Saving Society from Crony Business

When popularity-seeking politics meets bureaucracy, legal plunder occurs. Politicians seeking to win the support of particular groups by offering special favors collude with administrative agencies seeking to expand their own influence, producing a flood of regulations and subsidy policies. This is also why legal plunder is increasing in Korea.

Voluntary exchange increases social benefit. By contrast, transactions forced by the government are carried out through someone’s sacrifice. Whether through legislation or through regulations imposed by government ministries, artificial transactions distort resource allocation and prices and hinder the development of the market economy. The harm they cause is a decline in social welfare and, ultimately, a heavier tax burden on the public.

The Fair Trade Commission is a representative agency that has expanded government-dependent business while mass-producing regulations. In return for creating regulations that sacrifice businesses, former senior FTC officials enjoy the benefits. The FTC is constantly creating new regulations to secure its future livelihood. Law firms and legal professionals are satisfied to see government-dependent business expand. As business vitality declines and social costs rise, their incomes increase instead. The public does not directly feel the burden of these costs, making it difficult to develop a sense of urgency about the problem. Amid such indifference, the economy loses vitality.

The Ministry of Science and ICT creates government-dependent business under the pretext of trying new things in place of the market. Its recently proposed plan for a fourth mobile carrier is another case in which the government refuses to recognize market competition and instead tries to impose what it wants. There is no reason to distort the market by using massive taxpayer support measures, yet the government has revealed the arrogance of trying to artificially create the outcome it prefers. A business sustained by government control and subsidies is not a genuine business. It only produces side effects by replacing or shrinking private business.

The Ministry of Environment is another agency that has mass-produced government-dependent business through regulation. Obsessed with environmental ideology, it deprives citizens of their freedom of choice and dictates how businesses must operate. Interest groups that put environmental issues at the forefront pressure government agencies to create business arrangements favorable to themselves and to secure support.

The Financial Supervisory Commission and the Financial Supervisory Service are no exception. It is regrettable that financial firms, which should be faithful to economic logic, have been reduced to government-dependent entities because of government bureaucracy. The harm caused by government-directed finance is severe. If they are subordinated to politicians and financial authorities rather than working for and paying attention to financial consumers, it is difficult to expect improved competitiveness. It may be convenient for the financial authorities to keep financial companies under their influence and control, but the damage is enormous.

If the gains from plunder are large, people will not stop. For society to remain stable and prosperous, institutions must develop in ways that protect individual property rights and freedom of choice. To preserve the health of the community, mutual cooperation through voluntary private exchange—not an artificial order imposed by the government—must increase.

Sung-no Choi

President, Center for Free Enterprise (CFE)

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Original title: 관변 비즈니스에 빠진 사회 구하기

Author: Sung-no Choi

Date: 2024-01-12

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=26373