The Housing Lease Protection Act Amendment? A Socialist Bill Like a Wolf in Sheep`s Clothing

Farmers are unable to enjoy freedom and live in constant anxiety. They are continually exposed to the threats of a free market and price fluctuations that can ruthlessly reduce their income, pushing them into financial crisis. As a result, they live in fear that they could lose the right to cultivate their own land. To ensure that farmers can work their land without such fear and anxiety, the state enacts laws to manage and protect farmers’ land ownership. In addition, a Price-Setting Committee determines prices so that farmers are guaranteed a stable and “appropriate” income. Farmers need only cultivate the crops designated by the state, or crops approved by the state, in accordance with government directives.

Did the farmers of this country, under state protection, truly enjoy stable lives free from the fear of losing their land? The policies described above are in fact part of the measures implemented by Nazi Germany as it socialized its economy—particularly the agricultural sector. But socialism? How can this be called socialism when land ownership formally remained in the hands of individual farmers rather than the state?

Ludwig von Mises, often called a “knight of liberty,” identified two patterns of socialism. One is the “Lenin pattern,” or “Russian pattern,” familiar from the former Soviet Union or North Korea, where all factories, shops, and land are nationalized. The second is the “German Nazi pattern,” implemented by Hitler’s regime. In simple terms, this Nazi model of socialism preserves nominal private ownership, but renders it meaningless—making it little different from state ownership in practice.

On the surface, private ownership of the means of production appears to be maintained, and ordinary markets, prices, wages, and interest rates seem to exist. In reality, however, owners have no genuine rights to use their property as they see fit. What to produce and at what price to sell are determined by orders from the highest government authorities. In other words, the government directs all economic activity. Economic actors do not obey the market and prices; they obey the government. Mises described this German Nazi pattern of socialism as “a socialist wolf in the sheep’s clothing of a capitalist market economy.”

An astonishing development has occurred in 21st-century South Korea: the emergence of this very “socialist wolf in capitalist sheep’s clothing.” If, in the Nazi German example above, farmland is replaced with rental housing, the policy content becomes strikingly similar. Tenants live with housing insecurity, suffering from unilateral rent increases and eviction demands. To ensure that tenants can live without such fear and anxiety, the state intervenes through law to manage and protect them. The tenant’s right to request lease renewal—currently limited to two renewals and already problematic—is to be made “unlimited.” Furthermore, Rent Assessment Committees would be established by region to announce “appropriate rents.”

These are the core provisions of a partial amendment to the Housing Lease Protection Act, recently proposed by Progressive Party lawmaker Yoon Jong-oh, co-sponsored by two Progressive Party lawmakers, six lawmakers from the Democratic Party of Korea, and one lawmaker from the Rebuilding Korea Party.

While rental housing would remain formally under the ownership of landlords, the right of owners to use their property in the manner and at the price they choose would be completely stripped away, with that authority transferred to the state. This is no different from the “German-style socialist transformation” carried out by the Nazis.

Perhaps because of the massive confusion and severe side effects caused by rental housing policies since the Moon Jae-in administration, or due to intense public opposition, the amendment was fortunately withdrawn almost immediately. However, attempts to hollow out private property rights and advance socialism in this manner have appeared in many forms across many sectors, and they will continue to do so in the future. This is something we must remain vigilant about—again and again.

Kwon Hyuk-cheol
Director, Free Market Research Institute

Korean version: https://www.cfe.org/20241211_27160