Remove self-contradiction within ‘Geunhye-nomics’ first
It is clear what President Park Geun-hye’s economic policy, dubbed “Geunhye-nomics,” aims at ― better distribution through continuous growth. Far less certain is how to achieve that.
Park and her economic aides have wrapped up this simple goal in fluffy terms such as “economic democratization” and “creative economy.” These are slogans more rhetorical than real, and few seem to know exactly what they mean, let alone how to realize them.
It was small surprise then that Park’s economic team, which got together Monday for the first time since her administration took power a month ago, came up with few tangible programs. Officials say they will unveil major policy directions later this week, and specific action plans by early next month.
Voters have few choices but to wait and see. Yet we can hardly remain optimistic about the success of Geunhye-nomics as it is now.
Above all, there are wide gaps between its goals and the circumstances surrounding the national economy. Park, for instance, wants to expand the welfare state, but the Korean economy has entered a low-growth phase, which many economists ― public and private, local and foreign ― say will continue for quite a long time. Still, both Park and her finance minister, Hyun Oh-seok, have ruled out any tax increase.
Hyun, who also serves as deputy prime minister for the economy, said he would carry out a stimulus package, including 10 trillion-won ($9 billion) of extra budget and monetary easing, to jolt the economy out of its prolonged slump. However, not only is it uncertain the additional spending will be sufficient to jumpstart the $1-trillion economy but also whether monetary authorities will cooperate with it, as Bank of Korea Governor Kim Joong-soo reportedly is reluctant to lower interest rates.
Considering the fiscal stimulus, which represents 0.1 percent of Korea’s GDP, would be little more than pump-priming water, a major boost should come from the private sector, especially large businesses. Most family-controlled conglomerates, which together hoard more than 100 trillion won in cash, are lying low in part because of their complaints about Park’s chaebol-bashing policy and because of uncertainty of the new president’s economic policy.
Former President Lee Myung-bak, despite his controversial pro-business policy, failed to draw business investment from these industrial behemoths. It’s a catch-22 for the incumbent leader to induce chaebol investment while curbing their crooked business practices and heavy-handed dealing with small suppliers.
Equally self-contradictory is Park’s “creative economy.” It’s hard to know how the nation’s first female president will promote creativity while the leader herself is returning to an old government-led development era, as shown by the resurrection of the economic deputy premier after 15 years’ absence, and government officials busy jotting down her “excessively detailed” instructions in any meetings chaired by the president.
There are too many gulfs within “Geunhye-nomics” ― between its goals and reality, between objectives and methods, and between its philosophy and actual operating system. We hope Park is not unready in economic administration, too.
It is clear what President Park Geun-hye’s economic policy, dubbed “Geunhye-nomics,” aims at ― better distribution through continuous growth. Far less certain is how to achieve that.
Park and her economic aides have wrapped up this simple goal in fluffy terms such as “economic democratization” and “creative economy.” These are slogans more rhetorical than real, and few seem to know exactly what they mean, let alone how to realize them.
It was small surprise then that Park’s economic team, which got together Monday for the first time since her administration took power a month ago, came up with few tangible programs. Officials say they will unveil major policy directions later this week, and specific action plans by early next month.
Voters have few choices but to wait and see. Yet we can hardly remain optimistic about the success of Geunhye-nomics as it is now.
Above all, there are wide gaps between its goals and the circumstances surrounding the national economy. Park, for instance, wants to expand the welfare state, but the Korean economy has entered a low-growth phase, which many economists ― public and private, local and foreign ― say will continue for quite a long time. Still, both Park and her finance minister, Hyun Oh-seok, have ruled out any tax increase.
Hyun, who also serves as deputy prime minister for the economy, said he would carry out a stimulus package, including 10 trillion-won ($9 billion) of extra budget and monetary easing, to jolt the economy out of its prolonged slump. However, not only is it uncertain the additional spending will be sufficient to jumpstart the $1-trillion economy but also whether monetary authorities will cooperate with it, as Bank of Korea Governor Kim Joong-soo reportedly is reluctant to lower interest rates.
Considering the fiscal stimulus, which represents 0.1 percent of Korea’s GDP, would be little more than pump-priming water, a major boost should come from the private sector, especially large businesses. Most family-controlled conglomerates, which together hoard more than 100 trillion won in cash, are lying low in part because of their complaints about Park’s chaebol-bashing policy and because of uncertainty of the new president’s economic policy.
Former President Lee Myung-bak, despite his controversial pro-business policy, failed to draw business investment from these industrial behemoths. It’s a catch-22 for the incumbent leader to induce chaebol investment while curbing their crooked business practices and heavy-handed dealing with small suppliers.
Equally self-contradictory is Park’s “creative economy.” It’s hard to know how the nation’s first female president will promote creativity while the leader herself is returning to an old government-led development era, as shown by the resurrection of the economic deputy premier after 15 years’ absence, and government officials busy jotting down her “excessively detailed” instructions in any meetings chaired by the president.
There are too many gulfs within “Geunhye-nomics” ― between its goals and reality, between objectives and methods, and between its philosophy and actual operating system. We hope Park is not unready in economic administration, too.
