[OUTLOOK]Don’t impeach the economy

How strange that everyone seems to be worried and clamoring about the president’s impeachment. Everybody except for international credit rating firms, who are saying the impeachment is no big deal.
Moody’s Investors Service, the credit rating agency, has announced that regardless of the outcome of the impeachment trial, the Korean economy will not be seriously affected and that stability will return after the general election in April. This is almost exactly the opposite attitude taken by the agency at the time of the 1997 financial crisis. Then the agency ignored all arguments that the basics of Korean economy were firm and dropped Korea’s sovereign credit rating down eight notches. Now, it is telling us that there is no need for us to lose our cool and that Korean politics is, for better or worse, simply moving on.
There are many times when the big credit rating agencies such as Moody’s or Standard & Poor’s act in incomprehensible way. The fact that they sharply downgraded Korea’s credit rating eight ranks in 1997 alone shows how flawed their rating system was. Of course, it can’t be denied that the financial crisis was brought on by shortcomings in the Korean economy, but there still seemed to be a basic unfairness. The Korean economy was treated much like those of Indonesia, Thailand and the Philippines. Even with all the difficulties Korea was facing at the time, that was a misjudgment. Seeing the same credit rating firms act so calmly makes one think that they have gotten used to all these political crises in Korea. You can only be surprised so many times. When crises happen all too often, one becomes insensitive to them and they become routine.
Nevertheless, I do not give a high credence to credit rating firms’ abilities. It is inappropriate to compare today’s Korean economy to, say, that during the assassination of President Park Chung Hee or during the 1997 financial crisis. It would be an exaggeration to say that the National Assembly’s impeachment of the president, despite the unrest it has caused, will paralyze the nation’s economy. If we only bring down the hypertension in politics, we will not have to worry about a financial panic marked by the flow of foreign currency out of the country. These days there is so much foreign currency in the country that it couldn’t be withdrawn easily in any case.
The essence of the problem lies deeper within. While we do not have to worry about contingency measures as during the financial crisis, we have to find fundamental ways to bolster a weak economy. It is frustrating to think of the long and winding path ahead. The impeachment has already happened. More turbulence is expected with the general election, regardless of the Constitutional Court’s decision on the validity of the impeachment itself. The upheaval could last the whole year.
The Roh administration cannot be evaluated favorably for its economy management over the last year. The president himself claimed that he had done well and that he was not responsible for the current difficulties but replacing his entire economy team in one year is an implicit admittance of the government’s failures. In fact, the situation must have been pretty serious for the president to declare to the labor union leaders that he has changed his views. That is why the president had vowed on several occasions to concentrate his efforts in helping the economy this year and revamping his economic team. Unfortunately, the impeachment happened before anything got started.
The changes most expected in Mr. Roh’s economic policies were labor policies. Despite saying his views had shifted, we had still to see whether his actions would follow his words. Labor union leaders are Mr. Roh’s friends and comrades. To tell these people that he was no longer the Roh Moo-hyun of the past must have been a difficult thing for him to do. He was impelled to do so because belatedly, he realized the seriousness of rising unemployment and the loss of jobs.
Whether reviving weakened industry, attracting foreign investment or pursuing the goal of becoming the economic hub of Northeast Asia, labor problems need to be solved first. There could be no progress without attending to the labor problems first. The imminent implementation of the five-day workweek system and the issue of irregular employees are some of the most urgent problems that must be dealt with in our economy.
Only if the labor market achieves some stability can Korea’s credit rating rise, come impeachment or whatever.
However, it is worrisome whether we can address our labor problems effectively in the new political landscape created by the impeachment. What could be more serious in managing a country than the fact that firms are thinking about leaving the country and graduates fresh out of school are unable to find jobs?

* The writer is the chief economic correspondent of the JoongAng Ilbo.

by Lee Chang-kyu