[Yoo Choon-sik] Statistical integrity must top governance agenda

Korea Herald

27-04-2025

We have been witnessing an exponential increase in the frequency of writings emphasizing the value of good governance over the past several years, particularly in debates on how to ensure that artificial intelligence innovation contributes to the sustained prosperity of humanity.
South Koreans are also observing a growing number of discussions on governance issues in another context — sparked by the political turmoil following former President Yoon Suk Yeol's declaration of martial law in early December last year. This unrest culminated in the Constitutional Court's decision to depose him and is continuing ahead of the snap election scheduled for early June.
Like millions of my fellow citizens, I sincerely hope the June 3 election will help put to rest the widespread concerns about governance issues in this country. However, such hope may prove premature — especially in light of a recent announcement by the Board of Audit and Inspection, which reported suspected systematic manipulation of key government statistics on the housing market during the Moon Jae-in administration.
In a revelation that has shaken the foundations of public trust, the nation's supreme audit institution has found that between January 2018 and October 2021, the Korea Real Estate Board was pressured by the presidential office and the Ministry of Land, Infrastructure and Transport to alter housing price data on 102 occasions.
These manipulations were intended to portray the administration's real estate policies in a more favorable light by reporting artificially reduced growth rates — or even declines — in housing prices, in contradiction to actual market trends. During this process, the REB was subjected to threats of budget cuts and staff reductions if it failed to comply, highlighting the coercive methods employed to distort the truth.
The manipulation extended beyond housing statistics. Discrepancies between official data and private-sector statistics — particularly those from KB Kookmin Bank, a widely trusted source of housing market trends — prompted the Moon administration to explore ways to suppress independent data providers.
According to internal government documents, measures were even proposed to regulate or marginalize private indices, including the introduction of a certification system for private statistics and the imposition of fines for noncompliance. The objective was unmistakable: to reduce public scrutiny and control the narrative around housing price trends.
The findings, detailed in a final report following a nearly three-year investigation, expose a disturbing pattern of falsification involving housing price data, income figures and employment statistics.
This scandal is a textbook case highlighting the governance challenges facing South Korea, including one to restore trust in government statistics. When official numbers are manipulated, the consequences extend far beyond flawed policymaking — they also erode confidence in governance, financial markets and public institutions.
While this scandal is particularly alarming, it is not unique — many other nations have engaged in similar distortions of statistical data, with far-reaching consequences. One of the most infamous examples occurred in Greece, where authorities misrepresented budget deficit figures to meet European Union requirements.
Trust matters more than anything else
The Greek government understated its fiscal deficit and debt levels, concealing the country's true financial instability. When the deception was uncovered in 2009, Greece plunged into a severe economic crisis marked by austerity measures, surging unemployment and a prolonged recession. The scandal not only undermined trust in Greece's governance but also contributed to wider financial instability across Europe.
Other notable examples include Argentina and China. Under the administrations of Nestor and Cristina Fernandez de Kirchner, Argentina's government manipulated inflation data to make economic conditions appear less dire. In China, authorities have previously faced accusations of inflating economic growth figures to project an image of stability and prosperity.
On the surface, some might argue that manipulating statistics provides short-term political gains. However, the long-term consequences are far more serious than and often reach beyond what most people anticipate. When governments distort statistics, public faith in official data deteriorates, complicating the implementation of future policies. Once skepticism sets in, public institutions must fight an uphill battle to restore credibility — a process that can lead to enduring political instability.
Falsified economic data can also mislead investors, businesses and international organizations. We have seen this in countries that understated financial risks or exaggerated growth figures, only to face market crashes, capital flight and economic crises — as was the case in Greece and Argentina.
In democratic societies, transparency is essential. When governments manipulate statistics, they undermine accountability, enabling political leaders to deflect criticism and justify flawed policies. Distorted data also skews public perceptions on critical issues such as poverty, crime and unemployment, prompting citizens to respond based on false premises. This misinformation can lead to misguided protests, misplaced complacency or irrational economic behavior.
Moreover, countries caught manipulating statistics risk damaging their global reputations. International organizations such as the International Monetary Fund, the Organization for Economic Cooperation and Development and the World Bank rely heavily on accurate data. Violations can result in reduced foreign aid, restricted investment opportunities and diplomatic repercussions.
Statistical integrity is indispensable for sound governance. Even if initial motivations are not malicious, manipulating data may offer short-term political benefits at the cost of long-term consequences — including economic instability, erosion of public trust and weakened democratic institutions.
We understand that the incoming government — which will begin work immediately after the June 3 election results are confirmed, due to the nature of this snap election — will face an enormous list of urgent tasks from day one.
There is no doubt that each task carries significant weight, whether it involves responding to the impact of US tariff hikes or revitalizing the country's efforts to stay competitive in the global AI innovation race.
Nonetheless, I wish to stress that restoring public trust in official statistics should be prioritized at the very top of this list. Governments must implement independent oversight, reinforce legal safeguards and pursue institutional reforms to ensure that national data remains free from political interference.
A nation's success is grounded in good governance, the very foundation upon which democracy flourishes and the well-being of its people is protected. Good governance ensures that power serves the people, not political agendas. Trust in governance is not a given; it must be earned through integrity and accountability.
Yoo Choon-sik worked for nearly 30 years at Reuters, including as the chief Korea economics correspondent, and briefly worked as a business strategy consultant. The views expressed here are the writer's own. — Ed.