However, a weak won policy is not entirely bad as some are claiming. If the won falls against the dollar due to such a policy, import prices rise but exports grow. Korea is seeing a deficit in its balance of international payments, so a weak won boosting exports and decreasing imports could be seen as a solution. But we should not forget that the Kim Young-sam administration pursued a weak won policy too aggressively, worsening Korea’s account deficit and in the process making the country more vulnerable to the impact of the Asian financial crisis.

Right now, however, the pressure comes primarily from overseas, fanning consumer price increase, so sticking to a weak won makes it hard to tame inflation. And over the 10 years or so since the financial crisis, Korea has posted back-to-back trade surpluses -- too much in the opinion of this writer -- thereby boosting the country’s dollar reserves. So it is acceptable for Korea’s trade deficit to widen a little by allowing the won to strengthen against the greenback. In other words, a stronger won will not have a huge impact on Korea’s currency reserves but a large effect on keeping consumer prices from rising, so this could be said to be a better policy choice.

The view can change according to shifting circumstances. If Korea’s deficit in its balance of international payments rises, depleting its dollar reserves to dangerously low levels, then the time may come when the government must return to a weak won policy.

There is no silver bullet when it comes to economic policy. As seen in the examples cited above, the situation dictates which policy is the better one. At the same time, different decisions may be made depending on the point of view. As a result, I have my own opinion, but cannot say this is the best answer.

But one thing I can say confidently is that there are policies that can easily be changed according to necessity, and there are others that, once set in motion, are difficult to reverse. And the more difficult a policy is to reverse, the more caution it requires in implementing.

Usually macroeconomic policies involving foreign exchange, interest rates and fiscal spending are easy to fix. When it comes to such reparable policies, slight mistakes in decision-making or haste in implementing them are not fatal mistakes, because the direction of such policies can be shifted or their intensity adjusted.

But there are policies that, once chosen, are difficult to alter. These are policies that bring about huge changes in the structure of the economy and society or are bound by international treaties that are impossible to reverse if problems arise later.

A prime example of such an irreversible policy is probably the cross-Korea canal project being pursued by the Lee Myung-bak administration. Once dug, there is no way to return the waterways to the way they were.

The same goes for the Korea-U.S. and Korea-EU free trade agreements, which the Roh Moo-hyun and Lee Myung-bak administrations have pursued aggressively. In Europe during the 1800s, there were 20-year free trade agreements, but those being pursued by our government now are permanent deals that cannot be unilaterally scrapped once signed unless one is willing to sever diplomatic relations.

The same goes for the privatization of state-run companies. Although it has slowed down due to public opposition, some sectors being considered for privatization, including electricity, water, rail and public health insurance, are by nature unsuitable for privatization and must be tightly regulated if they are privatized. If you consider how difficult it is to return a company to government ownership once privatized, these endeavors must be approached with great caution.

The more irreversible a policy, the more it requires research, feasibility studies and a clear consensus and approval from the public before being implemented. It can take several years for proper assessment and debates to be held. A delay of a few years in privatization or in the ratification of a free trade deal does not lead to crisis, but privatizing a state-run company that is unsuitable for it, forging a premature FTA or digging a waterway that should not be dug could lead to irreversible results.

The column was contributed by Chang Ha-joon, a professor of economics at the University of Cambridge.