[Lee Jung-jae Column] True Power Revealed in Times of Crisis

Speak of Crisis in Restrained Language
Gain Public Support and Create Government Momentum

[Asia Economy Lee Jeong-jae, Director of the Economic Media School and Editorial Advisor] Handling a crisis is the true skill of power. A well-known example is former President Kim Dae-jung. DJ crystallized the crisis with the simple phrase, "The treasury is empty." This ignited the crisis-overcoming DNA of the people. Following DJ’s lead, the entire nation mobilized for an all-out effort, reforming conglomerates and labor, and declared the end of the crisis in just a year and a half. Riding this momentum, DJ swiftly concluded the long-awaited Pyongyang summit. This is an example of properly consuming and utilizing a crisis.

In fact, the treasury was not empty at that time. The finances were unusually solid. Only the foreign exchange reserves were temporarily depleted. The granary was full, but there was no cash on hand. As an economic expert, DJ could not have been unaware of this fact. Nevertheless, he succeeded in transforming the energy of the crisis into the driving force of national governance through a brilliant rhetorical device. This is how a president’s language should be. It stands in stark contrast to former President Kim Young-sam, who was surrounded by bureaucrats saying "the fundamentals are fine" and tried to ignore the crisis, ultimately leading to his downfall.

What about the Yoon Seok-youl administration? To put it bluntly, it is hard to give them a high score. The current crisis is unprecedentedly complex. The triple highs of inflation, interest rates, and exchange rates, combined with the previous administration’s excessive spending, have truly emptied the treasury. The new Cold War era and supply chain disruptions have brought a crisis from places never seen before. As a small open economy, Korea is inevitably more affected. It would be insufficient even to properly inform and emphasize the crisis. Yet the president says, "There is no need to worry." Government officials also echo, "It’s okay." This inevitably raises doubts about their ability to handle the crisis.

Why on earth does this government avoid talking about the crisis? A presidential office official revealed, "The economy is psychological. If the government says there is a crisis, the danger could become real." In other words, the economy is that difficult. It takes courage to call a crisis a crisis. Byun Yang-gyun, presidential economic advisor and former policy chief of the Roh Moo-hyun administration, said, "Speaking the truth is the hardest. To say the economy is bad, you must also present solutions on how to overcome it." Which side is this government on? Do they lack alternatives, confidence, or both? The more so, the more they should talk about the crisis. There are at least three advantages.

First, crisis talk prevents the crisis. It can activate the Korean people's unique DNA for overcoming national hardships. The current crisis cannot be overcome by the government alone. Even if the government, businesses, and households unite, it will not be easy. A second brilliant rhetorical device is needed to unite the people, following "The treasury is empty."

Second, it can gain momentum for reform. DJ’s labor and conglomerate reforms were possible thanks to the foreign exchange crisis. To push through pension, labor, education, and regulatory reforms despite resistance from the Korean Confederation of Trade Unions and the major opposition party, a sense of crisis that "without surgery, death is certain" is essential. You cannot cut open a person’s belly if they are fine. It is common sense that a crisis justifies reform.

Third, it’s a no-lose situation. If the crisis does not come or is minor, that is enough. Like during Typhoon Hinnamnor, at worst, you only endure criticism for "unnecessary fuss." You can avoid resistance and shocks that would cost you power.

On the other hand, what happens if you say "There is no crisis" and "Don’t worry" like now?

First, you might end up taking the blame for the previous administration’s mistakes. The Moon Jae-in administration spent freely when times were good. As a result, now the granary is not just empty but completely bare. The biggest shield against the crisis is unusable due to the predecessor’s mistakes, so is there any reason to take joint responsibility by saying "Everything is fine"?

Second, overcoming the crisis becomes difficult. If the government says it’s okay, households and businesses become complacent. Even if oil prices rise, they do not save electricity. Conserving public resources is the first step to overcoming the energy crisis. Small things accumulate into great power. The same applies to overcoming an economic crisis.

Third, at best, you break even. If you say "The typhoon won’t come" and it does, the damage and criticism increase. Why does the Meteorological Administration usually forecast "heavy rain" or "typhoon" first? Shouldn’t the ability to run the country be at least as good as the weather forecast?

Of course, just talking about the crisis is not enough. Quoting Byun Yang-gyun again, "You should not only emphasize the crisis. You must also talk about hope. The president is the overall economic commander. He must demand shared sacrifice but also speak of the resulting ‘victory and hope.’ That is the vision and blueprint." The vision he pointed out was ‘restoration of the middle class.’