[FORUM]Consistency is the key

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[FORUM]Consistency is the key

What advice would Finn Kydland and Edward Prescott, the winners of the 2004 Nobel Prize in Economics, give about the economic and educational policies of our country?
We find a hint in a 1977 article they wrote together. There is a lot of mathematics in the article but its main point can be understood easily by referring to the case of parents raising a son.
Parents give love and care to their son so that he can grow up to be a fine young man. On the other hand, parents also teach their child that he must face punishment when he does something wrong. When a child ignores this warning and does something bad, the parent’s dilemma begins.
If the child is to be disciplined properly, he must be punished. However, punishing one’s precious child is not only a heartbreaking affair in its own right but it also might make the child resentful and creates a doleful atmosphere in the house for a while. So, should the parents give a strict warning that there will be no forgiveness next time and just let this one episode pass by?
The two economists are of the opinion that the parents should punish the child as they intended to in the beginning. Letting the child get away with wrongdoing, punishing the child sometimes and turning a blind eye other times, only compromises the parents’ credibility. Once this happens, no matter how firmly the child is warned, he will not be afraid to do something wrong. If parents want to achieve the long-term goal of raising their child properly, they must be willing to go through short-term pain and uphold principles consistently.
Once it sets a long-term objective, a government also should not waver and should implement its policies with consistency. The two economists go on to state that it is desirable for the government to establish strict rules so that policy makers won’t exercise arbitrary decisions based on convenience.
Like previous governments, the Roh administration’s biggest problem is the harm of inconsistent policies. Educational policies are a classical example. With the education system having been torn down and rebuilt so many times, the quality of our education has degraded and spending on private education has increased as a result.
It is the same with economic policies. The government raises its voice insisting that it has no intention of implementing pump-priming policies, but at the same time it tries all sorts of schemes to revive the economy, making the public confused. Our administration and our National Assembly rant on about how important public economic welfare is, but are more preoccupied with mudslinging over politics, security, history and relocation of the capital city.
It is hard to predict how important issues, such as the regulations that limit companies from investing more than 25 percent of their own assets in other affiliated companies, will turn out. How could the economy progress normally under such conditions?
The biggest issue is in labor. One government official makes it sound as if labor unions are the weak of society and therefore must be forgiven even if they break the law, while another official claims that the law and principles must be upheld no matter what. Such inconsistency in government policies makes it difficult for productive labor-management relations to be established and creates huge economic and social costs that damage the long-term competitiveness of the country.
If the government is to implement policies consistently, it should let go of personal ambitions or political calculations in the designation of goals or the implementation of policies. That is how it can avoid irrational policy objectives. If the goal is wrong, trial and error would be unavoidable and consistency impossible.
Next, strict personnel standards should be applied to the main official posts, and individuals whom the public can trust should be appointed. These individuals should have their independence and term guaranteed. Personnel appointments based on bias or political calculations lead to frequent cabinet reshuffling and ultimately harm the consistency of the policies and the credibility of the government.
Consider how in the United States, many of the secretaries finish their terms with the president and how Alan Greenspan of the Federal Reserve has held his office for such a long time, even through changes in the administration.

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


by Roh Sung-tae
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