A rotten Chuseok

The long Chuseok holiday is over. Some lucky people had Wednesday off. But the less lucky ones had to drag themselves back from laborious trips to their hometowns and return to work yesterday. One of the country’s biggest holidays was completed. But somehow the holiday mood was absent. It may have been because Chuseok - Korea’s version of Thanksgiving for a good harvest - came earlier than usual, before fruits and crops were ready for harvest. Instead we had to prepare our holiday meals with half-ripe or greenhouse-produced farm products.

But the sense of our glasses being half-empty may not have been due to the earliness of this year’s holiday. We may not feel a sense of ease or satisfaction because of uneasiness about our future. Those who were able to visit their hometowns were actually the fortunate ones. There were many people who had to stay home because they were without jobs and did not have the money to go home or bring gifts to their relatives. They may have given a sigh of relief that they could blame it on an unseasonably early Chuseok. The real reason for skipping their annual homecoming was too painful to admit.

Bank of Korea data on national income is another crude reality check on the state of the Korean economy. Real on-quarter economic growth in the second quarter was 0.5 percent, the lowest in 21 months. The total monetary value of products produced during the second quarter contracted from the first three months of the year. The output edged up 0.5 percent in volume but decreased 0.4 percent in value, which means that less money was earned despite a growth in actual production. Exports brought in less profits when converted into the local currency due to the won’s appreciation against the U.S dollar. Corporate earnings were hurt both at home and abroad.

The mood at companies, both in the executive suite and on the work floors, can hardly be good. Many did not get holiday bonuses this Chuseok. Those who did had to settle for a more modest bonus than in years past. Therefore, gifts had to be economized. In fact, the drastic drop in consumption that occurred following the Sewol ferry sinking never bounced back fully. The usual Chuseok boon was even absent this year. Private consumption fell 0.3 percent in the second quarter from the first. The pall from the Sewol crisis has gone on longer than expected. The government’s stimulus actions did not arrive fast enough to fan a Chuseok shopping spree. Few are ready to open their wallets, Chuseok or not.

The much-publicized government stimulus actually remains rhetoric. Only a few measures were implemented and they required some time to have any impact. Many of the stimulus measures dreamt up by the government demand National Assembly approval. They are gathering dust because the National Assembly has not done any lawmaking since the Sewol sinking in April. There have been zero laws on the economy passed since then. All the stimulus actions announced by the government became no more than rhetoric. Politicians have been too busy wrangling over a special law to investigate the Sewol sinking to have any concern for the public. They sent the Korean public off to their Chuseok holiday empty-handed. That is the real reason why the holiday was spent in bitterness and low spirits.

Worse, if politicians continue to dither and waste time arguing about the Sewol investigation, green shoots of recovery in the real estate market could die. Then it will become a long time until we see any pickup in domestic demand.

Finance Minister Choi Kyung-hwan made a public plea before the Chuseok holiday asking politicians to return to legislative work and pass economy-related laws because “the economy is debilitated.” He may have been referring to second quarter data. Industrial activity, which grew 2.2 percent in June, fell 0.2 percent in July. The country’s industrial activity could come to a standstill if it continues to slow at the current pace. Economists and analysts are all warning of a structural downward spiral. They are not crying wolf, given weakening signs of exports on top of a prolonged slump in domestic demand.

Taking something away after it is given is cruel. Since Choi took charge of economic policy, various stimulus actions were trotted out. He marched boldly onto an “uncharted path” of aggressive stimuli measures despite criticism and concerns. If all these endeavors are totally wasted because laws are delayed, who will the people blame? Will it be the government for tantalizing them with promises of stimulus? Or the opposition lawmakers who used the laws as political bargaining chips? The people are still watching.

JoongAng Ilbo, Sept. 10, Page 20

The author is an editorial writer of the JoongAng Ilbo.

by Kim Jong-soo