[Viewpoint] Stop meddling with the market

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[Viewpoint] Stop meddling with the market

On the 85th day, the veteran fisherman’s luck finally turns, and he catches a fish. The old man fights with a marlin bigger than his skiff for two days and nights until he finally stabs the mighty fish on the third day. But the old man’s ordeal is not over in the least. His prize fish is attacked by a school of sharks lured by the marlin’s trail of blood.

The old man uses his bare fist to defend his catch from the sharks, having already lost his harpoon. By the time he arrives back on shore, only a skeleton consisting of a backbone, tail and head remains as evidence of the old man’s failed triumph.

As in Ernest Hemingway’s “The Old Man and the Sea,” President Lee Myung-bak’s economic policy, including a signature tax cut promise, has been devoured by sharks, and what is left is mostly skeleton, as the president enters the final stage of his term. We can barely remember Lee’s main campaign promise of attaining 7 percent economic growth with a per capita income of $40,000 or his goal to have Korea become the world’s seventh-largest economy.

Lee may have fought with all his might against challenges and enemies, but at the end, he sacrificed the core of his plan after dilly-dallying with many measures designed to restore his favor with the public. He failed to maintain the dignity of his beliefs in the face of hard challenges. That is why all of his endeavors have failed to generate either sympathy or applause.

The government, facing elections next year, is in disarray and a state of denial. It threw away its long-held goal of lowering taxes to spur consumption, which, in the end, was supposed to increase tax revenues. It had put forth such economic reasoning for the past three years.

Minister of Strategy and Finance Bahk Jae-wan recently said that even if the government could not cut income taxes on the rich, it would surely shave the corporate tax as planned.

But in its final 15 months, the government blinked with both eyes. After describing itself proudly as pro-business, the Lee administration has turned its back on large business groups, believing that this is the only way conservatives can win in the next elections and maintain power.

At the forefront of this pro-people, anti-corporations minstrel show is Fair Trade Commission Chairman Kim Dong-soo. The agency’s legal weapon to restrain large companies is the Antitrust Law, yet the commissioner is not content with that power. He has twisted the arms of large department stores and retailers to bring down the commission fees on boutiques renting space in their stores. Large retailers have been accused of overcharging their tenants, but that does not mean the authorities can override contracts that have been signed in perfectly good faith.

Other government agencies have been equally heavy-handed. The Financial Services Commission made credit card companies cut commissions for sales outlets, while the Korea Communications Commission cornered wireless operators to lower phone charges. The government, which supposedly believes in free-market principles, has been pushing around big players in the economy like pawns on a chessboard.

Large companies are grumbling that government interference is now worse than under the liberal Roh Moo-hyun administration. Small- and medium-sized companies may get some short-term benefits if their larger business associates are horsewhipped by the government. But such practices are contradictory. The government says it wants balanced growth between large and smaller companies, and it is stepping between immediate business partners. But if large companies are like the royal family, its first group of suppliers is aristocrats. What the government is doing is helping the aristocrats get wealthy by robbing from the royal purse. The corporate population below the ladder remains out in the cold.

Instead of lowering taxes on oil, authorities are pressuring oil refiners and retailers to bring down their sales prices. Next, the government plans to target restaurants and make them keep menu prices unchanged. These measures are all makeshift and will prove useless in containing inflation.

The use of force can intimidate, but it does not have a lasting effect. Prices will bounce back. Ministers working without logic or principles simply to please the president are only undermining the government’s credibility.

*The writer is an editorial writer of the JoongAng Ilbo.


By Shim Shang-bok

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