President Lee Jae Myung surveys a candidate site for a southwestern region industrial complex by helicopter on June 30.PRESIDENTIAL OFFICE
Koh Hyun-kohn
The author is the chief editorial writer at the JoongAng Ilbo.
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During the Covid-19 pandemic years of 2021 and 2022, Korea experienced a strange phenomenon. The economy was struggling, yet tax revenue far exceeded projections. The government collected an additional 61 trillion won ($44 billion) in 2021 and 52 trillion won in 2022 after the Moon Jae-in administration raised corporate, property and capital gains taxes. Much of the money was distributed as pandemic relief.
The policy produced short-term political gains but left little behind. Cash assistance reached voters before elections, then disappeared without creating lasting assets for future generations. Political calculations and left-wing convictions took precedence over long-term planning.
President Lee Jae Myung has long been associated with cash payments. As mayor of Seongnam and governor of Gyeonggi, he championed generous subsidies and became Korea’s most prominent advocate of universal basic income. Gyeonggi distributed Covid-19 relief ahead of the central government in 2020.
After taking office last year, Lee approved emergency payments for all citizens. This year, his administration provided fuel subsidies to 70 percent of the population. Officials described the policy as an economic stimulus, but its effects were limited. The reliance on cash transfers fueled concerns that the new administration might simply repeat the policies of the Moon government despite Lee’s emphasis on pragmatism.
The unexpected arrival of a semiconductor boom has changed the debate. Additional tax revenue generated by the industry alone is expected to reach 50 trillion won to 100 trillion won this year. The windfall immediately revived demands for redistribution. Proposals for a “national dividend” emerged from the presidential office, while Labor Minister Kim Young-hoon argued that semiconductors are “a public good” and that extraordinary profits should be redistributed.
Such thinking is misguided. Rather than focusing on expanding the economy, it centers on dividing existing wealth. Yet the government has recently taken a different approach: Instead of distributing the extra tax revenue, it has announced plans to establish a future-response fund.
President Lee said the money would be used to strengthen the country’s growth potential for future generations. Presidential Chief of Staff Kang Hoon-sik added that it would help secure electricity and water supplies for semiconductor clusters. For an administration that has frequently relied on subsidies, the shift is noteworthy. If sustained, it would mark a departure from the ideology and populism associated with previous left-wing governments.
The government’s three megaprojects will not succeed, however, unless political thinking changes as well. Conservatives who ask why semiconductor factories should be built in the southwestern area of Honam or suggest that the investments are tied to the Democratic Party (DP) convention are indulging in conspiracy theories. At the same time, Lee’s own suggestion that semiconductor investment amounts to compensation for Honam is equally excessive.
Politics should be removed from the discussion. Korea can no longer afford to divide itself into Honam and Yeongnam, Korea's southeast. Advanced factories should be built wherever conditions permit. Complaints that the government should not lead investment efforts ignore global trends: Governments around the world compete aggressively to attract strategic industries. U.S. President Donald Trump has openly pressured both foreign governments and corporations to build factories in the United States.
More important than the headline figure of 4.76 quadrillion won in investment is whether the government demonstrates genuine commitment. To do so, it must abandon old ideological assumptions.
The three megaprojects will require electricity equivalent to more than 24 nuclear reactors, nearly matching the output of Korea’s current fleet of 26. Solar and wind power alone cannot satisfy such demand. Climate and Environment Minister Kim Sung-hwan recently acknowledged that additional reactors may need to be considered if electricity consumption continues to rise.
That is not a decision to approach reluctantly. President Lee should state clearly that Korea will build nuclear power plants quickly and at scale, formally abandoning the antinuclear policies of previous administrations.
The same logic applies to water shortages. A political worldview that treats former President Lee Myung-bak’s Four Rivers project as inherently harmful offers no practical solution. The government should instead make active use of existing infrastructure and build additional dams where necessary.
Contradictions remain elsewhere. The administration promises deregulation while avoiding reform of the 52-hour workweek. If the DP opposes change, then the party itself must change.
Lee’s government owes nothing to the Moon administration and has no obligation to preserve its policies. In his inaugural address, Lee declared that “outdated ideologies belong in history’s museum.” Korea now stands at an important crossroads: Whether to remain trapped by ideology or transform itself into a pragmatic government focused on creating prosperity.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
