Where should we go from here?

By Eugene Lee

Having won the election, the incoming Yoon Suk-yeol administration is set to fight an uphill battle. In the face of rising inflation and global energy prices entangled with the ongoing geopolitical cataclysm in Europe, the government is set to deal with what hopefully is not too much on its plate.

My hunch is that instead of responding to oncoming crises, the best strategy would be not only to anticipate, but rather expedite them and prevent any potential fallout. A fair share of adjustment is needed to bulletproof the country. You may ask what do I mean and then how should it be done. So, please, hear me out.

Foremost, the reality of today poses a completely different set of challenges and objectives and we must understand and act upon them soon. A failure to address those challenges adequately will require a doubling of the effort needed to recover from the damage later on. Korea today exists in a world that isn't what it used to be, even just a decade ago.

Many policies, in the areas of education, healthcare, immigration, financial sectors (are ones I'd like to start from), have outlived their purpose, as they were created when Korea was a developing country. Answering why these spheres will require special attention is a separate story.

For now, let's hit those four areas. One comment though, readjustment of the policies in the spheres I've listed below needs to be made in a systemic and orchestrated way, as those spheres are closely interlinked.

Korea is the 10th-largest world economy and generates a substantial amount of wealth comparable to well-developed countries. However, the toolbox of regulations and supervision in the financial sector is inadequate, if not outdated. A lack of transparency and expert knowledge breeds conditions for corruption and misuse of corporate and public funds.

A deeper overhaul is necessary not to eradicate those, but to meet a bigger future. Better transparency and oversight of corporate funds, for example, will not only help the government understand the flow of finances and investments, but also improve the condition for legal money on the global level and address the issues of white-collar crime along the way.

A new, carefully revised set of laws, harmonized with global standards, will create more trust in the market, plus, the ability to govern (i.e. tax) it effectively, and therefore will lead to the improved sentiment of foreign investors.

The investment here so far has been big; however, the current educational system does not meet the needs of the contemporary economy, and it especially doesn't reflect the demands of the ongoing digitalization and virtualization of the world economy.

The effort needs to be made not only through the provision of an extended education (after-class tutoring) in elementary through high schools, but a stronger push for experimentation in the development of a new curriculum to raise visionaries, creators and entrepreneurs of the future.

Universities, confronted with a declining number of students, are at an existential crossroad ― some must choose either to close down or widen the enrollment age. On the global level though, Korean education has enjoyed a substantial growth and visibility attracting interest from abroad.

This lack of domestic students can be filled up by attracting a larger number of international students. Upon their eventual graduation they are likely to follow two paths: remain or leave the country. If they remain, they will create a substantial part of the economy, diversifying and globalizing Korea further through international marriages and the creation of new businesses, often with global outreach, in effect, strengthening the Korean economy.

If they decide to leave to pursue their careers abroad, the links and their experience with the country will take them back to their home countries and eventually make them experts on Korea, which will also lead to a more extensive international integration of the country.

Many policies have helped Korea achieve the standards of the developed nations. Korea's plastic surgery and dentistry industries, for example, are some of the best in the world. However, these spheres are rather technical in their foundation.

More support is necessary toward basic sciences in medicine (for example, microbiology, virology, nuclear biology and nanochemistry). For example, government efforts in the 90s laid the foundations for an adequate response to earlier viral outbreaks (SARS, MERS, avian flu, and finally COVID-19). The outcome has been great, however, what is lacking is prevention and treatment.

A prompt response from the government also allowed Korea to keep the COVID-19 pandemic under control until we got the right tools to fight it. The next government would need to have a deeper understanding of each sector and design necessary policies to allow the sector to leap forward, in not only responding to the problems, but also preventing them.

The problem is that the earlier adopted subsidies are turning "evil," instead of being "good." For example, a subsidy that initially was designed to help expecting patients, eventually "fed" private clinics. These clinics, while specifically targeting the subsidy and squeezing every bit of it, in some cases without parents' consent and were misleading, purposefully misdiagnosing or prescribing dodgy treatments, sometimes in collusion with pharmaceutical and medical equipment producers.

These, in effect, created massive imbalances in the quality of healthcare provision across the country, with good healthcare in the capital and surrounding region and much lower quality in other regions.

In case of prenatal care, misleading diagnoses led to a high number of abortions, causing physical and psychological suffering to parents, and they have also led to an unknown number of unborn children. In other words, the pursuit of profits by private clinics is feeding into a dropping birthrate across the country.

Some of these traumatized parents face the gruesome reality caused by local clinics, even choosing to avoid pregnancy completely. Moreover, with a growing number of multicultural families, the impact of these predatory practices on these families remains unknown and needs deeper evaluation and maybe even punishment.

All support during the pandemic that went to the sector was necessary, as it has helped many businesses to survive and most importantly adapt to new realities of the market. However, a better understanding of where the funds went is necessary.

This analysis and understanding how support functions in general, will help the government to design better policies and improve the effectiveness of any subsidy in the future. It will also help the government to ensure that the help has reached the relevant groups and lead them to benefit, not in a short, but in a long-term way.

The support may have preserved some businesses, but we must realize that many of these jobs aren't coming back. As a result, a more meaningful change is necessary to dampen the hardship of economic readjustment.

In conclusion, just a little word of caution. It might prove wise not to become overzealous with the concept of change. Some in academia compare a country's economy to a very sophisticated supercar. And in the attempt to give it more horsepower, or "tune" it, you certainly don't want to ruin it. Of course, you may try to make some minor modifications, in the case of the economy, it would be reforms and deregulation.

But any major changes would be quite risky. For example, if you want to change your unique supercar from being a left-hand drive to a right-hand one, ― technically, it is doable, ― but you run the risk of jeopardizing your car's integrity. Forget the analogy, the economy is a much more intricate and complicated thing than a supercar, or even any human-made device. Any careless interference into its function without proper understanding can easily make it slower or, god forbid, render it useless.

So there you have it, here is a miniscule share of my ideas and I have just scratched the surface. Even if I do want to tell more, at the end of the day, I am limited by time and the number of published words. No pun intended! And my only hope is that someone in the government picks these ideas and runs with them.

Eugene Lee (mreulee@gmail.com) is a lecturing professor at the Graduate School of Governance at Sungkyunkwan University in Seoul. Specializing in international relations and governance, his research and teaching focus is on national and regional security, international development and government policies in Northeast and Central Asia.