Time for leadership
The author is a senior editorial writer of the JoongAng Ilbo.
In every crisis, there was a reliable economic commander. Under strongman Park Chung Hee, Chang Ki-young, economic chief from 1964 to 1976, was as aggressive in policy as his boss; Kim Hak-ryul (1969-1972) was knowledgeable about his responsibilities; and Nam Duck-woo (1974-1978) was credited for the Miracle on the Han. Governments change, but the economy was usually in reliable hands. Shin Byung-hyun under President Chun Doo Hwan, Choi Gak-kyu under President Roh Tae-woo and Kang Kyong-sik under President Kim Young-sam were respected by their bosses and cabinets for their conviction. The first dissident-turned-president, Kim Dae-jung, upheld the legacy of placing the best bureaucrat in charge of economic policy. Jin Nyum, Jeong Yun-churl and Kang Bong-kyun were able to turn the country around fast after the 1997 crisis.
Liberal Roh Moo-hyun did not insist on putting his people in command over the economy. He recruited veteran economic bureaucrats like Lee Hun-jai and Han Duck-soo. Businessman-turned-president Lee Myung-bak chose Kang Man-soo to fight the 2008-2009 financial meltdown. Seasoned bureaucrat Yoon Jeung-hyun followed. The list of charismatic economic leaders stops here.
The human resources pool began to thin from the middle of President Lee Myung-bak’s term. Ruling party candidate Park Geun-hye became his successor. But because of the ill will between the two, Park refused to use anyone from Lee’s government or people from past liberal governments. As a result, she placed questionable people or politicians in command of the economy.
The failures went on under the Moon Jae-in administration. The policymaking seats were reserved for people from the progressive front or those willing to uphold left-wing policies. Candidates were few. The deputy prime minister for the economy no longer feels like a position for a heavyweight. Kim Dong-yeon, the first economic chief under Moon, tried to slow the policy drive towards the left. But he could not stop policies that went against market forces and corporate interests, such as the decision to phase out nuclear reactors.
Hong Nam-ki, current deputy prime minister for economic affairs, dutifully follows orders from the Blue House. He has gotten vaguer since the economy worsened, giving the impression that he is unaware of the gravity of the situation. He is said to have been prudent about handing out cash allowances for disaster relief. Gyeonggi Gov. Lee Jae-myung and Seoul Mayor Park Won-soon took the credit by touting the idea as their own. Hong reportedly opposed a further increase in a supplementary budget. When he did so, ruling Democratic Party Chairman Lee Hae-chan scolded him and even threatened to dismiss him.
The curse of an economic crisis every 10 years has come true. The crisis has just begun. An economic team engrossed with leftist policy experiments over the last three years is being put to a test. The economic team at the Blue House is mostly comprised of politicians, scholars and liberals from civic activist groups. They have not battled a real crisis before and lack wisdom. Their teamwork is loose as each think they are close to the president.
Who is at the helm in economic policy has been unclear. The deputy prime minister for the economy was pushed aside. Presidential policy chiefs (Chang Ha-sung, Kim Soo-hyun and Kim Sang-jo) were more vocal. Economic policy design was in the hands of leftist scholars and activists. Economic bureaucrats merely assisted them. The so-called income-led growth policy — a policy not found anywhere else on the planet — became the basis for economic policy.
Incomes were stagnant over the last three years under Moon while other countries prospered. Korea ranked 34 in nominal growth in GDP last year among the 36 economies of the Organisation for Economic Cooperation and Development (OECD). A virus-triggered crisis arrived when the economy was at its weakest. The shock has been amplified. A policy chief, who knows little beyond leftist theory, and a presidential secretary for the economy, whose presence is hardly visible, cannot control the situation.
The commander in chief in economic terms is Hong. He must realign his army. He must not waver at orders from the ruling party or Blue House. He must take command in a warlike situation. At crisis times, precise and fast judgments are essential. Only a seasoned bureaucrat can do the job, not a scholar or politician who has learned the economy from books.
President Moon must relay more power to Hong. He must not consider him merely one of his cabinet members. He must regularize individual meetings with Hong and send the message that he is in full command. Then the market will have more confidence in him.
Hong must establish his own authority. If he fails to show overpowering weight and leadership or wavers at market or political demands, the economic battle cannot be won. He must restore his own voice to normalize the economy. If he feels he cannot handle the work, he should step down and make way for a more qualified figure. There are experienced veterans who have been exiled because of their loyalty to past governments. The question is whether the president will employ a relief pitcher.