[VIEWPOINT]Owning up to bad judgmentSomeone once said that trying to make economic forecasts was like driving on a winding mountain road while looking in the rear-view mirror. As a journalist who covers economic affairs, I am totally ashamed to remember how many times I have gotten things wrong in the past. My only excuse is that I was not the only one whose predictions were proven wrong.
Consider Hynix Semiconductor, for example. Years ago, plenty of economic specialists were crying out in unison that this insolvent semiconductor company should be sold to foreign investors as quickly as possible. I was one of them. I raised some procedural objections to the sale, but nevertheless, I was sure that it would be for the best to get rid of this debt-ridden company that had no hope of survival. I thought it was the only way to head off further losses to the banks and to improve Korea’s credit rating. I wrote many columns to this effect.
But look at Hynix now. Not only has the company become independent of the supervision of creditor banks, it has been in the black for eight consecutive quarters. Nor have these profits been modest. Last year’s profits were 1.7 trillion won ($1.6 billion), and comparable numbers are expected for this year and for 2006. The same banks that had worried about recovering their investments are now beaming with joy, wondering whether this is all a dream.
Never mind for the moment whether things will continue to go so well. The mere fact that once-troublesome Hynix has been able to produce such numbers has left everyone awestruck. What happened?
I admit that I have lost my credibility when it comes to discussing Hynix, but nevertheless, I would like to acknowledge my misjudgment here and apologize to readers. This is not something that should stop with the apology of a single columnist.
I am sure that those in the government and the banking community who paved the way for Hynix’s liquidation and sale to a foreign investor, and the economists who encouraged them, must all be feeling some degree of awkwardness and embarrassment. I hope that all of them will talk frankly about the misjudgments they made in the past. I sincerely hope to organize, although belatedly, a Hynix case review group to examine the reasons why the policy that we once thought was the best choice turned out to be the wrong one.
Looking back, Hynix was a big problem during the Kim Dae-jung administration, and its sale to the U.S. semiconductor company Micron was officially supported by the government and the financial authorities. No conditions were attached to the sale. The gist of the government’s instructions was to give Micron whatever it wanted. The government wanted Hynix off Korea’s hands, no matter what.
Those in positions of responsibility at the Blue House, the Ministry of Finance and Economy and the Financial Supervisory Service who pressed hard for the company’s sale may all be extremely embarrassed to look at Hynix today.
The head of Foreign Exchange Bank (the main creditor bank), Lee Kang-won, was appointed to the post with the assignment of getting rid of Hynix quickly, and people around him complained that he was not pushing the sale through fast enough. Mr. Lee himself thought that selling it off quickly was the right thing to do. But he went around asking the government and other supervising institutions to wait a little longer, because he thought the conditions and the procedure that had been established for the sale were unfair.
Time passed while everyone waited, and it was during that time that Hynix succeeded in laying the groundwork for profitable management. Looking at sales profits from the second quarter of this year, Hynix’s were up 17.4 percent, while those of Micron, which had tried to acquire Hynix for free, were down 12.3 percent. These numbers leave nothing more to be said. The fallacy of the decision that Hynix should be sold to a foreign firm is self-evident. Those who bought Hynix shares, meanwhile, have made a killing; the Hynix share that cost 2,800 won ($2.75) three years ago is now over 24,000 won.
But I have yet to see or hear of a single person of authority who was involved in making the decision to sell Hynix frankly acknowledge and reflect upon his misjudgment. Most of them defend what they did, putting the blame on other people or the difficult circumstances of the time. Nor is the press very good at pursuing the truth and documenting the facts to the end.
It can be said that all this was done during the previous administration. But what about the Roh Moo-hyun administration? I wonder to what degree the members of this government will acknowledge its mistakes. To date, it seems that they do not acknowledge any mistakes at all.
The present administration is made up of people who, rather than admit to the errors they have made in such important areas as labor, real estate, education and balanced national development, would proudly say instead that all of these have benefited from their reform policies. But whoever assumes power next will have a very hard time repairing the damage they have done.
* The writer is the CEO of JoongAng Ilbo News Magazine. Translation by the JoongAng Daily staff.
by Lee Chang-kyu