[FOUNTAIN]Sometimes a lead foot is neededGas mileage is a measure of fuel efficiency: distance traveled per unit of fuel. Test agencies designated by the Ministry of Industry, Commerce and Energy determine the official fuel economy of each automobile model. Depending on driving habits, traffic and road condition, the actual gas mileage is usually considerably lower than the official number, especially in stop-and-go traffic. Fuel efficiency increases if a car can be steadily accelerated to a steady speed.
A Japanese economic commentator, Taichi Sakaiya, says that the principles of fuel efficiency can be applied to economic policies. A government sometimes has to alternate too frequently between the accelerator to boost the economy and the brakes to cool down an overheated market. Of course, policy-making authorities need to switch appropriately to drive the economy safely. However, just as a novice driver might lower his gas mileage by stopping too frequently, economic policy could lose efficiency if it is micromanaged.
In this case, the fuel, or the money infused for an economic boost, cannot generate power to the theoretical maximum. Mr. Sakaiya blamed the Japanese government’s novice driving for the prolonged slump of the Japanese economy. He said that the financial authorities should have stepped on the accelerator in 1997 when the economy showed signs of revival. But instead, the government put on the brakes by raising the consumption tax and pursuing retrenchment policies.
There are Korean economists with similar opinions. A professor who once served as a presidential secretary for economic affairs said in private that the economy should be nurtured strongly when it can be done. We need to step on the accelerator hard when the road is clear even if it means bringing the car to a sudden stop later. It might not be a suitable thing to say as a scholar, but his public sector experience changed his mind.
Last week, the Monetary Policy Committee decided not to reduce the call rate from its present 3.5 percent because of a fear of the inflationary effect. But the deputy prime minister, Lee Hun-jai called the decision “unsatisfactory.” The committee might have been too prudent in keeping its foot off the accelerator. Is the fuel efficiency of economic policies constantly falling, or are we too anxious when the authorities are driving safely?
by Nahm Yoon-ho
The writer is a deputy city news editor of the JoongAng Ilbo.