Time to change economic policy

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Time to change economic policy

When you get lost, you should return to where you started. The same applies to the Moon Jae-in administration’s economic policy. Kim Kwang-doo, vice chairman of the National Economic Advisory Council, who designed economic policy for President Moon, urged him to return to the human-centered growth policy Moon vowed during his campaign — instead of adhering to his “income-led growth.” Of course, it would not be easy to change the administration’s signature policy overnight. But the time has come to change course.

First, Moon’s income-led growth has lost in the frame war as claimed by economic circles. The government stresses that the minimum wage hikes are just one of its policy tools to achieve income-led growth. In fact, the administration has been implementing policies to lessen growing burdens in housing, medical services, education and telecommunication. But wage hikes are a major symbol of the income-led growth policy. The relentless pursuit of wage increases ended up hurting small merchants across the country. The policy has turned into an emblem of the administration’s pro-labor, anticorporate stance.

Second, the income-led growth policy demands excessive fiscal input as the government simply tries to absorb the shocks from wage hikes with fiscal spending. That is not desirable or sustainable.

Third, the income policy gives the public an illusion. Kim Dae-hwan, a former labor minister in the Roh Moo-hyun administration, said, “It only feeds them a fantasy that their incomes will grow naturally.” A policy motto should differ from campaign catchphrases. The government can hardly plea for pain-sharing later.

Fourth, the policy damages the government’s ability to timely react to a looming crisis. The Blue House asks the public to wait until the minimum wage hike bears fruit. But the already released data tells the truth.

Last, reality is always more powerful than theory. Former Labor Minister Kim warned against justifying policies based on theories. The opposition Liberty Korea Party has demanded that three proponents of the income-led growth — Jang Ha-sung, President Moon’s policy chief, Kim Soo-hyun, secretary for social affairs, and Hong Jang-pyo, chairman of a special committee — all step down. But more important is returning to pragmatism. Former President Kim Dae-jung underscored the significance of mixing the sense of a scholar and a merchant to devise government policies. The Moon administration must ask itself if it has both.

JoongAng Ilbo, Aug. 25, Page 26
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