Then and now“Financial markets hit by rumors of a financial crisis following Kia bankruptcy...”
“Serial bankruptcies a necessary process to fix weaknesses in the Korean economy...”
“The government strongly reacted to negative reports about the Korean economy…”
These were some of the headlines leading up to early November 1997. On Nov. 22, Korea sought a bailout from the International Monetary Fund and avoided going bankrupt. National insolvency arrived that suddenly. President Kim Young-sam was not aware of the seriousness of the situation until he talked over the phone with the deputy prime minister for the economy Kang Kyung-shik on Nov. 10.
The economic command center was dysfunctional. People were stupefied. They had to take in the pain. One breadwinner out of every other house was out of a job. Companies went out of business. College graduates could not find a job anywhere. A full revival of the job market has not come about even now, 19 years later.
Those nightmarish days are being invoked more and more because our current times feel very similar. In the place of Choi Soon-sil, the corrupt friend of President Park Geun-hye, was Kim Hyun-chul, the son of President Kim Young-sam. He wielded mighty power from the shadowy wings. A former president was also charged with receiving bribes from companies at the time. The way companies paid donations behind closed doors and bribed the president hasn’t changed.
Policymakers’ stumbles in response to the crisis are also very familiar. The government and legislature had been at odds over dealing with Kia Motors, which was sinking under 10 trillion won in debt ($8.56 billion). Kang, the deputy prime minister for the economy, and Lee Hoi-chang, head of the ruling party, clashed over a choice between court receivership or a creditors’ workout for Kia. That’s not so different from the way the government wavered over how to deal with ailing Hanjin Shipping and Korea’s shipbuilders. The economic team in in a mess now as it was then. The presidential election factor is also similar.
On the external front, the United States slapped a monster trade act against Korean imports at the time. Korea Inc. is now threatened by trade barriers and protectionism from the incoming Donald Trump administration.
Still, the media trumpeted optimism about the Korean economy. State-run think tank Korea Development Institute and the Bank of Korea predicted that economic growth would exceed 6 percent even a month before the country sought an international bailout. Authorities had been plastering bandages on an economy that was breaking apart. They pitied the Japanese economy, which was hardly growing at zero percent. The only difference between then and now is that the Japanese economy has bottomed out and the Korean economy is the one that is at a standstill. The media and analysts are sounding loud alarms about the supine state of the Korean economy.
Yet politicians then and now remained oblivious to ominous signs in the economy. They are entirely engrossed in factional interests and political moves to get the upper hand. Public officials can hardly pay attention to work. The government is in a lapse.
In the meantime, interest rates are going higher and the household debt bomb is ticking. Endeavors to strengthen economic fundamentals through corporate restructuring and labor reforms lost steam. Politicians don’t care since it will be the people that have to pay for the pain at the end of the day. Politicians might start making a fuss but that depends on the extent of the pain.
Koreans stuck in a pall of gloom will not have a future if their economy loses ground. The people fill the downtown streets every weekend not just out of rage, but in search of hope of a better future. Yet there is no one taking care of their future. Livelihoods and even lives are at stake but you wouldn’t know it from our leaders.
The people are distressed but not angry, as the festive protest of one million people underscored. Psychologist Dorothy Rowe said that people who get depressed are good people. The way to relieve some of their depression is stabilizing the economy. They are too good to be betrayed by politicians as well as the president.
JoongAng Ilbo, Nov. 28, Page 28
*The author is an editorial writer of the JoongAng Ilbo.