On the economy, a saint

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On the economy, a saint

Lee Chul-ho
The author is a columnist of the JoongAng Ilbo.


Former president Chun Doo Hwan died at age 90. Few who lived through his autocracy would bear apathy toward military regimes. The fury still runs deep. But from the economic perspective, Chun governed well. His many sins did not extend to the economy. Chun recruited outside experts and placed economic management under their authority. The tombstone of Steel King Andrew Carnegie reads, “Here lies a man who knew how to enlist in his service better men than himself.”

Upon receiving his appointment as Chun’s senior economic secretary, Kim Jae-ik bluntly asked Chun if he was willing to have faith in him since his plans for economy would bound to be unpopular and meet with resistance. Chun told him, “On economy, you’re the president.” Appointing the best men was just the start. The work began from then.

Economic policy-making process did not progress well at the beginning. Chun found out why. He learned that Kim, a brain recruited from the Bank of Korea, did not mingle well with bureaucrats who move up the government ranks based on their seniority. Bureaucrats used to growth-first policies did not agree with Kim’s idea of balance. They regarded him an idealist and theorist without worldly experience.

Kim — a vice ministerial-level official — discussed affairs mostly with assistant ministers from the Economic Planning Board and Finance Ministry, who were in the higher hierarchy thanks to their longer service in government. Although they maintained decorum, the complicated decision-making process got in the way. A policy proposal went through the assistant minister, vice minister and the minister and back down the ladder to arrive with the senior economic secretary. According to a taped record, Chun stepped in to solve bottlenecks in economic policy-making. He rounded up economy-related ministers and told them to directly confer with his senior economic secretary. Working-level officials also were ordered to brief and report to Kim. Chun had set the environment so that Kim could push ahead with his economic designs.

The environment is the opposite with the incumbent Moon Jae-in government. The president and his office as well as the ruling Democratic Party (DP) distrust government officials and outside experts. Two years ago, the DP floor leader and Moon’s policy chief held a private talk without realizing a TV camera microphone was on. They grumbled that government officials were not obedient and would do other things if they were not controlled.

Anyone working with conviction endured battering from the party. Former Finance Services Commission Chairman Eun Sung-soo faced harsh scorn from the DP and loyalists of Moon for the possibility of ruining the Seoul and Busan mayoral by-elections after he argued that regulations on cryptocurrency and resumption of short stock selling should be executed as planned. When resigning in August, Eun said the policies should have been upheld regardless of the risk of inviting reproach.

Chun protected his government from political and external influence. The plan of adopting the Fair Trade Act in September 1980 drew strong protests from the business and political communities. Kim argued that fair competition was essential to not just stabilize prices, but to ensure justice in society. When opponents protested, Chun would immediately ask them if they really did not wish for a more just society.

His defense protected his government evenly. After a cut in the defense budget in 1983, two armed Army generals stormed into the budget office of the Finance Ministry to protest. The Army’s influence was mighty then, with a former general as president. Chun demoted the two generals and told the budget office head to push ahead with the plan.

However, senior government officials under President Moon are feeble and weak. Hong Nam-ki, deputy prime minister for economic affairs, never had the chance to see through his beliefs.

When he opposed universal relief grants last April, Moon’s loyalists called him a remnant of a “past evil” and lambasted him until he backed down. DP floor leader Yun Ho-jung warned of a parliamentary investigation of the Finance Ministry when the office protested another universal handout earlier this month. The Blue House stayed on the sidelines.

The results show in the economic scorecard. Under Chun, the economy grew 10 percent annually with inflation at 5 percent and the unemployment rate at 2.8 percent. The country achieved its first trade surplus in 1986. The Moon administration scores poorly on the economy. Real estate policy shaped by ideological beliefs brought catastrophe to the market. Wealth disparities have deepened and unemployment increased. Korea’s hard-achieved supremacy in nuclear reactor technology has been frittered away, while electricity costs shot up due to the policy to phase out nuclear energy.

DP presidential candidate Lee Jae-myung is distancing himself from Moon’s policies so as not to lose his chance in the election. He apologized for the real estate fiasco and the frustrations of the young and people without homes of their own. He was ambiguous on the nuclear phase-out policy, saying that nuclear reactors have become a part of the economic structure regardless of the debate on the pros and cons. He has realized how cold public sentiment has become. Regardless of who wins the presidential race, Moon’s follies in real estate, nuclear reactors and income-led growth policies could invite a parliamentary hearing or special investigation.
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