Wider and Longer

New Economic Team Should Look Further Beyond Crisis

It's apparently too early to tell, but new Finance Minister Yoon Jeung-hyun seems to differ from his predecessor on two major points ― down-to-earth solidity and on-the-spot checking.

The first thing he did after taking office Tuesday was to revise the ministry's frothy growth projection for 2009, from a 3-percent expansion to a 2-percent contraction, while admitting the nation could lose up to 200,000 jobs instead of adding 100,000 new ones. Since his nomination three weeks ago, Yoon has also frequently visited industrial fields, including small businesses and day-labor markets, demonstrating his sympathy for economic underdogs.

These were welcome changes for most people who have grown tired of unrealistically rosy forecasts, based mainly on desk theories and paper plans, and overstretched policy steps, to turn at least part of them into reality, under the previous finance minister.

Unfortunately, however, noticeable differences between President Lee Myung-bak's old and new economic czars appear to end there.

First of all, Yoon has left little doubt he would push ahead with the major policies of the first team, including the deregulation of the financial industry and property markets, and pushing for greater flexibility of labor markets and tax cuts.

With respect to the controversial Capital Market Integration Act, Yoon asked lawmakers, saying ``Why are you so afraid of letting some industrial capital flow into the financial industry?'' His question came at a time when the United States and the rest of the world are reeling under the adverse effects of financial deregulation and over-expansion of banks and brokerage houses beyond the reach of proper supervision.

Responding to concerns about expanding temporary workers and lowering minimum wages, he said, ``This is no time to take issue with the quality of jobs.'' Yoon may be right, but only in part. As long as a majority of wage earners remain as temps with even smaller incomes, no amount of government stimulus and recovery packages will wake up dormant domestic demand. Moreover, its reinforcement would result in another social turmoil, hurting national unity and harmony essential in tiding over the current crisis.

The new finance minister has only to revisit the policy of the former Kim Dae-jung administration to see how brief the benefits and how lasting the aftereffects of re-igniting the property boom were before easing restrictions on property trades.

Yoon calls for the swift parliamentary passage of his yet-to-be-finalized supplemental budget, but had the government not introduced hefty tax cuts for wealthy property holders last year, the extra budget could have grown enough in scale to bring about real effects on the economy.

To sum up, how the new finance minister will tackle the problems may be different from his predecessor, but what he does for them will largely remain the same, raising skepticism about substantive changes in the national economy.

Of course, the situation facing Korea is too difficult to expect a quick and sharp improvement, whoever takes the top economic job. Moreover, there are multiple tasks, none of which are easy, such as bold restructuring of ailing firms, preventing a second financial crisis resulting from the moribund real economy and finding new growth engines.

What makes Yoon's job more difficult is he has to keep the economy from aggravating further ― if not improving it much ― at least until global recovery takes place, while, at the same time, leave no serious adverse effects for his successors.

This is an almost no-win situation. A sharp turnaround in the way of thinking and policy-making seems the only way to minimize long-term damage. But given Yoon's track record and pronounced plans, this may be hard to expect.

[출처 : 코리아타임스]