Restructuring should begin with changes in our attitude

Restructuring should begin with changes in our attitude

It has been three years since this nation of ours went through an unprecedented economic crisis. At the time, the international reserves held by the central bank fell to the level of $10 billion or below which was a virtual bankruptcy of the country that eventually led to the 'humiliating' request for bailout from the International Monetary Fund.


As a result of the crisis itself, plus the ensuing restructuring regimen as we strove to overcome the crisis, thousands of companies went belly up and as many as 2 million people were out of work.


These painful experiences are still fresh in our collective memory. Now gloom is again spreading through every corner of the economy, fearing that another crisis may hit us.


It is true that every macroeconomic indicator shows otherwise. The economic growth rate still approaches 10 percent and our trade surplus keeps breaking monthly records. Foreign reserves now stand at more than $90 billion, a far cry from the miserable level only three years ago.


Then what's the problem? The real problem, some say, lies in the fact that the very cause of the 1997 crisis has not been removed by the ongoing restructuring in the financial and corporate sectors.


When the economy began turning around, many people thought -- erroneously -- that the crisis was over and the restructuring process was completed. The incomplete nature of the restructuring was, however, revealed after external conditions, such as oil prices, turned for the worse. Only then did people begin to realize that the nation's reform efforts had not been serious enough.


Of course, a nationwide restructuring cannot bear fruit within a short time span of one or two years. The process involves so many different parties and complex variables that its success can be guaged only by whether the reformed economy can withstand subsequent recession or external shocks.


In that sense, today's 'psychological' crisis in the face of adverse turns on the external front may reflect the fact that our restructuring efforts have not been very effective.


Since the 1997 crisis, individual corporations have reorganized their operating strucutures and downsized their workforce significantly while the government poured in a collossal amount of public funds and repaired many age-old rules. Somehow, to many people, restructuring has come to mean only cleaning up frail corporations and financial institutions.


But that is not all it takes to restructure. What's really needed is a fundamental change in attitude and behavior of individual economic actors, including the firms, the government and the households. Put differently, it's how we do business that needs change.


During the development era from back in the 1960s, Koreans had been instilled that in order to escape from poverty you can do whatever it takes. Means can be justified to achieve a goal, in a sense. You can cut corners, bribe anyone to push your agenda, and break the rules whenever possible.


This kind of 'crony capitalism' was permissible and, perhaps, even necessary when the economy was in an initial stage of development. But as the economy got bigger and more globalized this way of doing business has become incompatible with how others conduct commerce elsewhere.


Doing away with legal and administrative frameworks that hinder compliance with global standards may be a start, but these are far short of reform in a real sense. Until the government and business leaders and each individual come to realize this simple fact -- until we all are ready to accept responsibility for openness, honesty, and fairness in government, in business and in our personal lives -- the threat of crisis will linger.