New economic team
It is time to promote deregulation, innovation
President Moon Jae-in is in the process of forming a new economic team after sacking his chief economic adviser and finance minister Friday. His move is apparently aimed at reinvigorating the economy which has continued its slowdown.
Moon nominated Hong Nam-ki, a career economic bureaucrat who is currently serving as chief of the Office for Government Policy Coordination under the Prime Minister’s Office, to replace Kim Dong-yeon as finance minister and deputy prime minister for economic affairs.
The President also appointed his social affairs secretary Kim Soo-hyun to succeed presidential policy chief Jang Ha-sung. Moon had to sack Jang, the architect of his much-avowed “income-led” growth policy, as Jang has come under severe criticism for bringing about economic woes by putting the top priority on wealth distribution and inclusive growth.
The replacement of Kim and Jang was inevitable not only because of their policy failures, but also because of their rift over how to revive the slumping economy. For a little over a year, the two have clashed frequently over details about how to generate jobs as well as boost economic growth.
Against this backdrop, the public has high expectations that the new economic team will do better than the current one to speed up economic recovery. Of course, changing only the minister and the policy chief does not necessarily lead to a turnaround of the economy. That’s why we call on the Moon administration to come up with a new policy and a new strategy for sustain- able growth.
In this sense, the reshuffle of the economic lineup should not be intended only to ease the public’s deep dissatisfaction over the government’s poor economic performance. For this reason, President Moon needs to overhaul his income-driven growth formula which has aggravated the economic situation despite its good intentions of creating more jobs and increasing wages, especially for the working poor.
Moon should realize the income-led growth policy has brought about serious ill effects of cutting the number of new jobs drastically and reducing the income of the poor. The policy has also caused production, consumption and investment to fall considerably, prompting the economy to lose steam rapidly.
We recommend the liberal administration shift its focus from inclusive growth to deregulation and innovation in order to encourage entrepreneurship and bring back economic vitality. Of course, this is not to say Moon should give up his inclusive growth policy. Instead, he needs to deal with the more urgent tasks of preventing the economy from sliding into recession and finding ways to sustain growth momentum.
The Moon government also must avoid repeating past mistakes that arose from the policy friction between Kim and Jang. To this end, it ought to establish an economic policy control tower to be led by the finance minister, not by the presidential policy chief. Otherwise, the next economic team could also end up rudderless.