[Viewpoint] It’s the economy, stupid

The ruling party these days is busily playing the blame game. The point of this game is to pin the tail on whatever donkey can be faulted for the party’s crushing defeat in recent local elections. As a result, the tail is being plastered everywhere. The favorite places are the administration’s plan for the development of Sejong City and its four major rivers project.

Other targets are as diverse as flawed nominations by the party machine, the fiasco of an exclusion of a popular democracy movement theme song at a memorial service for the anniversary of the Gwangju democracy movement, an alleged black-balling of pro-Roh entertainer Kim Jae-dong from TV programs, and the negligible role of former ruling party chairwoman Park Geun-hye in the local elections campaigns.

All were contributing factors to the party’s poor performance, but the real blame lies elsewhere. It is the economy. To be precise, economic policies that ignored politics.

Many may not approve of my theory. Our economy grew more than 8 percent in the first half from a year before. Exports and trade data show impressive numbers thanks to extraordinary performances by large companies. But I hold decisive evidence that the economy was at fault.

For my first argument, I would like to uncover the real story behind all that buoyant economic data. Behind the impressive facade of statistics, the real economy has fared poorly under the two and a half years of the Lee Myung-bak administration. Household debt increased while jobs decreased compared with the years under the previous administration. Jobs for the under-29 age bracket have become scarce. Household incomes were slashed while consumer prices soared. The middle class thinned, widening the gap between the rich and poor. No wonder complaints and votes of disapproval poured out from the grass roots. The bottom of the economic pyramid has long been cold, yet this fact went widely unnoticed, and was eclipsed by the Cheonan disaster.

Of course, the president may want to shout and point to all the things he has accomplished. He has kept the economy on course despite a tumultuous global economy. Yet few at home seem to be appreciative. It is a fact that the government’s timely pump-priming helped the country weather the financial crisis better than any other economy. As a result, Moody’s Investors Service has upped our sovereign credit ratings to pre-1997 Asian financial crisis levels, and our economy is the envy of many others. The president even flew to the Middle East to personally witness the signing of a multibillion-dollar nuclear reactor contract won by a Korean consortium. Lee can say he has more than fulfilled his role as the president of our economy. No wonder he has a 50 percent approval rating.

But kudos for outstanding performances by the president and large companies are shared among themselves, while the majority grapples with the realities of reduced salaries and an anemic job market. Some can argue that it’s too general to fault the economy for the ruling party’s fallout from public favor, and in the long run, economic recovery will lead to better salaries and living conditions.

My second argument is based on the theory that the economy and politics have the same root. The president likes to draw a clear line between the economy and politics. But reality does not work that way. Just look at the fallout from Sejong City and the four major rivers project. In terms of economic efficiency, the president is right in seeking to change the plan to make Sejong an administrative hub. Also, the plan to dredge and dam the four rivers to make them more resourceful and clean is necessary, apart from the fact that the president has been too aggressive in the construction schedule and spending.

But the problem is that both issues have become a source of political wrangling. As efficiency is the bedrock of economy, compromise is the foundation of politics. Waging a political war to push ahead with these projects can bring high costs. The wave of disapproval in the local elections was one such cost. Compromise sometimes can be more economically sensible, as it can save costs. Yet such simple logic failed to work in Sejong and in the river program.

A former presidential secretary to Kim Dae-jung once said that a president who manages the economy well is someone who can reduce political cost. He said former President Kim had regretted picking bureaucrats for economy-related ministries. Bureaucrats failed to implement reforms and welfare programs because they were too engrossed in their calculations. Former deputy prime minister for the economy Cho Soon used to say economic policies are, in the end, shaped by politics.

The government must first focus on measures to generate greater income for households and revitalize the job market. Secondly, it must yield and compromise to work the economy more politically. The president declared on the day following the election that he will concentrate on the economy. He must revise his way if he wants to avoid making the same mistake.

*Translation by the JoongAng Daily staff.
The writer is the business news editor of the JoongAng Sunday.

By Yi Jung-jae