[OUTLOOK]Looking beyond the immediateAfter half a year in office, the “participatory government” gets the lowest grades for its policies in the field of economics. People are bound to feel discontent about the administration when the economy is crawling. Of course, our current recession is partly due to the economic cycle and factors such as markets abroad and policies of the past administration; the Roh administration cannot do much about those things. The problems could all be solved in good time if left to the market; but then again, things might get worse. Even if the government can’t solve all the problems, there is something it can do. Most of the questions about the role of the government are obvious ones: whether the measures for economic recovery are effective, how to renovate the frail economic structure and what alternatives there are to acquire long-term growth capability and social stability.
But framing and implementing such multi-dimensioned policies is easier said than done. The foremost difficulty is the fact that there is a time difference in the policies. A simple example is that to get a short-term increase in demand, an increase in consumption would be desirable, but for long-term growth potential, savings should also increase. It is easy to talk about the harmony of social distribution of wealth and economic growth in the long term, but some degree of conflict between the two objectives is unavoidable when making decisions for short-term policies.
To decide what policies are desirable at what particular moment requires a broad view and timely thinking within the government. A government that waits until something happens to get moving and a government that maintains consistency of policy even after a change of administration are very different. If the administration is reactive rather than proactive, it will be led around by the situation and probably fail. If policies are consistent, the immediate circumstances might be difficult for the government, but it would still be able to implement its policies according to its beliefs. For example, the same wealth distribution policy would set off a different chain of reactions from the market and create different policy effects according to who implements it and with what philosophy in mind.
The reason the participatory government is doing poorly in the economy is the fact that it lacks the ability to choose the most appropriate policies and to persuade the people to accept them when faced with such conflicting choices. Many experts with experience in the government in the past pinpoint the inadequacy of systemic mechanisms to coordinate policies and the human infrastructure of the administration’s economic team. But the bureaucrats in the present administration are not less competent than those in the past. The lack of experience of these mostly scholars-turned- bureaucrats is often highlighted, but it is hard to see what was better about the figures in the past who were chosen for their ability to flatter those in power.
It is true that our policy coordination function is weak. But this is not due to the reorganization and decentralization of a Blue House system centered around the senior secretary for economic affairs, as the majority of experts say. There is plenty of room to coordinate policies under the existing system as well as under the former.
The core of the problem is the slightly bigger frame of the changes in our economic environment. Unlike in the initial stages of our economic development, when we concentrated on exports, domestic factors now play an important role in growth and stability. But the international gearing of financial factors and the transfer of capital across borders have lessened the effectiveness of traditional financial and fiscal policies. The time when we could block import of highly competitive foreign goods is gone. It is now time to enhance the competitiveness of our domestic industries through foreign businesses and capital. In addition, the progress of political democracy has increased public expectations for the welfare system as the social demand for equitable wealth distribution rises.
Despite the increased number of policy objectives, the government’s ability to frame and implement policy measures does not seem to have progressed much. This is not a problem that can be solved by changing the system or the faces. That is also why we cannot blame only the government for our economic difficulties. In this present situation where not only the administration but the entire government and political structure is less influential, it is easy to make mistakes when desire exceeds ability.
This is what the participatory government must focus on. If the government sets policy objectives that are realistic and show a systematic effort to enhance its policy capabilities, it would at least not lose public confidence.
The participatory government needs the wisdom to look beyond the immediate.
By Chun Chu-song
The writer is a professor of economics at Ewha Womans University.
Translation by the JoongAng Daily staff.