[Insight & Opinion] What Are They Trying to Do... Policies Going Off Track

There are truly many strange and hard-to-understand occurrences. It was quite odd for the government to mention the risks of increasing household debt. It was the financial authorities who loosened loan regulations and increased household debt. They released 40 trillion won in special policy funds through the Special Bogeumjari Loan, allowed loans exceeding 1.5 billion won and loans to multiple homeowners, and introduced 50-year long-term mortgages. They also verbally intervened to suppress the rise in market interest rates. Even if the Bank of Korea raises the base interest rate, it is unlikely that authorities suppressing loan interest rates would be effective. In October, 90% of the increase in household loans from the five major banks was mortgage loans. It is unrealistic to expect loans to decrease while lowering interest rates. The government's soft-landing real estate policy encouraged the increase in household debt. They led the way in loosening loans and then warned that "all-in" investments are risky. This is contradictory.

It is also strange to hope for inflation to be controlled while preventing interest rates from rising. The cumulative inflation rate until October this year was 3.7%. Achieving the Ministry of Economy and Finance's inflation target of 3.3% for this year has become practically difficult. The government's measure is to introduce a "dedicated management system" by appointing public officials responsible for processed foods, which are directly linked to the cost of living for ordinary people. Although it is called "management," it essentially means pressuring the industry to suppress price increases. This is similar to the "Price Management Responsibility Real-Name System" designated by the Lee Myung-bak administration in January 2012. At that time, 52 essential daily items were designated, and individual officials were held responsible for price increases. The outcome is not hard to predict: packaged snacks will shrink, and fruit juice content will decrease.

No one is unaware that interest rates must be raised to control inflation. While the whole world does this, we do not. This is strange. What about the temporary ban on short selling abruptly implemented on the 6th? Until now, financial authorities had rejected individual investors' demands to ban short selling. There are indeed issues with short selling regulations, and banning short selling may be necessary if needed. However, banning short selling when there is no crisis is inconsistent with international trends, yet this stance changed within a month. On the 11th of last month, during the National Assembly's Political Affairs Committee audit, the Financial Services Commission chairman questioned whether making short selling transactions difficult truly protects individual investors. Has that doubt been resolved in the meantime? There is no explanation of what changed in a month.

The electricity rate increase is equally strange. The government froze rates for residential use but raised electricity rates only for large corporations among industrial users. This contradicts the principle of beneficiary pays and cost-based pricing. The "cost-based electricity pricing" was emphasized by the president since his candidacy. The current government, which criticized the previous administration for causing astronomical Korea Electric Power Corporation deficits by not raising rates on time, has done the same.

The issue currently causing the biggest controversy is the push for Seoul annexation by Gimpo City in Gyeonggi Province. On the same day the ruling party formed the "Mega Seoul" special committee, a "Local Era" proclamation ceremony attended by the president was held. Is the ruling party creating "Mega Seoul" while the government opens the "Local Era"? What exactly do the government and ruling party intend to do?

Upon reflection, it feels like everything the government does is going off track. Labor reform has caused controversy over working hours without progress. Pension reform was passed to the National Assembly without figures, and education reform is stuck on peripheral issues like the level of the college entrance exam questions. I really wish the government would clarify what it intends to do. Come to think of it, the current administration has yet to present a clear direction or blueprint for state affairs.

Kim Sang-cheol, Economic Commentator

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