[Editorial] Move Fast to Enliven the Economy

The economic plans which the government announced yesterday can be summed up as bringing about job creation and stability in the livelihood of the public through investment enlivened by fiscal expansion and deregulation. They also include cash gifts for small and midsize companies which hire specialty employees and a direct investment scheme by the government for viable small and midsize firms.

There is little for us to take issue with the overall policy orientation. Rather, at issue is whether the plans will pull the economy out of the severe slump.

Especially regarding the regulations that work as a decisive barrier to the enlivening of investment, the key is how promptly they should be eradicated. The government said it will review 7,800 regulations in the course of the next two years to streamline them. However, as is the economic outlook we are in, there is little room for such maneuvering.

Not a day passes without policymakers talking about deregulation. The government should cleanse itself of “administrative ego-centricity,” or bureaucratic collective self-interest, and should get rid of regulatory thicket to the point where entrepreneurs would rush to investment.

Although it is not wrong to use fiscal policy to stimulate employment and support small and midsize companies, the effect of such a policy may be limited or cause side-effects. The top priority is to improve the institution and environment drastically so that entrepreneurs will voluntarily expand investment and add new jobs. It is essential to change high wages and the constant standoff between labor and management into internationally competitive wage levels and law- and principal-driven labor-management negotiations.

The roles President Roh Moo-hyun and politicians should play are pivotal. They should admit that a worsening in the economy is not just caused by economic factors, but also by security and political concerns, breaches of free-market tenets, and confusion over the national agenda. Addressing factors external to the economy is the most urgent task in enlivening the economy.