Global Economics Monthly: Gangnam's Pile
December 20, 2012
In Washington you can generally tell it is time to pay attention to an issue when it makes the cover of the Economist. The magazine’s October 13 edition ran a special feature on income inequality, focusing on the damage it can do not only to social stability but to economic growth. Indeed, inequality has become a potent political issue in the many Asia-Pacific countries undergoing leadership transitions in late 2012, including the United States, China, and – most pointedly – South Korea, which held its presidential election on December 19.
Both major candidates in the Korean election made “economic democratization” a centerpiece of their campaign. While a precise definition of the term has been elusive, it boils down to ensuring that economic prosperity is shared across all strata of society. During the campaign, President-elect Park Geun-hye focused her sights on Korea’s chaebol conglomerates as the principal culprits behind the widening gap between the rich and the rest. As a way of distancing herself from the unpopular policies of outgoing President Lee Myung-bak, Park’s attack on the chaebol made sense; but as an effective solution to inequality, it is at best incomplete.