Posted November. 04, 2017 07:21,
Updated November. 04, 2017 07:29
The Korean society had suffered from serious after-effects of the 1997 Asian Financial Crisis. Businesses and financial institutions were shutting down and large-scale unemployment forced millions of people in pain and despair. The newly launched Kim Dae-jung administration barely managed to escape national bankruptcy with its massive reforms and a nationwide grassroots campaign for gathering gold. Thankfully, the growth rate jumped from negative 5.8 percent in 1998 to 11.3 percent in the following year. As the saying goes, “After a storm comes the calm,” Everyone relieved such figures indicated a turnaround in the economy.
However, a shadow is being cast over the Korean society again in the face of harsh situation – the collapse of the middle class, the serious economic polarization, and the security and economic crises. Some warn that another financial crisis is looming. As a matter of fact, it takes several decades for a country to thrive, but it does not take that long for a country to fall. Unless our socioeconomic structure and public consciousness are reformed and renewed from a long-term perspective, Korea will never be able to join the ranks of developed countries.
The Korea Development Institute, the nation’s leading think tank, conducted a survey of 489 economists asking about the Korean economy. In the survey, 88 percent of the respondents said that the nation’s economy is like “the boiling frog,” describing a frog being boiled alive to die slowly. Sixty percent of the surveyed economists feared that the golden time for economic recovery is only one to three years. Nevertheless, the government is churning out only anti-corporate, labor-friendly policies by increasing minimum wage, giving permanent employment to irregular workers, and undermining labor flexibility. People-oriented economy can only be achieved by reforming regulations and sort out good businesses.
The Moon Jae-in administration is either hesitating or disregarding in carrying out the unfinished labor and public reform. They fail to view populist welfare policies as a culprit to exhaust the national budget. The bigger problem is that they do not recognize the crisis as a crisis. The presidential office dismissed the possibility of economic crisis, saying, “Foreign exchange reserve, corporate debt and current account balance are good.” In many ways, the current situation is very similar to the situation twenty years ago.
Despite serious circumstances in and outside Korea, the government has not shown its capability to overcome difficulties by bringing the people together as in the Asian financial crisis in 1997. It has merely absorbed in solving the problems accumulated in the past at once in the name of abolishment of deep-rooted evils. But, what will happen to the legislation on reform and people’s livelihood if the ruling and opposition parties are at odds over everything in the National Assembly? President Moon should lead by example to show his leadership to prevent another financial crisis.
To save the Korean economy from a low-growth trap, our paradigm should change first. Now is not the high growth period led by the state. Take Silicon Valley, home to the world’s major high-tech corporations. Government regulations and intervention need to be reduced. And then help our homegrown companies competing with global players to innovate and change. The government should know what to do and what not to do. The last thing the government wants to do is hearing the voice of companies complaining “it is better for the government not to do anything.”
First, President Moon should take a step forward in reforming the public and social sector with confidence and trust in the market. No president would want to be a president who failed during his or her term. The late President Kim Young-sam made great accomplishments in the early years of his administration with his reforms, but at the end of his administration he was dishonored as a failed president in the wake of the Asian financial crisis, which made the Korean people suffer. If Korea is once again in crisis, it is primarily the responsibility of the government and the president who ignore structural reforms.