[VIEWPOINT]Focus on our country’s finances first

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[VIEWPOINT]Focus on our country’s finances first

The presidential election is a year away. We are literally half-expectant and half-concerned. We have the expectation that a president, like a savior, will come quickly to save the people from their present troubles.
But at the same time, we are very concerned the people will suffer during the election process of forming a lineup, picking sides and meeting and sorting out candidates throughout the next year.
To borrow the expression, “We should at least do one thing properly, even if we fail in all other areas,” I’d like to cry out, “Let’s protect the health of our national finances even if we give up everything else during the presidential election process.”
In the coming campaign, financial policies are highly likely to become lax about opening up the coffers of the state.
About this time last year, the Grand National Party asserted that it would cut 8 trillion won ($8.6 billion) from this year’s budget, saying the budget was too lax. But the party ended up only reducing 900 billion won.
Even now, when deliberations over the next year’s budget have begun, the party promises to curtail overlapping and inefficient projects, but it will not be easy to do.
Why is it important for the government to be thrifty in its finances?
First, our national debt is growing rapidly.
It is silly for the government and the governing Uri Party to say that our national debt is not worrisome because its size is small compared to other advanced countries.
This is like the head of a family saying, “while our household debt is rapidly increasing every year, family members do not need to worry because our debt is smaller than our neighbor’s. ”
In fact, our national debt has officially tripled during the eight years since the foreign exchange crisis of 1997 and 1998.
Second, to reduce the debt, we should at least be able to pay back the interest, but we spend too freely.
The government spends more than it collects every year, so it has to issue bonds of about 9 trillion won to pay its deficits. The deficit increases each year as much as the amount the opposition party planned to reduce the national budget.
South Korea was once well known for its effective public finances. When many advanced countries were panic-stricken about financial deficits and national debts, our country was united with the determination to follow conservative financial policies, no matter how difficult the situation.
Although the people called for more budget spending, bureaucrats would persuade them to be thrifty, sticking with the principle of keeping the “expenditures within the revenue.”
Thanks to the resources that were stored in the process of implementing tight financial policies, our country overcame the foreign exchange crisis sooner than expected.
But the present situation is exactly the opposite.
While planning to spend more, the government and the ruling party guarantee the people that there are no problems with the national finances.
In the late 1980s, the United States was so worried about its national debt that the country hung a “National Debt Clock” in the Times Square in Manhattan, New York City, which publicized the climbing debt.
Now it seems the time has come for us to conduct a campaign to protect our national finances and cut our national debt. With the presidential election nearing, we should not give in to the sugar-coated promises of candidates that they will work to the benefit of their regions and particular occupations.
We should have the wisdom to foresee the tremendous tax burden they will bring to us or to our children as time passes, even if it is invisible now. We should not be pleased that the government will allot 6.6 trillion won in the next year’s budget, an increase of 1.2 trillion won from last year, to the National Basic Livelihood Security System, which is the basic framework of the Korean social security system.
Because less than 5 percent of the low-income households participating in the self-support program under the basic livelihood security system regain their self-sufficience, what is the point of injecting more money?
In public finances, how the government spends is more important than how much its spends.
In this regard, it is irresponsible to say we should increase welfare spending, because the proportion of our welfare expenditure is far less than that of other advanced countries. What is more important is to examine how well the money currently put in welfare is spent.
For our people to earnestly play the role of watchdog of our finances, we must look around ourselves first of all.
We should watch whether the budget spending is used in unnecessary places, whether similar, overlapping projects are carried out here and there, and whether new projects are made as a sop with the presidential election ahead.
We cannot afford to launch a new government while bearing a heavy debt with empty national coffers.

*The writer is a professor of economics at Sungkyunkwan University. Translation by the JoongAng Daily staff.

by Ahn Jong-bum
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