The Era of Bureaucrats Has Already Ended, But Still..."Is This Really Your Best?" [Economic Policy Zoom-In]

The book "The Age of Economic Bureaucrats" (written by Hong Jehwan), published in April this year, tells the stories of 13 outstanding economic bureaucrats who contributed to achieving the "Miracle on the Han River." This was during a period of dictatorship, with a government-led economy, significant discretionary power for bureaucrats, and insufficient economic laws and regulations-circumstances very different from today, which made such achievements possible.

From today's perspective, it feels like a story from a bygone era. The age of bureaucrats has already passed. Nevertheless, the true role of bureaucrats still exists. The brief surge of anarchism in the early 20th century has disappeared into history. Some form of government is always necessary; the only question is whether it is a good or bad government. Even though the power of bureaucrats has diminished, their role remains. The only issue is whether they are good or bad bureaucrats. Although the age of bureaucrats has ended, I urge those who wish to become good bureaucrats to ask themselves whether they are truly doing their best.

Even until the early 2000s, it was still considered the "age of bureaucrats." By the early 1990s, the private sector had grown both quantitatively and qualitatively to the point where some argued that the Five-Year Economic Development Plans were no longer necessary. Nevertheless, the power and influence of the government ("gwan") remained strong. Despite the intense market opening and economic liberalization that followed the 1997 foreign exchange crisis (IMF crisis), few believed that the age of bureaucrats had truly ended. The comment by former Financial Services Commission Chairman Kim Seokdong-"The government exists to govern"-during the debate over government-controlled finance ("gwan-chi geum-yung") symbolizes this era. Even in the early 2000s, economic bureaucrats aggressively tackled various economic issues. There was no other group with such expertise.

However, the power of the National Assembly continued to grow, and the advancement of democratization led to an atmosphere of increased information disclosure and the weakening of vested interests. Lawmakers began to recognize and actively pursue their core roles in legislation and policy. Even ruling party lawmakers, once called "rubber stamps," began to criticize the government and propose new policies. Civil organizations and various associations, as interest groups, developed their own expertise and voiced diverse opinions.

The grip (control) of the Presidential Office (formerly the Blue House) also became much stronger. Until the Roh Moo-hyun administration, political appointees and career bureaucrats in the Presidential Office would debate in front of the president, leading to rational decision-making. However, during President Lee Myung-bak's administration-which faced a major crisis early on due to the mad cow disease incident-the need for unified action among government ministries became paramount, and this approach continued under subsequent administrations. The Presidential Office began to lead issues and policy directions, while the influence of ministers decreased significantly compared to the past. Some even self-deprecatingly referred to ministries as mere subcontractors carrying out orders.

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During multiple changes in administration, some bureaucrats faced audits and investigations by the Board of Audit and Inspection and the prosecution, either in the process of correcting the previous administration's flawed policies or under the pretext of doing so. As a result, some were punished. Depending on whether bureaucrats had worked in the Blue House under progressive or conservative administrations, politicians began to categorize them as "ours" or "theirs." As things have developed to this point, the age of bureaucrats has indeed come to an end.

It is often said that "bureaucrats have no soul." Bureaucrats cannot directly oppose the philosophy and policy direction of a government elected by the people. They can only present grounds and logic for the administration to consider-such as opposing opinions, possible side effects, whether the budget to be allocated is appropriate, or if there are more urgent priorities for funding. Of course, voters do not necessarily agree with every campaign promise or philosophy when electing a candidate. Nevertheless, there is no denying that "elected power represents the will of the people," and appointed bureaucrats must follow the will of the elected authority.

The phrase "bureaucrats have no soul" became an issue during the Lee Myung-bak administration's transition committee, when the Government Information Agency, which had spearheaded media reform under the Roh Moo-hyun administration, was pressed.

The last time economic bureaucrats truly led policy was during the Roh Moo-hyun administration. They persuaded the progressive government, overcame opposition from its support base, and concluded the Korea-US Free Trade Agreement (FTA). Under Minister of Health and Welfare Rhyu Si-min, they also achieved pension reform despite fierce resistance. Although the "for-profit hospital" controversy prevented significant results, they announced and actively pursued measures to promote the service industry.

Since then, there have been few memorable achievements. The Park Geun-hye administration attempted three major reforms-pension, labor, and education-but only achieved some success with civil servant pension reform, while the rest fizzled out. These were also pursued as presidential campaign pledges, with the driving force being the administration rather than the bureaucrats.

Amid various changes, bureaucrats have increasingly relied on budgets and funds.

While budgets are a traditional policy tool, concerns arose that, after the Ministry of Planning and Budget merged with the Ministry of Finance and Economy (a deputy prime minister-level ministry) during the Lee Myung-bak administration, there was excessive reliance on budgets as a policy tool. As bureaucrats lost policy leadership, the importance of budgets-which they could easily control-grew.

Instead of solving problems with innovative policy ideas or pushing through structural reforms despite stakeholder resistance, a culture developed where simply allocating a budget was seen as "doing our job as bureaucrats." There is little emphasis on how the budget is actually executed, how it works in practice, or whether the original objectives have been achieved.

Recently, the Lee Jaemyung administration pledged, even before the presidential election, to separate the budget function from the Ministry of Economy and Finance. Following the launch of the new administration and ensuing discussions, some department heads within the ministry reportedly expressed optimism, saying, "We have been too swayed by the budget until now. Now, we can finally take the lead in policy work."

Funds originated as policy funds to support venture businesses. Using the "fund of funds" approach, the government invested seed money to attract private capital (such as venture capital), while actual management was handled by the private sector. Institutionalized after the foreign exchange crisis to foster ventures, these funds initially invested in ventures and early-stage startups until the mid-2000s. Later, they expanded to include regional specialization funds, youth startup funds, M&A funds, restructuring funds, cultural content funds, technology finance funds, "Sobu-jang" (materials, parts, and equipment) funds, bio funds, global funds, and carbon-neutral funds, depending on the needs of the time.

Another trend was the creation of policy-driven government funds. These included the Green Growth Fund under the Lee Myung-bak administration, the Unification Fund under the Park Geun-hye administration, the New Deal Fund under the Moon Jae-in administration, and now the "National Growth Fund" under the Lee Jaemyung administration. The government or public institutions provided initial capital, private management companies managed the funds, and in some cases, the public could invest through public offering funds. Sometimes, the government or public institutions participated as subordinated investors, ensuring that as long as total fund losses remained within 30%, ordinary citizens would not incur losses.

Whether budgets or funds, the problem is that the approach has become input-oriented rather than goal-oriented. Instead of focusing on how much progress has been made on the challenges facing the country or how problems have been solved, the process ends with reporting how much budget was allocated or how much was invested through various funds.

The Ministry of Economy and Finance recently announced 30 leading projects for the AI transformation and super-innovation economy in its "New Government Economic Growth Strategy." Deputy Prime Minister and Minister of Economy and Finance Koo Yooncheol stated, "We will assign one department director to each project to ensure proper management. Naturally, companies will be at the center, but the government will provide top-priority support packages in finance, taxation, banking, human resources, regulation, and site selection." Deputy Prime Minister Koo added, "The AI transformation is the only breakthrough to reverse the decline in growth caused by demographic shocks. We will mobilize all our resources to ensure that tangible results are achieved in a short period."

Among the recent "Economic Policy Direction" announcements by the Ministry of Economy and Finance, this one conveyed the strongest sense of determination and resolve. The fact that it presented specific goals and directions also set it apart from previous announcements. I hope Deputy Prime Minister Koo's determination and resolve will spread to all economic bureaucrats.

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