[OUTLOOK]Public sentiment hard to change

Let’s go back to the early 20th century America, when progressives raised their voices, as they do in Korea today. In the late 19th century, the wind of progressivism began to blow among laborers, farmers and small business owners, who had been relatively alienated in the process of economic growth. Their targets were the business tycoons and financial giants that lead the rapid growth of the U.S. economy at the time, such as Andrew Carnegie, John D. Rockefeller, Jay Gould, and JP Morgan.
The biggest problem was freight rates for rail transportation. Business giants made under-the-table deals with railroad companies and received huge discounts. To be more precise, they received rebates from the railroad companies after paying the regular rate because they could not get a discount officially. The business giants thought the discount was justifiable because they were big accounts with a large volume of goods to be transported. However, small and mid-sized companies had to pay full price and were disadvantaged in competition. Farmers could not accept the fact that they had to pay a higher price than industrialists to ship their crops and produce.
Moreover, conglomerates acquired competitors at dirt-cheap prices. They often threatened their smaller rivals to start a price war and make them fail if they wouldn’t sell their businesses. At the same time, they justified their actions, stating that the small business owners could make far more money in the future by exchanging their stocks for shares in the conglomerates.
Bankers and financiers like JP Morgan did not want companies going bankrupt from overcompetition, resulting in more insolvent loans, and believed companies became more efficient as they grew in size. Therefore, they actively supported or lead the trustification of industries.
The first U.S. president to use a progressive yardstick for business was Theodore Roosevelt, who came into office in 1901. As practically the only progressive mind in the conservative Republican Party at the time, Mr. Roosevelt began applying the Sherman Anti-Trust Act, which was only nominal during the tenure of his predecessor. However, Mr. Roosevelt had a sense of balance. He admitted the fact that the U.S. economy strengthened thanks to the trusts, and that they would continue to make a big contribution to the future development of the U.S. economy. Therefore, he said that his goal was to support “good trusts” and eradicate “bad trusts.” However, the social atmosphere did not allow moderation. The media took the lead in attacking the business giants. Furious at this indiscretion, Mr. Roosevelt wrote that while he appreciated the media’s crusade against corruption, it should not mislead the citizens by stating all evils were associated with businessmen and that corruption of the rich was the only evil in society.
Once changed, public sentiment remained against trusts. After Mr. Roosevelt stepped down from office, the Democratic Party adopted the dissolution of trusts as a party platform, and the Republican presidential candidate followed suit. Some people sarcastically said that one presidential candidate had a big head without a brain, and the other had a big stomach without any guts.
In the end, Mr. Roosevelt had to report to a hearing on the dissolution of trusts as a witness. During his term, he allowed an exception to the anti-trust act so that U.S. Steel could acquire TC&I, a steel company on the verge of bankruptcy, in order to avoid a financial panic. He was under suspicion that he had yielded to threats from the trusts. Mr. Roosevelt called the charge “preposterous” but the media and most Americans believed the conspiracy theory at the time.
When I meet entrepreneurs operating businesses in Korea, they often complain about our politics and the media. They claim the media and politicians amplify uncertainties and try to hold them back, instead of helping them. Some even say that the “national sentiment” is more powerful law than the Constitution. I hope that these businessmen change the way they think.
However, considering the past, it might be safe to keep that expectation to a minimum. No matter which of the presidential hopefuls is elected, the national sentiment will not change easily. Moreover, politics and the media operate independently in a democratic society. It would be better to think that politics, the economy and the media are in sync either by coincidence or only in a very special situation.

* The writer is an economics professor at the National University of Singapore. Translation by the JoongAng Daily staff.

by Shin Jang-sup