Home > Opinion > Columns

Imperial leadership kills the economy

Published: 26 Dec. 2024, 19:39

Lee Sang-ryeol
The author is a senior editorial writer of the JoongAng Ilbo.

In its recent disturbing reckoning on the Korean economy, the Bank of Korea (BOK) warned that without structural reforms, the country’s growth potential will continue to falter and sink to the zero percent range by 2040.

Point taken. But to whom is the central bank addressing when there seems to be no one steering public policymaking? The Korean economy has been on thin ice since President Yoon Suk Yeol’s failed Dec. 3 gamble with a martial law decree. The chair of the Korean Federation of SMEs has been beseeching for government attention to economic woes on behalf of small- and medium-sized companies. The plea is shared by businesses of all sizes from the biggest ones to the self-employed. Korea had to seek an international bailout in 1997 after national coffers ran out of foreign reserves. Today, national leadership has gone bankrupt. The Korean won value has hit its weakest against the U.S. dollar, nearing the 1,500 threshold for the first time since the global financial crisis. “Political events are half responsible for the won’s recent crash,” said Choi Sang-mok, the deputy prime minister for economy. Chey Tae-won, chairman of the Korea Chamber of Commerce and Industry, sent letters to 116 foreign envoys in Korea to assure the Korean economic system is intact, but foreign investors are not convinced.

According to the Heinrich’s Law, a single major incident or disaster can be preceded by as many as 29 minor incidents and 300 underlying risk factors. The theory warns against negligence to obvious danger signs.

In hindsight, ominous signs of the president’s deviance had been apparent. Flip-flops and sudden moves in policymaking became frequent under his government. The methods of introduction also were too aggressive without room for disagreement or discussion.

The well-known examples of this are the abrupt decision to axe the government budget for science research and development (R&D) and the verdict to stretch medical school admissions by 2,000 seats a year. The radical moves were rarely accompanied by good reasoning. The bigger problem was that there was no one in his government or party who refuted him. Everyone around him were yes-men who fed his ego and drove the insane idea of invoking the military regime legacy of martial law. The prime minister, members of the cabinet, the head of the National Intelligence Service and his chief of staff were powerless in stopping him from causing a national crisis.

Can we be sure the Democratic Party (DP) and its likely presidential contender Lee Jae-myung will be any better in staving off the temptation of exploiting presidential power? If the DP wins the next presidency, it will command the legislative as well as executive branches to become the most powerful political group since democracy was institutionalized in 1987. The party has already been making the best use of its 57 percent dominance of the legislative seats through the landslide election win in April. It paid little respect to the government or the rivaling party. It impeached the head of the Board of Audit and Inspection, the justice minister and the chief of the Seoul Central Prosecutors’ Office. It axed the government budget for 2025 to its liking.

It railroaded the bill of handing out 250,000 won ($170) to every citizen and the so-called Yellow Envelope Law for protection of strikes in industrial sites without any care for the toll on public finance and corporate viability. The contentious bills were stopped only through presidential veto. The DP also passed amendments to the Grain Management Act that it opposed when it was the ruling power. Its members habitually ostracize government officials or witnesses in hearings. In the party, dissent was disallowed. Before the April 10 election, the party purged members disloyal to its boss, Lee. Both Yoon and Lee cannot tolerate dissidents and both People Power Party and DP members are no different in indulging their leaders’ vanity.

The answer to the problems of the economy is straightforward. As the BOK suggested, it lies in structural reforms and life in the market economy. But that cannot take place in a society under imperial political clout which is prone to the abuse of power to silence opponents and populist gambits. Unpopular structural reforms would be unthinkable in that setting. What the country really needs is a sweeping fix to politics before it really ruins the economy for good.

Translation by the Korea JoongAng Daily staff.