Following Japan’s leadThe Japanese economy has been on the upswing for 63 straight months now. It’s a record. Experts predict the hot streak will continue for the foreseeable future. This is not the Japan of the 1990s, when bursting bubbles sent the country into “the lost decade.” The turning point came in 2002, when Junichiro Koizumi assumed power as prime minister. He called for a small government and undertook restructuring in the public sector. Despite stiff opposition, Koizumi pushed ahead with the privatization of Japan Post, which had 270,000 employees. He either eliminated or privatized 136 of 163 state-run companies. Over the past five years, more than 1,500 regulations in the business- and labor-related fields have been abolished.
Shinzo Abe also tightened the belt. Under the law, civil servants can no longer simply “parachute” into affiliated organizations or private companies. Abe managed to break away from the decades-old custom of guaranteeing civil servants job security and allowing parachute moves. At the same time, his policy prioritized growth in the private sector.
Fruits from these efforts are sweet. With fewer regulations, corporate facility investment jumped 7.6 percent last year. Thanks to a better business environment, Japanese companies that had left for China and Southeast Asia are returning. The job market is booming. An average college senior reportedly has four to five acceptance letters from which to choose. Companies are extending the retirement age, and often bring back the retired. Spending has increased, and the birth rate rose for the first time in six years.
But what about Korea? It’s the polar opposite. This administration has chosen welfare and big government as its ideology, and has obsessed over balanced regional development and real estate issues. The number of civil servants has jumped 50,000, and the government plans to add another 50,000 by 2011. Meanwhile, regulations and taxation burdens continue to weigh heavily on the private sector. Economic polarization has deepened, and manufacturers’ first-quarter production posted its first minor growth in four years. There are forecasts that the hiring of university graduates this year could fall by 30 percent from the previous year.
This contrasting situation in the two nations clearly proves the leader and his policy determine the fortunes of the country. The answer is in the success story of Japan. If they don’t right the policy ship right now, the spineless bureaucrats here who were busy bowing to the administration will pay the price.