New policies needed to solve 21st-century problems
The Yoon Suk Yeol government is advertising its 10 significant achievements over the past nine months on 150 electronic displays nationwide this month. "We intend to increase direct communication and contact points with the people," the presidential office said last week.
Many Koreans might have been surprised to hear that. President Yoon skipped the New Year's news conference and stopped engaging with reporters on his way into the presidential office, yet he wants to expand "direct" contact with the public.
Even harder to understand is the content of the self-promotion.
The 20-second footage flickering on a board over Gwanghwamun Plaza in central Seoul cites three economic accomplishments. It stresses Korea becoming the world's six-largest exporter last year with record-high foreign shipments; the government's easing of regulations to boost property transactions and attracting substantial foreign investment.
According to a government tally, however, Korea's trade deficit hit an all-time high of $12.7 billion in January. It was the first time the monthly trade shortfall broke the $10 billion mark since 1956. The nation also recorded a trade gap over the past 11 consecutive months for the first time in 25 years. All statistics show that it is not the time to brag about export prowess but rather to worry about structural trade problems.
The International Monetary Fund recently readjusted its global growth projection upward for this year but revised Korea's down. A ranking IMF official cited the high interest rate and trade deficit as two primary reasons. The nation posted an economic contraction in the fourth quarter of last year. It was the fourth quarterly setback, following the ones during the Asian currency crisis of 1998, the global financial turmoil of 2008 and the early days of the COVID-19 pandemic in 2020. Korea Inc. is amid a perfect economic storm.
In his New Year's address, Yoon said Korea could get over the multiple crises through exports as Park Chung-hee did in the 1960s. Yes, Korea, which has scarce natural resources but excellent human resourcefulness, will have to export its way to another leap.
But the question is, "How?"
Yoon has high expectations for exports of plant, defense and nuclear reactors. However, these account for only 5 percent of total exports. As well, this government lacks adequate means of supporting exporters. Yoon vows to increase trade financing and go all out to win plant orders. However, few, if any, countries among the top 10 economies will try to overcome 21st-century problems with these methods of a half-century ago.
Export growth will be easier said than done in this era of neo-mercantilism replacing neo-liberalism. The U.S. is turning inward and becoming more selfish. China, which buys a quarter of Korea's exports, is shrinking and replacing imports with domestic products, some of which are more sophisticated than Korea's. Korea must diversify its export products and destinations.
The time has long passed for Korea to shift from total production to productivity and from quantitative exports to export profitability. If boosting exports is to have any meaning as a policy direction, it should lead to households' real income growth. However, in this country with polarizing wealth and income disparity, the share of families who believe they belong to the middle class is shrinking rapidly.
Yoon stresses the need for three reforms ― labor, education and pension. At best, these are medium- to long-term goals of little immediate help for breaking through current crises. Labor reform may be needed but should be done by narrowing gaps towards rectifying big businesses' exploitation of small suppliers, not suppressing unions or pulling down relatively well-to-do workers' income to their less-fortunate colleagues' levels.
Yoon must see why Japanese Prime Minister Fumio Kishida helps unions raise wages. U.S. President Joe Biden declares himself the most pro-labor leader in recent history.
Economic growth is possible ― and meaningful ― when more people can work stably and comfortably.
He must think about what most ordinary people feel ― some of whom are worrying about their heating bills and some of whom are being driven out of their homes amid fraudulent rental practices that capitalize on the property bubble ― as they watch the government's ads on those electronic boards.
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