[FORUM]A crisis in a teapot

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[FORUM]A crisis in a teapot

In 1980, the U.S. presidential campaign was fierce.
The economy was in trouble because of high oil prices, and Ronald Reagan attacked his rival, President Carter, saying the situation was a crisis and a depression was possible. Mr. Carter responded that there might be a recession, but not a depression, and that a person with no knowledge or insights about the economy was blowing things up into a crisis.
Mr. Reagan, who majored in economics at college, gave an interesting reply: “If you wish, I’d like to give you a definition of an economic phenomenon. When my neighbor loses his job, it is called a recession. When I lose my job, it becomes a depression.”
It is not an easy job to judge economic theories, and it is even harder when there is no strict definition of such terms. Therefore, different people can come up with different arguments.
It would be good to understand the controversy over the economic debate stirred up by President Roh Moo-hyun’s recent remarks in this context.
In a speech before the National Assembly, President Roh concluded that the situation at the time was not an economic crisis and offered some grounds for that optimism. He suggested some indices such as the large trade surplus, foreign currency reserves of $160 billion, improved business profits and financial structures and this year’s economic growth estimated at more than five percent.
He went a step further to point out that some people argued exaggeratedly that this is a crisis with hidden intentions and without an exact diagnosis. He also warned that these people were jeopardizing the economy.
Watching the pros and cons of the debate that continued after the president’s speech, I got the impression that the government was showing an overly sensitive response to the talk of an economic crisis. Although there were loud voices on the newspapers for the past year voicing worries about our economy, few people argued that such a crisis was imminent.
I think that most of the alarmists were concerned about and criticizing the lackluster government efforts to prevent the Korean economy from sinking further under the economic problems. Although there were few people who may have been inventing a conspiracy by arguing the case to call this a crisis, Mr. Roh seemed to end up warning against these few people.
Even if there are some who try to blow up the crisis, the government does not need to be overly concerned about them. This is because the judgment on the state of our economy is not made by this group of a few people or the government alone.
Not only do a number of scholars and experts participate in the judgments at home but foreign investors do as well, along with rating agencies, financial institutions, and research institutions. They are all making assessments from an objective point of view. This is to say that exaggerated talk of a crisis or rosy optimism will lose the debate.
In my opinion, it is the right way for the government to come up with policies for reform based on economic logic in order to gain support from a majority of the people is to persuade the forces with vested interests that things are going well, rather than searching for a conspiracy of the forces that impede government reforms.
In retrospect, the arguments for crisis or uncertainty seemed to have originated in the government itself. The three years when the economic growth rate was lowest were 1980, 1998, and 2003. During the two years, the Korean economy experienced a severe crisis. Although the crisis of last year was not so severe as those of the previous years, what did the government do during the past year when serious economic difficulties emerged? The administration put politics before the economy and words before actions.
I think the government should reflect on this point very deeply. The government should also show the people that it takes the attitude that it will solve problems based on economic logic while maintaining a consistent policy instead of blaming others.
Not until then will the economy turn around toward a recovery, and the talk of a crisis will die out naturally.

* The writer is an editorial writer of the JoongAng Ilbo.


by Roh sung-tae
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