Redefining a ‘revival’
During a meeting of her senior secretaries, President Park Geun-hye said she felt sorry for the Korean economy. She compared the delayed passage of three bills to stimulate the real estate market to noodles that have sat too long in their broth. “I feel bad to see the economy livening up after consuming those (swollen noodles).” The allegory was meant to underscore her frustration over a delayed recovery of the economy and a determination to reach the light at the end of the tunnel. “Our top priority this year should be given to economic recovery,” she emphasized. She promised to bolster domestic demand by pushing ahead with a reform agenda to pave the way for stable growth over the next three decades. In her third year in office, the president has finally set her focus on the economy.
I can’t help feeling skeptical. I can’t really figure out what Park means by an economic revival. When she cited the three real estate-related laws, she may be thinking of way to give an immediate boost to the economy. Then she talked about building a foundation for stable growth over the next 30 years, which would suggest structural reforms. Maybe she’s simply ambitious enough to do anything that is good for the economy in either the short or long term.
But when a goal is ambiguous, confusion is almost guaranteed. Policies could waver and ultimately be derailed if their target is not clear. Under the president’s initial slogan, government offices have fallen over themselves to trot out policies that relate to a so-called creative economy. Now the slogan will change to economic revival. The president has raised a new standard and ordered ministers and bureaucrats to pledge allegiance to it.
When the government refers to economic revival, it mostly means stimulus. Stimulus usually involves artificial means to pump up the economy. When the president first pledged to restore the economy at the beginning of the year, there were expectations of stimulus policies. Her deputy prime minister for the economy, Choi Kyung-hwan, late last year said outright he would use all possible fiscal and monetary means to accelerate growth.
This year the term has been slightly tweaked to be more comprehensive, broad - and vague. This year’s economic policy outline placed top priority on reforms in four areas: labor, finances, the public sector and education. In fact, structural reforms normally cannot be associated with economic revival and stimulus measures. Economic revival under this administration suddenly took on a new meaning - all-encompassing actions to accelerate growth for the short term and structural reforms for long-term sustainability. Park nevertheless insists her government will focus on both fixing and reviving the Korean economy.
The deputy prime minister and finance minister who had championed immediate economic recovery and promised to come out with guns blazing now primarily talks about the reform agenda. He says there is no future for Korea without the reforms and the government will stake everything to push ahead with them. He advises the people to give up hope for the fast-paced growth of the past because that is no longer possible in an economy as mature as Korea’s. Instead of resorting to artificial means to stimulate the economy, the government will focus on bolstering potential growth through structural reforms. This would suggest that the administration has given up on any immediate pickup in the economy. We may have to assume that when the government talks about economic revival, it actually means structural reform to improve the economy’s potential in the future. It is a wonder how the same phrase can take on an entirely different meaning in just a year.
Park said the government has built the foundation over the last two years and now has to stack some bricks and raise a building. But she is mistaken. Restoring the economy was never her priority. In the first year of her administration, Park emphasized so-called economic democratization or more equality through increased social welfare spending. There was no foundation building going on. On what does she expect the government to raise its new building? Moreover, it is entirely unclear what the government is supposed to build. Economic policies under this administration have been totally muddled and, arguably, botched. Nothing has been achieved. The Sewol ferry sinking and slow global economy also dealt blows to the economy. Instead of chanting a half-hearted cheer to revive the economy, Park would be better off talking frankly with the people to find a practical way to mend and boost the economy. Now I feel sorry for the economy too - because our leadership is so unsure of what it’s doing.
JoongAng Ilbo, Feb. 25, Page 28
*The author is an editorial writer of the JoongAng Ilbo.
by Kim Jong-soo