Finance Minister Yoon Jeung-hyun came out in support of former Prime Minister Chung Un-chan in the ongoing debate on “profit sharing” between conglomerates and their subcontractors. The government’s chief economic policymaker told a National Assembly committee on Monday that he believed Chung’s idea should be given support.
Yoon’s sympathizing with Chung was particularly noteworthy, as he was retorting to Samsung chairman Lee Kun-hee on his bitter criticism of Chung’s proposal the other day. Minister Yoon must have been especially irked by Lee’s less than generous assessment of the overall economic performance of the current administration.
Lee’s comment on the profit-sharing idea put forward by Chung, now head of a presidential commission for shared growth of large and small businesses, was surprisingly bristled and even contemptuous.
“I grew up in an entrepreneurial family. I studied economics at school,” he said “But I have never heard of such a thing … I don’t know if it is a term used in a socialist state, capitalist state or communist state.”
Requested by a reporter to appraise the government’s economic policies, he said brusquely that the score was “not satisfactory, barely above the level of flunking.”
Chung’s reaction to Lee’s remarks was almost equally unreserved. He argued that one is not supposed to ignore something just because he had not found it in the books he read. Chung also asked Lee not to try to put his proposal into the ideological spectrum but make a productive approach toward it.
Watching this sharp exchange which invited divided opinions in support of either side, we regret that there have not been enough efforts to understand each other. Lee’s allusion to socialism and communism is touching a most sensitive element in Korea’s social debates while Chung also displayed certain academic arrogance as a former president of the nation’s most prestigious university. The lack of mutual respect is disappointing many spectators.
Chung asserts that businesses are already sharing profits beyond their targets with employees and executives in the form of bonuses and with shareholders through dividends. This sharing can be extended to include suppliers and subcontractors who have contributed to such profits. The shared profits may be spent on developing technologies, acquiring production equipment and stabilizing employment in the smaller firms, according to Chung.
However, from the standpoint of Lee Kun-hee and other conglomerate operators, the whole concept sounds like opening an avenue for state intervention in private business. Furthermore, it restricts the rights of shareholders, who expect investment returns from the companies’ profits. Chung plans to launch a 15-member panel representing big corporations, small firms and academia next month to work out practical schemes to share profits. But few believe actual implementation will be possible in the foreseeable future.
Basically, Chung’s shared growth commission is an outgrowth of President Lee Myung-bak’s fair society philosophy which emphasizes “win-win relations” between larger and smaller businesses. Its establishment was widely seen as the conservative government’s move to the center for the cause of easing social polarization. Even within the ruling camp, Chung is seen as a potential alternative presidential candidate to represent the centrist force. Here is one reason for the apparent isolation of Chung in his shared growth mission, despite having the backing of the president.
Chung Un-chan, as a famed economist, must have a strong conviction in the goodness as well as necessity of profit sharing in the business world. But he has only two years to work on this Herculean task. His first job should be holding meaningful dialogues with the Samsung chairman and other conglomerate leaders.