[OUTLOOK]The corruption of powerThe Roh Moo-hyun administration has constantly revealed distrust in functions of markets and trust in functions of the government. Judged from remarks by the president and other senior major figures in the administration, they seem to believe that markets are always unfair and designed to fail and the government needs to fix all problems. The administration has a strong determination to directly intervene to fix problems, looking at some of its major policies, such as a real estate policy, a policy for balanced development of local areas and a policy for distribution of resources and welfare.
The government comes up with regulations for permission or registration, price regulation, taxation, a quota system and a mandatory employment system, whenever there is an issue. The government’s intervention and regulations exceed those in the 1970s, when the country was focused on development. One wonders why and how the current administration, whose major figures are former student activists, have become so trusting of bureaucratic organizations. That is probably because they have little experience in managing the administration so they believe in the theory that the government represents the interests of the public and has a duty to protect it.
However, many research results show that the failure of a government is more systematic and more common than the failure of a market. A government’s inefficiency and bureaucracy are nothing unusual and these are not the fault of government workers. These problems are due to an essential trait of a public organization. Thus, if a public sector takes up a lot of an economy and a government intervenes and regulates the distribution of resourses unreasonably, the private economy will shrink and its efficiency and growth will potentially fall. People who overly trust a government’s functions believe that if a government distributes resources it will be fairer and more efficient. But this is nothing but a myth. Why were so-called socialist countries so poor when they planned and managed all, if a government is competent in managing people’s livelihoods?
If a government distributes resources, that means politicians and government officials decide who will make which items and who will get them. Politicians and government officials cannot know who makes a certain item best and who needs it most. So they apply subjective standards under the name of the public interest when distributing resources.
For instance, the government will allow families with many children to apply to get apartments before small families do. What has distributing apartments to do with the number of children a family has? The government decided that when people buy land they need to report how they made the money for it and they need to get permission on how they will use the land. This regulation shows that the government regards all citizens as having the potential to break the law. The government sees these regulations as necessary for the public interest and for implementing its policies. This is the distorted reality of today. A government distributing resources means that politicians and government officials give advantages to people they favor while they can starve others that they hate. That is power. Power tends to be tempting and corruptive. This is why former socialist countries still suffer from corruption. When a central government intervenes in a larger area, the economy is more inefficient and corruption is widespread.
The civil servants of this administration blindly trust the functions of the government, which is innocent but unprofessional. This causes the government’s organization and power to overly grow and leads to sluggish economic activities in the private sector and to less competitiveness in the country.
On the Global Competitiveness Report, released yesterday by the World Economic Forum, Korea’s competitiveness fell five levels from last year. The reason for that was cited as the government’s inefficiency.
Listening to and fixing 100 complaints by companies does not mean improving the environment for business. In order to improve the environment for business, the government should seriously think about its competence and efficiency and should transform its ideas about its functions.
* The writer is a professor of economics at Hongik University.
by Kim Jong-seok