Global Economics Monthly: Gangnam's Pile

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.