Finding a breakthrough in restructuringHeading to the presidential office at Yongsan Wednesday, President Yoon Suk-yeol warned of a global economic crisis. “Every country is treading on thin ice,” he said. We welcome his perception of the crisis resulting from the worst inflation since the 1970s. But the shocks from high prices, high interest rates and a strong dollar cannot be resolved easily.
Prime Minister for Economic Affairs Choo Kyung-ho, who also serves as finance minister, has proposed a united battle against the crisis. His proposal was followed by the People Power Party’s call for radical deregulation. The government must pay heed to Choo’s emphasis on restructuring of the five key areas of the economy: the public sector, labor, education, finance and services. The finance minister urged the National Assembly to support the new administration’s crusade to win the battle.
Choo’s underscoring of the five major sectors carries great significance. Our past governments relied on a conventional approach based on more spending and lower interest rates. But such methods are not affordable as a result of the Moon Jae-in administration’s spending splurge over the past five years. The new government may have to raise interest rates for a while to help combat the surging inflation.
A breakthrough can be found in changing our economic fundamentals. In fact, our economy cannot rebound by expanding fiscal input or lowering interest rates anymore. The decline of our growth rate to the one-percent range is further exacerbated by ultralow birthrates. Korea’s competitiveness has dropped to 27th in the world from 23rd in the new IMD World Competitiveness Index.
The time has come for the country to escalate its potential growth. A primary tool for the goal is a restructuring of those five fields. Due to the previous administration’s relentless pursuit of a big government, the public sector expanded too much. Frequent financial frauds as seen in the Lime and Optimus cases reflect the backwardness of our financial system.
Revolutionary change of mind is the answer. After former Financial Services Commission Chairman Lim Jong-ryong proposed to scrap government regulations by as much as 50 percent, former Regulatory Reform Committee Chair Suh Dong-won joined the move by saying, “Deregulation is also an investment.”
But Yoon must not blindly trust public servants who skillfully report to their boss. He must install a daily situation board and demand concrete accomplishments from government ministers. Only then can he avoid the failed paths of past administrations. Lawmakers also must roll up their sleeves to help the government successfully overcome the crisis.