[EDITORIALS]Serious policies requiredLee Hun-jai, the deputy prime minister and minister of economics, has disclosed that the government will announce an economic revival plan in mid-December involving large-scale construction projects. The government, in short, is planning measures to revive the economy in the manner of the New Deal policies that the U.S. government implemented in the 1930s to get out of the Great Depression.
Until recently, the government has been asserting that the economy is fine despite continued worries to the contrary. It is a relief that it has finally become aware of the seriousness of the situation. Until now, the central figures in the government had dismissed concerns about the economy as the “conspiracy of the jaebols and the conservative media.” Mr. Lee himself had reacted sensitively to criticism, criticizing the groups who dared to complain instead of accepting the view and rethinking government policies. Officials should feel remorse over the fact that their arrogance had caused the policies to go further astray.
If a comprehensive economic measure is to have a positive effect, we must accurately diagnose the problems of our economy. There is no investment and domestic consumption. This is due mostly to the apprehension that business owners, consumers and the public feel. The government is hostile to the rich and the political community is preoccupied with ideological wars such as the debate over the National Security Act and the expansion of investigations into acts of collaboration during the Japanese colonial period. A sense of nervousness pervades and the rich are rushing to wind up their companies and send their children and money abroad. This is the reason that investment and consumption are not rising despite the increase of fiscal investment and 400 trillion won of floating capital in the market.
The problem cannot be solved by money alone. It needs an increase of investment based on efficiency, deregulation and reform of the system. More importantly, it needs to restore the desire on the part of businessmen to invest and to reassure the consumers they can start spending again.
Without fundamental prescriptions, the “Korean New Deal” will only be “pouring water into a pot without a bottom.” Such a policy would only beget negative side-effects that will only burden the economy over and over as the credit card and real estate policies of the last administration did.