[EDITORIALS]No Time for Mixed SignalsPresident Kim Dae-jung and his economic ministers met, and announced that the government would prepare economic measures in June after carefully examining the situation. It is desirable for the government to hold such a meeting to discuss and fine-tune the policy direction in the midst of the economic downturn that gives rise to concerns of stagflation, in which exports decrease and prices rise, while stock prices, the Korean won and bond prices plummet.
What we would like to ask about is the meaning of President Kim's words, "We can do it!" If he means, "The government must press ahead forcibly," it is going in the wrong direction. In an open economy in a globalized era, such a spirit will only give birth to harmful effects as it did in the days of our "development dictators."
Instead, we hope that the president meant to criticize the current economic team, which is still swerving, having failed to find its center. We believe that the government has sought to blame the changes in the overseas economic environment and glossed over problems, instead of taking the responsibility to solve them. For example, outright projections ?"If the American economy makes a hard landing, the Korean economy will grow less than 4 percent," or "If foreign exchange rates drop further, it will be difficult for Korea to hold price increases to 4 percent." ?are not suitable for economic ministers to utter.
They should not discuss minute details of the economic situation and prospects, because their words have enough weight to make economic actors readjust their economic activities. Instead, they must examine the economic situation, and if changes are deemed unavoidable, mirror it in policies. Their remarks ?the public statement that the economy would hit bottom in the first quarter, their promise that there would be no equity swaps for the four largest companies (but Hyundai Construction swapped its debt for equity last month) and their official remarks that Daewoo Motor would be sold within a month ?were bad mistakes which only helped to further erode confidence in the government.
It will not do if the government oscillates between clashing policy objectives ?restructuring vs. economic stimulus packages and economic recovery vs. stabilizing prices. It should make up its mind one way or the other. We hope the government will send consistent signals through policy, not through mere words.