This is the year of presidential election. Two great wavesㅡchange of power and recreation of powerㅡare clashing fiercely. Presidential candidates are intent on gathering support by hurling insults at each other. The country is divided into two whenever there is a presidential election but this year it is even more worrisome.
The country is facing an unprecedented crisis, such as third year into China’s challenge to American hegemony and prolonged COVID-19 pandemic. Nevertheless, populism fever is simmering ahead of the presidential election instead of presenting insight and vision on how to solve national challenges, and focusing on policy competition.
The ruling party is poised to leverage all policy measures for the remaining two months until the March 9 presidential election. A case of point is the government’s decision to make advance payments of 5 million won in compensation to 550,000 small business owners at the end of January. This kind of compensation, where payment is made first, and then the loss is determined and settled after the election, has not been seen before. To be sure, supporting small business owners, who will suffer further damage from the extension of social distancing measures, is not something to blame. But the fact that the government has accepted presidential candidate Lee Jae-myung’s suggestion can cause controversy for distributing cash before the election. The ruling party also formalized its plan to push ahead with a supplementary budget in Feb. It is not normal to talk about another supplementary budget in less than a month after the main budget for next year was passed by the National Assembly.
The opposition party is no different that it repeatedly made election promises to release cash without presenting proper policy measures. It did not hesitate to say that it will inject 50-100 trillion in supporting the self-employed. There are mixed opinions within the party about the timing of the cash support. It is also unclear how they will raise the fund for the support. The opposition party has also joined in a move to make unrealistic election pledges, driving the national economy out of control.
The Korean economy is currently showing signs of ‘slowflation’ with high inflation amid slow economic recovery. According to Statistics Korea, the country’s consumer price growth hit a 10-year high this year at 2.5%. There are concerns that the economic growth will fall below the government target of 3.1% due to sluggish private consumption and investment in facility despite high prices. A delicate policy combination that reduces market liquidity and revitalizes the private sector is essential in order to increase the economic growth rate while lowering inflation. The U.S. and China, which are in confrontation over global hegemony, also face the challenge of inflation. South Korea is in a situation, where it has to walk the tightrope, both at home and abroad. Under such circumstances, irresponsible fiscal spending could lead to an economic crisis.
The ruling and the opposition parties sugarcoat their pledges saying that releasing money is for the livelihood of the people, but they are ignoring the reality of the Korean economy, which is facing an era of “1,000 trillion won in national debt.” Support for the self-employed should be made under a sophisticated plan, regardless of the presidential election schedule. Ushering in a new year, it is very concerning if the presidential election would get in the way of the national economy.