[FOUNTAIN]So far, speculation hasn’t lost a match“I will control real estate speculation even if the world comes to an end.”
It seems as though the sky’s the limit for President Roh Moo-hyun’s urge to bring an end to real estate speculation. It would be wonderful if he succeeded, but history doesn’t offer a single case of speculation being successfully contained, whether involving real estate or stocks. Edward Chancellor, author of “Devil Take the Hindmost,” compared speculation to a carnival. Only when the madness of a carnival ends can normal life resume, and it is just as difficult to end the madness of speculation by artificial means.
Modern-day real estate speculation has its roots in the United States, where, during the 18th century, the speculation boom swept up everyone from presidents to servants. George Washington, the “Father of the Country,” participated, as did Benjamin Franklin. Both Thomas Jefferson and Alexander Hamilton, America’s first Secretary of the Treasury, profited from real estate sales. It became so excessive that William Priest, a British traveler, called real estate speculation an American characteristic. Real estate prices skyrocketed, and only after skyscrapers were built in Manhattan did the wave subside.
It was President Franklin D. Roosevelt who began to attack speculation politically. In dire need of a scapegoat for the Great Depression, Roosevelt berated stock market speculators as “money changers” during his first inaugural address in 1933. In 1946, President Harry Truman characterized speculators as making their living on other people’s misfortunes. But in the end, the politicians failed poorly in their bouts with speculation.
When he ended the gold standard in 1971 because of excessive attacks on the U.S. dollar by currency speculators, President Richard Nixon blamed speculators not only for feeding off the crisis, but for creating it. In 1992, French Finance Minister Michel Sapin criticized speculators who undermined the British pound as “people who would’ve been beheaded during the Revolution.”
The politicians who waged wars on speculation have disappeared into the past, but speculators still prosper today. Their roots go so deep that Milton Friedman, winner of the Nobel Prize for economics, called speculation a necessary evil in the free market economy. But President Roh says he will not allow real estate speculation even as a necessary evil. We would like to see our president end 30 years of rising prices in Gangnam and become the first leader in history to emerge victorious in the war on speculation. History repeats itself, but then again, there’s also the saying that there is no rule without an exception.
by Yi Jung-jae
The writer is a deputy business news editor at the JoongAng Ilbo.