Flipping on principles for votes
When populist policy platforms seem as if they will draw votes, politicians suddenly flip on previous stances and dismiss sound advice on public finances and economic fundamentals. This is exactly what has happened in the National Assembly as it debates the recent savings bank and credit card commission bills. The ruling and opposition parties in the National Policy Committee demonstrated a rare showing of bipartisanship by rubber-stamping a special law to reimburse lost deposits of suspended savings banks and a bill to regulate the commission rates credit card companies charge individual merchants.
But the reimbursement of lost deposits in suspended savings banks with taxpayer money undermines the legal order of financial consumer protection. The legislation would not only hurt ordinary taxpayers but set a precedent that might force compensation for future losses in other mismanaged financial companies. Similarly, the law authorizing the government to set the credit card commission rates instead of leaving the fees to be decided by the market is economically unsound and tailored to win votes from the self-employed.
Their votes are valuable, but they should not come at the expense of free-market principles. Credit card companies plan to appeal the law through the Constitutional Court if the bill passes the Assembly.
Legal experts say the industry has a good chance of winning the case. The law to rescue the lost deposits of savings bank customers also impairs the constitutional property rights of common citizens who have no interest in the savings banks.
President Lee Myung-bak indicated that he would veto the savings bank bill if it passes the Assembly. Ruling party floor leader Hwang Woo-yeo and Woo Yoon-keun, head of the Assembly’s Legislation and Judiciary Committee, pledged prudence in dealing with the bill when it arrives for approval. Their promises, however, do not assure the outcome of the vote.
The leaders of the ruling and main opposition parties Park Geun-hye and Han Myeong-sook must declare their positions. They must choose between economic fundamentals and populism. They also must set a precedent for the handling of half-baked bills concocted solely to serve campaign purposes. Park and Han must follow through on their promises to show the people how their parties have changed. Both lawmakers know what is right. The question is whether they will act on their knowledge.