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Advice for the first 100 days

Economic policies selected by the majority of voters are likely to be populist rather than inspired by a long-term vision.
May 05,2017
April 29 was U.S. President Donald Trump’s 100th day in the White House. It was a turbulent time of trial and error. An anti-immigrant executive order was revoked by the federal court, and Congress opposed the attempt to repeal Obamacare. His campaign promise to designate China as a currency manipulator was revoked.

In the same period, Barack Obama appointed 190 high-level government officials, but Trump has appointed just 58. But he is pushing for promised regulatory reform and proposed tax reform, drastically lowering the corporate tax rate from 35 percent to 15 percent and the income tax rate for the highest bracket. We need to watch how he makes a deal with Congress.

I wonder what policies the next president of Korea will promote in the first 100 days. The next president has had little time to prepare as this election was scheduled at the last minute. Considering the seats in the National Assembly, the elected president will have a hard time with the confirmation hearings for prime minister and other high-level positions and passing reform bills he wants.

Hopefully, the next president will execute good economic policies in the first 100 days. It would help bring the nation together and get the support of the legislature if he reviews the campaign promises and includes good policies proposed by other parties to propose the dream economic policies.

In fact, voters do not support a certain candidate 100 percent because they agree with his economic policies entirely. Many voters may not consider economic policies a priority since people yearn for a new political vision after the impeachment of former president Park Geun-hye and security is a concern due to the North Korean nuclear program and the Thaad deployment. However, the economy affects people’s lives directly, and it is important to pick good policies and execute them at the right time.

Economics could sound difficult as it involves complicated theories and numbers. It is hard for individuals to assess the impact of government public spending on social overhead capital facilities, defense, environmental protection and childcare on people’s economy. It is not easy to understand the total cost of a certain policy, including opportunity cost. Many voters don’t make a decision for the future generation. Therefore, economic policies selected by the majority of voters are likely to be populist rather than inspired by a long-term vision. Therefore, neutral and competent economic experts may need to reassess policies.

In television debates, major party candidates shared their understanding of our economic reality. They agree that the Korean economy needs to break out of the low-growth trend, create quality jobs, resolve imbalance among businesses and classes and prepare for a low birthrate and an aging population. The liberals and conservatives traditionally have different views on policy priority, scope and method of government’s involvement in private economy. But a dream economic policy plan can be drafted by converging common grounds to give hope to the people.

First, innovative small and midsize businesses and venture companies should create quality jobs. Service industries with high added value should be effectively backed with deregulation to increase jobs. Unfair conduct and excessive market control of large conglomerates should be strictly controlled to allow all businesses to engage in fair competition.

Second, taxation should become fairer, and taxation on unearned income and self-employed need to be more thorough. Wasteful government spending needs to be eliminated. Tax reform is necessary to secure resources for welfare and reinforce income redistribution.

Third, a social safety net for the low-income earners, small business owners and senior citizens should expand, and social welfare spending on childcare leave and childbirth cost subsidies should be increased.

Fourth, labor market reform is urgent. Excessive protection for regular employment should be reduced. Irregular employees who consistently carry out the same duties as regular employees yet receive much lower salaries should be converted to regular positions. The seniority-based compensation system should be changed to reflect job description and performance.

Fifth, educational and training system reform should prepare students for technological changes. For the fourth industrial revolution, the industrial structure needs to be adjusted and new industries should be promoted.

The first 100 days are important. Division and confrontation continue in the United States. While 96 percent of the people who voted for Trump still support him, only 13 percent of Democratic voters do. No economic policy can satisfy all citizens. But the next president needs to focus on economic policies for the future rather than his supporters, communicate with the National Assembly and people and show economic leadership in the first 100 days.

JoongAng Ilbo, May 4, Page 31

*The author, a former senior economist at Asian Development Bank, is an economics professor at Korea University.

Lee Jong-wha