Maybe our last chance
Japan did whatever it could during the so-called lost decades. It spent astronomical amounts to stimulate the economy, sending its national debt ratio to over 200 percent of its gross domestic product. It kept interest rates at zero percent and experimented with quantitative easing for the first time in the world. Yet nothing worked. It failed because the fiscal and monetary expansion were not accompanied by industrial restructuring to hone efficiency and generate new growth.
Poor leadership and political instability are the primary hurdles to any reform campaign. Reforms ask for pain and sacrifice. They are vehemently resisted by the industries and people. But reforms must be carried out so that fewer people in the longer run are hurt. Strong leadership and political solidness can combat resistance. Japan’s politics in the 1990s were morbid. The ruling party was divided with no commander. The opposition was entirely engrossed with capturing the ruling power. That is why structural reforms were never made first priority.
Korea today is the spitting image of Japan in the 1990s. The ruling party is a train wreck and the opposition has its eye entirely on the next presidency. Politics has long lost its primary function of creating a social consensus. Everyone knows the importance of reforms. We all agree that there is no future for this country unless the outdated ways in the public sector, labor market, education, and financial field are overhauled. None of the governments have succeeded in implementing structural reforms because of dysfunctional politics.
Another major stumbling block to reforms is deep-seated distrust and social conflict. An unpublished report by the Presidential Committee for National Cohesion in 2016 concluded that Korea was not just an enraged, but a resentful society. People have become paranoid, distrusting, and resentful over inequalities.
They are more than merely quarrelsome: they want revenge on scapegoats. Social resources of trust, norms and networks have not advanced to the levels of economic standards. The current politics and leadership cannot handle such a bickering and untrusting society.
It is no wonder the public agenda on reforms has made little progress.
To make matters worse, the leadership removed from power yesterday delivered to the nation a scandal of unimaginable scale that brought international disgrace to Korea. Confidence in the president and government has been quenched. The social divide between the conservatives and liberals worsened during the impeachment process. Tough reforms are impossible when society is so polarized.
There is of course a simple solution to avoid the path Japan wandered down. The country must end conflict and normalize politics.
Without unity, the Korean economy cannot be saved from sinking. March 10, 2017 could go down in history as a milestone for Korean politics. It could also decide the fate of the Korean economy. If society does not try to restore unity, there is no hope for the country.
That task is up to the presidential candidates. They must strive for social unity more than votes. I believe in our people’s judgment. They are innately resilient and devoted to this nation. Our presidential aspirants must appeal to the best side of the Korean people to realize the politics of unity.
JoongAng Ilbo, March 10, Page 28
*The author, a former editorial writer of the JoongAng Ilbo, is an adviser to the Korea Institute of Finance.