A lost decade
The author is a senior editorial writer of the JoongAng llbo.
Loyalists of President Moon Jae-in and former President Park Geun-hye may hate me for saying this. But the two have a lot in common. First, they did not communicate with the people, and they enjoyed watching the people wrangling over which side they are on. They are similar most in terms of economics. Neither are well versed in economic affairs. Due to a lack of interest in economics, their policies were often pushed back in prioritization. Both were also engrossed in erasing the remnants of the past. They wished to undo the policies of the former governments, win the elections, make achievements on inter-Korean relations, and reform the prosecution.
They took economic affairs for granted. As the economy slowed under the Park Geun-hye administration, disparities deepened. Yet the president was not worried. Since she merely read the reports by her aides, she stayed sanguine about the economy. The so-called “creative economy” — a campaign slogan she chose to replace “economic democratization” — could not be explained even by the government offices of economic affairs.
Moon chose to wean the country off nuclear energy as he cherished environment. He pressed with income-led growth policy to prioritize distribution over growth. Naïve wishes to protect the economy and help the needy cannot guide the world’s No. 10 economy. When things did not work out as hoped, the innocent wishes turned to stubborn obsession. I had been appalled by a thought from a scholar backing the income-led growth policy. He argued that since the country’s per capita income is $30,000, everyone would be happy if the government evenly distributed $30,000 a year to the people. The concept is purely socialist. There were no ideas to raise the national income to $40,000 or $50,000. Korea cannot keep up an income of $30,000 if it stays in the income level as if a frog in the pond amidst the wave of a fourth industrial revolution.
If the two presidents did not know the economy well, they should have hired people who did. But they did not. Park excluded government officials or experts who had worked for the former Lee Myung-bak government. She also disapproved of the choices from the liberal Roh Moo-hyun government. A senior member in the former governments became demoted or pushed out. Choices became small since she left out talent of the past 10 years. The economic team under Park was the weakest. None showed any of the leadership, vision or resolve. Korea wasted a critical moment as a result.
Moon’s human resources pool was equally shallow. He led the economy with the experimental concept called income-led growth, which was approved by a minority even on the progressive front. The experiment went on for five years. Despite the worsening housing condition, he insisted on keeping politician-turned-land minister Kim Hyun-mee on at the helm of real estate affairs for three years and a half.
In a column in 2016, Chang Ha-sung — current ambassador to China who had spearheaded the income-growth policy as Moon’s first policy chief — pointed out that Korea’s debt-to-GDP ratio hit 39 percent in the third year under Park. He raised alarm about the potential impact on Korea’s fiscal integrity, which was a strong pillar for the economy. But the ratio has hit 47.3 percent under President Moon. In the same column, Chang, the ambassador, also warned about a surge in consumer debt under Park. In fact, household debt increased by 380 trillion won ($322 billion) under the Park administration, but it increased by greater 460 trillion won under the Moon administration. We wonder what Chang would say now.
If Kim Dong-yeon, the first deputy prime minister for economic affairs under Moon, wishes to go ahead with running in the presidential election, he must first apologize for pushing ahead with a steep increase in the minimum wage and the universal application of the 52-hour workweek. He argues real estate affairs would not have become so bad if his advice was heard out. But he is just excusing himself. Incumbent Deputy Prime Minister for Economic Affairs Hong Nam-ki has been raising challenges to demands from the ruling party. But it’s too late. He is merely building up excuses to avoid criticism at the end of Moon’s presidential term. The chiefs of the Korea Electric Power Corp. and the Korea Hydro & Nuclear Power Corp. — who are suddenly calling for the resumption of the construction of nuclear reactors — also are laughable after keeping so silent for so long. It is a pitiful scene of a bureaucratic society at the dawn of a presidential term after serving the president, not the people.
The economy ran at an average 2 percent range over the 10 years under the two presidents. Per capital income which stood at $27,351 in 2013 rose to $31,881 last year, gaining around 2 percent per year. Luck was not with Moon, either, due to the outbreak of Covid-19. Taiwan grew by an average 4.5 percent over the last five years. At the current rate, Taiwanese per capita income will be bigger than ours. When looking back the early 21st-century economy, future generations will likely call that period a “lost decade” after bundling up the Moon and Park governments regardless of their sharp ideological differences.
A government’s achievement is defined by the economy. Dissident-turned presidents Kim Young-sam and Kim Dae-jung came out of the 1997 financial crisis very differently. Kim Young-sam was blamed for sparking the international bailout crisis whereas Kim Dae-jung is remembered for combating the crisis. Lee Jae-myung, the presidential candidate for the ruling Democratic Party, hopes to steal the conservative slogan of being a president on economy.
But whether he really means it cannot be known. Vain policies will only undermine confidence. There is no sight of economic experts on the campaign team of opposition People Power Party presidential candidate Yoon Suk-yeol, either. His economic platform is also unclear. If he becomes the president while his head is filled with affairs other than the economy, the lost decade could be extended to 15 years. If the economy fails, so does the government — regardless of how well it does in other affairs.