Confidence in the Market Economy Is Essential

An Assessment of the Yoon Suk Yeol Administration’s First 100 Days and Its Tasks / Economic Policy

To begin with, if we assess the Yoon Suk Yeol administration’s performance based on the public’s evaluation of its governance, it has not been very successful. Negative assessments are much higher than positive ones. Moreover, the fact that its approval rating for state affairs fell below 30% in a shorter time than under any previous administration requires serious reflection on the causes.

However, in the area of economic policy, it is difficult to say that the Yoon Suk Yeol administration has committed especially serious mistakes compared with the conditions other administrations faced at their launch.

Of course, from the perspective of economic experts, one could point out countless disappointing and inadequate aspects, but since opinions differ, it is questionable whether policy approval in the economic field would have risen even if the administration had listened closely to their advice and implemented policy accordingly.

What is certain, however, in this writer’s judgment, is that the Yoon Suk Yeol administration, which came to power after judging the Moon Jae-in administration for tormenting the public with the worst divisive policies, has in fact still failed, in the field of economic policy, to present a policy vision that resonates with the public and makes them feel that this is why a new administration was necessary.

Certainly, if one looks at the economic officials in the Yoon Suk Yeol administration, they are very stable and well-vetted figures. But that is precisely the limit.

If the administration had been able to gain public sympathy in areas such as political inclusiveness or appointments, its approval rating for governance would probably not have fallen this far, and in some respects economic policy itself does not appear to have been a major factor in evaluations of the administration’s performance.

That said, in Gallup Korea’s fourth-week-of-July evaluation of state affairs, personnel issues ranked highest among the causes of negative evaluations at 21%, but incompetence and lack of qualifications (8%), indifference to the economy and people’s livelihoods (8%), and waste of state funds, welfare, real estate, and lack of policy vision (4%) were also cited. Taken together, distrust in policy competence totaled 20%, meaning it could also be seen as a major cause of negative evaluations on par with personnel issues.

Meanwhile, among those giving positive evaluations, policy-related areas such as stability (2%), hard work (4%), change and reform (2%), nuclear energy policy (2%), competence and rationality (1%), and real estate policy (1%) together accounted for 12% of positive assessments. Thus, while policy was not as decisive in the collapse of approval ratings as personnel issues, which accounted for only 4% of positive evaluations, it nonetheless appears that the policy field also contributed substantially to the causes of negative evaluations.

Then where can we find the reason that, despite forming a cabinet centered on stable figures with long public-service experience and seasoned judgment, the administration has still failed to receive high marks in policy?

Moreover, the Yoon Suk Yeol administration could likely have received a passing grade simply by restoring the system damaged by the Moon Jae-in administration’s divisive policies, so why has it posted below-average results even in the policy field?

One reason may be that although President Yoon loudly proclaimed freedom and market principles in his inaugural address, the substantive content of his thinking is still not clear, and the cabinet can also be seen as lacking the courage and ability to embrace and concretize the president’s vision.

As a candidate, he said that just as President Chun Doo-hwan used capable talent, he too would do the same. But recognizing talented people and creating an environment in which they can work is no easy matter. Kim Jae-ik, whom former President Chun selected early in his rule as the chief architect of economic policy, was not someone with a stable and well-verified career.

He was neither from the mainstream bureaucratic establishment nor of a rank higher than bureau director, and he had never served as vice minister or minister. If one wants to appoint talent with the ability and courage to transform the policy framework, then experience in operating policy stably and without major disruption may actually be a disqualifying trait.

Although the administration criticizes the Moon Jae-in government and says it is changing economic policy, the current policy content is proceeding not so much by changing the distorted policy framework as by gradually addressing the grievances of groups harmed by the Moon administration’s misguided policies—for example, partially easing tax burdens and partially reducing populist policies.

Of course, this may be a very safe way to proceed without major disruption, but in a situation where the ruling party is in the minority and the opposition holds the majority, measures requiring amendments to laws cannot be pursued without overwhelming public support.

Rather, even though what is needed is a policy vision that can lead state affairs by proposing a breakthrough policy shift capable of winning the support of the majority of the public and making it impossible for the opposition to resist—or, if blocked by the opposition, of generating even greater governing momentum—the content of current policies gives the impression that it is the majority party that is acting overly cautiously.

Lack of a Clear Understanding of the Concrete Content of the Governing Vision and the Ability to Execute It

The president himself, unlike the free-market rhetoric in his inaugural address, has shown the image of a cautious politician who weighs both sides, and this may in fact have been perceived by the public as a lack of vision.

It is true that in the Cargo Truckers Solidarity and Daewoo Shipbuilding & Marine Engineering incidents, a cautious approach produced relatively smooth resolutions, but questions remained about what this administration’s philosophy actually is, and the same was true on issues such as weekly working-hour limits and the minimum wage system.

Not only on labor issues, but also on support for compensation for COVID-related losses, debt relief for ordinary people, and easing the comprehensive real estate holding tax, one may think that stable and gradual improvements are generally under way, but they still seem to fall short of the public expectations placed on the birth of the new administration.

There are certainly factors—such as the Ukraine war and the sharp rise in energy and raw material prices—that could lead to a low evaluation of the current administration’s economic policy, but those alone are insufficient to explain both the collapse in approval ratings and the negative assessment of policy.

The rapid increase in the base interest rate has also added to the burden on businesses as well as ordinary citizens, but this itself has not led many people to denounce the administration for policy failure.

It may still be somewhat early to evaluate the administration’s governing ability on issues such as Korea’s strategic choices amid the deepening U.S.-China conflict or its push for regulatory reform to carry through market principles.

At the very least, however, on the question of choosing in U.S.-China relations, this is not a naïve situation in which the problem can be solved simply by restoring the Korea-U.S. alliance or maintaining strategic ambiguity in consideration of economic relations with China. Our economy has already reached a stage where it is difficult to sustain growth by depending unilaterally on one camp. As such, we must prepare a strategy to pursue mutual benefit with both the United States and China by giving what we should give and receiving what we should receive, based on our own capabilities.

The same is true for regulatory reform: if the administration simply tries to push it through as a means of creating jobs and reviving the economy, assuming that it can thereby overcome groups that would be harmed by it or the opposition party, then policy failure is all but guaranteed.

Only if the administration can make use of people with the vision, capability, and strategy to persuade the public so that regulatory reform becomes a task that wins sympathy not only from businesses and the government but from all citizens as well, can the liberalism the president emphasized in his inaugural address avoid remaining empty words.

Sunggu Lee, Chairman, Korea Consumer Experts Association

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Original title: 시장경제에 대한 확신 있어야

Author: Seong-gu Lee

Date: 2022-08-23

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=24917