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Shielding the horse and buggies

Published: 08 Aug. 2018, 19:23

President Moon Jae-in said on Tuesday that his administration will ease regulations on internet banks by allowing industrial companies to take stakes in them. He mentioned the red flag traffic law in 19th century Britain, which required self-propelled vehicles to be led by a pedestrian waving a red flag to warn bystanders of the vehicle’s approach. The law was aimed at keeping automobiles from running faster than wagons or carriages. The regulation ended up making the UK lag behind Germany in the automobile industry. The reference was a clear example of how regulations in the past blocked the development of new industries.

Moon’s comments were encouraging. In the European Union, Japan and China, innovative enterprises are fiercely competing to dominate the fintech market. However, our civic groups and liberal politicians continue to worry about the deregulation of internet banks. They think deregulation will break a campaign promise by Moon and transform those banks into industrial companies’ puppets.

That is short-sighted and paranoid. Internet banks are small-scale banks dealing with ordinary citizens, not large companies. Therefore, there is no chance that those banks will have to bear massive debts from the corporate sector. Complementary measures can also reduce the possibility that those banks turn into big shareholders’ private piggy banks.

The decades-old regulation that bans industrial companies from banking is a prime symbol of suffocating government regulations. If we cannot remove such restrictive red tape, the government’s vow to deregulate is an empty slogan. Civic groups keep saying that if regulations are removed, it will only benefit large companies rather than ordinary citizens.

Regulations are preventing the development of telemedicine, car-sharing services and even keeping convenience stores from offering simple drugs. Those were vehemently opposed by the Democratic Party when it was an opposition party. As the ruling party, however, it must look to the future rather than try to satisfy its base. That is the key to improving our society.

If the Moon administration wants to succeed, it must learn from the past. The Korea Chamber of Commerce and Industry singled out civil servants’ passive attitudes, the establishment’s resistance, lawmakers trying to meet demands of interest groups, and the people’s anti-corporate sentiment as the biggest obstacle to deregulation. But a more important thing is to devise feasible plans for the future.

JoongAng Ilbo, Aug. 9, Page 30