[VIEWPOINT]Half-baked policies usually falterA popular Sunday night television comedy ends with a skit in which the actors try to put a spell on the government. I find myself laughing, but there is a lingering question in the corner of my mind. This is a program popular among young people. Should it be allowed to portray the government as capable of anything? Or, on the contrary, it may be trying to convey a different kind of message by parodying the government's power. After all, we are living at a time when even garlic can get the government into trouble.
In the government-directed economic system that we have become so accustomed to, the public may have complaints but there are relatively few doubts aired about the effectiveness of the policies. Academics are preoccupied with how government resources are allocated; evaluation of policies is secondary.
This phenomenon can be seen in the National Assembly's budget process. There is always a fight for a larger share of the pie, but no one can account for how the money is spent. The same can be observed in policy administration; once a policy plan leaves a bureaucrat's desk, it is forgotten quickly.
But increasingly there are signs that the old way of policy formulation is further losing effectiveness in the age of democracy and an open economy. In the face of changes in the environment, the government's ability to create policies that meet the evolving situation has been lagging. The government's policy during the financial crisis －－ just as it was in the corporate and financial communities －－ was that restructuring was needed.
The recent garlic debacle shows clearly the fate of a policy cooked up in the minds of bureaucrats. Advocates of openness will reason that it was much more important to open our garlic market to get a firm foothold in China's manufacturing. But it is a totally different question for the farmers who would suffer damages and the politicians who have to woo the farm vote. To them, it has been a pathetic incident that happened because not enough thinking went into policy.
The same can be said about recent measures to counter the plunge in the stock market. Not many people were surprised at the markets tepid reaction to the announcement. But the staleness of the measures was such that even the bureaucrats may have been thinking, "Why are we replaying this rerun?"
In short, for a policy to be effective, three conditions must be met. First, the substance of the policy must be right. What is frustrating is that the basic principle of allocating the limited government resources to a list of policy objectives according to priority and then weighing the benefits and cost is often neglected. What we often see instead is a potpourri of policy objectives and outrageous utility-cost analyses.
Next is the process of policy administration. No matter how good a policy is, it is not as good if it is not accepted by those who are affected by it. The ideal world according to economists is often a far cry from reality. And there is a limit to how much bureaucrats can be asked to do just out of patriotism and volunteerism for meager salaries. Political logic is often blamed for economic ills, but it should instead be a regular part of policy administration and there should be alternative policies.
The other thing to be considered is the question of credibility in policies. No matter how good it is, a policy that no economic entities can believe in is useless. This is especially important at times of great uncertainties, such as now, that policies are transparent and consistent. It would be better to provide sufficient information and an unwavering policy direction that will help economic entities make the right decisions than to come up with patch jobs that will only confuse the market. It is often sound policy judgment to come out honestly and acknowledge there is not a clear-cut solution.
Everybody likes to talk about the power of the market, but what we need is the power of the government.
It is time for us to pull our resources together to help make a strong government, rather than to criticize the government and bureaucrats.
The writer is a professor of economics at Ewha Womans University.
by Chun Chu-song
with the Korea JoongAng Daily
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