[Viewpoint] Not too late for a policy turnaround

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[Viewpoint] Not too late for a policy turnaround

As the Lee Myung-bak administration enters its third year, the midterm report card is not so good, but not bad either. Grading the last two years of national administration, citizens are equally divided between “satisfactory” and “needs improvement” - a fair-to-middling report on the face of it, but nonetheless a higher approval rating than any other administration’s at the beginning of the third year.

The Blue House and the ruling Grand National Party are shamelessly praising the administration’s performance, and it certainly is a success considering the candlelight vigils and global financial crisis of the first year. The Lee administration has grown since the inexperience and mistakes of the early days and has built a stable foundation from which to conduct state affairs.

The Blue House believes that the success of the administration is rooted in Korea’s accomplishments in economic and foreign affairs. Pre-emptive spending helped the country ride out the worst of the financial storm; winning the bid to build a nuclear power plant in the United Arab Emirates and the green-growth strategy reinforced the springboard for another economic leap. In national affairs, securing the G-20 summit meeting in Seoul elevated the national reputation.

But two years do not determine the success or failure of an administration.

It’s still too early to evaluate the performance of the leader who regards himself as the “economy president.”

On the face of the statistics, the report card could hardly be good: The job rate has fallen drastically, the state is running at a deficit and national debt is growing.

However, the critical variable of the global financial crisis in the first year of Lee’s administration makes the numbers add up differently.

While the growth rate has dropped, it is in fair shape compared to major economies. Korea’s own economy is rapidly recovering. And the increased financial deficit and national debt are the unavoidable result of expanded spending.

Some indexes have improved as well. The trade surplus saw a large increase, even as imports and exports shrunk. The foreign currency reserve has recovered to pre-crisis levels. The stock market has bounced back.

With all these elements, it’s difficult to get a clear picture of the Lee administration’s economic achievements from statistics alone.

There is another way besides statistics or opinion polls to measure the economic effects of the Lee administration’s policies. Just in time, the Center for Free Enterprise published an interesting report entitled “Analysis of market friendliness toward the Lee Myung-bak administration’s implementation of campaign promises.” Lee ran on a platform of “business-friendly” policies, and the report investigates how well the president has met his goals.

Some promises were given up before pursuit even started, such as the pledges of 7 percent growth, $40,000 per-capita income and membership among the world’s top seven economies. Yet despite the crisis, promises such as reforming the system can be kept as long as Lee has the will.

Checking which campaign promises have been kept can provide a yardstick by which to measure the administration’s performance. And knowing what progress has been made can help us predict the direction of Lee’s economic policies for the rest of his term.

The analysis was conducted as follows: Thirty-five major promises related to the economic sector were identified and classified as “market-friendly” or “anti-market,” then their implementations were verified.

Twenty-six of the 35 promises were considered market-friendly, nearly three times the nine anti-market promises. This shows that the Lee administration was launched on market-friendly policies.

However, after two years, 61.1 percent of the anti-market promises have been fulfilled, while only 42.3 percent of the market-friendly promises were met. In contrast to the initial enthusiasm for market-friendly policies, these were pursued reluctantly while the anti-market policies were promoted more aggressively.

Of course, the classification between market-friendly and anti-market promises are arbitrary. Nevertheless, the direction of Lee’s economic policy has obviously changed.

This is not unrelated to the candlelight vigils and the financial crisis. Throughout the first half of Lee’s first year, the candlelight vigils cornered the administration and severely discouraged its will to promote market-friendly policies.

As the global financial crisis hit Korea, the administration was left with limited options. So in the second year, it began to lean toward moderate pragmatism and pro-middle and pro-lower-class policies.

In fact, the market-friendly policies were hushed by this time, and new anti-market policies that had not been mentioned in the campaign were introduced. Taxes and fines were reduced, and traffic violations were pardoned. Terms of school loan repayment were relaxed, and large distributors’ advancement was restricted.

These policies were labeled as pro-low-income family and moderate pragmatism, but in fact they were anti-market policies. And such policies might temporarily boost the administration’s popularity and approval rating but they will ultimately destroy the order of market economy, damaging the vitality of economy.

When economic vitality drops, the low-income class will be hurt the most. It is the pitfall of the anti-market policies disguised as pro-lower class.

If the Lee Myung-bak administration truly hopes to revive the economy, it should return to its initial market-friendly policy direction.

*The author is an editorial writer of the JoongAng Ilbo.


By Kim Jong-soo
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