Starting to see senseAsked by an opposition lawmaker about Korea’s economic crisis in an interpellation session Monday at the National Assembly, Hong Nam-ki, deputy prime minister for the economy and finance minister, expressed concerns as deep as he felt during the global financial meltdown in 2008. The stunning remarks came a day after he posted a slew of troubling information about our economy on Facebook.
On Facebook, Hong posted his thoughts about a recent G-20 finance ministers meeting in Washington he attended. On the economy, he singled out sluggish exports and imports as the main reason for our economic slowdown. He underscored the need to solve the problem by raising labor productivity, fostering a shared economy and services sector, and accelerating deregulation across the board. “That is a very tough challenge for us,” he said.
Hong highlighted the need to take “extraordinary steps” to help the economy rebound. Citing the case of France, which surpassed Germany in terms of growth rate and reduced its jobless rate to the lowest point in 10 years through labor reforms, he stressed the importance of simultaneously pursuing reform in the labor, education and government sectors. “Growth potential should be raised by productivity,” he added.
Hong’s comments were in sharp contrast with his past mantra that “our economic fundamentals are strong.” We welcome his changed perception, which is in tune with mainstream economists who have persistently raised the need to ratchet up productivity and ease regulations on innovations. We hope Hong helps change the government’s economic direction away from its experimental “income-led” growth policies.
The real problem comes from the Blue House. In a nationally televised address to the nation, President Moon Jae-in praised his own economic policy for “being more highly appreciated by the rest of the world” and for “improving the quality of jobs and income.” How many of us would agree? Our economy is on the verge of entering an unprecedented era of growth rates less than two percent. The growth rate gap between Korea and the rest of the world has widened more than ever. The government’s spending to create jobs only increased short-time and part-time jobs for the young and old.
And yet the Blue House adheres to its ill-conceived policies. As Prof. Shin Jang-sup at the National University of Singapore says, that’s distorting facts with ideology. As Hong says, the government must devise extraordinary measures to revitalize the economy by raising productivity and easing regulations. Otherwise, it will face a moment of truth.
JoongAng Ilbo, Oct. 29, Page 34