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‘Leeman Brothers’ offer no panacea for economy

‘Leeman Brothers’ offer no panacea for economy
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First Published: Mon, Jan 26 2009. 11 56 PM IST

Updated: Mon, Jan 26 2009. 11 56 PM IST
It’s a bad sign when governments blame the media for their travails. Or go after obscure bloggers.
Reading the above paragraph, you may think this column is about China, Iran or Uzbekistan. Nope. It’s about South Korea, a technology-savvy democracy of 50 million people and home to the world’s 13th biggest economy.
Korean media is rife with breathless coverage of the nation’s most famous blogger, who goes by the pen name Minerva. He has become public enemy No. 1, at least within President Lee Myung Bak’s administration. Park Dae Sung, Minerva’s real name, was charged under laws on electronic communications. His alleged misdeed was writing online that the government ordered banks and trading firms to stop buying dollars.
This tale isn’t about whether Korean officials were right to arrest Minerva, nor is it an assessment of the veracity of his online dispatches. It’s about how Koreans are losing confidence in Lee’s handling of the economy.
Growth fell 5.6% last quarter, the biggest decline in a decade. Exports, business investment and consumer spending all got hammered by the global credit crisis. The economy may contract 2.5% this year, says Lim Jiwon, a Seoul-based economist at JPMorgan Chase and Co.
‘LeeMan Brothers’
On 19 January, three days before the dismal gross domestic product report, Lee replaced his finance minister of less than a year. Kang Man Soo was voted the worst minister in Lee’s team in a December poll of 82 economic professionals by Citizens’ Coalition for Economic Justice.
Lee stuck by Kang for far too long, drawing parallels with former US president George W. Bush, who stood by incompetent cabinet members. The media dubbed the pair the “LeeMan Brothers,” a play on Lehman Brothers Holdings Inc. Lee tapped Yoon Jeung Hyun to be Korea’s new finance minister, and not a moment too soon.
The damage has already been done. Lee, a former chief executive officer of several Hyundai Group affiliates, was touted as the “CEO president” when he took office in February 2008. He forgot early that he wasn’t running a company, but a democratic nation with a free press.
Decisions such as renewing US beef imports against widespread public disapproval were disastrous. Lee’s team first denied the global crisis was a threat to Korea, and then reacted with a patchwork of policies that ran afoul of investors.
President of Internet
It would be an overstatement to say a blogger brought about this cabinet shake-up. Yet the government’s preoccupation with an unemployed 31-year-old hunched over a computer says a lot. Doesn’t it have bigger things to worry about?
Minerva, named after the Roman goddess of wisdom, developed a huge following after predicting the collapse of Lehman, an event that dragged down Korea’s economy. Minerva’s some 300 postings on Internet portal Daum Communications Corp. focused on economic and market predictions. He was extolled in local media as the “economic president of the Internet”. Now, he’s in jail.
The blogger’s lawyer, Park Chan Jong, describes Minerva as “just a curious, inquisitive youngster”. It makes you wonder why investors would put so much stock in the writings of a then anonymous prognosticator. Turns out, Minerva isn’t a financial expert, but a largely self-educated graduate from a two-year course at an engineering community college.
Internet policy
It’s worth noting that there’s some scepticism about whether authorities have the right guy. Shin Dong-A, a leading magazine, this week carried an interview with a man claiming Minerva is really a group of seven people. Who really knows?
That’s a matter for Korea’s justice system. As troubling is Korea’s willingness to limit the free flow of ideas that promote economic vitality.
China’s efforts in this regard are well known. India, Indonesia and Thailand aren’t above blocking websites or certain content from time to time. Korea’s Internet content rules are raising concerns about transparency and democracy. Japan is making similar noises.
Serious work
This isn’t an easy issue. In Korea, cyber-bullying was blamed for driving celebrities such as actress Choi Jin Sil, 39, to commit suicide. Governments have a point when they consider how to protect children from online predators, consumers from being scammed and investors from being manipulated. Minerva’s writings allegedly created some wild swings in markets.
“The accused dealt a blow to the country’s credit status and caused damage to the foreign exchange market by spreading such falsehoods,” Korean prosecutors said, according to Agence France-Presse.
What’s true for sure is that Lee has some serious work to do to stabilize the economy. Perhaps Minerva hit a nerve because some of his critiques of policies were too close to home.
Korea has had to work harder than peers to calm markets. Lee even has an economic war room in an underground bunker to restore voter support. Many CEOs think their job is to spin the press. Lee is making the mistake of applying that strategy to voters and investors. More time spent crafting good economic policies, and less on Orwellian ones, would yield better results.
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First Published: Mon, Jan 26 2009. 11 56 PM IST