(EDITORIAL from the Korea Times on Dec. 18) - 2009 Economic Plan

Shovel-Ready Projects Based on Rule-of-Thumb Forecast
``Advanced Korea" is the Lee Myung-bak administration's stock phrase. Pressed on whether the government's growth projection of 3 percent for next year was too optimistic Tuesday, officials said it was rather a ``target" than forecast.

Few advanced countries set up economic growth targets in specific numbers, however.

Be that as it may, the ``official" expansionary target is too ambitious, indeed,
especially compared with those of private institutions here or abroad, which
range from 2 percent to a negative 3 percent.
The officials could be forgiven had they made these and other rosy projections to
raise the people's morale or rouse them into activity. If there were some
political considerations involved in hammering out these figures ??? Lee has a
nickname of ``economic" president ??? however, the popular feeling will be closer
to deception than disappointment later.
Come to think of it, the rule-of-thumb estimates are neither new nor surprising
given the track record of Lee's economic team over the past 10 months, which has
mostly failed to look even a few weeks ahead, pothered after the event and gone
in several ways. The President is urged to meet the New Year with a new economic
team, which understands the market better and be understood by the market better.
At first glance, the government's economic management plan for 2009 seems not
much different from those of other governments in that it features spending and
tax cuts to stave off looming recession and lay the basis for long-term recovery.
But the details can hardly be more different. Take the project to ``refurbish
four major rivers," which officials compare with the U.S. New Deal program in the
1930s. First of all, most people are not sure whether the state of the four
rivers is so bad as to require 14 trillion won in four years. As recently as in
2006, the construction ministry said 97.3 percent of the refurbishing projects
had been completed in these rivers.
The officials also cite their effects on creating jobs. But these projects can
provide jobs for only day laborers and part-timers, including migrant workers.
How many of the 550,000 college graduates next year will be doing the spadework
there? Their greatest beneficiaries will be provincial builders ??? corrupt,
inefficient but hard to ignore politically. The chairman of the governing Grand
National Party recommended Lee turn the entire country into a huge construction
site, to which the construction CEO-turned-President nodded with satisfaction.
People are wondering whether it is the case of old habits dying hard or
consideration for the President's former colleagues.
All this has something to do with the governing camp's misunderstanding ??? or
distortion ??? of the New Deal, which was far more of a progressive economic
policy for the society's weakest classes than ``digging a hole in the ground," as
economist John Maynard Keynes put it.
In contrast, the biggest victims of the government's economic plan will likely be
the minimum wage earners and non-regular workforce. In the same context, the
government slashed heavy real property taxes for the wealthy, while encouraging
local governments to levy signboard taxes on self-employed.
Shovel-ready projects themselves may not necessarily be bad, but that depends on
what is being built and where. Also, the government economic stimulus should aim
at both boosting the economy in the short run and developing a new growth engine
in the long perspective while saving and creating maximum jobs in the process.
Tuesday's announcement is likely to meet neither goal, we are afraid.
(END)