[OUTLOOK]Throwing money at jobs

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[OUTLOOK]Throwing money at jobs

The government seems to be putting all its energy into creating jobs. As soon as President Roh Moo-hyun proclaimed in his New Year’s press conference that job creation was the overriding task in national affairs this year, all departments of the government competed to announce their policies on job creation.
It is fortunate that the government, albeit belatedly, realizes the importance of job creation and the need for business investment and economic revitalization. The problem is that job creation is not achieved by slogans or determination alone in this fiercely competitive international community. Jobs are basically created by increasing investment when businesses expand their production or start a new enterprise. Therefore, revitalization of businesses investment is the key to job creation.
But all the policies produced by every department of the government focused on creating jobs by force in the public sector through public spending. For example, the Ministry of Finance and Economy said it would add 82,000 jobs in social services and 30,000 jobs through expanding employment and granting special tax benefits. The Ministry of Government Administration and Home Affairs would increase the number of local government officials by 5,000. The Ministry of Labor would extend the retirement age to 60. The Ministry of Science and Technology would create 10,000 jobs for master’s or doctor’s degree holders through forced employment of science and engineering graduates. The Ministry of Information and Communication would add 200,000 jobs in the information and technology sector.
Anyone can create jobs through spending money. The problem is that these jobs will disappear the moment the money runs out. Of course, the government also suggested alternatives in order to create jobs in the private sector, including deregulation and the stabilization of labor-management relations. But because it takes time to do such things, the government says, it was necessary to create jobs in the public sector for the time being, until the private-sector economy recovers.
But these policies are based on the premise that business investment will revive before long. If business investment does not increase within a few months, government spending will come to nothing, eventually swelling the budget deficit and triggering inflation. Again, the key is revitalization of business investment and economic growth. Watching the policy-making process in job-related ministries, it struck me that it would be difficult for our economy to recover if the government, including the president, do not first make some fundamental changes in their way of thinking.
First, the president should not ask for “epoch-making” policies to fight economic problems. As he demands drastic policies and reprimands officials, they just produce temporary expedient policies to achieve short-term goals and avoid responsibility for failures during their tenure. The recent situation of astronomical household debts, insolvent card companies and unstable real estate prices is the result of such policies.
Second, in advocating short-term policies like job creation, the government should not exaggerate its achievements. Adding 300,000 jobs through tax reductions, extending the retirement age, creating 10,000 jobs for higher degree holders and 200,000 jobs in the information and technology industry may work as slogans, but how many companies would agree to those figures?
Third, the government should ask fundamental question about why the record-breaking increase in exports did not lead to increases in facility investments and jobs. Vague uncertainties still make businesses hesitant to invest. Among them are doubts about our ability to solve conflicts in society that hold our economy back, the foolishness of replacing the foreign minister just a day before the “future of the alliance” talks with the United States for the promotion of a “self-reliant diplomacy” and the absurdity to assert that we can achieve 6.6 percent economic growth through balanced national development. There is also the ignorant belief that if only we could reform our chaotic politics, which annoy the people every day, economic problems would be solved naturally.

* The writer is a professor of economics at Hanyang University. Translation by the JoongAng Daily staff.

by Na Seong-lin
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