[Viewpoint]Money won’t solve day care issue

There is almost no difference in the day care policies of the two presidential hopefuls of the Grand National Party.
Basically, both of them pledge to make sure the government takes responsibility for it.
In fact, it looks like they will compete with each other to determine who will raise the budget for day care more than the other side.
Politicians are tempted to present, for purely political reasons, expanded and unconditional financial support for such popular issues.
Therefore, whoever emerges as the presidential candidate to challenge the Grand National candidate will certainly present more or less the same election pledge on day care.
In general, presidential candidates pledge to expand government expenditures on policies that benefit the most people.
On the other hand, they also tend to shy away from making a concrete commitment on policies that could transfer the financial burdens to a certain class or provoke psychological conflict among people.
The day care policy is an attractive issue, especially during a presidential race, for politicians.
It is a concrete policy issue that can solve multiple policy goals with one stroke: the population problem in the era of a low birth rate, the revitalization of women’s participation in the economy and the expansion of investment in human resources for the future.
This is why politicians even borrow such emotional expressions as “I will make sure the government is held responsible.”
In terms of the purely quantitative expansion of the day care budget, the Roh Moo-hyun administration has done more than any of the previous governments.
No other Korean government has ever invested more than 1 trillion won ($1.07 billion) on day care.
But the participatory government under President Roh Moo-hyun had the wrong belief that the government could provide high-quality day care just by expanding the government investment in the sector.
Although the demand for diverse and high-quality day care has grown drastically, the government has simply expanded the supply of monolithic service under the guise of enhancing its role in public sector service.
Disregarding the simple economic theory that the quality of private day care can be improved only through competition, the government made competition in the private sector virtually impossible by restricting the fees that day care service providers charge and the activities they offer.
On top of that, government is trying to control private day care agencies by giving them more money while strengthening the government’s control and supervision over them. Bad side effects generally follow when a government policy ignores market principles.
And in the day care market, more and more complicated regulations are emerging.
The government does not recognize interest expenses from bank loans when it calculates the costs of day care facilities, declares suddenly that the private day care facilities at apartment houses that are independently managed well must be run by government or changed into public institutions and denies property rights to operators of day care facilities in commercial buildings.
These unprecedented government policies are now disturbing the market.
If the government ignores competition and keeps following its egalitarian policy, the growth in budget spending will just waste taxpayers’ money.
If the problems related to day care were resolved through the market, there would be no need for the government to intervene.
Things would be fine if the government allowed the market to function properly by removing the regulations.
The government can more effectively achieve its policy goals by concentrating on service to people with low incomes.
The presidential candidates should learn from the policy failures of the current administration, that is, that expanding the budget does not guarantee good quality day care service.
They should also pledge to present a more advanced day care policy. The pledge to increase the budget and make the government responsible for day care is not enough.
The candidates should make it clear what role the market will play in their day care policy.
It is only natural that the demand for good quality service will rise as people’s income increases.
It is not possible for the government to satisfy all of the diverse demands of the consumer.
Only the market can do that.

*The writer, a professor of economics at Ajou University, is the secretary general of the Citizens United for a Better Society. Translation by JoongAng Daily staff.

by Hyun Jin-kwon