Red flags flying all around

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Red flags flying all around

The author is the head of the industry 1 teamof the JoongAng Ilbo.

“At the end of the 19th century, England had a red flag traffic law. People waved a red flag in front of an automobile to keep the speed of the car the same as the speed of carriages. At the peak of steam engine-powered automobiles, England stuck with the law to protect carriage drivers. In the end, the automobile industry that started in Britain fell behind Germany and America due to regulations.”

This is what President Moon Jae-in said in August 2018, the second year of his term. On a visit to an event on regulatory reforms to allow internet-only banks, he emphasized that regulations should be removed to expand the scope of banks.

But his promise to get rid of the red flags was in vain. In the four years of the Moon administration, 3,919 cases of regulations were motioned, three times the 1,313 cases in the conservative Park Geun-hye administration.

Regulatory reform has been a regular slogan in every new administration over the past three decades. There is no disagreement between the liberals and the conservatives that a good cycle of corporate investment, economic growth, consumption and employment growth will follow when regulations are eliminated. President Kim Young-sam pushed for the Administrative Reform and Renewal Committee. President Kim Dae-jung said, “I will remove regulations just like the guillotine during the French Revolution.” President Roh Moo-hyun commented, “I will break the lump regulation,” while President Lee Myung-bak said, “I will root out all regulations stuck in our society just like electric poles.” Park Geun-hye said she would “take out the prickle under the nail.”

But all administrations, not just Moon’s, failed to remove regulations in the face of stubborn bureaucrats, lawmakers trying to please interest groups and the resistance of the establishment. There is another factor for the current administration’s failure — attempts to cover up policy failures with one regulation after another. The most notable is the covering up of its real estate policy failure by putting a cap on sale prices, loan-to-value ratio restriction, and the three acts on registration for monthly and yearly rents, tenants’ right to renew the contract, and the cap on monthly and yearly rents.

One more thing. The 180-seat ruling party pushed for three controversial corporate regulations — revisions to the Commercial Act, the Fair Trade Act and the Financial Group Supervision Act. As a result, Korea has become a country with red flags flying all around. In the last four years, 12,000 companies fled abroad to avoid the red flags, and jobless young people gave up seeking jobs. But the government is still covering up its policy failures with the temporary jobs it created.
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