Tag: socialism

Major conglomerates in South Korea are ready to push back against the ruling party’s attempt to make them give up profits to other companies not making profits. It is going to be interesting to see how this plays out:

The move is sparking backlash from large business owners, with major companies claiming the measures are only implemented in socialist or communist countries. Companies have also been criticizing the proposal over the lack of guidelines determining on which level a company is deemed profitable.

The ruling party has stressed that the profit-sharing scheme would not be compulsory and that each company’s voluntary participation would be encouraged through various incentives. However, business insiders believe the government will continue to pressure firms to take part in the initiatives.

“The government says it is voluntary but will continue to pressure firms to take part in the profit-sharing scheme,” an industry official said. “The Moon Jae-in administration has restrained companies with dozens of new regulations that severely impact business operations. This administration has pressured companies financially much more than other previous governments.”

Dozens of corporations including Samsung Electronics, LG Electronics, Kakao and Woowa Brothers are expected to be subject to the scheme as they have been able secure large profits amid the prolonged pandemic.

Korea Times

You can read more at the link, but it is the responsibility of the government that shutdown companies like restaurants and bars to subsidize them through tax money, not other private businesses.

It looks like the DPK is testing the waters to implement some of their socialist ideas:

Debates are rising over ruling Democratic Party of Korea (DPK) chief Lee Nak-yon’s proposal for a profit-sharing scheme aimed at encouraging profitable companies to distribute their earnings to those hit hard by the COVID-19 pandemic. 

Although the ruling side is stressing that it will not twist anyone’s arm and will instead offer various incentives, such as corporate tax breaks, to those voluntarily adopting the scheme, the opposition is critical of the idea, claiming that it goes against market economy principles. Plus, business owners are also skeptical of the proposal, saying there are no clear criteria on which companies are profitable. 

There is speculation that tech companies such as Samsung Electronics and LG Electronics, the nation’s top mobile messenger operator Kakao Corp., and Woowa Brothers, the operator of delivery app Baedal Minjok, would be subject to the scheme, as the companies have seen their sales grow amid the prolonged pandemic.

“In Europe, those who are prosperous in the pandemic are called economic winners from the COVID-19 crisis and are required to fulfill their social responsibility,” Lee said during Monday’s party meeting. 

“Now we need to discuss various ways for profit-making companies to help those plagued by the coronavirus.”

Korea Times

You can read more at the link, but I thought that was the job of the government to help those struggling because of the coronavirus? Additionally if a company is profitable during the pandemic it is likely the vast majority of their employees are working. If business owners want to give out increased bonuses because of the pandemic that should be their own decision.

The government should be helping the small businesses that are shutdown or at reduced operations because of the pandemic. If they need more funds to do that then that is what the power to tax is for. It just seems like the DPK just doesn’t want to make a case for raising taxes and instead pressure these companies to give up their profits instead.

The Moon administration is claiming they are not socialists:

Many foreign experts, in particular, have criticized Seoul government for tipping the balance of economic policies toward socialism, which they claim violate free market principles and will eventually lead to an exodus of foreign capital.

The nation’s top economic policymaker, however, strongly refutes this criticism describing the Moon administration’s income-led growth policies as an inevitable choice to tackle the ever-deepening issue of polarization and to ensure sustainable growth.

“I would disagree with such an argument,” said Finance Minister Hong Nam-ki in an exclusive interview with The Korea Times at the government complex in central Seoul, Jan. 10.

“I believe they have gone too far. In an era of per-capita income of $30,000, it will be difficult for Asia’s fourth-largest economy to move forward without addressing such issues as polarization and the fair distribution of wealth,” he added.  (…….)

This means that the government is pursuing a two-pronged strategy ― on one hand, boosting growth potential through innovation, and on the other hand, narrowing economic inequalities by enhancing social safety nets for the underprivileged. 

Korea Times

You can read more at the link.