Moon Still Stuck on Failed Economic Policies

      November 27, 2018 13:33

      President Moon Jae-in met OECD Secretary-General Ángel Gurría on Monday and agreed to promote the "inclusive growth" model the intergovernmental organization is pursuing. In a keynote speech at the APEC Summit a couple of weeks ago, Moon also mentioned his "inclusive growth" model and proposed to compile a case book on similar policies in APEC member countries. The president now seems to nurture hopes of international acclaim for a policy that has massively backfired at home. Cheong Wa Dae officials are patting themselves on the back claiming that Korea has become a global model for something-or-other.

      Cheong Wa Dae claims that the policy is an extension of his original pitch for income-led growth, innovative growth and fair trade principles. It may look on the outside like a government that sees itself as responsible for the public's wellbeing, but it is the same old wine in new bottles. Moon's sharp minimum wage hike, shortened working week and other policies have in fact increased unemployment and made low-income earners even poorer. Now we must not call the policy "income-led" any more, but the gimmick is fooling nobody.

      In reality the OECD and International Monetary Fund's vision of inclusive growth profoundly different from Moon's policy. Only last week the OECD issued a report criticizing his drastic minimum wage hike, warning that it could hamper hiring and growth. It was a rare instance of singling out a specific policy of a member country. Yet Cheong Wa Dae wants to share this failed policy around the world. Has the presidential office completely lost touch with reality?

      Most governments in the world at least pay lip service to being inclusive economies. The question is how to do it, and both communist and populist governments have signally failed in this task. In which direction is the Moon Jae-in administration headed?

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