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Impatience kills the economy, Mr. Chairman

Published: 25 Dec. 2024, 19:14

Park Su-ryon
The author is the industrial news editor of the JoongAng Ilbo.

President Yoon Suk Yeol would not have pulled off such daredevilry if he had any care for Korea’s wavering economy. Although he pledged to be the ultimate salesman for “Korea Inc.,” he has shown little appreciation for the complexities of trade or the importance of teamwork and negotiation. The leader who vowed to address the “Korea Discount” — the chronic undervaluation of the Korean stock market — has ironically become the main architect of its downward spiral. This is the unfortunate tale of a political novice who rose to the presidency just nine months after his political debut, only to lose his composure and sound judgment in the face of faltering newfound power.

Yoon’s decline has inadvertently boosted the fortunes of Democratic Party (DP) leader Lee Jae-myung, who now postures as a shadow president. Lee is pulling out all the stops to precipitate a snap presidential election as his legal troubles loom large. His haste is evident in his aggressive tactics of bulldozing ahead with motions to impeach anyone in his way — the president and the heads of the Board of Audit and Inspection and the Seoul Central Prosecutors’ Office — and threatening to remove the acting president.

Such rashness reflects a lack of strategic foresight akin to a commander thrust into an unexpected battlefield, particularly in handling economic challenges. The DP recently launched a task force aimed at revising tax codes unfavorable to salaried workers and is pushing amendments to the Commercial Act to bolster protections for retail investors. It has also backed government plans to eliminate taxes on financial investment incomes and defer taxation on cryptocurrency assets, moves welcomed by individual investors.

In an unprecedented move, the DP unilaterally passed next year’s budget bill with opposition-led spending cuts and swiftly proposed a supplementary budget that includes funding for Lee’s pet project: regional tokens. These populist measures have been carefully packaged to appeal to voters. There is even speculation that Lee might resurrect campaign promises from three years ago, such as introducing a handful of basic allowances and expanding national insurance to cover hair loss treatments, aimed at wooing senior voters.

The overreaching tactics and political gambits from a politician with approval ratings hovering around 37 percent go markedly out of sync with Korea’s economic realities. Next year’s economic growth is projected to stagnate at around 1 percent, with exports — the backbone of Korea’s economy — expected to gain a mere 1.5 percent, just 17 percent of this year’s growth. Businesses are struggling to plan for the year ahead, grappling with mounting challenges from Chinese competitors in manufacturing and the United States’ aggressive policies to attract investments and jobs in high-tech industries.

The U.S. incentivizes manufacturers by offering substantial benefits, recognizing their role as major employers of quality jobs. Korean companies are happily complying as their home turn has become increasingly inhospitable, burdened by high labor costs and stifling regulations. Korea’s harsh habitat for startups offers little appeal to global venture capital. Foreign capital accounts for less than 2 percent of Korea’s venture capital market. The bottom-line question is whether Korea can reignite its economic dynamism and foster companies that create meaningful jobs.

Bleak economic prospects are most concerning to centrists, who were disenchanted with both Yoon and Lee in the last election. To win over this critical voter base, leaders must prioritize the voices of industries and present a credible road map for structural economic reform, rather than rushing to implement poorly conceived policies. While Lee recently proposed mediating between proponents and opponents of Commercial Act amendments during a hearing, his sincerity is questionable, as his party has already decided to push the bill through. The DP has also forced through amendments to the Act on Testimony and Appraisal, which would compel companies to disclose business secrets if the legislature demands them.

If Lee truly aspires to present himself as a pragmatic leader focused on the public’s well-being, he must address the struggles of “Korea Inc.,” whose success is directly tied to the well-being of the common people. The sustainability of Korean businesses is synonymous with the country’s survival amid escalating geopolitical risks.

Lee must learn from the repeated failures of past leaders. Yoon’s impeachment highlights the grim consequences of unprepared leadership. The Moon Jae-in administration’s experimental income-led growth policy left a heavy debt burden on leveraged homeowners, while its hasty phase-out of nuclear reactors inflicted lasting damage on the industry and the country. Korea, now facing its second presidential impeachment in just eight years, desperately needs a leader who is either readied or ready-minded to take up immense challenges ahead.

Translation by the Korea JoongAng Daily staff.