Crusade against the Constitution
The author is an international, foreign policy and security news editor of the JoongAng Ilbo.
The Moon Jae-in administration and ruling Democratic Party (DP) are coming up with one half-baked real estate measure after another. The DP has decided to retroactively confiscate past profits earned by government employees and extend the scope of the required asset registration to all civil servants under the government. Retroactive legislation runs the risk of unconstitutionality, and restriction of civil servants’ property ownership poses many problems.
Even if such bills pass through the legislature, their effect in rooting out speculative activities in officialdom appears minimal at best. The strong push for such strong measures are apparently aimed at mitigating public rage over massive speculation by Korea Land and Housing Corp. (LH) employees through inside information in order to turn the tides ahead of the April 7 mayoral by-elections in Seoul and Busan.
The problem is that such measures by the ruling front do not work. The government seems to believe that regulation and punishment can eradicate housing speculation. But no past administrations could end speculative activities with such radical ways. If a government forcefully tries to control housing prices without following market principle, it fails. The biggest reason for the government’s real estate blunders is its adherence to regulations without any respect for the market.
The government and DP believe that their draconian measures will help win back the public’s support, but their hopes will most likely be dashed. In his book “Don’t Think of an Elephant,” Gerorge Lakoff, a distinguished professor of cognitive science and linguistics at UC Berkeley, pointed out that the more the Democratic Party opposes the Republican Party’s policy, the more it evokes the Republican’s Party’s policy frame from voters. Likewise, if the Moon administration and DP stress the importance of exterminating speculation, the public is reminded of their real estate fiascoes more.
The government must go back to basics. It must accept its failures in real estate policies and present feasible measures after having thorough debates with professional groups. If the Blue House and DP simply echo what their ideology-driven inner circles championed, it will only lead to another debacle.
Housing measures must start with a respect for markets. Regulation cannot defeat the market. The biggest reason for the collapse of socialist states, including the Soviet Union, is their overconfidence in government power. Capitalism recognizes human selfishness. Such attitudes sometimes lead to market failures, but an appropriate level of government intervention can minimize failure. In modern capitalism, market and government help the public’s pursuit of happiness by complementing one another. A laissez-faire approach without appropriate intervention from the government can cause social inequity, but government policies ignoring the market result in inefficiency.
Investment and speculation have blurry boundaries. It goes too far if the government wants to enact a bill authorizing a life sentence for a speculator as seen in its crusade against the pro-Japanese forces.
An attempt to regulate individuals’ greed through legislation just because housing speculation is bad will only produce unwanted side effects. If the government rushes to quick fixes to achieve short-term goals, that backfires. Clause 1 of Article 119 in our Constitution stipulates that the government should respect the freedom and creativity of individuals and companies in economic terms, and Clause 2 of the same article says the government can enforce regulation and adjustment on the economy for economic democratization. That means the government must exercise regulation at a minimum level even though our Constitution recognizes economic regulation by the government. If housing regulation is too excessive, it benefits no one.