[EDITORIALS]Economic word games

“The government’s real estate policy is working properly,” the deputy prime minister of the economy insists. “It is only the prices of large and medium-sized apartments in Seoul’s Gangnam area [south of the Han River], and in some other, limited areas, that have skyrocketed. In the sense that small apartment prices in most places are stable, the government’s measures to stabilize real estate prices have worked to a considerable degree.”
What sophistry is this? The government has made more than 30 attempts to bring apartment prices in Gangnam under control, but has succeeded only in lowering the value of homes owned by less affluent people in the provinces or north of the river. That would be best described as widening the gap between the rich and the poor. It is shameful to hear the government tout this as a positive result.
The same applies to this assertion, by the chairman of the Blue House policy planning committee: “The government will never take a pump-priming approach to the real estate market.” The real estate tax, which has been criticized as a leftist policy, is only going to be raised to 0.50 percent, from this year’s 0.15 percent. But interest rates have been cut four times in the past two years, each time by 0.25 percent. On top of that, more than 16 trillion won ($16 billion) was paid to Seoul-area landowners in the past two years, to compensate for land appropriated for large development projects. Because so many projects were launched prematurely, land prices have gone so high that the Ministry of Construction and Transportation has had to ask for a doubling of its compensation budget. This combination of rate cuts and reckless development projects can be called the biggest construction-and-engineering-dependent pump-priming policy in history.
During the 2002 presidential race, the Roh Moo-hyun camp pledged to attain 7-percent annual economic growth and create 2.5 million jobs. There is no way this pledge can be kept in the two years left to Mr. Roh. Experts even fear that the growth rate, once at 5 percent, will fall to 3 percent. Global factors such as rising oil prices and the falling dollar will particularly hurt Korea’s economy.
Solving this problem will require frank reflection. We should abstain from playing with words to gloss over shameful results. It is competence and credibility that the administration lacks. Word games will only worsen its credibility problem, and deepen the doubts about its competence.