&#91VIEWPOINT&#93Politics is driven by economics

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&#91VIEWPOINT&#93Politics is driven by economics

The most notable feature of our society for the last half-century was the eye-opening economic development. Any side effects accompanying “economy-first” policies did not make us anxious for a long period of time.
Politics, culture and society are all important to human lives, but nothing took precedence over the accumulation of the nation’s economic wealth. But then the more economic wealth we achieve, the more cultural values we want to enjoy. Of course, a dirty accumulation of wealth cannot be justified and may be poisonous to society, and we have to keep in mind that there are still relatively poor people who regard the demand for leisure as an unattainable luxury.
Economic growth was slowed for a time because of the financial crisis in 1997 and 1998, but even at that time our people were talking about economic growth through economic reform. Corruption stemming from dirty ties between politicians and businessmen were seen as the fundamental cause of the economic crisis, and so some experts clamored for political reform as the proper therapy. But collusion between politicians and businessmen is hard to cure with political reform because the more fundamental problem is that there is no proper moral and institutional apparatus to weed out corruption.
Corruption occurs because markets are not operating transparently. The former administration adopted a strategy to make the market economy more transparent, thinking that that strategy would be the best way to keep businessmen and politicians from colluding and exchanging money. It was a continuation of the old “economy first” policies.
These days we are hearing loud voices calling for political reform, social reform and press reform rather than economic reform. The justification of those reforms is understandable, but it is important to have consistency between those reforms and economic reform. If those reforms are pushed independently with contradictory philosophies and ideologies, they will not benefit the nation’s development.
Some people say that the economy should be managed with economic logic and a policy separating economics from politics should be set up. But those assertions are ironically telling us that separating the economy from politics is impossible. I want to emphasize an active strategy that politics should not be kept apart from the market economy ideology. We should shed the passive viewpoint that the economy should free itself from political influence.
It is better to see economic reform as the first priority and to let other reforms flow from those economic reforms. Economic development is not sufficient but it is a necessary condition to development in other sectors. The economic sector can minimize ideological conflict. Though I am not advocating that the economy can cure all illness, it can achieve economic growth while minimizing wasteful political wrangles. Economic reforms, such as improving company governance structures, consolidating financial supervision and protecting poor people, can be catalysts to reforms in other sectors by increasing transparency and justice in society.
Recently we can see that the will to maintain law and order has been weakened. Behavior involving collective selfishness has become a social issue, and labor unions are building up political clout. I wonder whether the authorities will take action if they analyzed and understood how markets will respond to the new circumstances. The government should understand that not only Koreans but also foreigners are decision-makers in our globalized domestic economy. The government should not expect any sympathy from markets. If the government sees that strife between interest groups is a political-social problem that can be solved without worrying about market principles, that is a short cut to failure. The government should look at history: All behavior ultimately is influenced by markets.
Politics here is unstable, and interest groups are rampantly pushing their agendas. Political leaders should understand the concept of deferred gratification. They should be able to ask the people to do something, or sweat and struggle, rather than promise to give people anything for votes. That should be the goal of political reform.
If politicians see the economy as subordinate to politics, and if they think the economy can grow by itself, they do not have a real understanding of the market system.

* The writer is president of the Korea Development Institute.

by Kim Choong-soo
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