The New Nation - Internet Edition

Kang Seok-hoon

Life has its ups and downs. We have to act properly on the uphill road in order to succeed. But acting properly on the downhill road is much more important. In most people's lives, success or failure is determined by competition on the downhill. In economy, too, there are up and down cycles. The Korean economy is now about to slump, despite the absence of a boom over the past several years.

Like a human life, success or failure of government economic management is determined during a downturn. The problem with President Lee Myung-bak's economic policy seems to be that his administration is determined to make Korea an exception to a worldwide economic downturn. Considering today's globalised economic structure, such an attempt can hardly succeed.

Through our own experiences, we're already aware of what happens when the Korean economy moves in opposite direction from the global trend. In the early 1990s, when the world economy was weakening, the Korean economy was booming At that time, the entire nation was bustling with construction work under a government drive to build 2 million housing units. In the early 2000s, when the global economy was again backpedaling, the Korean economy posted extraordinarily strong growth. At that time, credit card companies were indiscriminately doling out cards on street corners, urging consumers to enjoy themselves.

But the boom times brought us only short-lived pleasure. When the global economy began to recover, Korea was forced to suffer from the side effects of its economic boosters.

The same mistake should not be repeated. The Lee administration, which vows to pursue pragmatic policy lines, is now being asked to pay attention to the disparities of an economic slowdown.

In Korea, economic upturns tend to benefit everyone, though to varying degrees. In bad economic times, however, the lower income people suffer the most. When the economy slows, sales at luxury hotel restaurants remain unchanged, but sales at small-scale neighbourhood restaurants fall sharply.

Salaries of regular workers at conglomerates are not affected much, but non regular or part-time workers lose jobs or assignments. Eventually, the middle and low income people feel the brunt of the slowdown, and small and mid-sized enterprises that depend on middle-class consumers are driven to the brink.

The government needs to establish temporary income-boosting policies to help the people below the middle-income class survive an economic slump. Tax cuts that benefit low-income earners are necessary. Tax-exempt financial products should also be introduced and the government needs to reinforce its loan guarantee programme.

Attention to small and medium-size enterprises also is needed. The focus of the Lee administration's "business-friendly policy" should be on small businesses, rather than conglomerates.

In addition, the government has to further reinforce policy mechanism to boost fair competition and coexistence between large and small businesses. Small and medium-size companies should be given greater state support to beef up their R&Ds and hire superior employees. Small businesses struggling with troubled overseas investments also deserve government attention and support.

The Lee government, under fire for the appointment of controversial scandal-tainted figures as Cabinet ministers and presidential secretaries, can be truly loved by the public, if it makes sustained efforts to support lower income people weather an economic downturn.