Today’s Regulatory Problems Through Sunset Ordinances

Former President Moon Jae-in once said that abolishing the Red Flag Act-style ordinances was necessary for innovation-led growth. In addition, Minister of SMEs and Startups Park Young-sun also cited the Red Flag Act in a public setting, saying she would carefully examine irrational regulations so that they would not undermine the dynamism of the Korean economy. As calls for regulatory reform are repeatedly emphasized in this way, the Red Flag Act is often mentioned as well. So what exactly is this Red Flag Act?

The Red Flag Act, also known as the “Locomotive Act,” was a law enforced in mid-19th century Britain (1861). It prescribed how motor vehicles were to be handled on roads in Britain at the time.

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The problem, however, was that the law imposed far too many regulations. First, it restricted vehicle weight (12 tons) and speed (16 km/h, or 8 km/h in urban areas), and required that automobiles be operated by a total of three people: a driver, an engineer, and a person carrying a red flag who walked 60 yards (about 55 meters) in front of the vehicle.

Moreover, the person carrying the red flag was required to maintain a walking pace and give advance warning of the vehicle’s approach to riders and horses.

According to a revision to the law in 1878, the red flag itself was no longer required, but vehicles still had to stop whenever they happened to encounter horses, and measures had to be taken to ensure that no smoke or steam was emitted so as not to frighten them. As a result, no matter how advanced a vehicle’s performance became, the weight and speed limits and the various regulations made it difficult to produce better automobiles. Ultimately, the development of Britain’s automobile industry was significantly delayed.

As a consequence, Britain’s automobile industry fell behind France and Germany. Although the Red Flag Act was finally abolished in 1896, it was already too little, too late. The relative scarcity of famous British automobile brands today compared with other advanced countries can also be attributed in part to this background.

This case remains a famous example of an economic tragedy caused by absurd government intervention and interference, with industry prevented from being fully left to the market economy and spontaneous order. Korea today likewise has ridiculous laws and regulations similar to the Red Flag Act. Nevertheless, far from deregulating, some ministries are still creating new Red Flag Acts.

If such anachronistic regulations are repeated, South Korea’s future will be very uncertain. To achieve economic growth and innovation, it is important to remember that the best course of action is to abolish unnecessary regulations and make the market as free as possible. Accordingly, superficial, hollow policies should be avoided, and this issue should be addressed in depth.

1) At the time, most vehicles were steam-powered automobiles, and gasoline automobiles had not yet been commercialized.

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Original title: 적기조례로 보는 오늘날 규제 문제

Author: Seong-woo Jeong

Date: 2019-09-04

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=18&idx=21849