chaebols over 99.9% of SMEs deters innovation: chaebol’s plunder and exploitation of technology from SMEs deters their discovery.

Not only are Moon’s economic policies timid and lukewarm, his relationship with chaebols is moving towards the cozy one behind disgraced and toppled President Park Geun-hye. This can be seen in Moon’s relationship to Samsung’s (Korea’s largest chaebol) Vice-Chairman[10] Lee Jae-Young. Their honeymoon began with an “accidental” run-in during a July 9th visit with India’s Prime Minister. Despite the improbability of a president simply running into and meeting with a suspect for bribery of Park, the Blue House dismissed it as happenstance.

The “accidental” but well publicized meeting is a common political move to feel out public opinion. Upon assessing the political ripples as minor, Moon sent his then-Economic Deputy Prime Minister (concurrently the then-Minister of Economy and Finance[11]) Kim Dong-yeon to meet Lee Jae-young and Ko Han-seung (CEO of Samsung Bioepis) (also involved in an ongoing accounting fraud investigation[12]) on Aug. 6. Kim asked Lee to help create jobs and growth through investment. Lee, ostensibly on behalf of the biologics[13] industry, asked for deregulation of biosimilar[14] medicines including deregulation of prices[15]. After the meeting, Lee promised 180 trillion won in future investment. Kim announced the administration would consider the recommendations. Amidst the ongoing investigation of Samsung Biologics’ accounting fraud, its meeting with the government afforded it greater legitimacy and assured shareholders: the day after, stock prices jumped by 6.53% pulling up the stock prices of (parent company) Samsung C&T by 2.88%[16]. In one bold stroke, Moon and Lee cleared the path for Samsung market dominance strategy in the biologics industry[17] and undercut an ongoing investigation. The administration sold itself for 180 trillion won, and not even in cash but in credit.

Without weakening chaebols’ economic power, their corrupting political and social influence will continue. The legislature is unable to extricate itself from Samsung’s money. The highest level of the judicial branch has been exposed as lackeys for Samsung. In addition, as is evident with Kim Dong-yeon, those in the executive branch need Samsung “insurance” to be set-up upon retirement from government. The media, often seen as the fourth branch of governance, has been tamed by Samsung even asking for approval on the management and hiring of its personnel[18]. They’ve become Samsung’s propaganda agents. Isn’t such pervasive corrupting influence at the root of our society’s ills? The Moon administration’s refusal to reform the chaebol, nay, its return to the past through collusion with the criminally suspect Lee Jae-young is pouring water upon the candlelight revolution’s burning desire for change.

Thus, the candlelight administration is coming undone. The high 70-80% approval ratings of the Moon administration have fallen to 45%[19]. The Moon administration’s backtracking of its economic policies can be witnessed everyday through its ministers’ policy announcements. While Moon is unable to overcome his policy limitations, people’s livelihoods deteriorate.

It’s time to mobilize the candlelight protests again.

On Dec. 1st of 2018 in front of the National Assembly, the Korean Confederation of Trade Unions (KCTU), the Korean Peasant’s League, the National Alliance of Street Vendors, and 50 other citizens organizations carried out the 2018 National People’s Rally. This was the first People’s Rally after the Moon administration came to power. It was three years since the last People’s Rally in Nov. 2015 opposing the Park Geun-hye administration and sparking the candlelight revolution.

At the rally, 20,000 amongst them workers, farmers, urban chanted their visions of a candlelight revolution society: Stop the Flexible Employment System! Eliminate irregular workers! A bowl of rice for 300 won! Introduce benefits for farmers! Stop forced evictions! Dismantle the private thug system! Pass the Anti-Discrimination Bill! Arrest Yang Seung-tae! Eradicate judicial evil! Strengthen the social safety net! Ratify the Panmunjom Declaration in the National Assembly! Introduce the fully proportional representative system!

The dissolution of the 50+ year chaebol-centered economic system will trigger a backlash revolt by the ruling classes. Yet, the Moon administration’s candlelight revolution mandate gives it a rare and precious opportunity to fundamentally change Korea’s politico-economic economic structure in accordance with the spirit of the candlelight revolution. It, now, stands at a crossroads: Will it fulfill its historic responsibility as the candlelight administration, or will it continue its regression to its conservative confines? My hope is that the Moon administration musters the courage and vision to finish as the candlelight government.

1. While technically a conglomerate, chaebols differ from the traditional western conglomerate in that their development involved heavy government intervention through protection, cultivation, and even control during Korea’s industrialization and dictatorship.
2. Income-driven growth is a broader Korean take on (Keynesian) wage-driven growth. Given 25.5% of the workforce in Korea is comprised of self-employed business owners, the term income would also include them along with employed people. The economic logic behind income/wage-driven growth is that redistributing wealth to the lower classes will increase their consumption and create a greater demand for goods and services which will in turn stimulate economic growth. http://www.pressian.com/news/article.html?no=163927#09T0
3. In a Nov. 9 speech, Moon described “fair economy” as the democratization of the economy. He specifically pointed out that the profits of economic growth in the past had accumulated in the hands of the chaebols rather than being distributed with the small and medium enterprises as well. As such, “fair economy” refers to a more fairer distribution of profits between the conglomerates and the small and medium enterprises they subcontract and a more level playing field for competition. http://www.hani.co.kr/arti/politics/bluehouse/869551.html
4. Innovation based growth is economic growth based on technological innovation in particular the 4th Industrial Revolution.
5. A law passed that limited the number of weekly work hours to 52 hours. 40 hours + an extension of 12 hours. The Flexible Employment System allows for these 52 hours to be enforced as an average for a three month period. In addition, through this system the additional hours that are worked would not be calculated as overtime (i.e. 1.5x the pay). Currently, the Moon administration, under pressure from business, wants to expand this 3 month period into 6 months. https://www.youtube.com/watch?v=IHFTMwliY7E
6. With approval of the Financial Services Committee, a non-financial firm can own up to 10% of non-voting shares.
7. This is to prevent the practice of industrial capital using their influence so that banks give them loans.
8. http://www.nocutnews.co.kr/news/5034691
9. http://www.hani.co.kr/arti/economy/economy_general/691668.html
10. The title of chairman is reserved to Lee Kun-hee (Lee Jae-young’s father) who is in a coma.
11. On Dec. 10, 2018 he was dismissed from his post by the Moon Administration.
12. Samsung Bioepis is the subcontracting company at the center of the byzantine account manipulation in Samsung Biologics that consolidated Lee Jae-young’s power in Samsung Group.
13. Biologic products refer to biological medical products that are genetically engineered inside living cells. For example, these products (hormones and proteins) are more effective in targeting cancer or diabetes than are synthetic drugs. There greater effectiveness makes them a burgeoning market.
14. Biosimilar products are roughly generic copies of these products. However, given the complexity of producing the product, the biosimilar products are “similar” rather than exact copies.
15. In the meeting, facilitating the import of medicine and medical supplies and an overall relaxation of regulations in the pharmaceutical industry. Effectively, this abolishes the biosimilar price ceiling set to 70% of the price of the biologic (original, non-generic) product.
16. http://www.hani.co.kr/arti/economy/economy_general/856631.html
17. Currently the Korean biologics market is shared roughly 50-50 between Samsung Biologics and Celltrion. While both pursue different pricing strategies, the government effectively threw its weight behind Samsung Biologics.
18. In 2017, emails were leaked between Chang Chung-kee, President of Samsung Future Strategy Office, and various chief editors and presidents of mainstream media (e.g. Chosun Ilbo, Munhwa Ilbo, Hankyoreh, Kyunghyang Shinmun, Dong-a Ilbo, Yonhap News) around news coverage and appointment of editors. https://newstapa.org/43714
19. http://www.hani.co.kr/arti/politics/politics_general/875358.html