[OUTLOOK]Say No to Pesky Interest Groups

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[OUTLOOK]Say No to Pesky Interest Groups

Why have we not seen interest groups such as the National Union of Department Store Customers, National Subway Passengers United, Association of Wage Earners in Korea, Korean Solidarity for Middle Class and even an organization for those who want to eat wonderful beef for cheap price? Economists had already explained why such gatherings would not be associated.

According to them, it is because individuals' benefit from such association would not compensate for the individuals' cost whether it is money, time or knowledge. There would be many free riders if fierce activists take on such matters. However, there would be few willing to come forward to pay opportunity costs for such causes.

Because the Internet allows people to get together easily and say whatever they want, social behavior is slightly different from the past. However, the associations on the Internet cannot be compared with devoted interest groups.

The bigger the potential interest is than the individuals' costs, the more powerful the interest group. This is why a smaller number of manufacturers and suppliers are more active in the association of interest group and are more influential than larger numbers of consumers and users.

Let's look at local retailers who succeeded in banning department stores from providing free shuttle bus services to their customers as of July. Under the pressure from local retailers who appealed for an end to the free shuttle bus service, 54 members of the National Assembly, from both the ruling and the opposition parties, including Representative Park Kwang-tae of the Millennium Democratic Party and Representative Kim Moon-soo of the Grand National Party proposed revisions to the Passenger Transport Service Act last October.

The revision would take wholesalers, including department stores, off the list of entities that can run free shuttle bus. The revision was accepted at the related committee and at the plenary session last December.

No representative voiced opposition to a bill regulating the types of industry that can run free shuttle bus service. No representative computed what is more important: consumer convenience or local retailers' interest.

What would happen if the National Union of Department Store Customers existed and became vociferous? The legislators would not have dared act in the manner they did because there are many more department store customers than local retailers. However, as I already said, local retailers have gotten together but department store customers have not. The Fair Trade Commission once opposed the idea saying the prohibition of free shuttle bus services by department stores would be in disaccord with economic principles.

There are other cases where the interest of the few took precedence over the interest of a larger number of people. Wage earners are suffering relatively more loss than non-wage earners because of the merger of medical insurance cooperatives for corporate workers and regional non-wage earners. But they have not taken advantage of the freedom of association fully, while most small and medium independent entrepreneurs have raised their voices after establishing associations or unions, according to the types of industry.

We can find such characteristics of associations in almost every interest group. They are run for the interest of their relatively small number of members, not for the interest of society as a whole. Such characteristics are basically the same whether they are national entities financially loaded and with wonderful articles of association, or ephemeral ones sporadically popping up for their own interests but disappearing as soon as their goals are achieve.

We cannot blame them for such characteristics. They were formed for such narrow reasons. The problem arises when politics, society and country panders to them. It could ruin this country from its roots. That is the very end of populism. A renowned economist, the late Mancur Olson called it the "arthritis of oragnizations."

As the presidential election approaches, all interest groups will raise their voices more loudly. The Korean Federation of Teachers' Associations has already made a stir by announcing its plan to campaign for and against politicians for either general elections or the presidential election.

This is a story of little value in reiteration, but the Saemangeum project was initially brought up in 1986 and appeared to have been scrapped after an economic feasibility study. It was revived at the meeting between then President Roh Tae-woo and the then president of the opposition party, Kim Dae-jung, in 1988. In a sense the Kim Dae-jung government cannot help but continue the project no matter what.

I hope you would keep a proper distance from interest groups whether you are from the ruling party or the opposition party, if you really don't want to see yourself in the situation where you have to pander to them after winning the presidential election.


The writer is the chief economic news editor of the JoongAng Ilbo.

by Kim Su-gil

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