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Saving face for Moon

July 07,2018
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Yoon Jong-won, the new presidential secretary for economic affairs, says hello to reporters at the Blue House on July 1. [YONHAP]
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Kim Dong-ho
*Yoon Jong-won, the new presidential secretary for economic affairs, says hello to reporters at the Blue House on July 1.

President Moon Jae-in in his second year enjoys a nearly 70-percent approval rating. He has earned credence from people at home and even leaders abroad for his unwavering leadership and putting the Korean Peninsula on a peaceful course.

But the same kudos cannot be given to his economic management. Despite his pledge to establish a government that creates jobs, job data has been ever worsening under his administration. For the first time since the financial crisis of the late 1990s, new hires have registered fewer than 200,000 for four months in a row. The youth jobless rate hovers at the highest-ever 10.5 percent mark. The income gap between the highest and lowest 20 percent income brackets in the first quarter was the largest since data has been available since 2003.

Examining the household income developments in May, Moon said it hurt him to see incomes worsen in the first quarter. That must have been an understatement for someone who took pride in representing the working class. He must be trying hard to make face-saving amends.

That may explain why he replaced trusted economic adviser Hong Jang-pyo with career bureaucrat Yoon Jong-won as his senior secretary on economic affairs. The two have many things in common. They were both born in 1960 and studied economics at Seoul National University. Both have a doctorate in economics. Hong served as a staff member in the presidential commission on policy planning under President Roh Moo-hyun, while Yoon also served on Roh’s staff at the Blue House.

But that’s where their similarities end. Hong mostly spent his career teaching and researching. Before joining the Blue House last July, he taught at Pukyong National University in Busan. He lectured on the theory that increases in real incomes spur consumer and corporate spending, raise labor productivity and lead to a benign cycle of sustainable growth. In short, he advocated income-led growth.

After becoming presidential secretary for economic affairs, Hong worked to prove his theory right. To sell the merits of his policy, he even showed income improvements among salary earners (after skipping data about the self-employed). That was how the president came to announce that 90 percent of the results of the government’s minimum wage hike were positive.

Meanwhile, Yoon joined the government through the state exam. He got his doctorate at the University of California, Los Angeles (UCLA), and served key posts at the Strategy and Finance Ministry. He was on the board of the International Monetary Fund and headed the Korean mission to the Organization for Economic Cooperation and Development. Yoon spent his career in the mainstream, building a balanced macroeconomic view and an ability to coordinate with other government offices.

Considering the differences between the two, the Moon administration’s economic policy direction may change. But it may not be immediate. Moon’s Chief of Staff Im Jong-seok insisted that Yoon was chosen to spearhead the government’s income-led growth as well as innovation-led growth with speed. In other words, the Blue House recruited Yoon because a new impetus was needed to expedite the income-led growth policy.

Jang Ha-sung, Moon’s policy chief, also said Hong left the Blue House so that new traction could be given to income-led growth. That’s a declaration of faith in the economic policy. But the public may not be so sanguine. Sentiment, which has already soured to the levels shortly before the special presidential election in May 2017, could further lose ground upon worsening data.

Yoon must become a cool-headed coordinator. He must work towards structural reforms through restructuring the labor and industrial sectors to improve productivity and innovation. If he cannot play such a role, he, too, will have to be replaced. Saving face for Moon may not be easy if confidence among the general public is lost. It’s their incomes the Blue House is supposed to be raising.

JoongAng Ilbo, July 6, Page 28