Desire drives capitalism. The strong will to earn more money and to succeed is the kindling of progress. But peel back a layer and envy holds a large stake here as well. The mechanism of comparison and competition — "why can others do it and I cannot?" — is at work. For better or worse, people have looked upward, demanded more and pulled one another higher.
Consider the environment surrounding asset markets. There could hardly be a better stage for amplifying people's sense of comparison. What poured oil on a market already burning with envy and relative deprivation was Samsung Electronics. The company is now launching a program that lends up to 500 million won at an annual interest rate of 1.5% to employees buying their first home. The gap is stark compared with ordinary borrowers, who must accept annual rates of 7% to 8% on new mortgages from banks.
Some talk of separating industrial capital from financial capital, but in the asset market a "Samsung Bank" of an entirely different kind has emerged as a liquidity provider. At a time when relative deprivation among salaried workers has already grown over bonus payouts, even the central bank's rate decisions no longer apply equally to all economic actors. In fact, funding costs have long differed depending on whether one works at a large corporation or a small firm. But as manufacturers with strong earnings turn to becoming bank-like in the name of financial welfare, the chances of a welfare competition among companies have risen. Just as the business community went through a bout of turmoil when SK hynix handed out astronomical bonuses, Samsung Bank could this time become the fuse for another round of welfare competition among companies and labor-management conflict.
In an age when envy spreads, it is fortunate that companies can extend at least some lending to their employees. Behind the scenes, a considerable number of firms are already weighing whether to introduce in-house loans, partly to secure talent. But most companies are in no position to follow even if they want to. In particular, the government is sharply restricting lending in the name of curbing household debt and home prices. The gap could grow enormously between those who can obtain loans at work that amount to virtually free money and those who cannot. Public resentment over the government's blanket lending restrictions may also keep growing. A door to finance that has opened only for chip companies showered with money by artificial intelligence is bound to become an object of envy. But make no mistake. This is not an argument for blocking companies from lending money to employees at low rates in order to cut off envy at its source. Quite the opposite.
Ultimately, regulations need to be revised in the direction of allowing individuals to borrow from banks to the fullest extent consistent with their ability to repay. Under capitalism, which professes free markets, it is hard to keep tolerating a situation in which credit itself becomes scarce and the right to access that scarce credit varies by employer. Fundamentally, the government need only manage two things with precision: the extension of credit to people without the ability to repay, and excessive leverage that fuels asset price increases. The appearance of Samsung Bank may be the inflection point that allows the focus of regulation to shift from "how much has been borrowed?" to "can it be handled?"
Finally, consider Samsung Bank from a policy perspective. Bank of Korea Governor Shin Hyun-song invoked the proverb about the hoe when raising the base rate for a second consecutive time recently. Since blocking a problem with a rake costs more, the governor said, the policy response came early with a hoe. Before the governor's eyes would have loomed a future response fund approaching 100 trillion won that is loosely controlled by the National Assembly, and next year's super budget well above 800 trillion won. Yet there are liquidity channels the monetary authorities have not seen. A prime example may be manufacturers spreading liquidity in the name of welfare.
The spread of AI is changing the economic structure. The boundary between finance and industry is blurring little by little, and the providers of welfare are expanding from the state to companies. As a result, the pressure of monetary policy is transmitted differently from person to person because of differences in corporate cash holdings. From the standpoint of policy authorities, liquidity flows created inside companies, such as in-house loans, also need to be examined within the overall circulation of funds in the economy.
