Park's economic policy resembles that of Bush-era US
President Park Geun-hye is now fighting a fierce battle with what she describes as a "sworn enemy" that the nation must crush, or a "cancer" it must remove. No, it's neither North Korea nor Kim Jong-un that Park hates so much. Her No. 1 enemy for now is administrative red tape.
Park's abhorrence of bureaucratic regulations is not exactly new. Her "3-R" economic policy ― reduce tax, relax regulation and reestablish rule of law (in labor issues) ― dates back to seven years ago when she was a candidate in the primary of her then conservative opposition party. After a brief excursion into "economic democratization" mainly for her election victory in 2012, Park has returned to her neo-liberalistic mantra.
The President's New Year address and the three-year economic plan that followed it also evolved around "deregulation." Yes, bureaucracy and regulation are two major obstacles for free entrepreneurial activities.
Are all regulations evil, which should be the less, the better, however? Most people, especially Anglo-American economists, thought so from the 1980s to early 2000s ― until the market-knows-best deregulatory fervor ended up causing the world's worst financial crisis in 2008. Since then they have reverted to reregulation ― except for Korea.
The Lee Myung-bak administration said its pro-business, deregulation policy would allow big businesses to grow, and its beneficial effects would trickle down to smaller firms and wage earners. It didn't go that way. Like the George W. Bush administration's tax cuts and small-government policy widened the gap between the rich and poor and turned the fiscal surplus to a deficit, the Lee administration turned Korea into a 90 percent versus 10 percent society.
It is regrettable, and frustrating, that President Park has not learned the lesson and is following in the footsteps of her failed predecessor.
Park must realize there are regulations, such as those in public safety and environmental matters, which are not only necessary for society and the economy, but also helpful for creating jobs. She also should know deregulation resulted in the credit card crisis and savings banks' fiasco. Most recently, deregulation on builders, especially for large construction firms, led to the deaths of a dozen college students, as an auditorium built by a chaebol affiliate under relaxed rules couldn't stand the weight of snow on its roof and collapsed.
It is true there are bureaucrats, too many of them, who find their raison d'etre, and side income, in administrative red tape. What President Park should do then is to minimize room for their arbitrary application of rules by strictly stipulating principles, criteria and procedure.
Leaders of advanced countries have long shifted their focus of policy to jumpstarting domestic consumption by dissolving economic inequity. U.S. President Barack Obama is pushing for a raise in the minimum wage, and Japanese Prime Minister Shinzo Abe has secured the promises of large businesses to increase salaries for their employees. They know from experience that deregulation only makes the rich richer, and the poor poorer.
President Park will chair a government-private, nationally-televised economic conference tomorrow, calling for drastic deregulation. For those in the know, Korea's economic administration is like a clock stuck at two decades ago.
President Park Geun-hye is now fighting a fierce battle with what she describes as a "sworn enemy" that the nation must crush, or a "cancer" it must remove. No, it's neither North Korea nor Kim Jong-un that Park hates so much. Her No. 1 enemy for now is administrative red tape.
Park's abhorrence of bureaucratic regulations is not exactly new. Her "3-R" economic policy ― reduce tax, relax regulation and reestablish rule of law (in labor issues) ― dates back to seven years ago when she was a candidate in the primary of her then conservative opposition party. After a brief excursion into "economic democratization" mainly for her election victory in 2012, Park has returned to her neo-liberalistic mantra.
The President's New Year address and the three-year economic plan that followed it also evolved around "deregulation." Yes, bureaucracy and regulation are two major obstacles for free entrepreneurial activities.
Are all regulations evil, which should be the less, the better, however? Most people, especially Anglo-American economists, thought so from the 1980s to early 2000s ― until the market-knows-best deregulatory fervor ended up causing the world's worst financial crisis in 2008. Since then they have reverted to reregulation ― except for Korea.
The Lee Myung-bak administration said its pro-business, deregulation policy would allow big businesses to grow, and its beneficial effects would trickle down to smaller firms and wage earners. It didn't go that way. Like the George W. Bush administration's tax cuts and small-government policy widened the gap between the rich and poor and turned the fiscal surplus to a deficit, the Lee administration turned Korea into a 90 percent versus 10 percent society.
It is regrettable, and frustrating, that President Park has not learned the lesson and is following in the footsteps of her failed predecessor.
Park must realize there are regulations, such as those in public safety and environmental matters, which are not only necessary for society and the economy, but also helpful for creating jobs. She also should know deregulation resulted in the credit card crisis and savings banks' fiasco. Most recently, deregulation on builders, especially for large construction firms, led to the deaths of a dozen college students, as an auditorium built by a chaebol affiliate under relaxed rules couldn't stand the weight of snow on its roof and collapsed.
It is true there are bureaucrats, too many of them, who find their raison d'etre, and side income, in administrative red tape. What President Park should do then is to minimize room for their arbitrary application of rules by strictly stipulating principles, criteria and procedure.
Leaders of advanced countries have long shifted their focus of policy to jumpstarting domestic consumption by dissolving economic inequity. U.S. President Barack Obama is pushing for a raise in the minimum wage, and Japanese Prime Minister Shinzo Abe has secured the promises of large businesses to increase salaries for their employees. They know from experience that deregulation only makes the rich richer, and the poor poorer.
President Park will chair a government-private, nationally-televised economic conference tomorrow, calling for drastic deregulation. For those in the know, Korea's economic administration is like a clock stuck at two decades ago.
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