Losing confidence in the economy

Results of a Seoul National University Graduate School of Public Administration study on the role of the government and quality of life show the public’s critical lack of confidence in the economy. In the survey of 6,300 respondents, seven out of 10 perceived their income as lower than it actually is. They also thought the country’s jobless rate was 27 percent, which is six times more than the official rate of 4.5 percent. Of course, people’s perceptions can differ from official data. Yet the differences are too great: it reflects widespread pessimism about our economic situation.

Such a negative view of the Korean economy leads to distrust in government policies. The Moon Jae-in administration said it implemented a 52-hour workweek on all workplaces to “share jobs,” but two-thirds of respondents did not agree. Over 80 percent of them attributed self-employed people’s worsening financial conditions to the government’s push for rapid increases in the minimum wage.

Lack of confidence among economic players is nothing new, as confirmed by the recent survey. Korea has joined the club of advanced economies: its per capita income surpassed $30,000, its GDP is ranked 11th in the world and its total trade volume is the sixth largest. Korea also became the seventh member of the so-called “30-50 Club” — countries with over $30,000 per capita income and a population of more than 50 million. Why is the public increasingly losing confidence in the economy under such circumstances?

It’s primarily due to the disappearance of hope for the future. The low growth and ever-widening income gap does not allow the public to be optimistic about their future, as seen in the phrase “Hell Joseon.”

Nevertheless, the government remains laid-back. Regardless of such catchphrases as “innovative growth,” deregulation cannot move forward in the face of the red tape prevalent in officialdom and the administration’s incompetency to coordinate various stakeholders. Despite growing opposition to the ill-conceived income-led growth policy, the government does not show any signs of change even when businesses are increasingly reluctant to invest.

Yet the government steadfastly ignores such warnings. Economic activities are rooted in psychology. If the repression cycle prolongs and economic players fail to overcome lethargy, crisis can revisit Korea at any time. The Moon administration cannot recover confidence in the economy if it simply sticks to self-complacency.

JoongAng Ilbo, Feb. 28, Page 30