What is ‘economic demagnification’ in South Korean society? Do you think is it a possible way to resolve the current problems on economic structure, business culture and employment crisis in South Korea? Please elaborate your answer with examples. Economic demagnification stands for the argument that unequal distribution of wealth which is confined to big corporations should be relieved by legislative law with political communities and civic groups as the central figures.
And according to the South Koreans constitution, ‘the State may jugulate and coordinate economic affairs in order to maintain the balanced growth and stability of the national economy, to ensure proper distribution of income, to prevent the domination of the market and the abuse of economic power, and to democratic the economy through harmony among the economic agents. ‘(Article 1 1 9) In that sense, despite the nation respect principle of free market economic, it can interfere in order to prevent weighted wealth towards the major large companies.
Hence, the politicians us port for the economic demagnification to relieve the gap between the rich ND poor based on the article number 119 constitution. However, will this have the impact on resolving the present South Korean society problems in terms of economic structure, business culture and employment crisis? Rather believe that the name of the economic demagnification will not only put the society in chaos but also it will make the majority of citizens aggressive. Economic demagnification is another name of prevarication.
That is, the public enterprises come under private management for the sake of ultimate cost-effectiveness for the citizens. To be more specific, unlike private general impasses go on bankrupt, the public corporations run from citizen’s tax even if they go deficit budget. Hence a number of South Koreans public enterprises sit tight on their debts. In that sense, in order to break down public official’s inefficiency in running business, the politicians argue that demagnification will be the hope to one nation. In principle, the supposed outcome of this should have been efficiency of management via prevarication.
However, the side effect of this results in numerous unemployed workers and retrogression of economic effect due to excessive competition among other mediators. Also, private companies weigh more on profit seeking rather than welfare system which was aimed of nationwide service when under the government control. Therefore, private entrepreneurs see the nation as customers for products. For example, KIT&GI company has been private enterprises since 1999 and nowadays, foreign investor ownership possesses over sixty percent of it.
And there are worries that there will be more harms than profits if the foreign capitals take up majority of companies in terms of draining national wealth, debilitating competitiveness with allied industries. Nevertheless, title of products still goes around with public corporation name ‘Korea Ginseng Corporation’ which triggers customers’ criticism. In fact, their representative product called ‘Conjugating Red Ginseng extract’ has been over-priced than other similar Red Ginseng products. And the customers have kept purchasing with higher price owing to the impression of its companies name and trusts.
Hence, some people criticize that the payments come from the civil go into the foreigners pocket which in fact, distributing more than millions of dollars of profits to foreign stockholders annually. Moreover, from the process of going from publics to the prevarication, the numbers of employees have been reduced to 4000 from 7300 people. And the eighteen plants have been merged into five. Numerous breadwinners were driven into a corner all of sudden. In addition, KIT company is found out to using trick to monopolize tobacco supply to expressway rest areas.
According to related industry, in condition of not doing business with foreign tobacco companies, KIT has deducted its price and installed TV sets and parasol for free of charge to some expressway service areas. And this was the not the first unjustified sales scandal. In 2008, they were fined $50000 dollar for the act of providing fund to retail dealers on terms of not selling or displaying other rival companies’ tobaccos. Also, from the year 2009 to 2012, KIT&G were discovered to the Office of Customs Administration in charge of changing duty free tobacco for ocean-going ship crews into overseas consumption.
And the amount was worth $61 7 billion dollar. Overall, they have harmed the public good. Moreover, protection for vulnerable members of society has been paid no attention because prevarication has purpose on pursuit of profits. And it leads to negative effect on employment instability such as massive layoff. Especially when propagating a public enterprise brings resistance between stakeholders and the labor unions. After Dodson Heavy Industries & Construction took over CHICK in 2001, it carried out a large-scale restructuring operation.
As a result, 1124 people were cut off in format of voluntary resignation. Hence, about 7500 of employees in 2000 has been reduced to 6270 as of 2001 after going through reconstruction. Owing to this fact, labor union members keenly confronted against the company consecutively via going on strike until 2002. For its effect, about 61 people were prosecuted and charged, 89 people received disciplinary measures including 18 people of dismissal. And their goods and properties were seized provisionally which worth of $65 billion dollar.
In this progress, one of the major members Bee, Dalai burned oneself to death. Before experiencing foreign exchange crisis, public corporation’s prevarication initiated in South Korea was to give advantage to rich people for the majority of time. This is because places where have founding power only constricted to conglomerates and thus, it was giving away enterprises to the rich people tit lower price. At that time, it was tremendous privilege of cacheable taking over state-owned companies with full potential of profits and market growth in a low price.
As a result, CHIC which had approximately $16672 million dollar of year-end net assets passed down to Dodson ranked 12th in economic business circles for the amount of thirty six percent of stock shares for $millions dollar. Consequently, Dodson Group which mere 323935 million assets scale at the first half of the year took over public corporation worth of $3550 million dollar. Dodson has benefited from the government owing to prevarication on force under the condition of stock market depression.
Afterwards, despite Dodson group has consecutively taken over a subsidiary company, Dodson Infraction Co. , Ltd for $2595 million dollar, Dodson Emaciate burdened by high debt due to no capability of corporate merger. In this progress, doubts have arisen concerning Dodson Group selling over Dodson Infraction Co. , Ltd overpricing properties by million IIS dollar skipping assets count. Having failed, Dodson leaves more profits taking over heavy industries in the present days. Beneficiaries of economic mechanization were concentrated on major shareholders of Dodson Group.
Capitals used for enrollment Were immediately returned and secured the opportunities of territorial expansion utilizing Dodson Heavy Industries & Construction Co. , Ltd. ‘s massive assets. Overall, whereas privatized Dodson Heavy Industries & Construction Co. , Ltd acts as the pivotal role in enlarging Dodson Group, Chic’s demagnification not only did not bring advantages to government but also the price of products did not be lowered for consumers. And laborers suffered from unemployment far from supervised welfare and bob positions. To conclude, going from public corporations to prevarication has brought more harm than good.
The government propagandists that we reduce citizen’s burden by selling inefficient public business to the private firms. In here, there exists fundamental dilemma for the economic demagnification. That is, chairmen do no invest on the project that will not bring profits. Therefore, only the part worth value becomes prevarication and the rest of it has left behind increasing pressures on nation’s finances. It was originally meant to relieve the economic restraints for the public inducing autonomy economic as well as expecting the trickle-down effect.