[Editorial] ‘Roh-onomics’ Are Not the Answer

President Roh Moo-hyun stressed in his national address yesterday that the fundamental solution to address social polarization is to create a large number of quality jobs.

But ordinary Koreans are hungrier for those quality jobs than the president.

Social disparity is one of the nation’s most daunting challenges. We should remember, however, that we can’t heal illness just by repeating the name of illness, and that we can’t achieve our goals just by listing those goals. The devil is in not what to do, but how to do it.

The Roh administration has been listing polarization as one of its major national agendas since the beginning of its tenure. But polarization has remained a political tactic or a tool to create social division, mainly because the government has been spreading its focus by putting forward a wide range of past-oriented or political agendas. Even liberal factions have lambasted the administration, saying, “The government has made little progress in narrowing the social gap. It is only keen on trumpeting its plans.” President Roh said in his televised discussion with the public in August last year “Polarization is a serious issue in our society, but it should be viewed as a global trend. And our situation is not among the worst.” This statement indicates that the president’s perception on this issue differs according to the situation he is in.

This time, his political calculations aimed at the upcoming local elections in May and the presidential election at the end of next year lie behind his making polarization as the keyword for his New Year’s address. He appears to be using polarization as a means to promote division between the privileged minority and the underprivileged majority.

Contrary to what the president has said, the administration has fueled this social disparity for the past three years. The government’s anti-speculation measures on August 31, which were designed to drop so-called high-precision guided tax explosives on those who have been enriched by real estate speculation, backfired. It has put a damper on the whole real estate market, hampering transactions among even middle- and low-income earners. Its initiatives to build administrative cities, innovation cities, and business cities to promote the balanced development of land have turned the whole nation into a speculation market, widening the gap between those who own land and those who don’t.

The standardization of medical care and education services has brought down service quality and encouraged overseas spending by the wealthy. The mass exodus of families and students to foreign countries for education, and overseas education spending amounting to 10 trillion won annually are testament to the social polarization brought about by the government’s ineffective educational policy.

The president cited several concrete measures to address polarization in the yesterday’s speech: nurturing small and medium-sized businesses, developing the service industry, creating more jobs in the social service area, and expanding the social safety net. In other words, he intends to expand his own project to distribute the money collected from more taxes. But jobs created in the private sector thanks to brisk corporate investment are more quality jobs than social employment jobs created by taxpayers’ money. And they can be a more fundamental solution to the unemployment.

The administration’s patronizing solution, which aims to tackle a large number of problems only by increasing fiscal spending, is causing concerns even within the government. The Ministry of Finance and Economy pointed out, “Fiscal soundness is likely to deteriorate in the mid-to-long term if spending, such as social welfare spending, is dramatically increased.”

The government has no shortage of fiscal time-ticking bombs other than the welfare cost, including the reunification cost of aid to the North, the depletion of the national pension fund in the face of the falling birth rate and the rapidly aging population. Social welfare won’t be achieved by increasing government spending only. The nation has seen a fair share of problems arising from its poor welfare benefit management system.

The president singled out growing polarization as one of the most serious challenges hindering the growth and development of society in his speech, but many experts at home and abroad point out excessive government regulations and Korea’s inflexible labor market. Many renowned foreign scholars and businessmen also recommended the government focus on deregulation and increasing labor market flexibility.

The president urged business and labor circles to make a bold decision in connection with the legislation on non-regular workers in his address. But the roadmap to better labor and management relations should have been devised by the government earlier this year. Gregory C. Chow, professor emeritus at Princeton University and who recently visited Korea, said, “To tackle unemployment and polarization, the Korean government should make sure that businesses can make a lot of money.” This means that a business-friendly climate is essential to creating growth and employment.

Han Duck-soo, the deputy minister of Finance and Economy, pointed out economic polarization and dwindling growth potential as major challenges to the national economy and added, “If the potential growth rate can be achieved this year, polarization will be eased to a degree.” But it is more likely that ordinary people will feel less social disparity if the nation posts more than a five percent growth rate and creates more than 370,000 new jobs. “Roh Moo-hyun Economics” which is characterized by heavy fiscal spending and a patronizing welfare policy, should change course.