Economic expertise is keyPresident Moon Jae-in, having entered the latter half of his five-year term, will reshuffle the cabinet next week. Some of the politicians being replaced will be those wishing to run in the general elections in April. He will also be realigning his second-half team. As a reshuffle reflects the governance direction, Moon must show his devotion to the economy.
Moon’s approval rating has halved since he took office in May 2017. The disappointment has been mostly to do with economic policy. Income-led growth policy aimed to balance wealth disparities has brought about the opposite result. A steep rise in the minimum wage and a universal cut in working hours have nearly wiped out the self-employed and cut jobs for those in their 30s and 40s, further worsening income inequality. The sagging economy is buttressed entirely by public spending. But there are doubts about how long debt-financed growth can be sustained. Real estate policy that went against market principles has widened the wealth gap between Seoul and other regions as well as between the home rich and the rest of the population. Without a complete makeover in economic governance, Moon could graduate with an even worse report card.
The most important appointment is the cabinet head — the prime minister. The candidate should be well versed in economic affairs and the market, as well as bear the leadership drive. Some names from the political circle have been floated. No matter how competent he or she may be, the prime minister won’t be able to fully demonstrate their capabilities if the Blue House does not delegate the full authority.
In theory, the deputy prime minister and finance minister is in charge of economic affairs. Former Deputy Prime Minister Kim Dong-yeon repeatedly called for an equal focus on innovation along with income-led growth in order to drive the economy. But he was mostly ignored. His successor Hong Nam-ki wavered between the Blue House and the cabinet and failed to win confidence from either. Economic policies mostly came from the Blue House. Out-of-touch comments and perspectives from President Moon’s aides often irked public sentiment. Policies aimed at stimulating the private sector cannot come if they are out to please the president.
The economic conditions and prospects ahead are unclear. There is a lot of work to do. Deferred structural reforms should be carried out, and market confidence must be revived by enabling companies to invest freely. The reshuffle should be prioritized to seat the right commander of the economy. Once the commander is in place, the helm should be entirely transferred.
JoongAng Ilbo, Nov. 27, Page 32