[OUTLOOK]Unethical moralists lose their fightTo win a fight with the market is a hard task for any administration. But the Roh Moo-hyun administration has been more confident about its fighting abilities than most others who have occupied the Blue House. The administration was so brash that people believed it could win.
In the early part of his term, when the president swore he would win the battle against the real estate market, people applauded. They hoped he would be victorious because his cause seemed legitimate. But the real estate market hit back even more aggressively. The Roh administration has now become like a hunter who becomes exhausted after unsuccessfully chasing its prey.
Its failure has a simple source. The administration wanted a market in which all parties operate with high ethical standards. The administration said it would foster pro-market and pro-business policies. In this instance, a market means a place where ethical parties act morally and businesses seek to contribute to the public interest as well as pursuing selfish interests. That is the ideal market Adam Smith portrayed in his book “The Wealth of Nations.”
Just as government officials of this administration view the unfettered market of the Park Chung Hee administration as a monster, so they believed morals are a solution for everything. In their grand scheme, the housing market was nothing to be afraid of. Thus, their two management principles were established: No arbitrary intervention and punishment of unethical parties.
Right after the administration entered office, problems in credit card usage led to a financial crisis. Exporters suffered severely because sharp fluctuations in the exchange rate harmed their sales revenues.
But the administration did nothing about this because it mistook a no-intervention policy for a pro-market policy.
However, the administration was quick to impose punishment and regulations elsewhere. Owners of land and expensive houses were dubbed enemies of the ethically perfect market and charged with the “crime” of speculation.
Owners of jaebeol were viewed as people without morals and they suffered from strict regulations to limit corporate investment and improve management structure. Such companies had to stop investing and had to keep tens of trillions of won, or tens of billions of dollars as cash in their banks.
In this muddled administration, a secretary for the economy acts like a secretary for the property market and a secretary for social affairs is like a secretary for taxation. The Fair Trade Commission acts as if it was an organization to monitor conglomerates. These officials or organizations violated the principle that governments should not excessively intervene in the market but the administration will never admit that.
When Lee Baek-man, a presidential secretary, stepped down, he pointed to “unethical people” as the culprits for any failure of policy. Former prime minister Lee Hae-chan said “Policies have been designed in the right way but the publicity was insufficient.” These two also shared the belief that there are too many unethical people in the market. That position is the same as Confucianism from the Joseon Dynasty.
At that time, people in power believed that a market is where shirkers, tax cheats, murderers and thieves gather. They also believed that a market encourages people to pursue trivial interests and greed to the point where it ruins the entire country. A market meant a lack of morals.
However, during the Joseon Dynasty, there was a clear perception about production, unlike in the current administration. The Joseon Dynasty worked to send people back to agriculture, the primary source of production, by implementing measures to suppress commerce.
In the government’s pro-market and pro-business policies, there are no concepts for production, investment or for boosting the market. As a result, many small- and medium-sized companies have moved to India and China and 800 trillion won in capital has left the market to be absorbed in apartment sales. Because there are few other places to invest people feel they have to buy houses despite heavy taxes. That is how the Korean market works and it’s an aspect of Korean mob psychology. The administration is the only one who does not accept this fact.
And there is no way to explain why government officials bought houses in southern Seoul while they advanced a real estate policy with constitutional authority to discourage such purchases. Nobody will listen to a lecture on ethics from these unethical moralists. The government has pursued or implemented its so-called “pro-market policies” for four years and will do so for one more year. It seems we are helpless to prevent 12 more months of muddled thinking than can only harm Korea.
*The writer is a professor of sociology at Seoul National University. Translatyion by JoongAng Daily staff.
by Song Ho-keun