hankyoreh

Ha-joon Chang

About 10 days had passed since the “national state of emergency” had been declared. Was my failure to spot any developments worthy of that sober language the result of faulty vision, or a mixture of numbness to safety concerns and imperviousness to crisis? After all, the person declaring the state of emergency had been Ha-joon Chang, globally renowned scholar and professor at the University of Cambridge.

I should start by apologizing for my insensitivity to safety concerns and imperviousness to crisis. When an interview with such a scholar is published, the right thing to do is to pore over every word, underlining things and chewing the content over. Instead, I merely wrinkled my brow at the words “state of emergency” in the title, and nodded slightly at the part where he talked about the minimum wage.

After the words “state of emergency” began showing up over and over in columns, editorials, and even podcasts, I made a belated show of penitence and went back to re-read it. In Jang’s estimation, the problems with the South Korean economy had been caused by a “collapse in mainstay industries due to inadequate investment over the past 20 years and a lack of new technology.”

The interview went on to include his answers to questions about next year’s outlook and about income-led growth and inclusive growth. The remark in question came in response to a subsequent question asking what alternative he suggested. “The solution can only be found when we perceive there to be a national state of emergency,” he replied. In short, he was calling for the effective use of corporation policy to increase investment.

The key point in this interview is that the shortfall in investment is a reference not to the recent situation, but to a shortage of investment dating back 20 years. The investment surplus prior to the foreign exchange crisis in 1997 goes without saying, and there has been considerable investment since then. What about the ratio of total investment to GDP, which ranked first among OECD countries at 31.2% in 2017? Just this past Dec. 12, it was reported that the European Commission’s 2018 Industrial R&D Investment Scoreboard rated Samsung Electronics as the company investing the most in R&D out of all companies worldwide. It looks as though the regulations were loosened for Samsung Electronics alone – a case of “top-secret” corporation policy aimed exclusively at Samsung Electronics.

Chang’s proposed solution to the “state of emergency” is also unappealing. A state of emergency demands emergency measures, he argues; income-led growth and an increased minimum wage merely treat the symptoms when what is needed is an improved constitution. It sounds a bit like telling an emergency room patient that they ought to work out. In calling for the selection of “next-generation industries,” he said we should “focus in the same way we did with five to six heavy and chemical industries in the past.”

Is this suggestion truly rooted in the belief that this is a day and age where that sort of approach will work out under government leadership? Did the so-called “FAANG” companies in the US (Facebook, Amazon, Apple, Netflix, and Google) come about because of industry policy?

Maybe Chang just wanted to communicate his scholarly advice to the South Korean economy. But really, “state of emergency” was a bit much. The data he used to back up his assessment is also questionable. It’s dumbfounding to think his remarks might end up influencing the public discourse – and even government policy – simply because they came from a noted scholar.

Even sadder is the state of affairs with the South Korean government. The 2019 economic policy course announced by the Moon administration on Dec. 17 was filled with measures for “encouraging investment,” with only faint hints of the fair economy that is directly tied to industry ecosystem creation. I can only hope this is not a creeping victory for “them,” using the Professor Changs of the world as their hosts. Success for them is unlikely to translate into success for the South Korean economy as a whole.

Is anyone really prepared to deny that people are struggling to make a living? Examples are rife: the polarization exemplified by the gap between large corporations and small businesses, the difficulties faced by the self-employed, the shortage of jobs, household debt, and housing prices. The administration bears its share of blame as well: failing to coordinate among stakeholders and failing to carefully separate needed regulations from needless ones. That being said, I’m not sure it’s appropriate to resort to the kind of language we might use when talking about a collapse in national systems due to an earthquake or war. This is a moment that calls for objectivity and discernment on the administration’s part.

By Kim Young-bae, editorial writer

Please direct comments or questions to [english@hani.co.kr]