No such thing as a free lunch
*The author is the CEO of JoongAng Designworks.
After admission to public art galleries and museums became free in the spring of 2008 to follow up on a campaign pledge from then-President Lee Myung-bak, private exhibition spaces were hit hard. A veteran curator who ran a running a private museum in Gwangju, Gyeonggi, which charged 4,000 won ($3.70) for admission, said that visitors decreased significantly and school trips also fell sharply, as they turned to free public facilities.
The government’s good intention behind offering greater cultural accessibility to the public to help regional communities only ended up wrecking regional cultural infrastructure. The previous President Roh Moo-hyun allowed free admission to national and public parks in 2007, causing disorder and a mess to public greenery. Maintenance costs to taxpayers increased.
Few refuse freebies. It felt like a windfall when I learned that entry to Deoksu Palace was free on the day I visited there for a stroll during lunchtime. Although tickets were just 1,000 won, it felt good to get in for free. But if free rides become common, we won’t be as appreciative of them. The liberal Moon Jae-in administration is overly generous, and its spending is reaching a worrisome level.
Express toll fees were made free during the two major family-gathering holidays, Chuseok and the Lunar New Year, when road traffic is the busiest. The deficit-ridden Korea Express suffered 100 billion won in losses because of Moon’s generous gesture. The Seoul metropolitan government used 15 billion won to pay for free public transportation for three days in January to encourage people to keep their cars at home when fine dust levels worsened. The suspension of construction of the Shin Kori 5 and 6 reactors to gauge public sentiment on whether to stop building new reactors in line with the government’s nuclear phase-out policy translated into a 120 billion won loss for the reactor operator Korea Hydro & Nuclear Power.
Moon’s campaign promise to increase coverage for national insurance would require 30 trillion won in tax money over the next five years. To compensate small employers for the sudden spike in the minimum wage, the government has earmarked 3 trillion won to hand out in monthly subsidies. Experts point out the government has been spending recklessly because more tax revenue came in than expected in recent years.
When income inequality hit its worst-ever level in the first quarter, the Blue House hastily convened a meeting. President Moon Jae-in chaired the meeting, which ran for two and a half hours. He said he was “hurt” by the worsening disparity despite his focus on raising incomes. The data slammed the keystone of the Moon administration’s economic program — generating growth through increasing wages.
People are now lining up to register their business license cancellations and closures at a tax district office in Gangnam, southern Seoul, where rents are the highest in the country.
Devising other incentives, such as tax breaks for low-income earners, won’t be enough to minimize the damage done by Moon’s income-centered economic policy. The government should sensibly look at the havoc wreaked on jobs, workplaces and low-income households after the minimum wage went up 16.4 percent from January. If economists and bureaucrats put their heads together, they will be able to determine the objective impact of the minimum wage on the economy. Otherwise, the debate over income-led growth will only do more harm and divide society.
What is free would come back in much bigger bills and even fatal results. Venezuela and Greece have become bankrupt as a result of hefty government expenditures. Populist governments have indulged their people and ruined state finances.
Companies sometimes offer freebies to draw in future customers. It is seen as a marketing or investment expense. But the government’s generosity is designed to win votes and usually results in waste, because it is not usually thoroughly thought out. Voters must punish candidates who offer reckless promises in the June 13 elections, as they are clearly not being honest.
There is a Russian saying that free cheese can only be found in a mouse trap. Unlike politicians, there are many citizens who live clean and honest lives. I respect elderly metro riders who pay for their tickets even when they are older than 65 and eligible for a free pass.
JoongAng Ilbo, May 31, Page 28