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Yoo Il-ho

Yoo Il-ho has been speaking out lately. It’s a different look from his quietness before taking over as Deputy Prime Minister and Minister of Strategy and Finance - or the seemingly scripted responses he gave afterwards. But any attempts to trace his recent statements draw a blank on why he felt compelled to make them.　

Case #1 “If you look at the recent indicators, there are a lot of positive signs. We need to be wary of excessively nervous sentiments spreading.” (Mar. 7 extended meeting of Ministry of Strategy and Finance [MOSF] officials)

These remarks came at a time when all indicators for exports, consumption, and investment were tumbling. The administration described them as intended to “manage sentiments among economic actors.” At first glance, it’s a plausible explanation, since economies can change depending on how actors decide to act. The problem is that this skittishness isn’t anything new. A clear example can be found in the average propensity to consume, which has been in decline for over four years straight. The South Korean economy right now is facing such serious structural issues and it will take more than a few remarks for sentiments to improve.

Case #2“The administration is doing everything it can to prevent an ‘employment cliff’ among young people, including working at legislation for labor reforms and expansion of the wage peak system. It’s the National Assembly that‘s holding things up.” (Mar. 21 extended meeting of MOSF officials)

An MOSF source explained, “What we need is structural reforms to the economy, and that statement was made out of recognition that amendments to the law are inevitable if that’s going to happen.” This too isn’t false, but it will take more than a few changes to the law for structural reforms to be complete - and the current slump isn’t merely a matter of those reforms being held up. The administration‘s 2016 budget for use in actually boosting the economy is stingy. That’s why so many are saying the administration should start doing its job first.　

Case #3 “Stop making farfetched claims about what a serious income gap we‘re supposed to have based on data that lack objectivity.” (Mar. 21 extended meeting of MOSF officials)　

Here, Yoo was referring to purported improvements in redistribution indicators (including the Gini coefficient and quintile distribution) based on official statistics. The data that he described as “lacking objectivity” apparently came from a paper published by Dongguk University economics professor Kim Nak-nyun using the methodology of Thomas Piketty. Kim’s study, which used tax payment data, was motivated by the very inadequacy of the official national statistics, which have low rates of response and fail to capture income among the highest earners. As a scholar of finance with a focus on taxation and budgets, Yoo would know that.

If Yoo’s recent remarks aren’t about managing psychology, structural reforms, or an accurate interpretation of statistics, then what are they about? The answer could be in the upcoming parliamentary elections. But his remarks seem unlikely to help much when a few public statements aren’t likely to be enough to calm consumer nerves, the passage of legislation doesn’t guarantee new jobs, and a majority of the public is aware that the income gap has in fact deepened.

Instead, it reads more like a ceremonial offering to President Park Geun-hye, an attempt to appease her by placing responsibility for declining economic conditions at the feet of the political opposition and experts. Unfortunately, that attempt to safeguard Park‘s feelings isn’t going to revive the economy. The right approach would be to report the seriousness of the situation to Park in all its grisly detail and work toward finding a solution. From a Deputy Prime Minister like Yoo - who unlike predecessor Choi Kyoung-hwan hasn’t yet had a one-on-one meeting with Park - that may be too much to hope for.

By Kim Kyung-rok, staff reporter

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