[Editorial] An Economy Divided

After President Roh said in his New Year’s address, “I’ll rein in soaring property prices,” many seem to worry about his plans on the housing market. The main culprit of skyrocketing housing prices is the incumbent administration that has targeted the rich with stringent property tax policies over the last four years.

Right after the big defeat in the May election last year, the ruling party apologized to the public about the failed housing policy. Despite President Roh’s belated admission, saying, “Our property policy has failed,” the direction of follow-up measures is still unclear. Thus, the concern about the likelihood of a household-induced financial crisis is ever increasing. Some 100 economists pointed to the overly strict property policy when responding to the question, “What should the government not do ahead of the presidential election?”

Experts prioritized the finalizing of reform policies, including corporation deregulation and the Korea-U.S. FTA, as the area the government should focus on. It is far distant from the government’s main focus on welfare and balance. Even though the administration speaks of deregulation and innovation, its intention to showcase policies is obvious. It is why big government policy with tremendous spending meets complaints as it is the opposite direction of the small government it should pursue.

Its top priority is to encourage corporate investment leading to job creation, and then to enhance growth momentum. But it is still locked into an empty slogan of balanced development. It calls itself a systemic government, but there is no consensus on policy priorities. The Economic Deputy Prime Minister, the Minister of Commerce, Industry and Energy, and the president of the Fair Trade Commission differ on all the important issues.

The government has experimented with the people and the market over the past 4 years. And it may have learned by now that it cannot control the market even if it has strong regulations. When market players follow policies voluntarily, its effects will increase and adverse effects will decrease. If the government does not take market friendly U-turn even with the recognition of policy failures, the market will play not its appropriate role. It will hibernate again. As long as the government and market stand against each other, the government and the public will both lose.