Playing with numbers
The author is a columnist of the JoongAng Ilbo.
A Blue House spokesman flatly denied the accusation that the Moon Jae-in administration was threatening the neutrality of the statistical office. It is unbelievable that the Blue House has been accused of undermining the independence of the government body in charge of compiling and publishing data about this nation.
The fact that we cannot believe its denial is even sadder. A government that takes pride in being democratic is being accused of sacking the chief of Statistics Korea for its release of alarming numbers on the jobs front and household income that gave impetus to arguments that the government’s income-led growth policy was destroying jobs and chipping away at the incomes of people on the lowest rung of society.
It was hardly coincidence that it replaced the sacked chief of Statistics Korea with a scholar whose work championed the merits of Moon’s income-led growth policy. Outgoing chief Hwang Soo-kyeong, in a teary swansong, told her former employees not to give in to political pressure. She indicated that she became persona non grata with the Blue House because “she had not been that obedient to the people in high places.” The “people” she mentioned could be Jang Ha-sung, President Moon’s chief economics policy chief.
On May 17, 2017 — a few days before Jang was recruited by the president as his first policy chief — he posted his theory on stagnant household incomes. He argued that the fruit of economic progress did not reach ordinary Korean families because it mostly went to companies and the rich. While Korea’s gross domestic product surged by 260 percent from 1990 to 2016, combined corporate income expanded by 358 percent and gross household income by 186 percent, he said, citing data from the Bank of Korea.
So far so good. But Jang went on to refer to household income data from Statistics Korea to point out that growth in average household income during that period was nearly half the pace at 90 percent. He argued that the disparity in the growths of aggregate and average household incomes underscored the deepening wealth inequalities. His argument was printed in a liberal newspaper.
The statistical office immediately issued a press release rebuking Jang’s theory. It claimed that the total and mean numbers should not be compared because the weighted factors are different. The office also pointed to the fallacy of citing the difference in the growth of gross and average figures as reference data for deterioration in income inequality. The office explained that a Korean family in 1990 had an average 3.7 members, which was reduced to 2.5 in 2015. As reduced family size means slower growth in average incomes, the household income of a family of 2.5 is lower than in the case of a family of 3.7. The office said the growth rate in gross national income and average household income would have been more or less the same if the head count in a Korean family did not change over the span of 26 years.
The problem is that Jang has been equally stubborn. He made the same mistake lately by drawing a comparison between growth in gross household income and average household income. In a press briefing, he went back to household income history data to explain why the income-led growth policy must go on to ease disparities in wealth. He insisted that from 2000 to 2017, gross household income grew by 69.6 percent, while the average household income only grew 31.8 percent. He just shortened the time span to 17 years from 26 years, but went on with the misleading comparison to prove his point.
A year ago, his misquote was understandable. But repeating it despite the “generous” explanation from the statistical office is clearly intentional. Then he was a scholar. Now he is the chief economic policymaker. It’s no wonder the Blue House is under fire for meddling in statistics.
Kang Shin-wook, the new chief of Statistics Korea, vowed to defend the independence of the office. If the office’s “generous” explanation on Korea’s household income is deleted from its website, his words will be proven a lie.
JoongAng Ilbo, Aug. 30, Page 34