It boils down to restructuring
The Economic Planning Board had been in control of Korea’s economic growth during the development era. The vice prime minister-level head used state funding and long-term economic policies to command other economic ministries and the private sector. Along with the Ministry of Finance, a rival in the bureaucracy, the EPB became the predecessor of the current Ministry of Strategy and Finance. Kang and Saenuri Party’s economic policy chief, Cho Won-dong, had been with the EPB.
EPB alums are good at the big picture but rather rough in execution. They are not as detail-oriented as Ministry of Finance officials specializing in tax and finance. So they sometimes have accidents. Right after the foreign currency crisis, when Kang served as the Blue House secretary for economic affairs and the Minister of Strategy and Finance, the government used various bold measures to boost the economy, including the policy to offer income tax exemption for the credit card usage. The purpose was to boost domestic consumption and to make taxable income transparent. But it led to the credit card crisis, and many people became delinquent borrowers.
The Korean version of a “quantitative easing” promise has a clear objective, but it is an extreme measure with considerable adverse effects expected. In short, the central bank will issue notes to do the job for the financial market. Officials who know how the financial market and the Bank of Korea work are skeptical while they understand the intent.
But the EPB are not good at details. The pinnacle of Kang’s promises is not the quantitative easing. Instead, we need to focus on the “promotion of corporate restructuring,” which came in as the first of the five strategies to boost investment. It is the first time that restructuring is highlighted in the campaign promise. In fact, the quantitative easing was proposed to secure “funds” for restructuring. He was pointing at the moon, or the restructuring, but people talk about the finger, or quantitative easing.
Restructuring is an urgent task to clean up industries that lost competitiveness and bring new energy to the economy. But it is an unpopular policy as it could make employment and markets unstable for now. But Kang’s policy is a slap to politicians and bureaucrats who are reluctant to pursue restructuring and make welfare promises to win votes. If they find Kang’s pledge painful, they should make it possible with more realistic details.
JoongAng Ilbo, Apr. 6, Page 30
*The author is a deputy business news editor of the JoongAng Ilbo.
BY CHO MIN-GEUN