[fn Plaza] An Economic Team That Only Does Its Homework Cannot Overcome a Crisis

It took 19 days for the 26.2 trillion won “war supplementary budget bill” to be drafted and then submitted to the National Assembly after passing the State Council of South Korea on the 31st of last month. Normally, it takes 40 to 50 days to prepare an extra budget. The U.S.–Iran war that triggered this supplementary budget was halted for the time being on the 7th (local time).
However, the negative impact of the war has already seeped into every corner of our daily lives. As Middle Eastern oil supplies shrank, naphtha—often called the “rice of the petrochemical industry”—was pushed into a supply shortage. After a shortage of standard garbage bags, even syrup bottles used for medicine are now in dangerously short supply. If basic household and medical necessities are this strained, public anxiety can only grow.
In that sense, it was right to hurry the extra budget as if carrying out a military operation. Even so, cutting the usual preparation period by more than half and finishing in the shortest time on record is an achievement. The government’s extra budget, drafted under the baton of President Lee Jae Myung, moved quickly.
President Lee’s leadership, which puts work at the center, is widely recognized. He gives generous evaluations to people who have hands-on experience in administration that directly connects with citizens, or who are reputed to be good at it. Inside Cheong Wa Dae (the Blue House), he is known to stress the importance of administration whenever he has the chance, even during internal meetings.
Senior members of the ruling Democratic Party of Korea are now vying in primaries for heads of major local governments, seeking to reinvent themselves as administrators. This trend is part of the same pattern.
The president is driving the agenda almost single-handedly. It is not just about the extra budget. He is taking the lead on issues ranging from ending the grace period for heavy capital gains taxes on owners of multiple homes, to the stock market, tariffs, and fuel prices.
There are results as well. According to a survey released on the 2nd by Gallup Korea, President Lee’s approval rating for his administration stands at 67%, a record high that continues. Some argue that he is merely benefiting from the People Power Party (PPP), which has failed to sever ties with the so-called “Yoon Again” faction and remains mired in confusion even with local elections approaching.
But if President Lee’s job performance were truly poor, would the public have given him such high marks? That is a question worth asking. When performance and reputation are good, they should be sustained. President Lee’s micromanaging style of leadership—closely examining every matter and personally setting the agenda—is translating into speed. The “war supplementary budget,” in which officials at the Ministry of Planning and Budget worked in perfect unison, to the point of nosebleeds, is a prime example. Yet we must also look at the downsides. A president who knows administration well and issues highly specific instructions, combined with State Council of South Korea meetings that are now routinely broadcast live on television, can normalize a culture of bureaucratic inaction. For civil servants, the risk of being publicly rebuked may discourage them from voicing dissenting opinions at all, pushing them to focus only on taking dictation. If a minister behaved this way, what room would be left for frontline policy officials to speak up? Some compare the year 2026, when the Middle East crisis erupted, to 1929 and 2008—the years of the Great Depression and the global financial crisis. That is how sharply the global economic environment appears to be shifting. In this context, the assessment by the Center for Strategic and International Studies in the United States (CSIS) that “South Korea has suffered the greatest damage among non-combatant countries” is deeply significant. The Organisation for Economic Co-operation and Development (OECD) has also cut its forecast for South Korea’s economic growth rate this year by 0.4 percentage points, the largest downgrade among major economies. We must put national survival first and prepare for the post–Middle East crisis era. It will be difficult to break through the current turmoil if only the president is visible. The president cannot do everything. Even if he knows what needs to be done, he cannot carry it all out alone. For national agendas and broad social compromises, the strength of the system matters more than any individual. The spirit of the times is demanding new thinking across the entire spectrum of economic policy. As market economies retreat, the rise of state capitalism is being forecast. Government influence over economic policy is growing stronger, and the need for it is also increasing. In Japan, the core policy driving the revival of its long-stagnant economy after the “lost three decades” has been the active use of fiscal policy. Good policies come from creative thinking. The Government of Japan has announced plans to provide more than 10 trillion yen (about 93 trillion won) in public support by 2030 to strengthen the foundations of artificial intelligence (AI) and the semiconductor industry. In the United States, Donald Trump’s “America First” agenda, which uses tariffs as leverage, is also centered on government-led industrial policy. For a long time, heavy state involvement in industrial policy was seen as a shortcut to failure, undermining market efficiency. Yet in order to protect the economy and sustain growth amid external threats such as supply chain disruptions and geopolitical conflicts, expanded government intervention now appears to be an unavoidable choice. The Iran war could become a major turning point in the shifting global standing of the United States. A yes-man economic team and a dictation-style bureaucracy cannot carry the country through a crisis-level economic turning point. In his policy speech on the supplementary budget, President Lee said, “This situation may not end in the short term.” In extraordinary times, extraordinary measures are needed. South Korea must restore an economic policy elite capable of squarely facing reality in a changing international environment and crafting long-term strategies. This is the moment to think in multiple dimensions about South Korea’s existential survival strategy.
mirror@fnnews.com Reporter