[OUTLOOK]Act now to save the economy

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[OUTLOOK]Act now to save the economy

The general election for the 17th National Assembly, after having caused much trouble, ended exquisitely. Placards from the winners expressing gratitude to the voters greet people on the street. But a better way to express gratitude would be to solve the economic hardships of the people. Now that this tiresome political race is over, it is time to turn our attention to the economy, and find a way to save the ship before it sinks.
Now is the time for the politicians who’ve been shouting their throats hoarse with talk about policies, attention to the public’s needs and national progress to act on their words. President Roh Moo-hyun and Our Open Party claimed that they weren’t able to save the economy before because they were impeded by the opposition. Now the public has granted their wish and made Our Open Party the majority party.
From now on, it is time to concentrate on getting the economy back on track, without looking back and without putting the blame on others. Three stages of action will be required for an economic recovery.
In the short run, it is most urgent to stabilize the sharply rising consumer prices that have been putting pressure on households since the beginning of this year.
The fact is, the government as well as the political parties have been so busy with the general election, doling out or promising pork-barrel deals, that no one has paid much attention to stabilizing consumer prices. The recent rise in prices hit low-income households harder, because it is the prices of commodities that have been affected the most.
Under an already-polarized income structure, the rising prices of raw materials and commodities are distorting the consumption pattern of the low-income class. The rising prices are set against an unfortunate background of serious stagnation in domestic demand and a low growth rate, estimated at 3.1 percent last year. Because there are signs of stagflation, it is time to give full attention to stabilizing the prices.
Second, we must draw upon a national consensus for market reform, to overcome the negative legacy of the 1997 financial crisis and to encourage democracy. We must implement a mutually beneficial program to carry out these reforms. At present, our economy is faced with a fiscal deficit, an extreme gap between the rich and the poor, the polarization and hollowing out of industry, increasing youth unemployment, the lack of a social safety net, rising numbers of impoverished households and credit delinquents and an unquenchable real estate speculation fad.
Also, our economy still depends heavily on the autocratic and mutated jaebol structure, which invites the risk of cozy ties between business and politics, and the risk of compromising the fairness of the market order. The market exists, but instead of running on economic principles, it is hampered by political reasoning and bureaucratic red tape.
The mammoth labor unions that gained formidable power during the fight for democracy are now in a politically strong position, and have become a terrible danger to market reform with their selfish struggles with business and their political agenda.
This old-time Korean disease must be eradicated once and for all. If the reform program is to be implemented effectively, the government and the political community must show leadership and recover the trust of the people and the market.
Finally, in the long run, our national power must be focused to enhance the international competitiveness of all our production elements and maximize the growth potential of the Korean economy. When market reforms are on their way and the business management structure has been modernized, when the ancient custom of unconditional transmission by heredity in the jaebol firms is changed, the various business-related regulations that are being retained will naturally start to assimilate global standards.
In order to increase the long-term productivity of labor, human resource programs such as education should become consumer-centered, rather than supplier-centered as they currently are.
In order to fortify our competitiveness in an open market, we must form a broad public consensus on the necessity of improving our education system.
The prerequisite to ensuring the success of this three-stage program to save the Korean economy is the establishment of trust and rule of law among the economic actors. Without trust in the government and the political community, no reform program will succeed, and when the rule of law is ignored in the market economy, both the efficiency and the equity of the market would collapse.
For the newly elected National Assembly to become a true assembly representing the people of Korea, the legislators must shed the negative legacies of the past, compete with policies rather than power and give their full attention to saving the economy.

* The writer is a professor of business administration at Kyung Hee University. Translation by the JoongAng Daily Staff.

by Kwon Young-june
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