[OUTLOOK]Good cause, disastrous results

The economic situation is getting more difficult as time passes. Next year will be more difficult than this year, and prospects beyond that are unclear. What brought about this situation?
There could be many causes, but one might be the social atmosphere. There seem to be too many people who behave as if they have nothing to be ashamed of. Rather than take care of people with tolerance and sympathy, they are apt to judge and reproach. They are grudging in giving praise, but eager to find fault.
In this tough atmosphere, an economy can easily shrink. Because the economy is, after all, run by greedy people going about the course of their lives, it is bound to be selfish by nature. The economy cannot bloom when it is being held to criteria that are inconsistent or too lofty. The economy goes well when we fully understand human nature, and when people’s hearts are generous.
The people involved in making economic policies these days appear very simple and confident. They are stern toward what they consider to be social evils. They have a high sense of mission, and do not hesitate to conduct bold experiments to sweep away these evils. They think some sacrifice is inevitable in this process. They have less understanding of the circumstances of such evils. They see only the manifest social evils, but not the invisible people behind them.
Real estate policy is a case in point. Hearing that the common people are having difficulty because of rising housing prices, they come up with a relentless measure to suppress speculation. Who would dare raise a voice against such a measure? Less consideration is given to why housing prices increase, why people try to buy houses even with borrowed money, and what becomes of the economy when the real estate boom cools.
Because of this severe measure, the rise in housing prices and speculation has stopped for now. Instead, the real estate business has frozen. Jobs in the field are gone, and related industries are hard-hit. And because houses are not being built, the question of what will become of housing prices in a few years is worrisome.
The same goes with policy toward business. Policymakers’ sense of duty, to correct the concentration of economic power and the wrongdoings of large companies, is very high. Despite the controversy over the lack of business investment, the government’s determination to restrict total investment and reform corporate governance structure is unshaken.
There is little tolerance for mistakes in the present social atmosphere. Businesses that make a mistake must be braced for harsh criticism, even if they’ve done a hundred things right. So, rather than taking a risk, they are inclined to play it safe. They do not listen to the minister of economy and finance however much he calls on them to invest. They know full well that nobody will offer help when something goes wrong. Nonetheless, the government asks businesses to point out anything that prevents investment or blocks their activity. But the problem is the general atmosphere, and how can they be expected to point to that? This is why our national competitiveness falls behind.
Some time ago, a measure taken out of concern over the harmful effects of monopolies led to the collapse of a piano company. As a result, many smaller businesses will go bankrupt, and workers will lose their jobs. No one can blame the people behind this measure, because it was taken from a sense of mission. Recently, the prostitution business was dealt a blow in the crackdown on the sex trade. Because it is such a righteous cause, one can hardly oppose this crackdown. But, pushed through with no complementary measures, will it have no side effects? What will become of these women’s livelihoods? Won’t the business of prostitution itself become more shady?
To the rejoinder, “Do you mean to say that such social evils should be left alone, then?” I have no reply. Problems of human nature, or of urgent reality, may matter little when compared to lofty causes and a sense of mission. The task of clearing up the nation’s past, to which national energy is now being devoted, is a similar case.
In the United States in the 1920s, prohibition was implemented to eradicate the evils of alcohol abuse. Then-president Herbert Hoover called it “an economic and social experiment with lofty motives and great ideals.” An orderly society was expected once the nation was cleansed of alcohol. Who could dare object? But prohibition had unexpected outcomes in the proliferation of underground bars and gangland crimes. Still, it took more than a decade to reverse prohibition completely, because it was in good cause.
The loftier the motives behind a social experiment, the harder things will be for the economy. How long will it take for us to realize this?

* The writer is the vice chairman of Samsung Economic Research Institute. Translation by the JoongAng Daily staff.

by Choi Woo-suk