Fielding a new team
The author is the chief editor of the JoongAng Ilbo.
“I am not entirely happy, but since the confused market trusts him...” said President Roh Moo-hyun after he decided to appoint Lee Hun-jai, a champion of the market economy, as deputy prime minister for the economy in 2004. Roh also vowed to lead a government capable of creating jobs for ordinary citizens. But in 2003, his first year in office, jobs fell by 30,000 and the economy’s pace of growth halved from the previous year. His proposal for a Dutch model to reduce wage discrepancies through greater labor flexibility was met with vehement opposition from the militant Korean Confederation of Trade Unions (KCTU), which threatened to rally against Roh for betraying labor.
Roh’s long-time friend and Chief of Staff Moon Jae-in is entering his third year, typically the toughest period for any president in our single five-year term system. The Moon Jae-in administration is pressing ahead with a progressive agenda of minimum wage hikes and the 52-hour workweek cap despite enormous backlash and far-reaching damage to the economy. The president must quickly realign our governance system, or the structure of leadership and the decision-making process.
Handling the economy is not an easy job for a governing power whose political aspirations were mostly inspired by resisting and fighting the military regimes of the 1970s and ’80s. Former democracy movement activists view the economy with the same ideological faith that places compassion above capabilities due to their preoccupation with purity. Self-righteousness also disconnects them from the common people’s morality.
As a result, they have placed the cart, income, before the horse, growth. They thought they were helping the weak without actually knowing how an economy works. Instead of bringing more feed for milk cows and waiting for them to produce a lot of milk, they impatiently squeezed out the milk to the point of killing the cows. Progressives should be more in tune with concepts of competition, which values productivity and value-added efficiency. Instead, the invisible hand of the market has turned into the invisible fist of the state. Progressives of the old school from the industrialization and democratization period of the ’80s and ’90s are ruining the economy with their hidebound and ignorant ways.
Economic governance under the liberals must be shared with people who know the market and international trends. It would be better if the newcomers came from the business and marketing fields with experience of paying salaries and tax bills. And it would be even better if the newcomers knew something about the public sector. Public riches can hardly be expected to grow under policymakers entirely engrossed with distribution without paying heed to revenue. The economic helm should go to those oriented towards the market and business realities.
Previous presidents conceded economic governance in several ways. Park Chung Hee had the power divided between the deputy prime minister for the economy and his chief of staff. Chun Doo Hwan relied on his economic secretaries. Today’s Korean economy has become too big and complex to be placed entirely under career bureaucrats. The White House recruits experts from Wall Street and financial institutions for economic advisers, treasury or commerce secretaries.
Former deputy prime ministers and finance ministers under President Roh were all conservative bureaucrats. Through them, Roh balanced growth and distribution and sought conservative goals like the free trade agreement with the United States and corporate tax cuts. Entrepreneurs say those days were better for business. Still, they were repeatedly challenged and blocked by ruling party heavyweights and a strong opposition party.
Our market has outgrown bureaucrats’ intelligence. Creative leadership is needed to balance budgets for welfare, health and child care, as well as future growth. The economy has become a mess, enduring multiple layers of makeshift actions from government officials sandwiched between an emotional Blue House and opposition-led legislature.
Time is running out. It usually takes 35 months for an idea to be packaged into a policy subject to legislative review and become legally effective. Policy actions can only pick up toward the end of Moon’s five-year term even if procedures start immediately. Moreover, any legal proposals would be challenged in the National Assembly. Once the proportional representation system is overhauled, an opposition-led and multi-party legislature would become a fixture. Political alliances would become a must.
Moon should seriously consider recruiting a strong prime minister in charge of the economy who knows business and the markets well. The first cabinet members under Moon are also in their second year. The president could ask the legislature — preferably the opposition — to recommend a new prime minister for the economy. The prime minister could spearhead economic affairs through communication with the legislature.
The president also could consider naming a labor minister from the union-backed Justice Party to draw concessions from the KCTU on labor affairs. Why not name a business CEO as unification minister since inter-Korean business ventures are key to our future relationship with North Korea? Instead of the formal cabinet meeting, why not have the prime minister check the performance of each cabinet member as in a corporate management board?
The barriers to government office should be lowered to bring in diverse experts and voices from the field. Confirmation hearings that merely focus on finding dirt in candidates’ pasts should be changed. The activist-turned-tenants of the Blue House should become more open-minded. They must yield their stubbornness and pride, and share their power with others. Otherwise, there is no chance for a breakthrough in the poor state of the economy.
JoongAng Ilbo, Jan. 1, Page 27