Cabinet Reshuffle Puts Reality Ahead of Ideal

One of the characteristics of the latest reshuffling of economic ministries and advisers is the rise of technocrats with their own specialties in the economy.

The first economic team under the Roh Moo-hyun administration was a “two-top system” led by Deputy Prime Minister and Minister of Finance and Economy (MOFE) Kim Jin-pyo and presidential chief economic planner Lee Joung-woo.

However, Lee has retired from the first line of policy-making as he was appointed to head the presidential advisory group of the Policy Planning Committee and was replaced by Kim Byung-il, policy planner of the Bank of Korea`s Monetary Board.

The new economic team, filled with a number of people with extensive experience in policy-making, will likely tilt the balance of economic policy toward pragmatism by highlighting the importance of real economic issues such as growth instead of reform.

Professionalism as opposed to Amateurism. The first economic team, which has been at the helm of economic policy in the first 10 months of the Roh Moo-hyun government, was characterized by its zig-zag policy.

While imbued with idealism, it has exhibited an insufficient capability for coordination and failed to address the conflicts over a variety of interests. It failed to fully resolve numerous large issues that have surfaced, as shown in that series of labor disputes that entailed a truckers’ strike and the dispute over the Samanguem reclamation project.

The appointment of Kim Byung-il who is reputed for his balanced view and coordination skills as a top presidential economic aide represents an effort at filling such shortcomings.

More importantly, it will further clarify the new policy outlines that will put growth ahead of distribution and reality ahead of ideal.

“One of the reasons why there has been a slowdown in corporate investment is that there was a high level of uncertainty because of the lack of coordination in policy when addressing disputes between differing interests,” said Kim Jong-seok, professor of economics at Hongick University. Kim added that, “The uncertainty is likely to reduce substantially as a number of people with experience in policy feasibility have been appointed to the cabinet.”

The Rise of Officials from Former Ministry of Economic Planning. Another characteristic featured in the latest cabinet reshuffling is that it promoted many officials of the Economic Planning Ministry, now MOFE officials, most of them with stints in the Planning and Budget Office. In addition to Park, Kim Byung-Il, named Planning and Budget Minister, is a budget planning specialist who has spent most of his public life in the Planning and Budget Office.

Although he was not part of the reshuffle, Chun Yun-churl, the chairman of the Board of Audit and Inspection consolidated his career at the former economic planning ministry. The same context explains why Chang Seung-woo, former planning and budget minister, had replaced as maritime and fisheries minister Choe Nack-jeong who stepped down because of a scandal.

Kwon Oh-kyu, the presidential chief secretary for national policy, and Kim Young-ju, senior secretary of national policy, the two top aides who would work with Kim Byung-il are all former economic planning ministry officials. Assistant MOFE Minister Kim Kwang-lim and Assistant Planning and Budget Minister Byon Yang-kyun also started their bureaucrat careers at the economic planning ministry.

They all have been working together for over a decade since they began to work in the government, and it will help with policy coordination. Meanwhile, the fact that there are few financial specialists in the cabinet and the president’s office has raised concerns that it would limit the government’s ability to make fiscal policy, which is considered the core in the next year’s economic planning.

Whether or not Chief Economic Adviser appointee Park and MOFE Minister Kim, who passed the government officials’ test in the same year but who started their careers at two competing ministries (Park at the Ministry of Finance and Kim at the Ministry of Economic Planning) will work together or run into conflict is yet to be determined.

Industries are welcoming the reshuffle while civil society looks bitter. Corporate Korea welcomed the reshuffle of the economic team as it believed the new team would reduce policy uncertainty.

“An economic team which understands reality is now in place while chances are the economy will run into more difficulties next year,” said research manager Oh Seok-moon of the LG Economic Research Institute, adding, “they have to work hard to put the economy on a recovery course no later than the second half of the next year.”

“It is disappointing that MOFE Minister Kim has just been engaged in stopgap measures since he took office was not replaced and that bureaucracy is enforced,” said Koh Kye-hyun, the policy manager of the Citizens’ Coalition for Economic Justice, a civil-society group. He added, “Their commitment to reform aside, it is very doubtful whether or not they would implement economic restructuring in the long term.”

Kwang-Hyun Kim Young-Hae Choi kkh@donga.com yhchoi65@donga.com