[Letters] Learning about judicious spending

After coming back from vacation in India, I read your editorial “Household debt out of control” (March 1) as an economist to draw policy implications for any world economy, including Korea. The trend in debt ratio against disposal income - 143 percent in 2009, 139 percent in 2008 and 136 percent in 2007 - is shocking for anyone to interpret.

To diagnose the debt problem at micro and macro levels, we need to understand, analyze and interpret the data released by Statistics Korea with wisdom of not only t- value scores (significance) at 95 percent confidence but alternative practical solutions.

To boost the real estate market, there is a strong case for encouraging savings culture by increasing propensity to save and invest. This calls for change in the mind-set to limit oneself to needs only. And to fight inflation collectively, we need to remove the consumption-investment paradox. To learn how to spend judiciously can increase efficiency, productivity and capacity.

We will require no contingency measures if we learn to say no to many things in our daily lives in order to achieve long-term objectives of owning a house and paying for our children’s higher education.

There is, of course, some merit in microfinancing like that of Bangladesh, which has proved to be a success story worth replicating elsewhere in the world including Korea and India.

Professor M.M. Goel,
ICCR Chair Professor of Indian Economy, Hankuk University of Foreign Studies, Seoul