Take Roh’s road
The author, the head of the Economic Research Institute for the JoongAng Ilbo, is an editorial writer.
“Looking back, the business environment was best under President Roh Moo-hyun. His administration at least did not demand handouts from companies and also paved the way for investment,” the late LG Group chairman Koo Bon-moo once said. Many other entrepreneurs agreed.
Roh’s lineage is back in power with his longtime friend and former chief of staff President Moon Jae-in now in his old office. Yet most businesses these days are disgruntled and demoralized. Moon himself complained that he is frustrated by slow progress on the innovation front.
Innovation growth is a policy intended to encourage corporate investment in new technologies and startups so that the economy can grow and jobs can be made. In a capitalist economy, a company that does not pursue innovation cannot survive.
There is a simple way to promote innovation. The “animal spirits” of enterprises, the innate desire of businessmen to make money, must be excited. At the same time, referees should watch the playing field carefully so that rules are not broken and the big do not overwhelm others by abusing their size and not playing by the rules.
The Roh administration, for example, pursued a bilateral free trade agreement with the United States at the risk of losing favor with its voting base of farmers and unions, endorsed LG Display to build a large-scale industrial park in Paju near the capital and envisioned turning the country into a financial hub for Asia.
Despite their progressive agenda, Roh and his team maintained communication with companies and endeavored to enlarge the market. It did not interfere with the free market in setting prices. Roh kept bureaucrats and his recruits from the progressive front pitted against one another to debate rigorously and find common ground in policymaking. That is how his administration sought a FTA with the U.S. despite strong opposition from the liberal base.
Moon and his team do not wish to compromise on their reform agenda. The president and his aides believe Roh’s reform agenda failed because the president was too soft on bureaucrats and companies. They think polarization in the economy and society has worsened as a result.
In major policy-making, voices of career government officials are ignored in the incumbent administration. Kim Dong-yeon, deputy prime minister and finance minister, may be the commander spearheading the innovation growth campaign, but the business sector and market do not see it. His role is mostly to ensure taxes are well collected and the budget is stretched.
The minister of trade, industry, and energy and the minister of SMEs and startups are the administrative windows dealing with businessmen. But those who have met the two — the former a professor recruited to uphold the nuclear reactor-phase-out policy and the latter a progressive economic professor-turned-lawmaker — say it’s like talking to a wall.
Business owners say they are confounded to learn the true feelings of Moon’s key aides in the Blue House. Most of them blame chaebol and their predatory ways for worsening inequality and economic conditions. Instead of mediating in social conflicts, Moon’s government merely reflects the demands from the labor sector.
Korean Air’s debacle underscored the outdated excesses of owner families in Korean chaebol. But a sensible capitalist society must not paint large companies as the enemy. It is hard to meet with business owners these days because big and small companies are all under some kind of probe from the tax agency, antitrust investigation units or law enforcement. Government agencies raid companies based on nothing more than small insider tip.
It is not easy to tell whether all the clampdowns have a bigger design or whether public officials are just blindly loyal to the incumbent power. But companies bearing the brunt of the clampdowns will inevitably hold a grudge against the government. They could pack their businesses up and leave the country.
Governments around the world are vying to groom innovation and protect their industries through trade barriers. Korea is the only economy hurting its own breed. The first toll has been jobs. I do not want to start a blame game, but a leader should be able to unite people to fight the hard times together.
JoongAng Ilbo, July 20, Page 28