[OUTLOOK]Happiness is a hands-off stateApartment prices are causing a fuss. Though the government has announced new measures several times, the prices keep soaring. Why does this happen?
The government said that because of the rising housing prices in Gangnam, it would develop the new city of Pangyo with living conditions similar to those of Gangnam. Up to this point, the government had been going in the right direction. If prices are cheaper while other conditions are the same, people will rush to live there. But while planning the Pangyo development, the policymakers were struck by the same disease that seems to recur in the present government. For have-nots and the common people, they said, they would build smaller apartments rather than bigger ones.
Our housing supply rate is now at 100 percent. There is no shortage of housing. The push toward reconstructing apartment buildings in Gangnam comes not because of a housing shortage but because of a desire to have bigger and better apartments.
If such apartments are allowed to be built, prices will not rise. When there are enough houses, prices won’t rise. As policymakers ignored this simple reality in their efforts to help the common people, they limited 70 percent of housing in the Pangyo area to smaller apartments. Consequently, the prices of bigger apartments soared.
An unfamiliar concept of “a social mix” is introduced to the Pangyo development. The term means having the poor and the rich live together without distinction. How nice does it sound that bigger apartments, smaller ones and rentals are built together in a complex? Then, regardless of the size of their apartments, people will become equal and so make society happy in turn.
The idea is preposterous. Having people in rental housing who make less than 1 million won ($1,000) a month live near a person in a bigger apartment who makes 5 million won a month hardly makes for a happy community. Would people want this kind of social mix? This concept is the product of ideological egalitarianism.
Human beings are both rational and irrational. For example, they can get around quickly whether they ride a compact car or a custom-made luxury car. It could be difficult to understand why people choose to pay a lot more for such a luxury car. There must be similar elements in the Gangnam apartments. We cannot reasonably explain why apartment prices in Gangnam should be two times higher than those in Gangbuk when transportation and the interiors are the same as in Gangbuk.
Human beings learn virtues such as diligence and thrift, but we are instinctively attracted to idleness, waste and luxury. Two hearts coexist in us: one of integrity that urges us to save as much as we can every month without fail, and one of speculation that makes us desire to make easy money.
It has been argued that all humans should be equal, but there also exists a heart that makes people want to be better than others and show off in front of them. Some people are willing to pay dearly just for the sake of luxury. But just as this luxury sometimes develops a civilization, irrational factors can bring vitality to human society at times.
We cannot help but acknowledge both the rational and irrational aspects of human beings and find the best solution to deal with them. To put it in economic terms, this means adhering to market principles.
Marketplaces are where both rationality and irrationality coexist. Some people spend money lavishly, indulging in conspicuous consumption, while other people live thriftily, looking for a place to use money meaningfully.
Markets are places where rationality and irrationality are solved naturally. Speculation may lead to fortune, but when speculators cross a limit, bubbles are bound to burst.
So, accordingly, if housing prices in Gangnam are rising because of speculation and irrationality, they are bound to burst at some point.
Irrational human factors cannot be handled through governmental power. The problem of human irrationality belongs to the domain of religion and that of education and ethics. Any attempt of power or politics to correct this problem will lead to a totalitarian society. Social engineering, or reconstructing society by reason, sounds plausible, but in reality, no phrase is more fearsome and arrogant than this one. Human beings inevitably have limitations.
Who can reorganize this group of human beings? Who can dare to say that he would build an ideal society on this land when human beings are imperfect? Communism attempted to do so. The idea of creating the proper social mix presupposes such social engineering.
A more dangerous attempt is to try to simplify individuals’ happiness through money or the size of their apartments. Some live happily in a thatched cottage, others in mansions. People in the present administration are making policies based on wild guesses, saying to the common people, “You are unhappy because you cannot live in Gangnam” or “You are unhappy because you live in a small apartment.”
As long as the policymakers are seized with this kind of ideological egalitarianism, the government is sure to fail even if it builds another new city.
The government should let the market run its course, and this starts from a humble attitude that accepts even irrational human factors. Do not try to measure others’ happiness according to your own idea. Happiness is not created by the government. Happiness is what each person makes.
* The writer is the chief editor of the editorial page of the JoongAng Ilbo.
by Moon Chang-keuk