The economy does not run on ideology

Kim Dong-ho
The author is the economic news editor of the JoongAng Ilbo.

“The performance on security and economic management was overwhelmingly excellent under the liberal administrations of Kim Dae-jung, Roh Moo-hyun and Moon Jae-in,” said former President Moon on Sept. 19 in a speech to mark the fifth anniversary of the joint inter-Korean declaration in Pyongyang. His remarks defy the usual perception that a conservative government is better at economic management than a liberal one. The shocking comment from a former president who “wished to be forgotten” after retirement is too biased to be agreed upon by many.

Judging economic performance based on ideology — conservative or liberal — is disputable because the Korean economy is susceptible to external factors regardless of who governs the country. The economy can run well or not, depending more on global economic environments than on domestic policies.

For instance, the external economic conditions under the Moon administration were better than those looming over the incumbent Yoon Suk Yeol administration. During Moon’s presidency, all economic players could borrow money thanks to ultralow interest rates. The exchange rate between the Korean won and the U.S. dollar was also stable, not to mention international oil prices. There were no major upsets like the Russia-Ukraine war or the Middle East conflict. The usual factors of interest rate, exchange rate and petroleum prices did not burden the Korean economy particularly vulnerable to external variants.

Trade conditions are worse than before. Korea has more trouble exporting its products due to the intensifying hegemony war between the U.S. and China. Korea is rapidly losing its once-dominant market share in China. Its smartphones and cars can no longer stand against local names in China. Samsung Electronics’ share in China’s smartphone market is less than 1 percent now. The same goes for Korean cars. Korean companies can no longer rely on the Chinese market. The chip sector is also shaking in the face of China’s rising competitiveness.

Everyone — except for the policymakers during Moon’s presidency — worries about the negative impact on the economy from the rapid rise in the minimum wage and real estate policies focused on repressing the demand. The officials under the president are even being investigated for distorting statistics related to income, employment and real estate. National liabilities also stretched by more than 400 trillion won ($294 billion) during Moon’s five-year term.

Our founding president Syngman Rhee laid the grounds for the market economy and former president Park Chung Hee pulled the country out of war-torn poverty through the Miracle on the Han River. The Chun Doo Hwan administration fueled economic growth through stable prices, and the Roh Tae-woo administration expanded Korea’s economic frontier through the normalization of ties with members of the Eastern Bloc. The Lee Myung-bak administration further broadened Korea’s export front through free trade agreements.

Apartment prices under the Moon presidency doubled because his administration churned out one regulation after another, judging that the real estate measures under the Roh Moo-hyun administration had not been strong enough. In contrast, the housing market under conservative presidents Lee Myung-bak and Park Geun-hye was relatively calm. The Kim Dae-jung administration rescued the economy out of its near-default crisis and the Roh administration initiated a free trade agreement with the United States. The record shows that the government, liberal or conservative, placed practicality above the ideology in managing the economy.

Despite an all-engaging policy under President Moon, Pyongyang advanced its nuclear and missile weapons program. It even called Moon a “baked bull head” and blew up the inter-Korean liaison office in North Korea. Famous actress Lee Young-ae observed that the country could be a better place for children if people left the judgment on former presidents to history and lived in harmony without hatred toward one another. The economy can move forward when they demonstrate harmony, especially during tough times like today.

The conservative Yoon administration habitually puts too much emphasis on ideology and blames the previous liberal administration for any bad results. It must pay heed to the public demand for balance to earn public confidence.