Judging economic policies
Moon Jae-in, presidential candidate for the Democratic Party, claims the focus of his economic agenda is to make state administration efficient, not merely big. He believes a big government with a driving force is better than a small and incompetent one. Dubbing himself as a leader delivering jobs, Moon pledges to strengthen the government role and create 810,000 jobs in the public sector during his term. He draws the Keynesian concept of aggressive fiscal expansion to inflate demand, vitalize economic activities and hiring.
His biggest rival Ahn Cheol-soo of the People’s Party calls Moon’s agenda “a bullet train carrying the national economy towards bankruptcy.” He champions the private sector’s role in economic activities and hiring while the government limits its actions to ensure the playing field stays as liberal and fair as possible. His economic dogma is similar to Ronald Reagan in his 1980 campaign pledge to “get the government off the backs of the people.” Hong Joon-pyo of the conservative Liberty Korea Party also criticized that Moon’s prescription would lead to a Greece-like fiscal catastrophe.
Skepticism prevails on the country’s economic outlook with some predicting the growth pace would slow to the 1 percent range or even to zero territory. The government would have to decide whether it should enhance its role or cut back during the transition toward the fourth industrial revolution. Both Moon and Ahn are unclear in their vision to drive growth for the economy.
A bigger government role inevitably has the risk of waste and inefficiency through deficit spending and monetary easing. Although candidates cannot utter the word in fear of losing votes, higher taxes also may be inevitable. Moon vows to accelerate growth in fiscal spending to 7 percent from the current annual average of 3.5 percent. He also promises supplementary budgeting to finance big infrastructure projects. He does not explain how the country can sustain ballooning government deficit on top of 1,300 trillion won ($1.14 trillion) worth household debt and outstanding national liabilities of over 1,400 trillion won.
Regardless of the campaign slogans, both liberal and conservative candidates are generous with populist promises. The five leading candidates all pledge various pensions, allowance, and salary benefits without detailing the financing means. Voters must look past the flowery promises to judge their fiscal integrity and sustainability.
JoongAng Ilbo, April 19, Page 34