[Viewpoint] Technocracy Has Disappeared from Public Policy

Professor Kim Hong-beom, Department of Economics, Gyeongsang National University

The essence of public policy lies not in politics but in science (expertise), and the core of science is facts and rational logic. However, according to A. Blinder, former Vice Chairman of the U.S. Federal Reserve and professor at Princeton University, "It is neither possible nor desirable to remove political colors from the government." This is because the legitimacy of policy lies not in expertise but in "popular support." In reality, countries draw a "line separating political decisions from expert decisions" on various policies. At the end of the 20th century, he pointed out the short-termism and politicization of policies caused by elections and proposed shifting the line. More public policies (for example, fiscal policy) should be decided through a technocracy domain, that is, a 'policy system centered on expertise,' like monetary policy.

The reality was different. It was due to the 2008 global crisis. Because recovery was so slow, the policy horizon of governments worldwide remained short-term for a long period, and political colors in public policy became even stronger. Since early last year, the COVID-19 crisis has played a significant role. How about South Korea?

First, the Moon administration’s flagship economic policy, income-led growth, was never free from criticism that it was a theory and empirically weak fiction. In fact, income-led growth caused enormous market distortions every year through the artificial rapid increase of the minimum wage rather than growth. From some point on, the term 'income-led growth' quietly disappeared from "economic policy direction" press releases, but the government still clings to this failed policy. Meanwhile, real estate policy completely ignored market principles. Viewing the entire population as potential speculators, it focused solely on eradicating speculation, producing anti-market regulations. Every time regulations were introduced, housing prices soared conspicuously. This was because exaggerated housing price expectations caused a surge in demand and a sharp drop in supply. Especially with the three lease laws, both housing prices and monthly rents are soaring simultaneously, yet the policy stance has not changed.

Let’s look at the national treasury. During the five years of the Moon administration, the projected net increase in national debt was about 410 trillion won, which is more than 1.5 times the approximately 266 trillion won net increase over ten years under the Kim Dae-jung and Lee Myung-bak administrations, which managed the foreign exchange crisis and global crisis respectively. This was the result of increased wasteful welfare spending. Since the ultra-expansionary stance will continue next year, fiscal soundness is out of the question, and the tax debt for future generations will only accumulate. Financial supervision is also problematic. The government dances to the political circle’s co-prosperity bills that treat finance like a bottomless well. Financial services for ordinary people have long been disguised as 'consumer protection,' and the denial of interest rate differentiation based on borrower creditworthiness (financial principles) has transformed into 'warm finance.'

In short, technocracy has completely disappeared from the Moon administration’s major economic and financial policies. In fact, it is not only in the economic and financial sectors. The situation is the same in other fields such as nuclear phase-out, quarantine, education, defense, and diplomacy. Non-factual, illogical, and irrational elements dominate public policy overall. Populist politics, which openly deny expertise by emphasizing the conflict between ordinary people and elites, have completely overwhelmed policy. What then is the future of our society?

Adam Smith, famous for 'The Wealth of Nations,' once said, "There are many evils that bring ruin to a country." It means that "no matter how wrong the policy is, the country does not easily collapse," so should we be comforted? Look at Argentina. It was the "country of the future" for European youth in the early 20th century, but after a century of populism, it has become a failed country "trapped in the past." What else could be a better cautionary tale?

Kim Hong-beom, Professor of Economics, Gyeongsang National University