Here's a very interesting story about one area of agreement between the right wing presidential candidates as well as some particular types of economic nationalists: this is the issue of Chaebol ownership of financial institutions such as banks and other lending bodies. Traditionally, a separation of finance and industry is considered necessary to avoid 'moral hazard' issues that could lead to economic crises. Obviously, for the writers of this blog, the economic areas that we usually discuss issues such as moral hazard are mostly in terms of workplace and societal relations, but for mainstream economists these issues are mostly confined to who owns what. It should be no surprise then that the right wing (and occasionally some former left wing nationalists as well) have come out in support of the chaebol's right to own banks.
Now, some of the chaebol's complaints about reverse discrimination against Korean firms are legitimate in terms of the way in which parts of the banking system were preferrentially sold off to foreign speculative funds to whom Korea's restrictions on voting rights and ownership of financial and non-financial firms did not apply, but it should be remembered that the crucial exception that was made here was between foreign and domestic capital and not between foreign capital vs. the chaebol. A key distinction to keep in mind. The chaebol and the right here are mainly turning a criticism of what was a genuinely bad policy move into something that suits their interests in a way that would give them even more control over resources than they have now.
Jeon Seong-in, a professor of Hongik University, makes an astute comment in the article:
"They are plainly talking about transferring bank ownership to the conglomerates.'' "(The so-called presidential hopefuls) worry about the future of domestic financial industry and cite Lone Star Funds, but this problem was not caused because Lone Star represents foreign capital, but because a bank fell into the hands of a non-financial company. They may have correctly recognized a problem, but it is as if they have come up with the wrong solution. ''
I think this is the right step towards a larger debate on what to do about financial sectors as a whole, at the moment the banking sector is overwhelmingly foreign owned, but even where the government owns banks it runs them in the same way, investing in mostly speculative ventures like mortgage and consumer credit -- though they have now begun privatizing Woori bank which they own the majority stake in at the moment. Here one needs a critique of financial capital and what it does, not simply foreign vs. domestic capital. What could the government do to better allocate funds that create jobs, that don't go to environmentally wasteful investments or corrupt firms, and in way in which the public has more than a modicum of democratic input. Some people think that projects like the Ha Soon fund are the answer here, based upon investment in companies with strong shareholder rights, but I am also skeptical about this too. I would rather see money go to firms that respect their unions and workers or to other redistribution enhancing institutions rather than simply a firm with a good relation to its shareholders. Anyways, that's just my opinion.