The author is a columnist of the JoongAng Ilbo.
A year ago, a former staff member under President Moon Jae-in told me the president was the most conservative person in the Blue House. Since the first team was comprised of all leftists, I thought he could have a point. But now that I think about it, he wasn’t joking. The president has been busy dropping by corporate events and sites lately with praise for chaebol Samsung Electronics and Hyundai Motor. He could have either been innately rightist or has started to seriously worry about the economy ahead of the April general election.
I too would be scared of the economic numbers these days if I was in his place. The economy is projected to grow under 2.0 percent this year, and the irregular workforce has hit 870,000, making it the largest ever, despite all the government efforts to strengthen job security. The poor economy bodes badly for the election. U.S. studies on the correlation between the economy and elections show that no president has won a second term when the economy was in a downturn. It is why U.S. President Donald Trump has been railing against the “Fed’s boneheads” to slash interest rates to zero or below amid growing pessimism about the U.S. economy.
The GDP growth rate, unemployment rate and stock price index are key figures that can replace the leadership. Economic performance becomes pivotal in the year of an election. According to Sam Stovall, chief investment strategist of U.S. equity strategy at stock research firm CRFA, about 90 percent of presidents were replaced if the stock market was bearish from July 31 to Oct. 31 before the presidential election in November over the last 50 years. Another study showed that since 1972, governments are replaced in the United States when elections are held at a time when jobless rates are high.
The economy under other presidents was above the global average, and the ruling power was able to go into a second term. Kim’s centrist government was replaced by former liberal President Kim Dae-jung because his last year, 1998, was hit by Asian currency crisis and performed 5.5 percentage points below the global average. “Korea is sensitive to growth as it has been used to rapid growth under industrialization movements, which shows in election results,” noted the institute.
The economy under President Moon Jae-in grew 2.9 percent on average over the last two years, lagging behind the 3.7 percent global average. This year, the gap is expected to widen by over 1 percentage point. Moon must make changes if he wants to win the parliamentary election next year. But no progress would be made if his rhetoric on corporate policies changes day by day. The economy moves on sentiment, and the public questions the government’s will to save the economy. The president can make his intentions clear if he changes his policy about phasing out of nuclear fuel. He would be showing that he can act out of ideological context and can be flexible according to economic needs.
His former boss and political mentor, President Roh Moo-hyun, called himself a “socialist neoliberalist.” He angered his supporting base but is now missed most among the former presidents. The stock market did the best under Roh. The president’s legacy was made by the economic revival.