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Breaking down President  Park Geun-hye's U.S. Congressional speech in word cloud
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(EDITORIAL from the Korea Times on July 31)
Retreat from reform
Park cannot tame chaebol while begging for their help

In a recent meeting with media executives, President Park Geun-hye said the process of writing legislations for "economic democratization" will soon come to a close.

   It was a virtual declaration of the end of the government's efforts to reform family-controlled conglomerates by rectifying their various unfair and opaque business practices and narrow the gap with numerous small- and medium-sized enterprises.

   She showed the white flag less than six months in office and even before most Koreans could feel what her administration has done to this end.

   Park's economic czar, Deputy Prime Minister Hyun Oh-seok, wasted no time putting his boss's words into action Saturday, moving to further water down the already weakened legislation aimed to prevent the affiliates of a chaebol from monopolizing supply orders from the rest of the business group, by relaxing the criteria and allowing exceptions.

   The incestuous business practices have served as a major tool for tycoons to further amass wealth and hand over managerial control to their offspring while paying minimal taxes. The second- and third-generation managers of Samsung, Hyundai and SK groups earned several trillions of won through this method but paid less than one-hundredth of this unearned income as taxes.
Hyun said the government will shift from economic democratization to economic revitalization, summing up a remark of President Park who said, "Now is the time to make efforts for encouraging investment and developing economy." The Ministry of Industry, Trade and Energy soon canceled its decision to disclose the list of chaebol subsidiaries that unfairly slashed supply prices of their small partners, and the Fair Trade Commission put off scheduled regulatory legislations to the latter half.

   Park is of course not the first president who started with vows to tame the unwieldy business behemoths and gave up soon "in the face of grave economic situations." It was the path two liberal presidents, Kim Dae-jung and Roh Moo-hyun, followed. Park's immediate predecessor Lee Myung-bak, once CEO of Hyundai Construction, took a chaebol-friendly approach but the economy didn't improve much, either.

   What all this shows is clear and simple: the economic paradigm which depends on the exports of large manufacturers no longer works. President Park, like all of her predecessors, begs for chaebol's investment to perk up the dormant economy while not trying to shift the focus of economic operation to a number of smaller, creative firms and venture businesses. Studies show that Korea's investment rate, particularly that of chaebol, is far higher than the average of advanced countries, but the "investment efficiency" of the nation and its large businesses is way below the latter.

   In other words, economic democratization does not conflict with growth but supplements the economy's expansion, or rather is absolutely necessary for it.

   For Korean leaders to lead the economy in the right direction, they must shatter two myths spawned by chaebol and their cronies. First, don't try to reform corporate Korea when the economy is in a difficult situation. According to this theory, however, there has never been a time when the Korean economy is not in crisis. Second, only chaebol's investment recuperates the economy. It doesn't.

   We hope that President Park will regain her efforts to remedy the chronic diseases of the economy, but cannot shake a gloomy foreboding that this wish will just end up as such.