[Desk Column] Populism Hell

Leading presidential candidates compete by overusing 'populist financial policies'
Feasibility and funding plans remain unclear... 'Let's just do it first' approach
Must avoid the lure of populism and present fundamental solutions

National Assembly Press Photographers Group

[Asia Economy, Lee Cho-hee, Head of Finance Department] Every presidential election season, there is always a figure who becomes a hot topic apart from the main candidates. That is Mr. Heo Kyung-young. Whether his presidential bid is sincere or not is beside the point. The public's interest lies in his ‘novel’ pledges. Most people mocked his pledges, calling him the ‘Andromeda candidate.’

The presidential election season has returned. Mr. Heo is quiet. I visited the website of the ‘National Revolutionary Party,’ where he serves as Honorary Chairman. It was the same as before. On the front page, it boldly states that his support rate is 7%. (Whether this is true or not is unknown.) But strangely, it lacks the catharsis it once had. It feels like its effect has worn off. The reason becomes clear quickly. Mr. Heo’s pledges to distribute cash directly to all citizens have already been realized in the real world.

The pledges of this election’s candidates represent the peak of populism. They cover all fronts, including basic housing, cost-price housing, basic income, and service welfare. This is why Mr. Heo’s pledges are losing influence and attention compared to before.

Lee Jae-myung, the Democratic Party candidate, has evolved his ‘basic series’ to include even a basic overdraft account. The core idea is to lend 10 million won to every citizen at a low interest rate of 1-2%. Mr. Heo’s pledge to give 1.5 million won to 18-year-olds in this low birthrate era seems more realistic?perhaps just a feeling. Yoon Seok-youl, the People Power Party candidate, promises to open up lending opportunities widely. His pledge is to relax the Loan-to-Value ratio (LTV) up to 80% for young people and newlyweds. Given the current financial authorities’ stance, this is unrealistic. Even if realized, considering the skyrocketing housing prices and loan interest rates, it is dizzying.

The so-called ‘righteous thieves’ in folk tales are simply thieves from a legal perspective. They gained popularity by distributing grain to the people. The way populist pledges work is exactly the same. Candidates without substance find it hard to resist the temptation of giveaway pledges.

As economic inequality, class conflict, and polarization worsen, populism is more likely to prevail. In January 2017, Oxford Economics in the UK issued a report warning about the spread of populist governments. The main content was that among the world’s top 20 economies, populist governments would emerge within a few years. The likelihood of a populist regime arising in Korea was 20%, ranking fourth along with France. Judging by the behavior of the two candidates running in next year’s presidential election, Oxford Economics’ prediction seems likely, which is worrisome.

When mentioning the ‘harms of populism,’ Venezuela is often cited. For example, until last year, it sold gasoline to its citizens for less than 1 cent per liter. It was practically given away for free. We all know the result. In this country, a new term called the ‘Maduro Diet,’ named after President Nicolas Maduro, is popular. It refers to the forced weight loss of over 11 kg on average among citizens due to severe food shortages.

The economic distortions and aftershocks caused by populism have been repeated many times in history. The temptation of freebies is hard to shake off. But there is no such thing as a true free lunch. The lunch I eat for free today will only be charged to my children tomorrow.

In the book ‘The Open Society and Its Enemies’ by Karl Raimund Popper, an Austrian-born British philosopher, there is a saying: ‘The attempt to make heaven on earth invariably produces hell.’ Populist policies are merely painkillers that temporarily stop the pain. They cannot be a fundamental prescription. I hope presidential candidates do not commit the mistake of killing the ox while trying to straighten its horn (교각살우, 矯角殺牛) by focusing only on policies aimed at winning votes.

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