Cheong Wa Dae planned an internal meeting on the 20th under the theme of "social distribution of corporations' excess profits," but canceled it the same day, according to reports. As the government is pushing a special law to use "additional tax revenues" collected more than expected thanks to the artificial intelligence (AI) semiconductor boom, it is seen as a contentious issue in that it goes further to involve the government in profits generated by corporations. Still, because President Lee Jae-myung has expressed the view of "excess profits = basic income," discussion will likely proceed later with adjusted timing.
The president had initially planned to preside that afternoon over a senior secretaries and aides meeting, where key Cheong Wa Dae aides would attend to report and discuss major state affairs. The meeting, usually held every Thursday, was moved up in consideration of the "national debate on real estate policy" on the 23rd, which the president will attend in person. However, Cheong Wa Dae said in a media notice that morning that "the topic and schedule have been changed," announcing that the meeting would not be held.
The purpose of this meeting was to put on the public agenda, at the government level, how to use the record profits being reported by related corporations amid the semiconductor boom. But ahead of the meeting, it was reported that there were internal views, including from the presidential secretariat, that "it would be better to reconsider the timing." In particular, unlike tax revenues collected by the state, the judgment was that social discussion is needed from the outset on the very idea of assuming "excess profits" from corporations, whose purpose is to pursue profits.
A key ruling-party figure said, "Right now, the very concept of excess profit, or excess profits, is not yet sorted out." The person said, "For excess profits, unlike tax revenues, the actors are corporations. Each corporation has plans and shareholder views, and it's complex, so I understand the president initially tried to toss out the agenda," but added, "There needs to be social sentiment or consensus, and there are differing views on whether now is the right time."
Political considerations such as market conditions also appear to have played a role. With a spate of market negatives such as recent stock market volatility and losses in single-stock leveraged exchange-traded funds (ETFs), questions are growing over the effectiveness of government measures. In this situation, if the president personally puts "distribution of excess profits," which is directly tied to corporate management and shareholder rights, on the public agenda, some said it could become a headwind for the administration.
Some also think remarks by Chey Tae-won, chairman of SK Group and head of the Korea Chamber of Commerce and Industry, had an impact. At a press conference during the KORCHAM summer forum on the 16th, Chey said regarding Korea's structural problems, "We sometimes completely forget that the system runs on two pillars." He meant people think only of the democratic political system and forget the capitalist economic system. He also said, "The two wheels need to be balanced and spin at the same speed, but if one wheel isn't turning, it's bound to clatter."
◇ Lee: "We must consider ways to distribute part of corporations' excess profits to the public"
Cheong Wa Dae brought the "excess profits" issue squarely to the surface in May this year. Kim Yong-beom, Cheong Wa Dae policy chief, wrote on Facebook at the time, "The fruits of the AI infrastructure era are not solely the result of specific corporations, but come from an industrial base built up together by the entire people over half a century." He added that "even if the nation grows richer, the distribution of wealth does not automatically spread," calling "how to socially stabilize excess profits" a core question of the AI era.
At the time, as Kim used "excess tax revenues," "excess gains," and "excess profits" interchangeably, controversy followed over whether the government intended to use not only tax revenues but also corporate profits at its discretion. Cheong Wa Dae's stance, however, is that separate from tax revenues, profits generated by corporations can also be subject to distribution debate. The logic is that corporations have generated record profits on the foundation of infrastructure prepared by the government—such as power, water, and transportation—and the contributions of various groups including workers.
In an interview with the Economist, a British economic outlet, published on the 10th of last month, the president said that we should consider a plan to distribute part of corporations' excess profits arising from the AI industry boom to the general public, and that new mechanisms such as "basic income payments" are needed for this.