[Desk Column] The First Button of Y-nomics is 'Inseon'

[Asia Economy Jung Doohwan, Managing Editor of Economic and Financial Division] It is a dramatic success story. The Prosecutor General appointed by the current government ran as an opposition candidate and won the presidential election by the smallest margin ever of 0.73 percentage points, about 240,000 votes. One win in one attempt. No politician in the history of the Republic of Korea’s constitution has seized the presidency through a single confrontation like President-elect Yoon Seok-yeol. On the early morning of the day after his victory was confirmed, a flashback of the year following his resignation as Prosecutor General must have passed through his mind.

Paradoxically, President-elect Yoon is still an unverified leader. As shown in various polls after the election, his victory was as much a result of antipathy toward the ruling party candidate and disappointment with the Moon Jae-in administration’s five years of governance as it was support for himself. The fact that nearly half of the voters still do not support him lies behind his victory. Therefore, his victory is incomplete.

Unfortunately, the five-year term he must walk is a thorny path. The political landscape of a minority government with the opposition Democratic Party controlling 172 seats is a formidable mountain to climb. However, the greater test he faces immediately is the economic situation.

The economic conditions are not optimistic. Inflation is soaring relentlessly as the supply chain crisis triggered by COVID-19 is compounded by the prolonged Russian invasion of Ukraine. Inflation is poised to erode the growth rate that had just begun to recover. Inside and outside the Bank of Korea, it is becoming a foregone conclusion to lower this year’s growth forecast from the 3% range to the 2% range. On the other hand, concerns are growing that this year’s inflation rate will surge to the 4% range due to the recent supply chain crisis and sharp rise in oil prices. The market increasingly sees a high possibility of slowflation, where inflation drags down real growth, if not full stagflation.

Professor Yossi Sheffi of MIT recently defined the changes triggered by COVID-19 as the “New Abnormal” in his book, diagnosing that “most countries except the U.S., China, and Europe currently lack the capacity to overcome the crisis.” This is because they do not have the financial capacity to implement massive economic stimulus packages. South Korea is no exception. The national debt-to-GDP ratio has already soared to an all-time high of 50.1%.

Therefore, the appointment of economic advisors for the Yoon Seok-yeol administration, which will launch in May, must be more cautious than ever. The merits of the election process alone should not be considered. The real estate policy, regarded as the biggest failure of the Moon Jae-in administration, must serve as a cautionary example for the new government. The political attempt to solve economic problems only drove housing prices sky-high, a result of the personnel disaster of appointing a politically inexperienced minister as the head of real estate policy.

During China’s Five Dynasties and Ten Kingdoms period, the prime minister Feng Dao, who served five dynasties and eleven kings, is a figure whose legacy is sharply divided. Sima Guang harshly criticized him as “the epitome of a treacherous official without integrity or shame” for changing lords repeatedly. On the other hand, there is a considerable counterargument that he was an outstanding prime minister who put the people and the country before the king. Feng Dao himself held the belief that “I am loyal to the country, not the king.” Ultimately, the evaluation depends on whom the loyalty is directed toward. Perhaps the reason he could remain prime minister through successive regime changes was his exceptional ability.

From the president-elect’s perspective, it is never easy to deliberately overlook the so-called meritorious supporters who helped win the election. However, our current economy is not in a position to reward achievements leisurely.

The fortunate thing is that President-elect Yoon has also announced the personnel principle of the Presidential Transition Committee: “We will serve with people who have the best experience and capability in each field.” As he promised, it is time to consider not who is “my person” but who is the most qualified. This must be a thoroughly observed principle in forming the new government’s cabinet. Appointing economic advisors with the insight to withstand the high waves of our economy without being swayed by political interests is the first task the Yoon Seok-yeol administration must devote itself to for five years of success.

This content was produced with the assistance of AI translation services.