[VIEWPOINT]Car wrecks and lottery tickets

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[VIEWPOINT]Car wrecks and lottery tickets

In historical retrospect, it is hard to understand how people repeat silly mistakes. Even a dog would never return to the alley where he had been mauled, but a human is not afraid to go back to a place where he had a bad experience. There might be reasons to go back, but inveterate stupidity is incomprehensible.
People tend to make convenient interpretations and have false hopes. Statistically, winning a lottery is less likely than being killed in a car accident. Still, people think they might win the lottery some day, but never dream of being a victim of an auto wreck. In the past, Koreans made the stupid mistake of falling into group hypnosis whenever there was an election. The trance blinded the people and triggered enormous bad effects. But when the next election season came, people hoped that it would be different.
The financial crisis and the consequent IMF bailout were results of stupidity before the presidential election of 1997. People failed to look at the outside world. We were all swept up by a mood that valued emotion and stubbornness more than reason and the law. All of society was in chaos. Streets were filled with the protesters who cried that we should save the failed Kia Motors. Financial reforms drifted and failed over and over again. Far from easing the crisis, politicians encouraged acute confrontation between interests. They were blinded by the immediacy of getting votes and produced campaign promises they never intended to keep. The arrogant leaders of both the ruling and opposition parties waged unnecessary fights and never really cared about the nation. We all know that the result of the chaos was the IMF bailout. The investigation into what really caused the crisis and who was really accountable was hushed up by naming a few scapegoats. Those who should have been accused of causing the trouble brazenly transferred the blame to others.
There are numerous reasons for that national failure, but the most critical factor was the country’s ignorance of the international situation. We did not realize that the currency crisis in Southeast Asia was a prelude, and stubbornly stuck to an overvalued exchange rate. If we had adjusted the won-dollar exchange rate to about 1,000 won to the dollar in the fall of 1997, we would not have been driven to the wall. Of course, there were people who thought of that prescription, but no one had the courage to implement such a program. We did not have solid administrative leadership at the time. The cost of the financial crisis and the IMF bailout was tremendous. Government debt had grown large and many lucrative businesses were sold. If we were hit with a similar crisis once again, we could not afford to overcome it again.
But we have forgotten the bitter experience and repeated the mistake again during the last presidential election. A real estate boom was burdening the economy and credit card use and household loans had exploded. People thought that the times had changed and that paying off the debts was no problem once the economy recovered. As a result, the country was stained with insolvencies in household finances and an increased number of bad personal debts. We have been billed for the folly, and we will have to pay off the debts for a long time.
In the run-up to the National Assembly election, how are we reacting? Koreans are still indifferent to the world and are desperate about internal fights. Oil prices are rising and the shortage of raw materials is serious. The threat of China cannot be dismissed. But we are again split into factions and many national tasks are stalled. Unlike during the financial crisis in 1997, the government is making trouble this time by trying to keep the won cheap, not overvalued. Politicians still make pork-barrel promises to win voters. The government is generously spending tax money and has announced a rescue program for debtors. The ruling and opposition parties have agreed to move the capital, a historic plan that will come at astronomical cost.
Nothing has changed. The only thing on the minds of politicians is votes, and the election is still a contest of pride and obstinacy. The law is ignored and enforcing one’s demands is a trend. Before the financial crisis, the lack of attention to the trade balance and foreign currency liquidity brought catastrophic consequences. Now people are indifferent to the serious stagnation of investment and the flight of our industries. When we should be worrying about the future of our economy, the entire nation is stuck on the election. Especially, the national administrative leadership has been undermined because of the impeachment crisis. The financial crisis hit the nation hard because people had been reluctant to implement reforms. Now we are about to repeat the same mistake. It is urgent that we study international dynamics, make a decision and join forces to take action.
If we had acute hepatitis last time, we might have cirrhosis of the liver or even cancer this time. Japan suffered almost a decade from its economic slump, but Koreans are curiously optimistic.
Even though the vehicle of the economy is crossing the median line, people are not worried about the possibility of a crash. Instead, we are hoping to win the lottery. We all know how stupidity can bring disaster, but are blinded by false hopes and are engaged in yet another historic folly.

* The writer is the chairman of Samsung Economic Research Institute. Translation by the JoongAng Daily staff.

by Choi Woo-suk
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