No time for self-satisfactionAn economy is all about psychology. When optimism is in the air, consumption increases and that fuels economic vitality. On the flip side, if pessimism prevails, the economy can make a 180-degree turn astonishingly quickly. Boom turns to bust. That is why any government will try to give hope to the people in times of economic uncertainty. Yet such attempts should not distort reality as the public needs to trust its government and its policies. A loss of trust also turns to bust.
The Moon Jae-in administration is headed in a dangerous direction. On Wednesday, Deputy Prime Minister for the Economy Hong Nam-ki, who also serves as finance minister, wrote on Facebook that “our employment situation has steadily improved since May” — based on an incremental drop in the jobless numbers for July recently announced by Statistics Korea.
Hong’s diagnosis is far-fetched. He deliberately turned a blind eye to a record number of unemployed people last month — the worst in 20 years. 1.35 million full-time jobs have vanished and people in their 40s — the backbone of our economy — are increasingly being laid off. Despite a grim reality in which one out of four young people do not have a job, Hong nonchalantly claims things are getting better.
The government is bent on praising itself despite all signs that warrant caution. In a cabinet meeting Tuesday, President Moon said that our economy has been envied by other countries in the OECD, as it is expected to record the highest growth rate this year in the group of 37 member nations thanks to “the government’s swift stimuli measures through fiscal expansion and strong push of the Korean New Deal projects.” However, he skipped the OECD’s gloomy forecast that the Korean economy will achieve a dismal growth rate — 34th among 37 members — next year.
On Monday, Moon provoked a backlash after stressing the “stabilization of our real estate market.” He was trying to address public outrage over a scarcity of jeonse apartments as a result of the government’s push to rein in apartment prices. Opposition lawmakers are attacking the Blue House for turning a deaf ear to the public disgruntlement.
To overcome an unprecedented crisis from Covid-19 and address the overheated housing market, a government’s role is important. But the Moon administration spends too much time patting itself on the back after burying its head into the sand. When detached from reality, it can hardly devise effective policies to weather the kind of economic crisis we have never seen before.