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What spells success in the presidency?

Published: 30 Aug. 2022, 19:40

Kwon Tae-shin

The author is vice chairman of the Federation of Korean Industries.

What makes a successful presidency? “A true leader needs courage and the will to push forward something that is necessary,” answered former German Chancellor Gerhard Schröder in our 2015 meeting. “In some cases, even if you lose your power, you have to do something that is necessary for the country. And you need a strong will to do so.” Seven years have passed since then, but I still remember his words vividly.

Schröder is loved by Korean politicians across the political spectrum. He was the leader of the Social Democratic Party — a socialist party supported by labor unions — but nevertheless pushed labor reforms to promote a flexible market. In particular, he pushed Agenda 2010, a reform program with policies strongly opposed by unions.

Thanks to his determination and unique philosophy, Germany achieved strong reforms during his term from 1998 through 2005. After German reunification in October 1990, Schröder completely transformed Germany — which suffered from high unemployment and low growth — and led another economic boom. And yet, he failed to be reelected. It seems that the popularity of a politician and what they achieve for the people are not fully in synch sometimes.

South America had many populist leaders: Hugo Chávez and Nicolás Maduro in Venezuela; Juan Perón and Nestor Kirchner and his wife Cristina Fernández de Kirchner in Argentina; and Evo Morales in Bolivia. They all went after popularity.

When Nestor Kirchner, who took office in the early 2000s, finished his term, his approval rating was 50 percent, the highest of all retiring Argentinian presidents. His wife Cristina Fernández de Kirchner was elected as his successor. The decade of the couple’s presidencies was an era of populism. The minimum wage increased by an average 10 percent annually while the number of public servants doubled. They increased pension payouts and introduced a universal subsidy for a child.

Their approval ratings remained high, and so did the country’s fiscal deficit. Argentine’s spending-to-GDP ratio soared to 44 percent from 23.5 percent in 2003. They satisfied their greed for popularity by risking the country’s finances. To come up with resources to finance populist policies, they increased tax burdens on private companies and even nationalized some businesses. Good quality jobs disappeared and foreign investment plummeted. Such vicious cycles are common in populist governments.

Korea is no exception.

The Korean economy was hurt by the Covid-19 pandemic and the Ukraine war, but the country was already on a path similar to some South American countries. The number of public servants skyrocketed, while jobs funded by government budgets were created in a reckless way. Welfare spending increased while the minimum wage rose sharply. As of the end of 2021, Korea had more than 1.157 million public servants, 127,000 more than in late 2016. For the first time, the central government’s payroll for public servants exceeded 40 trillion won ($29.7 billion). The number of workers at public institutions increased by 100,000 over the past five years.

Many unreasonable jobs — such as a position to turn off lights in empty lecture rooms at a national university — were created. The Moon Jae-in administration did nothing to stop unions from staging illegal strikes amid the pandemic to please its supporters, fueling conflict between employers and unions. After the government increased the corporate tax rate, Korean companies’ direct investments overseas snowballed to $294.4 billion over the past five years, more than four times the investments by foreign companies in Korea during the same period. As the outgoing president’s support rate was over 40 percent, I was reminded of what happened in South America.

It’s been 100 days since President Yoon Suk-yeol took office. A successful presidency is not determined by approval ratings. Even if he or she is unpopular, a courageous leader who pushes reforms for the sake of national interests will be evaluated by history as a successful president. We must support the government so that it can push forward bold reforms.

A successful president should make a country with strong national security, a country that global companies want to invest in, a country full of quality jobs and a country where the people live happily. We are curious to see what scorecard President Yoon will receive after five years.
Translation by the Korea JoongAng daily staff.