An Out-of-Nowhere Proposal from the Bank of Korea on How Universities Should Select Students? It Should Focus on Its Core Job...

The Bank of Korea has reportedly proposed a method for selecting university students. The headline of a related newspaper article reads: “‘Golden Spoon’ Seoul National University Students Keep Pouring In... Bank of Korea’s Unconventional Proposal: ‘Let’s Select Them in Proportion to Region.’” The idea is that students from wealthy families, especially those from Gangnam, have unusually high acceptance rates at so-called prestigious universities and medical schools such as Seoul National University—in other words, admission is heavily influenced by parents’ financial resources and place of residence. As a result, talented students from the provinces are not being selected. Therefore, it proposes that incoming students at these universities be admitted in proportion to the number of test-takers in each region. Put simply, since Seoul National University’s freshman quota is 3,522, this number would be divided according to each region’s share of the 17-year-old population, so that Seoul, at 16.1%, would get about 567 students; Busan, at 5.5%, 193 students; and Gwangju, at 3.2%, 113 students. According to the Bank of Korea, “As admissions competition has become overheated, the burden of private education has intensified and is causing structural social problems such as low birth rates... These can be eased through a regionally proportional admissions system.”

Reading this article, I could not help but think how utterly out of the blue it was. According to the Korean dictionary, the expression “out of the blue” means “sudden and absurd.” The Bank of Korea proposing a university freshman admissions system! It would be stranger not to think that this was “sudden and absurd.”

Let us look at Article 1 of the Bank of Korea Act, which sets out its purpose. It clearly states: “Its purpose is to contribute to the sound development of the national economy by striving for price stability through the efficient formulation and execution of monetary and credit policy.” The purpose of establishing the Bank of Korea, and the very reason it exists, is to “strive for price stability” through the “formulation and execution of monetary and credit policy.” Where in this is there any educational function, or any room for it to make proposals on university admissions?

Pursuing “price stability,” the founding purpose of the Bank of Korea, is by no means a light task. It may well be the single most important responsibility in the economic sphere. Walter Eucken, the ordoliberal economist credited with laying the foundation for the German economic miracle along the Rhine, proclaimed the “seven fundamental principles of economic policy” and stressed that, among them, the most important and highest priority was the stability of the currency’s value.

What is crucial to carrying out this mission is the independence of central banks, including the Bank of Korea. In other words, central bank decision-making must be able to proceed with external influence—especially from the political sphere—thoroughly excluded. If monetary policy is instead swayed by those in power or by powerful interest groups according to their tastes, price stability will almost certainly be lost, and that in turn will bring enormous confusion and harmful side effects to the national economy as a whole. That is why Article 3 of the Bank of Korea Act, “Neutrality of the Bank of Korea,” states: “The monetary and credit policy of the Bank of Korea shall be formulated neutrally and implemented autonomously, and the independence of the Bank of Korea shall be respected.”

Given all this, it is difficult to understand why the Bank of Korea would go out of its way to bring up matters such as “overheated admissions competition,” the “private education frenzy,” and the “low birth rate problem,” and even mention the university admissions system as a solution. On the contrary, even if the government or politicians were to argue, on such grounds, that the Bank of Korea should play a role, would this not be a matter on which the Bank should strongly rebut that such things are not its role and would undermine its neutrality? Yet the Bank of Korea itself is jumping into the matter, which is hard to comprehend.

In many ways, this is a baffling move by the Bank of Korea. It is a well-known phenomenon that public institutions, when they fail to produce results in their original duties or seek to justify their existence, tend to bloat themselves unnecessarily or add new functions. Is this latest move another example of that? Looking at prices in Korea today, the Bank of Korea has not merely failed to produce results in its original duty—its core job of price stability—it is enough to speak of “the Bank of Korea’s failure.” The entire public is suffering and anxious under high prices, with prices surging by several dozen percent to well over 100 percent. Of course, this can be said to be the result of multiple overlapping factors, but in any case, it is hard not to say that the institution with the greatest responsibility is the Bank of Korea, which is charged with maintaining price stability.

“Parents’ financial resources determine college admissions... Let’s select Seoul National University students in proportion to region.” Instead of spending time worrying about such things out of the blue, it should devote itself to its real job: price stability...

Hyukchul Kwon, Director of the Free Market Institute

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Original title: 뜬금없는 한국은행의 대학생 선발 방식 제안? 본업에 충실하길...

Author: Hyeok-cheol Kwon

Date: 2024-08-28

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=2&idx=26844