[EDITORIALS]Time for Decisive Economic ActionAmid concern that the economic recovery may not come before next year, the government has unveiled proposals to boost the sagging economy. At Monday's cabinet meeting, President Kim Dae-jung explicitly ordered his ministers to come up with measures stimulate domestic consumption without triggering higher inflation. The president has changed his focus from restructuring to pump-priming.
Although such a policy change is unavoidable, we wonder if the administration is more worried about next year's elections than about good economic policy.
Because of our economic problems, we should use all appropriate measures to revive the market, but stimulus will be difficult. Businesses are stumbling, and restructuring in the finance and corporate sectors shows no tangible results. The world economy is stagnant, so the timing is bad for expansionary policies.
The government reportedly plans to accelerate its spending in the third quarter and encourage investments in the construction industry. But it is doubtful that more public spending will have the desired results; the government has already poured astronomical sums of money into financial bailouts with nothing to show for it. Policies to boost construction can also accelerate the upward trend of real estate prices, which have already been rising because of low interest rates.
If investments and exports remain stagnant and corporate profitability does not rise for some time, we worry about fundamental damage to our growth capacity. Our fundamental problem is that our economy's woes do not stem from the slowing economy; they stem from increased uncertainty about our economic structure and future.
The government should focus on eliminating policy confusion. It is treating restructuring passively, but it should resolve several critical issues like what to do with Daewoo Motor, Seoul Bank and the Hyundai group. It must ease the regulatory burden on business.
The present instability in politics, marked by extremism by both the ruling and opposition parties, is also a problem. Our politicians should quickly review and approve bills directly related to the lives of our people and economy, including special laws on corporate restructuring, rather than constantly fighting with each other.
If they do, they can escape the general perception that politicians are not part of the solution to our problems but are, in fact, the cause of those problems.