Why Fight and Try to Win Against Economic Principles?

The economic policies of the previous Moon Jae-in administration, particularly its push for 'income-led growth,' have drawn sharp criticism for defying fundamental economic principles. An elder economist once observed that the government's approach was akin to fighting against 200 years of established economic theory. This policy was built on the premise that raising household incomes would stimulate consumption, thereby driving economic growth and, in a virtuous cycle, further increasing incomes.

However, this logic faced significant pushback from the academic community. Critics likened the approach to putting the cart before the horse, arguing that it fundamentally misunderstood the relationship between income, consumption, and growth. The prevailing economic consensus suggests that sustainable growth typically leads to increased incomes, rather than the other way around. The administration's insistence on this model was seen by many as a departure from sound economic reasoning.

The article questions the wisdom of pursuing economic strategies that appear to be in direct conflict with widely accepted economic principles. It highlights the potential risks and unintended consequences of implementing policies that challenge established theories, suggesting that such approaches may be ill-fated. The focus is on the disconnect between the administration's policy goals and the underlying economic mechanisms that drive prosperity.