Posted on 07/08/2009 12:45:13 PM PDT by Oldeconomybuyer
South Korea is still struggling to shake off the legacy of decades of government-led industrial policy. So it's disappointing to see these ideas reinvigorated by the Lee Myung-bak administration under the cloak of "green growth."
Seoul announced this week that it would spend 107 trillion won ($84 billion) over five years on environmentally related industries. That's on top of 50 trillion won pledged in January's Green New Deal and several hundred trillions more promised over the past year to chaebol bailouts and loan guarantees to small- and medium-sized businesses.
The government says the spending plan will create 1.56 to 1.81 million new green jobs. There is no way to disprove this claim -- it's a finger-to-the-wind number based on assumptions about future growth. If Korea's unemployment numbers decline, Mr. Lee can say he "saved" jobs by spending money; if they rise, he's contributed by "creating" jobs.
This green spree will be administered by at least five government ministries. Bureaucrats will be incentivized to entrench their roles in "green" projects to protect their own jobs. If the Lee government were serious about jumpstarting green industries, it would ditch the lavish spending initiatives and simply cut taxes to zero for any investment in green technologies.
Mr. Lee may believe that green growth is the industry of the future. If so, it is better to unleash Korea's animal spirits and let the market decide that, not the bureaucracy.
(Excerpt) Read more at online.wsj.com ...
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