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Shifting gears

Feb 01,2019
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Yi Jung-jae
The author is a columnist of the JoongAng Ilbo.

Kim Hyun-chul, who recently resigned as the economic adviser to President Moon Jae-in, coined the term for the economic policy of the liberal administration — J-nomics — after borrowing the word J from the president’s initial. Ambassador to the United States Cho Yoon-je recalled that during Moon’s campaign, Kim proposed naming Moon’s economic agenda J-nomics.

As a presidential candidate, Moon was pleased with the ideas behind the name. The economist explained he had gotten the idea from the economist theory of the “J curve,” a phenomenon whereby a country’s balance of trade initially worsens after a devaluation of the local currency and then recovers to a higher level than before. The concept is supposed to explain the keystone of J-nomics — its income-led growth policy.

Proponents have been arguing that the damage to the economy may be inevitable in the early stages of the policies to raise wages, but that the economy will come out stronger once it passes a short transitional period. The theory must have stuck in the president’s head as he believes the policy will prove to be right.

Kim has no political connection with the president. They met upon the request of Moon, who was inspired by Kim’s book “The Breakthrough in the Age of Low Growth.” Moon was mesmerized by the economist’s insight and the solutions he laid out. An economic aide is a steward to uphold a president’s economic philosophy. His exit from the Blue House could weaken the philosophical grounds of the president.

Still, the president did not hesitate to let Kim go. A businessman who attended a seminar hosted by the Korea Chamber of Commerce and Industry said he had been very disheartened by the comments from the former economic aide. Kim was invited to speak under his new title as head of a special committee on the New Southern Policy, the president’s vision of cementing ties with Southeast Asian countries and India to expand diplomatic and trade relations beyond the traditional partners of the United States, Japan, China and Europe.

At the seminar, Kim urged retirees and young job seekers to stop whining and to seek opportunities in Southeast Asia. It was not just his careless way of looking at our job market that was offensive. The businessman said it was demoralizing to witness a hard-nosed leftist ideologue refusing to accept any flaw in his beliefs and shifting the blame to the common people.

The business community is used to the whimsical ways of the president who one day encourages businesses to invest as much as they want and the next day vows to punish any irregularities in business practices. Entrepreneurs still had some hopes and tried to look on the bright side. They presumed the inconsistency was possible because practical aides, like Kim, would speak some sense to the president after he was swayed by hard-line ideologues in the Blue House. But after hearing Kim speak, they gave up on him and concluded they have nothing to expect from the Blue House. “We told ourselves that we are on our own to save our businesses,” he said.

I think it is not enough for Moon to let Kim go. The president must shift the paradigm of his economic policy. I hope he puts an end to his signature policy of income-led growth, along with the weird concept of J-nomics. The government’s economic policy should be based on a combination of personnel, policy and execution. Among the three, the human factor is the most important. Without qualified aides, no policy can be successfully implemented. Hong Jang-pyo, the original proponent of the income-led growth and former senior presidential secretary for economic affairs, Jang Ha-sung, Moon’s former policy chief, and Kim have all stepped down. There is no need to adhere to a failed economic experiment anymore.

The Moon administration must shake out of its infatuation with the name J-nomics. Since the government is so keen on fairness, why not change its economic slogan to “three fairs” — fair distribution, fair growth, and a fair economy? There is no shame in reversing and amending policies when they are wrong. If the president does not let go of income-led growth, little good can be expected for the president or the country.

JoongAng Ilbo, Jan. 31, Page 30