※ This article reinterprets Kim Yong-beom's Facebook post in a Q&A format featuring a fictional financial expert for easier understanding.
Kim Yong-beom, the Blue House Policy Chief, begins his Facebook post with a critical question: "Is the KOSPI reaching 7,500 or even 10,000 merely a sign of stock market overheating, or is it an indication of a structural shift in Korea's industrial landscape in the AI era?" The crux of the matter lies in the potential for structural excess profits in the semiconductor and AI infrastructure sectors. If companies like Samsung Electronics and SK Hynix generate profits that surpass historical economic cycles due to demand for AI memory, high-bandwidth memory, and data center infrastructure, the government stands to gain substantial corporate taxes, income taxes, and trade surplus effects. This is what he refers to as 'excess tax revenue.'
The key question is how to utilize this money. Should it be treated as a one-time economic boom and allowed to slip away, or should it be institutionalized as part of a new social contract for the AI era? Kim's perspective is not merely optimistic or predictive of stock prices. Rather, it is a proposal to discuss how to share the benefits of Korea's potential transition into a technology-dominant industrial nation through entrepreneurship, culture, education, welfare, regional development, and retirement security.
Q&A with Financial Expert ABC and Kim Yong-beom
Financial Expert ABCMr. Chief, many have said your writing is difficult to understand. What is the simplest way to convey your message?
Kim Yong-beom
In simple terms, we should not view the current phenomena in the Korean economy solely through the lens of past economic cycles. While it is easy to say that exports are good, semiconductors are thriving, and the KOSPI is rising, the more important question is: "Is Korea's industrial structure itself changing in the AI era?" If so, we need to reevaluate taxes, welfare, entrepreneurship, education, and national strategy.
Financial Expert ABC
So, you are saying that the numbers 7,500 or 10,000 for the KOSPI are not the core issue?
Kim Yong-beom
Exactly. The index is a result. What we really need to focus on is corporate profits. Stock prices are ultimately a function of profits. If semiconductor companies' profits rise to levels that are fundamentally different from the past, the KOSPI will also change accordingly. The problem is that we are still viewing the present through the lens of the past KOSPI levels of 2,000 or 3,000.
Financial Expert ABC
However, there are counterarguments in the market suggesting, "Isn't this just another semiconductor cycle?"
Kim Yong-beom
That counterargument is valid. The Korean semiconductor industry has always experienced cycles of boom and bust. However, the current AI demand is different from past cycles driven by smartphones or PCs. AI is not just software; it encompasses a vast industrial infrastructure that includes data centers, power grids, cooling systems, memory, batteries, robotics, and industrial automation. Particularly, products like high-bandwidth memory create ongoing upgrade demands rather than being one-time sales. This distinguishes it from previous memory cycles.
Financial Expert ABC
The expression "AI is not just software but an industrial infrastructure" seems significant.
Kim Yong-beom
Indeed. Many people view AI merely as chatbots or apps. However, from a national economic perspective, AI is akin to infrastructure such as electricity, railroads, and communication networks. As AI becomes integrated into real industries, what is needed goes beyond just models; it requires memory semiconductors, power equipment, batteries, precision machinery, sensors, and robotics manufacturing capabilities. Few countries possess this physical supply chain.
Financial Expert ABC
What makes Korea special in this regard?
Kim Yong-beom
Korea is a rare country that possesses capabilities across memory semiconductors, batteries, displays, shipbuilding, power equipment, precision manufacturing, and industrial automation. The U.S. excels in design and platforms but has limited manufacturing capabilities. China has significant manufacturing power but faces geopolitical trust issues. Japan is strong in materials and equipment, while Taiwan excels in foundries. Korea uniquely combines various manufacturing capabilities necessary for AI infrastructure. This is not just an industrial competitive advantage but also a geopolitical leverage point.
Financial Expert ABC
So, what exactly is 'excess profit'?
Kim Yong-beom
Typically, when competition intensifies, profit margins decrease. However, in industries with high technological barriers, limited suppliers, and structurally increasing demand, profits can persist beyond the average. This is what we call excess profit. If Korean companies can position themselves in the AI memory and infrastructure sectors, the Korean economy will enter a different phase.
Financial Expert ABC
How does this excess profit connect to the state?
Kim Yong-beom
When companies generate significant profits, corporate tax revenues increase. Income taxes for high-earning engineers and related industry workers also rise. As exports increase, trade surpluses grow, impacting the value of the won and the purchasing power of citizens. The increase in corporate profits does not just end there; it connects to national revenue, citizen income, asset markets, exchange rates, and inflation. Thus, excess profits can lead to excess tax revenue.
Financial Expert ABC
But didn't we have excess tax revenue during past semiconductor booms?
Kim Yong-beom
Yes, there was excess tax revenue in 2021 and 2022. However, at that time, we did not recognize it as a structural change and failed to establish principles for its use in advance. Excess tax revenue emerged during booms, and tax shortfalls occurred during downturns, repeating the cycle. If this cycle is larger and longer, we cannot respond in the same way.
Financial Expert ABC
What should the government do then?
Kim Yong-beom
First, we should not only look at existing GDP statistics but also consider exports, trade balances, corporate operating profits, nominal income, and terms of trade together. Second, we need to establish principles in advance for how to use excess tax revenue when it arises. Third, we must redesign systems for entrepreneurship, education, culture, immigration, and welfare that are necessary for the AI era.
Financial Expert ABC
Why is it not sufficient to look only at GDP?
Kim Yong-beom
Industries like semiconductors experience rapid quality improvements. When performance, integration, and energy efficiency all increase simultaneously, it becomes difficult to distinguish between price increases and real production growth. Corporate profits may soar, while real GDP appears relatively ordinary. This does not mean the statistics are wrong; it suggests that they may lag in reflecting reality.
Financial Expert ABC
The most contentious issue seems to be the 'national dividend.' Is this akin to basic income?
Kim Yong-beom
It doesn't have to be defined that way. The key is not the name but the principle. The excess profits in the AI infrastructure era are not solely the result of specific companies' efforts. They arise from an industrial foundation built over half a century through the collective contributions of the public in education, taxes, industrial policy, and social patience. Therefore, we should discuss ways to structurally return a portion of those benefits to the public.
Financial Expert ABC
This could be misunderstood as simply giving away money.
Kim Yong-beom
That’s why more nuanced discussions are necessary. It could be used as assets for youth entrepreneurship, as accounts for AI transition education, or for basic income in rural areas, support for artists, enhancement of pensions, or investment in local entrepreneurship infrastructure. The important thing is that when excess tax revenue arises, we should not use it politically on a case-by-case basis but rather under national principles and social consensus.
Financial Expert ABC
Is this ultimately a discussion about distribution or growth?
Kim Yong-beom
Both. In the AI era, growth and distribution cannot be viewed separately. Excess profits tend to concentrate. Shareholders, key engineers, and asset holders in metropolitan areas may benefit significantly, while the middle class and rural areas could be left behind. While the nation as a whole becomes wealthier, internal disparities may widen, leading to a K-shaped structure. If this is neglected, sustaining growth itself will become difficult.
Financial Expert ABC
Why are entrepreneurship and culture important?
Kim Yong-beom
As AI replaces repetitive tasks, simply increasing public jobs will have limitations. The areas left for humans involve judgment, creativity, relationships, senses, expression, and meaning. Therefore, entrepreneurship and culture are crucial. AI tools can provide individuals and small teams with productivity levels comparable to large corporations. The government must lower the risks of entrepreneurial failure and create an environment where entrepreneurship can thrive in local areas. Culture is also not just a leisure activity but a strategic industry that preserves humanity in the AI era.
Financial Expert ABC
You also mentioned immigration issues.
Kim Yong-beom
Low birth rates and an aging population are Korea's most significant structural constraints. We need to attract high-skilled talent and ensure a stable influx of essential labor for caregiving and other sectors. This is not merely about labor supply; it is a matter of redesigning the national structure. If Korea becomes a stronghold for AI infrastructure, it will also create opportunities to attract global talent.
Financial Expert ABC
Ultimately, what kind of country should Korea become?
Kim Yong-beom
Korea should aspire to be the first nation that not only supplies AI infrastructure but also returns the excess profits of the AI era to enhance human lives. While technology is created by companies, civilization is built by society. If Korea designs this opportunity well, it can emerge as a model nation for the AI era, surpassing mere export strength.
Conclusions and Insights from the Q&A
Kim Yong-beom's writing may initially seem unfamiliar, as it combines terms like KOSPI 7,500, KOSPI 10,000, semiconductor profits of 700 trillion won, national dividends, and the redesign of the state in the AI era. However, when unpacked, the logic is surprisingly straightforward.First, in the AI era, memory semiconductors, data centers, power grids, batteries, robotics, and precision manufacturing are interconnected as a single industrial infrastructure. Second, Korea is a rare country capable of supplying this infrastructure. Third, if this position is structurally strengthened, Korean companies can achieve excess profits on a scale different from the past. Fourth, excess profits can lead to increased corporate taxes, income taxes, and trade surpluses, resulting in excess tax revenue for the state. Fifth, we must establish social principles now for how to utilize that money.
The core of this discussion is not about "giving away money" but rather about "how to manage new wealth within a national system." In the past industrial era, the state built roads, ports, industrial complexes, and schools. In the information age, it established high-speed internet and digital infrastructure.
In the AI era, safety nets for entrepreneurship, transition education, cultural ecosystems, regional regeneration, retirement security, and policies for attracting skilled talent will become the new national infrastructure.
The two main pitfalls to avoid are excessive optimism and excessive cynicism. We should not assume that AI demand will last forever, that Korean companies will always succeed, or that excess tax revenue will automatically accumulate. Technology changes rapidly, and competitors will always emerge. On the other hand, a cynical attitude that dismisses structural changes by saying, "semiconductors are always cyclical" or "national dividends are populism" is also dangerous.
National strategy is born between optimism and cynicism. We should recognize possibilities while designing systems with a clear-eyed approach. When excess tax revenue arises, some should be reserved for managing national debt and future funds, while some should be used to reduce the costs of transitioning to the AI era.
We need to create opportunities for youth entrepreneurship, ladders for retraining and career changes for middle-aged individuals, stable foundations for the elderly, and new hubs for industries and culture in rural areas.
The real question posed by Kim Yong-beom's writing is not, "Can Korea make a lot of money again?" but rather, "When we do make a lot of money, can we use it wisely this time?"
South Korea has seized opportunities in industrialization and informatization. Now, it stands at the threshold of the AI infrastructure era. Crossing this threshold could either lead Korea back to a typical cyclical export economy or elevate it to a new level as a technologically advanced nation.
Ultimately, while excess profits stem from corporate capabilities, the use of excess tax revenue reflects the nation's character. If the money earned by companies is merely collected as taxes, it remains finance. If that money is reinvested in people, regions, and the future, it becomes civilization. The path Korea must choose now lies at that intersection.
* This article has been translated by AI.
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