Tallying the losses

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Tallying the losses

The president has doubled down even as the public is getting more and more outraged with the scope of the wrongdoings and harm she had caused over the last four years.

At worst, Koreans may have to put up with her for nearly 500 more days. Imagine the toll on the country. My instinct as a business journalist tempted me to do the math on social costs.

I asked around about the potential social costs of 15 months of big protest rallies. Every public and private institution politely turned me down saying they could not make such an estimate.

So I looked for clues from the big rallies in 2008 triggered by the fear of mad cow disease from imported U.S. beef. The Korea Economic Research Institute published a book on the social cost of candlelight vigils. Direct damages came to 668.5 billion won ($565 million) and national losses were 1.93 trillion won, adding up to a final figure of 2.6 trillion won.

The protests lasted 61 days, from May 2 to July 1. Some 1,736 rallies across the country involved 773,794 people and 1,056,060 riot police.

Production disruptions from participation by umbrella unions aligned to the Korean Confederation of Trade Unions translated into output losses of 35.6 billion won, and public expenditure in financing riot police reached 58.5 billion won.

The toll on the economy from prolonged social unrest reached 1.35 trillion won and delay in public projects 570.7 billion won. The total cost included damage from traffic control and business disruptions by rallies. It did not factor in any psychological stress on the people.

The institute projected that the social costs excluding direct damage could have reached over 7 trillion won if the mass protests continued for a year. If protests proliferate and drag out, the financial toll on the economy from a stalemate in governance snowballs.

Let’s go back to the ongoing protests over the Choi Soon-sil scandal. The Saturday rallies that gained momentum from Oct. 29 already topped 1 million on one Saturday. As many as 3 million are expected to turn up this weekend.

As long as the president clings to her job and no dramatic solution is evident, the number of protesters could multiple. Weekend protests could spread onto weekdays, and physical clashes could take place.

If the upheaval continues for a year, the financial toll will skyrocket. KERI declined to make an estimate this time saying the nature of the protests is different. But under the same terms of 2008 unrest, the cost could reach billions of dollars.

The social costs could be much bigger than 2008 because economic conditions at home and abroad are worse. The legislative and executive arms will go their separate ways if the president stays recalcitrant.

Political grounds would be dominated by conflict and hostility instead of cooperation and harmony, a recipe to ruin the economy. The fissures have already begun to spread.

The budget to finance a so-called creative economy that turned out to be laid out for the Choi clan has been sabotaged, killing the habitat for startup companies. The four bills to reform the labor sector have gone down the drain.

A proposed bill on next year’s budget of 400 trillion won is the last thing on the minds of the lawmakers. Prospects for the economy next year are grim. The Ministry of Strategy and Finance is mulling downgrading its growth outlook to under 3 percent for next year, the poorest estimate under the incumbent administration.

The external front is even more dicey. Worries over the victory of Donald J. Trump in the U.S. presidential election have added to volatility in international markets. Interest rates have shot up and the won is in a downward spiral. Household debt and currency markets could build up to a liquidity crisis.

Household debt could wreck the economy and the government may have to run to Japan and the U.S., pleading for currency swap to fight a liquidity crunch.

In return, Seoul may have to yield to Washington by paying more for U.S. armed forces in Korea and rewriting the bilateral free trade terms to be more favorable for the U.S. Tokyo could strongarm us to remove the comfort woman statue in front of the Japanese embassy in Seoul.

If Park stays in the office for another 15 months, the social costs could reach 10 trillion won, or 21.5 billion won a day. The figure could be astronomical if the psychological effect on the public was included.

The cost is too heavy and the benefit worth very little: sustaining a president. So we beg the president to make the right decision before she completely wrecks this country. But we fear the president will never change her clueless ways. She may even blame the ruin on the public for persisting with the protests.

JoongAng Ilbo, Nov. 24, Page 34

*The author is an editorial writer of the JoongAng Ilbo.

Yi Jung-jae
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