[Editorial] Replace Roh’s Economists

Until recently, Deputy Prime Minister and Minister of Finance and Economy Han Duck-soo and the current government’s economy team consistently expressed an optimistic view on the economy. They were confident that the increase of exports and the improvement of domestic consumption would continue to lift the economy in the second half of this year. However, it is evident that consumer confidence and investor confidence, which are keys to increased domestic consumption, are aggravating. The consumers are not opening their wallets while corporations are stacking up cash and avoiding investment. If the government’s economy team had earned the slightest iota of trust from the market, the situation would not have worsened to this point.

With that being the case, the team members should be replaced. A new team composed of members that the market and corporations can rely on should be created. If the government is reluctant because it does not want to appear as if it is budging to the critics of the current regime by acknowledging the government’s failure, then it should reconsider. At the slightest slip, the country might collapse. President Roh Moo-hyun has stated that he would reshuffle his cabinet members semi-annually, every January and July, and now is the time.

The evaluation of the performance of the current economy team has already been finished not only through all economic indexes, but also through the results of the local elections. It was confirmed that the voters wanted to overcome the crisis by reviving businesses and the market. It will be difficult to change the market’s atmosphere with cabinet members such as Vice Minister Han or Minister of Construction and Transportation Choo Byung-jik.

Let’s look at the essence of the crisis coolly. Although international economic conditions are worsening due to a worldwide increase of interest rates and other factors, economic leadership to overcome such crisis is virtually non-existent. The Ministry of Finance and Economy, which should oversee the entire economic policy, has many of its current and former officials under investigation for selling the Korea Exchange Bank below market price and being involved in writing off Hyundai Motors debts. The situation is so bad that Vice Minister Han had to email his employees to maintain their calmness.

While other countries in the world are focusing on a soft landing to deal with real estate bubbles and inflation, Korea seems to be inciting a real estate shock through heavy taxation, interest rate hikes, and halting loans. Vice Minister Han, a self-proclaimed market-opening proponent, appeared to focus on concluding the Korea-U.S. FTA, but recently stated, “The Korea-U.S. FTA is not a panacea,” and derided the government’s signal system. That statement was made right after President Roh said, “The content should not be damaged because of running against time.” This is not the only problem, there aren’t any economic policies functioning as they should.

Will companies and households trust such an economic team and start to invest or consume more? According to a Bank of Korea’s second quarter consumer survey, all income classes showed signs of slumping. The quality of life, household income, prospect of employment and others had all deteriorated. The majority of Korean people are losing hope. In the midst of this, will the president continue to say, “Maintain the current economy team and just watch them?”