[OUTLOOK]The president and the economy

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[OUTLOOK]The president and the economy

At one time, I was a “criminal of conviction.” It was my adamant conviction that the more value placed on human beings, and the less on money, the better. I envied welfare states in Northern Europe their social models that valued people above all else. And I coveted the efficiency of the central banks of advanced countries, which withdrew huge chunks of money from heated stock markets at a mere 0.25-percent interest rate increase and deposited them into savings accounts.
But where there is light, there is shadow. I still believe that people should be valued more highly, but I have great doubt about the kind of labor strikes going on these days.
The general strike has its origins in revolution, when labor had a sudden-death playoff with political power. But lately it has become an everyday weapon, used at every opportunity.
The economist John Keynes said interest cuts would involve “mercy killings” of people living on interest. He saw interest, unlike wages or rent, as a compensation for scarcity, rather than a reward for sacrifice. But there has been a great change in the murderous competition in the age of globalization. Wage increases became the main cause of reducing overseas competitiveness, instead of improving welfare. Along with the euthanasia of people living on interest, the mercy killing of capitalism is about to follow. Finally, my conviction became a mere memory.
The economy seemed to revive around the Lunar New Year in February, but then it sank again. Then-Deputy Prime Minister Lee Hun-jae’s argument for restructuring the service industry drew attention. He contended that we should take the opportunity to escape the recession by reforming the service industry and improving the supply structure, rather than by spurring demand, as many others were calling for.
It was about that time when the president, during a visit to Turkey, said, “The Korean economy has recovered completely,” and “It will keep making progress if only accidents do not happen for a considerable period.” Since the easiest jobs to enter after losing employment were driving a cab or running a catering business, the restructuring of the service industry was a very urgent task. But the move for reform wound up being a joke ―a matter of granting certificates to confectioners and cleaners. Even a hike in taxi fares was given a cold shoulder by taxi drivers and passengers alike.
All sorts of remedies failed. The government spent intensively during the first half of the year, and domestic interest rates fell. The Korean Composite Stock Price Index exceeded 1,000 points, and so the market is brisk at present, with the aggregate market value of listed stock at 500 trillion won ($490 billion). But growth rate projections fell to three percent from around five percent earlier this year.
The problem lies in a lack of trust in the administration. For example, the president repeatedly pledged to put all his energy into rejuvenating the economy, but he recently handed over his authority to preside over meetings on that subject to the prime minister. He said he would control real estate speculation even if the world came to an end, but for some time, his focus seems to have been on political shows.
The way it generally goes in the world is that the receiver of a gift is anxious for fear of losing it. But for unknown reasons, things are going completely the other way. Saying that it made the “significant proposal” of sending 2 million kilowatts of electricity to North Korea, the government announced the proposal in advance without calculating how much it would cost, figuring out how to prepare the funds or at least reaching an internal consensus on whether the transmission of electricity would amount to a grant or a loan.
On the contrary, the giver in this case is anxious, wondering what will happen if the recipient for some reason refuses the gift, or if the recipient changes his tune. What on earth has led us to behave like this? In this case, excessive servility has become humility.
Gossip once circulated about “the president who gave up on the economy” or “the president the economy fears.” In the United States, former President Ronald Reagan received cheers from the voters for his unique, voluble style. Recession, he said, is when your neighbor loses his job; depression is when you lose yours; and recovery is when Jimmy Carter loses his. Of course, that was in the United States where the president can be re-elected. How could this be translated into our language?
For a while, the president could be characterized as to one who gave up on the economy. In the second half of his term, he could easily end up as the president the economy fears. There are many shows that the president might enjoy, including the North Korean nuclear problem, the formation of a coalition government and a constitutional revision. And nothing would be required of the economy, as long as accidents do not occur, whether the economy fears the president or ignores him.

*The writer is a JoongAng Ilbo editorial writer.


by Joseph W. Chung
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