[In-Depth Review] Undemocratic Policy Decisions Are Bringing Disaster

Kyung-Yeop Jo, Director of Economic Research Office, Korea Economic Research Institute

There is a saying that wise people know without experience, ordinary people know after experience, and fools do not know even after experience. During the Roh Moo-hyun administration, 15 real estate policies were implemented. All ended in failure. The current administration, inheriting Roh Moo-hyun's real estate policies, has pushed even stronger demand suppression policies 23 times. Apartment prices in Seoul have risen by 52% over three years, and jeonse prices are soaring to unprecedented levels.

It is taking away the dream of homeownership from the homeless, giving tenants the anxiety of being thrown out onto the streets at any time, and imposing unbearable tax bombs on homeowners. Despite this situation, the minister in charge says, "Apartment prices have only risen by 14%," and the president claims, "The housing market is stabilizing," pouring fuel on the fire of public anger with remarks detached from reality. Not stopping there, they say they will establish a 'real estate market supervisory body,' which seems to show that they have learned nothing from 38 failures.

The incompetence of policy makers and arrogance that they can manipulate the market at will are only increasing the suffering of the people. The foolish policy failures and cognitive dissonance of the current administration appear not only in real estate policies but also in income-led growth policies, nuclear phase-out policies, and large corporation regulation policies. Even though failure is obvious, they push ahead first and try to cover side effects with fiscal measures or solve them with bigger regulations, leaving the national treasury empty and the market increasingly tangled.

All policies of the current administration start from ideology and factional logic. They divide the people into two sides?rich and poor, entrepreneurs and workers, large corporations and small and medium enterprises, landlords and tenants, Gangnam area and non-Gangnam area?and perceive society as a conflict structure of exploitation and the exploited. Under the pretext of protecting the socially weak, they brand critics as deep-rooted evils. As a result, policy content lacks realism, and the policy decision process is far from democratic procedures.

In past administrations, 'eogong' (accidental public officials) from presidential campaign camps often emphasized the justification and ideology of solving social problems quickly. However, through discussions with 'neulgong' (career public officials) who implemented realistic policies according to the real economy, the worst policies that would plunge the people into suffering all at once were avoided. Recently, however, more neulgong are choosing to be criticized as 'soulless' rather than stepping forward and being branded as deep-rooted evils, even though they know the policies will fail. National research institutes that should provide policy advice are busy finding evidence to support policies rather than conducting critical research. The National Assembly’s check-and-balance function has also collapsed. The ruling party, having won a landslide victory, ignores democratic procedures such as bipartisan agreement and pushes through policies by force, while the opposition is powerless.

It has become frequent that half-baked ideas from Blue House eogong are immediately legislated and implemented. Institutional devices that should restrain their rampage are not functioning at all. If even one of the experienced neulgong, the clear-headed PhD researchers at national research institutes, or the National Assembly that should check the executive branch had functioned properly, the policy failures of the current administration could have been prevented in advance. Assar Lindbeck, a Swedish economist, argued that except in cases of bombing by aircraft, rent control is the most efficient way to destroy a city, making rent regulation one of the most failed policies in the world. This rent regulation policy (the three lease laws) was established and implemented in less than a month.

Policy makers obsessed with insignificant, noticeable gains inevitably cause harm to society over time. True policy makers must be able to foresee not only short-term effects that are easily visible but also long-term effects that appear over time. Moreover, not only the main results of policy effects but also indirect results must be reviewed, and policies must be promoted based on a thorough analysis of the economic interests of the specific groups targeted by the policy as well as the interests of society as a whole. Policy content must accurately reflect the demands of the people, and policy decisions must go through democratic processes. No matter how good the government's intentions are, history teaches us that policies contrary to market principles are bound to fail, and I hope this lesson is learned now.

Jo Kyung-yeop, Director of Economic Research, Korea Economic Research Institute

This content was produced with the assistance of AI translation services.