[Column] The Time for Political Economy Beyond the Laboratory

[Asia Economy Reporter Eunbyeol Kim] "Those who study economics academically tend not to pay attention to economic laws related to the novel coronavirus infection (COVID-19). It seems economic laws are made only according to political orientations."

"Most economic research institutes in the US and Europe have created separate COVID-19 sections and publish related studies. They also shorten the review process for research papers and articles to facilitate rapid discussion, but unfortunately, we do not have such places."

These are remarks from economics professors regarding economic bills in the post-COVID era. Recently, the National Assembly has been rushing to propose sensitive bills that require comprehensive political and economic judgment, but discussions suitable to Korean sentiment are not sufficiently conducted, being swayed only by factional logic. Representative examples include laws related to government fiscal soundness, amendments to the Bank of Korea Act, and discussions on basic income. These are all important topics that will determine the future of Korean society, yet it is difficult to find research that unravels them through academic logic.

In the economic debate on basic income by the Korean Economic Association released on the 9th, only 34 out of 74 scholars responded. Many did not answer, citing "lack of logic in the questions themselves," but it cannot be overlooked that some were reluctant to publicly respond to an issue that had become a political hot topic.

While domestic academia hesitates, related research is active overseas. The National Bureau of Economic Research (NBER) analyzed in a working paper last month assuming an annual basic income payment of $5,500 (about 6.6 million KRW). The paper argued, "The analysis shows that basic income requires higher tax rates over time and lowers technology and education levels." This is much more persuasive than simply criticizing basic income as an excessively anti-market policy.

Adam Smith and John Stuart Mill are known as founders of modern economics, but it is said they referred to themselves as "political economists." Economics was never separate from politics from its inception. Jeffrey Friedman, a professor at Harvard University, recently wrote in an International Monetary Fund (IMF) article that "COVID-19 clearly revealed the intersection of politics and economics," and pointed out that "policy makers should keep this in mind." It is hoped that more economic discussions emerging from outside the laboratory can be seen domestically as well.