The sentimental president

President Moon Jae-in made a speech at the National Assembly on Thursday. The public’s attention was focused on whether he would change the direction of his administration’s economic policy given South Korea’s noticeably low growth and high jobless rate compared to the mainstream economies of the world. We hoped for a dramatic reversal of the government’s radical experiment of so-called “income-led growth,” which aims to boost the economy by raising wages of people with low incomes and creating jobs in the public sector.

His address fell short of those expectations. Moon insisted on the legitimacy of his administration’s economic policy. Stressing co-prosperity, he insisted that we cannot go back to the days of concentrating on growth alone, which deepened economic polarization and inequality among the people. Distribution was the real issue, he said. He went so far as to underscore the need for the government to take responsibility for the livelihoods of citizens from birth to death and for the corporate sector to exercise social responsibility so as not to leave anyone behind. “That’s a good model for a caring state,” he said.

Moon said his administration has raised next year’s budget by 9.7 percent to 470 trillion won ($414.5 billion), which includes allowances for raising children. The government also increased the budget for creating jobs to 23.5 trillion won, a 22 percent increase from this year.
Inclusive growth is an economic concept widely accepted by international organizations. Considering the widening income gap and the need to improve the social safety net in our society, the government needs to correct those areas for sustained growth of the economy. But the government should not forget what happened to Venezuela and Argentina after their governments concentrated on sharing an economic pie without caring about growth.

We are disappointed at Moon’s speech as it was devoid of feasible ways to find growth engines for our economy. A bigger problem is his adherence to policies that are clearly failing. The number of new hires has decreased and income gap widened.

As Moon mentioned in the speech, our mainstay industries are suffering heavily from ever-worsening external environments. The time has come for the administration to change course. It must slow the pace of minimum wage hikes and loosen up on the 52-hour workweek, while endeavoring to speed up deregulation and deal with militant unions’ over-the-top demands. The government cannot tackle an economic crisis with sugary sentiments.

JoongAng Ilbo, Nov. 2, Page 30