[EDITORIALS]Three more years of misery?The ruling party, the administration and the Blue House have met to plan an economic recovery. The effort resulted in a plan for the government to launch an investment project worth 10 trillion won ($9 billion) in the later half of next year: a “New Deal” for Korea.
It is desirable that the ruling party and the administration came forward with their sleeves rolled up to save the economy. But there is an order of events that should be followed. If we want to establish an emergency plan to cope with economic difficulties, we should recognize the reality and decide the reason for the difficulties. If countermeasures are established through such procedures, they should be the right ones.
But the “Korean style New Deal” policy established this time has followed wrong procedures from the beginning. The government and the ruling party have so far stressed that the economy is not in a crisis. They insisted that the press and the opposition parties have created a crisis. They denied that the economy is in real trouble. Then they stealthily changed their position to say they would employ pump-priming policies if necessary. That is, they started to work on the revival plan without understanding economic reality or studying the reasons behind the problem.
The New Deal policy is based on a judgement that the economy will not get better even during the first half of next year. If the economy is left alone, it is presumed that both investment and consumption in the private sector will not revive, so the government will launch investment projects directly.
But the order of the day should be to give inducements for investment and consumption if the problems are there. Those are not matters that can be solved by unexpected government intervention. It is also anachronistic that the government would invest by mobilizing national pension funds and other private sector funds. Inducing pension funds and other private funds into unprofitable projects and compensating them for their losses with tax money is deceiving the people twice. The consequences will be the same whether the public funds show deficits through investment or losses from the projects are paid off by tax money.
Prime Minister Lee Hae-chan said, “If a short-term economic recovery plan and the New Deal policy are implemented together, we can be assured of our economy’s prospects after three years.” Does he mean that Korea’s economy will not recover until then?