[Desk Column] Is an Omnipotent Government Competent?

The common keyword among critics of the Moon Jae-in administration, now in its fourth year of power, can be summarized as "all-powerful (萬能)." In contrast, the Park Geun-hye administration, which ended prematurely due to various misgovernances and state corruption, was commonly described as "incompetent (無能)." Whether the emergence of all-powerfulness as a counter-example to incompetence is a lesson learned, a demand of the times, a trend, or a direction of the administration is unclear. However, it is true that all-powerfulness and all-powerful ideology are observed in many areas of the current government.

A professor at a private university recently remarked in a private setting that "the Moon Jae-in administration has fallen into the trap of all-powerful ideology," citing examples such as regulatory omnipotence, tax omnipotence, debt omnipotence, and legislative omnipotence. These forms of all-powerful ideology have also been consistently pointed out by the conservative opposition, critics of the Moon Jae-in administration, and the media. If summarized, it ultimately means "(with the president leading and the National Assembly supporting) the government wants to do everything." A representative example of all-powerfulness is the real estate sector, where even institutions to monitor and supervise transactions have been established. The real estate policies of the previous and the one before last administrations have been effectively discarded, and the new policies focus less on balancing supply and demand and more on suppressing demand first, then expanding supply centered on the public sector, followed by transaction monitoring. Landlords, tenants, and multi-homeowners alike express voices of "not knowing what to do."

Tax omnipotence or debt omnipotence was triggered by the COVID-19 pandemic. Even before the COVID-19 crisis, the current administration's economic policy was expansionary fiscal policy. Whether to pursue expansionary or contractionary fiscal policy inevitably depends on domestic and international economic conditions. However, the income-led growth before COVID-19 was effectively tax-led growth, which became the catalyst for fiscal expansion. COVID-19 even removed the fiscal rules that acted as a dam. While no one denies the role of fiscal policy in this unprecedented crisis, if the role of fiscal policy is not redefined, it will ultimately leave debt to future generations.

The way to fill the empty treasury of the country is either to collect more taxes or to increase tax revenues. The country's tax revenues mainly come from corporate tax, income tax, and value-added tax. Increasing taxes usually means raising the rates on these, primarily corporate and income taxes rather than value-added tax. Corporate tax, income tax, and various tax rates related to real estate and financial investments have already been raised. Tax policy should reflect domestic circumstances but is also a matter of international competition. The Korea Economic Research Institute, representing business interests, claims that while major competing countries such as the United States, the United Kingdom, Japan, and France are lowering corporate tax rates, South Korea has raised them. Although corporations pay corporate tax, the actual tax burden is passed on to consumers, workers, and shareholders.

Increasing tax revenues can also be achieved by maintaining or lowering tax rates to boost the vitality of economic agents and thus enlarge the overall tax base. What companies desire includes regulatory reform and increased labor flexibility, which have been long-standing demands but have often been frustrated. In contrast, the National Assembly sees bills related to corporate regulations proposed and discussed almost daily. With the forced passage of the three Fair Economy Acts and dozens of regulatory bills proposed weekly, criticism arises even in the 21st National Assembly that legal omnipotence and regulatory omnipotence prevail under the motto "if it doesn't work, legislate."

Kyung-ho Lee, Head of Editorial Planning Team

Whether to minimize government intervention in state affairs, choose intervention as needed, or actively intervene depends on the philosophy of the administration. Considering the stable presidential approval ratings and the ruling party holding an absolute majority, the party-government-office coalition will not relinquish control over state affairs during the remaining term of the current administration. The opposite of incompetence is not all-powerfulness but competence (有能). The State Affairs Planning Advisory Committee, which served as the presidential transition committee in 2017, stated, "There must be a belief that the government is competent for social change to be possible. Please provide advice for a competent government." Then and now, advice and counsel toward the government continue to pour in. Lee Kyung-ho, Editorial Planning Team Leader

This content was produced with the assistance of AI translation services.