[Outlook]No sense of crisisOn Sept. 28, as the financial crisis buffeted Wall Street, congressional leaders in the United States announced an agreement to put to a vote a proposed emergency economic stabilization package to cost $700 billion in public funds. A press conference announcing the decision was attended by Nancy Pelosi, the speaker of the U.S. House of Representatives; Henry Paulson, the secretary of the U.S. Treasury; and Harry Reid, the Senate Democratic Party floor leader. Their facial expressions revealed a sense of crisis about what lies ahead, rather than relief that they had produced an agreement between the government and the political party in two days.
More recently the CEOs of GM, Chrysler and Ford came to Congress for a hearing on whether or not to rescue the companies to revive the dying auto industry. The Democratic Party, which calls itself a friend of the country’s workers, proposed a rescue package of $25 billion to the White House, but was turned down after being opposed by the Republican Party, which said public funds shouldn’t be used for a specific industry.
The U.S. Congress is working hard to calm the economic panic that has spread around the globe. Paulson has barely left Congress during this time, and Federal Reserve Chairman Ben Bernanke created a close network for cooperation with Congress in order to ensure that any necessary actions can be executed as quickly as possible. Congress has been holding public hearing after public hearing, and is busy drawing all possible measures to prevent the U.S. economy from slipping into a depression.
In early September, as Freddie Mac and Fannie Mae mortgage giants went bankrupt, everyone could see that the U.S. subprime mortgage crisis would hit the world hard, including Korea.
Since then, what has the Korean legislature done? Lawmakers battled it out over rice farm subsidies for the whole of September, and then moved on to the comprehensive real estate tax in October. As for the farm subsidies, those who took the money illegally and can be identified, were told to pay the money back and measures can be drawn up to prevent it from happening again. The comprehensive real estate tax is not so urgent an issue that the ruling and opposition parties need to go to war over it. The Democratic Party has declared that it will do anything to prevent a revision of the tax that will only benefit the rich. The ruling Grand National Party failed to produce an agreement with the government, and has been left to handle the issue alone.
Now, consumption has dropped even more than during the financial crisis in the late 1990s, forcing self-employed business owners into bankruptcy. No politician in his right mind would think of giving back the comprehensive real estate tax. Would it be impossible to put even part of the money toward boosting domestic consumption?
It is generally agreed that Korea’s economy is in more trouble now than it was 10 years ago during the Asian financial crisis. Exchange rates and stock prices are fluctuating wildly, the once booming shipbuilding industry is shaking and the construction sector has been in a slump for so long that many companies are on the verge of bankruptcy. If the active volcano of the subprime mortgage crisis continues to erupt, all major industries, such as IT, securities, steel, petrochemicals and automaking, will be covered with ash. Even if the worst is prevented, some 20 countries are expected to go bankrupt this winter. We can’t just leave everything to the government.
The political community as a whole must prepare special measures in case of a disaster. Despite all of the hearings that the National Assembly has held, there has been no news about the economic calamity that we now face. The Assembly is too busy looking into alleged illegal campaign practices of the Seoul education superintendent, the comprehensive real estate tax and rice farm subsidies. A special budget meeting on Nov. 21 was attended by only nine out of 49 committee members. In the regular session of the 18th National Assembly, only 12 bills were approved. Among them, only one, a bill to supply $100 billion in foreign currency to banks, was related to the country’s economy. And that bill was proposed by the administration.
The president is yelling at banks, demanding they lower interest rates and supply money to businesses. The government has released 133 trillion won ($86 billion), and that has already been sucked into the banks’ coffers. Companies struggle due to a lack of capital, and the working class is suffering from poor domestic consumption. While a harsh winter wind is buffeting Korea’s economy, the Democratic Party has formed a group to rescue Kim Min-seok, and the GNP is wandering around without a clear idea of its priorities. One wonders why the 299 brainy career politicians in the National Assembly have no sense of crisis.
*The writer is a professor of sociology at Seoul National University. Translation by the JoongAng Daily staff.
by Song Ho-keun