[EDITORIALS]Muddying the watersPresident Roh Moo-hyun gave a special lecture to businessmen yesterday at the Korea Chamber of Commerce and Industry. He said that the purpose of the seminar was communication, to narrow the gap of misunderstanding by the business community about current issues. The president agreed to take an opportunity to explain his thoughts to the businessmen, but the message he sent was confusing. The broad outlines of his speech preached a market-friendly policy, but there were things in the details that are against market principles and would limit competition. The controversial “new-left liberalism” that the president mentioned in his Internet chat with the people was embedded in his speech.
The president’s thoughts on opening the market and on foreign capital are an example of the new liberalism based on market principles. He said that through opening up the Korean market in medical, legal, education, and accounting services in a free trade agreement, the country could raise the standards of those sectors by competing with the world’s best. In addition, on the flight of the country’s wealth through foreign capital, the president said he would “respect market principles.” That all points to a loyal recitation of free market principles.
But on polarization of wealth, real estate policies, regulations on conglomerates and education, Mr. Roh is still anti-market and maintains principles of equality. Saying that the polarization of wealth can, in the long term, make the market shrink, he offered a solution through active wealth redistribution policies. It’s confusing that although he said he does not plan to increase taxes, he is thinking of making wealthier people pay more to cover increased social welfare expenses.
His real estate policy is even more confusing. The president said that stable real estate prices are beneficial to companies, and stressed that real estate prices have only risen by 14 percent during his administration. But then he argued that a bubble in the real estate market is bursting, and this poses a risk; thus it is important to stabilize real estate prices. He does not offer a plan to increase the supply of homes, which would fit market principles, but opts for increased taxes and measures to keep reconstruction of buildings down, which are against market principles. While acknowledging that regulation of conglomerates puts too much of a burden on them, he said he won’t relax the regulations for the time being.
Outwardly, the president has made clear that the education sector must be opened to competition. But when it comes to domestic education issues, he stands at the forefront of equality. He said he will not bow to the demands of colleges that want freedom and market principles. He seems to have a strong faith in a bigger government. He argues that the government has much to do and needs more money, but says there is no big government here. Although he said that the lower income people must moderate their demands for equality, his administration has increased its budget for social welfare. It does not make sense to raise expectations about social welfare and distribution but wants to lower the demand for equality. This confusion can only lead to further policy clashes.