Repeated Workplace Deaths Are Murder.

• This was said by Lee Jae-myung (President) at yesterday’s Cabinet meeting.
• Yoon Seok-yeol (former President), who loved to talk solo, was nicknamed the ’59-minute President.’ Lee Jae-myung’s Cabinet meeting felt like a task presentation. Lee’s speaking time was 55%.
• The main messages of yesterday’s Cabinet meeting on industrial accident measures were threefold. First, it’s preventable but not being done. Second, it’s ultimately a money issue. Criminal penalties are good, but strong economic sanctions are needed. Third, if not done properly, the President will step in.
• Regarding POSCO E&C, where four people have died this year, it was described as “murder by willful negligence.”
• “If you visit construction sites, it’s not just one subcontract; it’s subcontracting of subcontracts, subcontracting of subcontracts of subcontracts, subcontracting of subcontracts of subcontracts of subcontracts, so the project is done at about half the contract amount, making it impossible to implement safety facilities or measures. It’s illegal but left unchecked. Isn’t POSCO E&C involved in this? I should go see for myself.”
• Related Link.

POSCO E&C: “Indefinite Work Halt.”.

• Right after the Cabinet meeting, POSCO E&C issued an apology statement.
• Jung Hee-min (President of POSCO E&C) stated, “We will conduct an urgent safety inspection and halt work indefinitely until safety is thoroughly confirmed.”
• Related Link.

Ministers’ Homework Inspection.

• Kim Byung-hwan (Chairman of the Financial Services Commission) stated, “If a major disaster occurs, we will reflect it in the ESG rating evaluation and consider restricting loans.” Lee Jae-myung emphasized, “We need to make the stock price plummet.”
• Han Ki-jung (Chairman of the Fair Trade Commission) said, “We are investigating four construction companies that have passed safety management costs onto subcontractors.”
• Baek Seung-bo (Deputy Commissioner of the Public Procurement Service) mentioned, “We are considering restricting public bids for companies where disasters occur repeatedly.” Lee Jae-myung remarked, “We should revoke their business licenses altogether.”
• Kim Young-hoon (Minister of Employment and Labor) was told, “You should stake your position on this.”
• Lee Jae-myung summed it up.
• “There are standards for everything. Accidents happen because they’re not followed. Why aren’t they followed? Because it costs money. But if an accident happens later, the cost is much higher, isn’t it? Then they wouldn’t act like this. Ultimately, the sanctions or consequences are too weak. It’s a society where risking human lives is profitable.”

This Is Our Real Problem.

• A scene from yesterday’s cabinet meeting. Post-incident punishment is important, but when asked about the fines for not adhering to safety standards, the ministers couldn’t provide an exact answer.
• “Could someone look it up when they have time?” was said,
• then a bit later, “Could someone step out and check?” followed by, “There should be something like imposing fines several times the economic benefit gained from such a structure.”
• Yet, no answer came, prompting this remark: “So this is our real problem. The fact that no one knows, despite so many people being here.”
• A bit later, “Has anyone checked yet? I asked for confirmation, but no one stepped out,” and then an answer came. It was 50,000 to 50 million won. It felt like a traffic fine, something you get caught by bad luck, not a real deterrent.
• “We need to fix this. There’s no reason to comply like this. Let’s review how to amend this. It seems there was a loophole here.”

What Matters Now.

$200 Billion Plus Alpha.

• Some speculate the offer could go up to $300 billion.
• Lee Jae-yong (Samsung Electronics Chairman) and Kim Dong-kwan (Hanwha Vice Chairman) are also going.
• Kim Min-seok (Prime Minister) stated, “There is a clear win-win area,” adding, “There’s no need to go for a one lose.” The message is that America can become greater with Korea.
• Many predict a decisive negotiation will happen tomorrow.

Why Tariffs Weren’t Mentioned at the Cabinet Meeting.

• It’s seen as strategic silence and an intentional low-key approach.
• The moment Lee Jae-myung speaks up, it could appear as a direct confrontation with the U.S. A high-ranking official from the ruling party, interviewed by Hankook Ilbo, said, “It’s about showing good negotiation results rather than fiery words.”
• Related Link.

Deep Dive.

Surviving Trump’s Big, Beautiful Deal.

• The EU could have retaliated with tariffs but chose to concede. The New York Times summarized the EU’s negotiation strategy as “Survive and advance,” referring to their decision to invest $600 billion. They accepted economic losses to avoid conflict.
• Trump called his massive tax cut package the “One Big Beautiful Bill Act (OBBA).” His tariff war is turning into “One Big Beautiful Deal.” Warnings abound about the long-term shock to the U.S. economy, but Trump shows no signs of backing down.
• Lim Sung-soo (Kookmin Ilbo Washington correspondent) noted, “The South Korean government has also tailored its negotiation strategy to Trump’s ‘preferences,'” suggesting that flattering Trump and avoiding imminent tariffs could be a viable strategy.
• Related Link.
• Related Link.

Corporate Tax Rate Raised to 25%.

• The decision has moved past the deliberation stage. The government and the Democratic Party have set a principle to “normalize tax cuts for the wealthy and strengthen the tax base.” Raising the top corporate tax rate from 24% to 25% will increase tax revenue by 7.5 trillion won.
• The threshold for major shareholders subject to capital gains tax on stocks will be lowered from 5 billion won to 1 billion won.
• Opinions diverged on the separate taxation of dividend income. A proposal to tax separately at a maximum rate of 35% was reviewed, but criticism arose that the reduction effect is concentrated on wealthy asset holders.
• Ahn Chang-nam (Chairman of World Tax Research Association) stated, “The low effective tax rate in Korea is due more to tax exemptions than the tax rate itself,” adding, “Even if we gradually accept the expiration of tax exemptions, the effective tax rate will rise without significant tax resistance.”
• Related Link.
• Related Link.

Kim Geon-hee’s Fake Necklace.

• Kim Geon-hee once stirred controversy by appearing with a necklace worth over 60 million won. It wasn’t listed in her official asset report.
• Initially, she claimed it was “borrowed.” The necklace, supposedly borrowed, was found during a raid on her brother’s mother-in-law’s house, and the story changed to “it was a fake.”
• Lee Young-tae (Korea Times Editorial Writer) pointed out, “It’s a problem if it’s fake, and even more so if it’s not.” The implication is that the real one might have been hidden, replaced by a fake.
• The special prosecutor confirmed it was indeed a fake.
• Related Link.

Another Take.

Why Park Geun-hye and Yoon Seok-youl Face Different Verdicts.

• A lawsuit for mental damages against Park Geun-hye (former President) was lost. Citizens suing Yoon Seok-youl received a ruling for 100,000 won in compensation each.
• Jang Won-jae (Donga Ilbo Editorial Writer) analyzed it in three ways. First, the unconstitutionality was clear. Second, the infringement on basic rights was more direct. Third, precedents emphasizing the liability of power have increased.
• Even if they win, collecting might be difficult, but more people are preparing for a second lawsuit.
• Jang Won-jae interpreted it as a stern warning to those in power: “Don’t even dream of doing something outrageous like martial law if you don’t want to be ruined.”
• Related Link.

Income Gap Creating Welfare Blind Spots.

• Last year’s standard median income was 2.23 million won, while the actual median income was 2.77 million won. The Yoon administration emphasized that it raised the standard median income to a record high over three years, yet the gap widened.
• If one’s income is below 32% of the standard median income, they can receive livelihood benefits, but failing to reflect inflation rates leads to more disqualifications.
• According to the ‘Joint Action for Basic Livelihood Security,’ there are 1.13 million households in the ‘non-recipient poor’ category.
• According to Lee Won-jin (Research Fellow at the Korea Institute for Health and Social Affairs), 390,000 people are in blind spots with only livelihood benefits.
• Related Link.

The Misstep of Moon Jae-in’s Administration in Boosting Jeonse.

• Choi Han-soo (Professor at Kyungpook National University) analyzed 40 years of data. In the U.S., when house prices exceed rent, prices fall. In Korea, rent follows suit, and house prices rise even more.
• Choi sees jeonse prices as a blind spot in financial regulation. As of 2019, jeonse deposits reached 783 trillion won, 93% of the 843 trillion won in mortgage loans. He analyzes, “In Korea, jeonse prices have been an inexhaustible source of liquidity that undermines financial regulation.”
• We must not overlook the uncomfortable truth that the jeonse guarantee system inflated the bubble. During the Moon Jae-in administration, jeonse loans increased from 56 trillion won to 183 trillion won, pushing up house prices. Choi analyzed, “Jeonse loans have been used as a bypass for mortgage loan regulations, damaging the price adjustment function.”
• Increasing public rental housing requires a lot of money. Jeonse guarantees are nice gestures but ultimately exacerbate housing insecurity.

“Our Dog Doesn’t Bite.”.

• At the memorial symposium for Noh Hoe-chan (former Justice Party lawmaker), Shin Jang-sik (member of the National Innovation Party) made this remark. Jeon Sung-in (former Hongik University professor) interpreted it as a warning against the “Mofia.”
• Lee Jae-myung said, “Public officials are like Robot Taekwon V.” It depends on who controls them, but ultimately, it’s no different from saying “our dog doesn’t bite.”
• Jeon Sung-in warned, “Lee Jae-myung might already be in the palm of the Mofia’s hand.” The point is, there’s no one around Lee Jae-myung to candidly speak about the dangers of policies proposed by the Mofia.
• When the president warned banks about their ‘interest games,’ Kwon Dae-young (Vice Chairman of the Financial Services Commission) gathered the association heads. Jeon Sung-in noted, “This is the thrill the Mofia offers,” but also warned, “To get the Mofia to move, you have to pay a price.”
• They are likely to push for easing BIS regulations and the separation of banking and commerce. The thrill from a ‘biting dog’ is hard to shake off.
• One might think it’s enough to keep hold of the Taekwon V controls, but we must not overlook the fact that Mofia reform has always failed, just like prosecutorial reform.
• Related Link.

Banking on Interest? Taxes Were Paid, Too.

• A Seoul Economic Daily column captures the industry’s mood.
• Last year, financial companies paid 11.6046 trillion won in corporate taxes. That’s 20% of the total corporate tax. The financial sector employs nearly 1 million people. They also contribute significantly to society, with 1.8934 trillion won last year. All four major financial holding companies announced plans for dividends and share buybacks worth billions.
• As economist Frédéric Bastiat once said, “We must consider both what is seen and what is unseen.” It’s a call to look beyond appearances.
• Kim Young-pil (Seoul Economic Daily Finance Editor) noted, “While we must curb the greed of banks, the economy needs them to achieve a reasonable level of profit to function.”
• Related Link.

Anti-Business Legislation? Conservative Media’s Collective Outcry.

• The amendment to the Commercial Act, the Yellow Envelope Act, and the corporate tax hike are being called a triple whammy.
• The People Power Party criticized the corporate tax hike, saying it’s like “sticking a straw into the neck of already struggling businesses.”
• Chosun Ilbo ran a headline “Breathlessness.” A business insider they interviewed said, “The Korean economy is approaching an irrecoverable tipping point.”
• Dong-A Ilbo, in an article titled “Yellow Envelope Act Phobia,” shared complaints like “Are we supposed to negotiate 100 times?” and “We’ll end up negotiating with subcontractor unions all year.” An anonymous foreign company executive reportedly said, “We have no choice but to withdraw from the Korean market.”
• The Yellow Envelope Act acknowledges the responsibility of the principal contractor and limits the liability of striking workers.
• JoongAng Ilbo pointed out, “Every year-end, major shareholders may sell off shares to avoid capital gains tax, increasing downward pressure on stock prices.” An anonymous asset management executive criticized, saying, “If the tax reform plan is finalized, reaching even KOSPI 3000, let alone 5000, will be difficult.”
• Related Link.
• Related Link.
• Related Link.

Chosun Ilbo Columnist on Expanding Conservative Reach.

• “If I were an elite in the People Power Party, I would stake everything on the conservatization of the 88% underdogs in Korean society, not on opposing the far-right. This is how conservatives in the US and Japan expanded their support base.”
• Sun Woo-jung (Chosun Ilbo columnist) stated, “Right-wing populism never dies,” suggesting to stop severing ties with Yoon Seok-yeol and instead ride the wave of right-wing populism. The ‘88% underdogs’ refer to those who are not part of the 12% regular employees in large corporations. It’s a proposal to redraw the battle lines, not to fight the far-right. A very dangerous column indeed.
• Related Link.

Xi Jinping’s Fall: A Hot Topic Only in Korea.

• The rumor was based on Xi Jinping (President of China) skipping the BRICS summit and his close aides stepping down. Contributions from Michael Flynn and Gregory Slayton were noted, but they aren’t credible writers.
• No major media in the US, Japan, or Singapore took these claims seriously. It was a sensation only in Korea, with a flood of articles verifying a non-existent controversy. SisaIN also played a part.
• Park Young-heum (Professor at Sungshin Women’s University) pointed out, “The problem is that in an atmosphere where widespread anti-China sentiment prevails and people eagerly await negative news about China, nothing gets corrected even after reading the articles.”
• Park Eun-ha (Beijing Correspondent for Kyunghyang Shinmun) confessed, “The news consumption ecosystem is broken and hasn’t found a way to fulfill its role,” adding, “I feel regret and misery.”
• Related Link.
• Related Link.

The Fix.

Spend Surplus Funds First.

• The government needs to release funds. Tax hikes may be necessary, but restructuring expenditures comes first, and finding hidden funds is crucial.
• Lee Sang-min (Research Fellow at the National Fiscal Economy Research Institute) emphasized, “In expansionary fiscal policy, the quality of spending is more important than its scale,” adding, “We should not rely solely on tax increases and national bonds, but actively utilize dormant surplus funds.”
• The ‘Disabled Employment Promotion Fund’ has a surplus of 550 billion won, with an additional 700 billion won in public fund management deposits. The accumulated fees from companies should be actively used for issues like disability mobility rights.
• The lottery pension reserve fund also has 700 billion won accumulated. Since revenue continues to flow, there’s no need to keep saving this money. Leaving just 10% of the reserve is sufficient.
• The National Sports Promotion Fund has a surplus of 500 billion won, with an additional 700 billion won in deposits.
• There are unused funds in the Electric Power Fund and Climate Response Fund. The Urban Housing Fund has a surplus of 30 trillion won, including deposits.
• Related Link.

400,000 Households Underground.

• About 40,000 households live in rooftop units. Combined, underground and rooftop households make up about 2% of the 22.29 million households.
• 97% of underground (including semi-basement) and 91% of rooftop households are in the metropolitan area.
• Single-person households number 8.05 million, accounting for 36% of all households. The elderly population over 65 is 10.12 million, 20% of the 51.81 million total. One in ten seniors lives alone.
• Multicultural households have increased to 440,000. The resident foreign population has surpassed 2 million.
• The median age is 46.2 years.
• The working-age population has fallen below 70%, now at 36.26 million.
• The metropolitan population stands at 26.3 million, making up 51%. This is according to Statistics Korea’s Population and Housing Census results.
• Related Link.

‘I Live Alone’: 8 Million Strong.

• When the variety show ‘I Live Alone’ first aired in 2013, there were 4.53 million single-person households.
• As of last November, there are 8.05 million single-person households. This has increased from 25% to 36% of all households.
• Among single-person households, those in their 60s make up 18%. Elderly living alone is emerging as a social issue. Yoon-hee Shim (Maeil Business Newspaper Editorial Writer) emphasized, “We should not just see the massive trend of single-person households as a symbol of ‘independence’ but also consider the potential for ‘isolation’ that lies beneath.”
• Related Link.

ICYMI.

Truffaut’s Cinephile Triad Was Jeong Seong-il’s.

• “There are three stages to falling in love with movies. The first is watching the same film twice, the second is writing about it, and the final stage is making a film yourself.”
• This is often attributed to François Truffaut (Director), but it was Jeong Seong-il (Film Critic) who first said it, and Truffaut’s actual words were slightly different.
• “I am often asked which part of my passion for cinema led me to become a director or critic. To be honest, I don’t know. All I know is that I wanted to get closer to films. The first stage was watching many films. Secondly, I began noting directors’ names as I left the theater, and in the third stage, I started watching the same film repeatedly, pondering what choices I would have made as a director.”
• Jeong Seong-il’s recollection was proven incorrect, but the so-called ‘Cinephile Triad’ inspired movie buffs.
• “Thanks to the distortion and misunderstanding of Truffaut’s words, cinephiles realized that watching the same film multiple times and staying up all night writing film critiques unrelated to their major before exams wasn’t just their own quirk. It eased the loneliness of young cinephiles and boosted their pride.”
• Park Kang-soo (Hankyoreh Journalist) assessed, “No matter how you look at it, the ‘Cinephile Triad’ deserves to be dedicated to Jeong Seong-il.”
• Related Link.

Worth Reading.

Prerequisites for KOSPI 5000.

• There’s talk not just of KOSPI 5000, but even 10,000 being possible.
• The price-to-book ratio (PBR) is 1.4 in Japan and 1.5 in China. In Korea, it’s 0.9. If it rises to Japan’s level, that’s a 50% increase.
• Lee Nam-woo (Chairman of the Korea Governance Forum) predicts, “If listed companies buy back and retire 1% of their shares annually, KOSPI could reach 5000 by 2030.” He adds, “If the buyback rate is increased to 1.5%, 6000 is possible.”
• But there’s a crucial condition. At the very least, corporate performance must remain at its current level. Ha Young-choon (Editor of Hankyung Business) warns, “No matter how much stock prices rise, without corporate performance to back it up, it inevitably turns into a bubble, as past experiences have shown.”
• Related Link.

The Illusion of KOSPI-led Growth.

• Kim Hak-kyun (Research Center Director, Shinhan Securities) assessed, “The stock prices have surged, but it’s hard to explain with fundamentals.”
• Lee Kyung-mi (Policy Finance Team Leader, Hankyoreh) disagrees with the government’s expectation that money tied up in real estate will flow into the stock market. The stock market is about arbitrage, while real estate is fundamentally an asset concept.
• The share of listed companies in the real economy is about 10% in terms of added value and 4% in terms of employment. Although there are 14 million stock investors, only a few individual investors make a profit.
• Lee Kyung-mi pointed out, “Making KOSPI 5000 the flagship slogan of economic policy only reveals this government’s impoverished philosophy towards the lives of its people.”
• Related Link.
• Related Link.
• Related Link.

The Presidential Office Decides Who Enters.

• During the Chun Doo-hwan administration, there were 25 reporters at the Blue House. Under Kim Dae-jung, it increased to 100, and under Roh Moo-hyun, it reached 300. The Yoon Seok-youl administration reduced it by about 100.
• The Lee Jae-myung administration added outlets like Kim Eo-jun’s News Factory, GoBal News, and Jang Yoon-sun’s Reporting Convenience Store, emphasizing that the decision on access to the presidential office rests with the office itself. They explained that these are internet newspapers, not YouTubers, so there’s no issue, but criticism arose for selecting pro-government media.
• Lee Kyu-yeon (Presidential Office Chief of Public Relations) stated, “We assessed based on objective criteria like the media’s reporting capabilities and performance, not political leanings, to decide access,” adding, “If conservative media meet the criteria of reporting capability, performance, and public interest, they can apply under the same standards.”
• Kim Jun-il (Current Affairs Commentator) pointed out, “While lowering the threshold for reporting, we should strengthen sanctions against media that engage in unethical behavior, harm social justice, or spread conspiracy theories.”
• “The problem is blocking media access, not providing opportunities to diverse media. However, to avoid accusations of favoritism, the government must offer opportunities equally.”
• Related Link.
• Related Link.

Ministry of Economy and Finance: Split and Merge Again?

• In 1948, the Ministry of Finance and the Planning Board merged, becoming the Ministry of Finance and the Economic Planning Board in 1961. In 1994, they combined into the Ministry of Finance and Economy, only to split into the Ministry of Finance and Economy and the Planning and Budget Office in 1998. In 2008, they merged again into the Ministry of Economy and Finance. Now, the Lee Jae-myung administration is considering splitting them back into the Ministry of Finance and Economy and the Planning and Budget Office.
• There are three main reasons. First, it holds budgetary power and dominates other ministries. Second, the mutual checks and balances have disappeared. Third, there is criticism that it is obsessed with fiscal soundness, ignoring economic stimulation and inequality reduction.
• Kim Yong-beom (Presidential Office Policy Chief) emphasized, “The Ministry of Economy and Finance is indeed a large organization, but the one who coordinates is the President.” He suggests the need for the ability to manage bureaucrats.
• Ahn Sun-hee (Hankyoreh Editorial Writer) stressed, “While the organizational framework is important, the philosophy and competence of the President and the ruling party, which transcend the bureaucrats’ perspective, are crucial.”
• Related Link.
• Related Link.

Thieves and Liars: Who’s Lying?

• The U.S. is a thief, and Japan is a con artist. What about Korea? It’s not easy to follow Japan.
• Japan promised to cut tariffs and invest $550 billion, but the story changed the next day. There’s no agreement document, and they’re not putting $550 billion in cash.
• Scott Besant (U.S. Treasury Secretary) warned, “If Trump is dissatisfied, it will immediately return to 25%.” Bank of America analyzed, “It could be a reasonable guideline for car-exporting countries like Korea.” Akazawa Ryosei (Japan’s Minister of Economic Revitalization) said, “There’s no need for an agreement document,” adding, “Documenting it is actually risky.” The point is that the tariff executive order is important, and the investment can be discussed during Trump’s term.
• Gil Yoon-hyung (Hankyoreh Editorial Writer) described it as “a collaboration of thieves and liars.” The hope for a joint response against the tyranny of squeezing an easy ally was shattered. Gil Yoon-hyung warned, “This is the hellscape Trump created,” and “the new normal we must endure.”
• Related Link.
• Related Link.
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The Era of Happy Free Trade Is Over.

• The U.S. collected $113 billion in tariffs in the first half of this year. Trump might consider this a major achievement. Last year, U.S. tariff revenue was $86.4 billion, so it could more than triple this year.
• Choi Joon-young (Specialist at Yulchon LLC) remarked, “Producing where the market is has become the new principle of international trade.”
• “Companies entering the U.S. are realizing how difficult it is to manufacture anything in a country that has lost its manufacturing mindset and where everything is expensive. Overcoming such disadvantages is now essential for survival.”
• Related Link.