“The most important thing the government needs to do is regulatory reform. We need to loosen regulations rather than loosen money.”
Choi Byung-sun (70), a professor emeritus at Seoul National University’s Graduate School of Public Administration who served as the civilian chairman of the Regulatory Reform Commission, said on the 23rd, “If the government loosens regulations, it can make a bigger difference than what money can do. Only a really strong government can do this,” he said.
“On the contrary, a government that pretends to be strong, a government that bluffs as if it can win a market it can’t win, will only repeat a ‘market failure’ into a ‘government failure.'” He cited the Moon Jae-in government’s real estate policy failures and tax-led growth as examples.
Choi has been making this argument since he was involved in government reform and regulatory reform during the Kim Young-sam administration. He led the founding of the Korean Regulatory Society and served as its first president, and has published books on regulatory reform, including “Theory of Government Regulation” and “Myths and Logic of Administrative Reform.
The market works without a ‘director general’
The first part of “Regulation vs. Markets,” which he wrote late last year, begins with an unusual short story, “Me, a pencil. Written in 1958 by Leonard Reed, founder of the American libertarian think tank the Foundation for Economic Education, it vividly illustrates the role and efficiency of markets. It warns against governments taking the market too lightly and trying to intervene and regulate too much.
The pencil says, “I am a plain, ordinary pencil, but a great mystery.” He explains how he was created. “I look so simple, yet I remain the object of your wonder and awe,” the pencil said. The process of the pencil’s creation shows that many people are connected through the market.
A straight-grained cedar tree growing in North Carolina and Oregon is miraculously transformed into a pencil by many people doing their jobs. From the drivers of the big-rig trucks that crisscrossed the continental United States carrying the wood, to the lighthouse keepers who lit the lighthouses along the route as the graphite mined in Sri Lanka crossed the ocean on cargo ships, it took the cooperation of countless people. There were also the people who made paraffin, wax, lacquer, and rubber and moved it to the pencil factory.
“The most remarkable fact is that all this was done without a ‘general manager,'” Pencil argues. “Overall, there was no one person who directed or coerced, but instead an ‘invisible hand’ worked.”
Nobel laureate in economics Milton Friedman wrote in his review of the 1976 edition of the short story. “I have never read anything that so succinctly, eloquently, and effectively describes Adam Smith’s ‘invisible hand’.”
Friedman concluded, “No one sat in a centralized control room and ordered thousands of people around. “The thousands of people involved in the process of making a pencil didn’t do their jobs because they needed a pencil, they did their jobs because they wanted to buy the goods and services they wanted,” he said.
Choi Byung-sun, former chairman of the regulatory reform commission, talks to this newspaper at a cafe in Jagok-dong, Gangnam-gu, Seoul, on Nov. 23. /Park Sang-hoon
Regulatory reform is the government’s biggest job
-How much of an impact does regulatory reform have on growth?
“According to a study by the World Bank, if a country with very strong regulations succeeds in reforming its regulations to the level of a country with relatively reasonable regulations, it can increase its economic growth rate by 1.4 to 2.1 percent annually.”
-How I rate my country’s regulatory reforms
“I wouldn’t call it a success, although there have been periods of progress. President Kim Dae-jung, who launched the Regulatory Reform Commission in early 1998, said, ‘Get rid 토토사이트of 50 percent of regulations.’ In fact, within a year, the number of regulations was cut in half. The president’s commitment to regulatory reform was strong, and the committee was well funded and staffed. But while the reduction in regulation was remarkable, what was even more remarkable was that the world was not much different.”
-Why it didn’t change
“Government regulatory reform is not an easy task. Government is not creative. When government leads, it kills creativity. Officials should say, ‘There should be a bookstore in front of the university, not a hop house or a clothing store. It’s easy to think that ‘students will study harder and the country’s competitiveness will increase.’ So they impose regulations. The commercial district will decline. When you regulate a college town to make sure there are no hoop houses, it makes things worse, not better.”
-Don’t leave regulatory reform to government and bureaucrats.
“Governments claim to have reduced the number of regulations, but it’s often a case of ‘number crunching’. That’s a bit of a stretch, but that’s because bureaucrats can be deceitful. They bundle regulations that they don’t want to repeal with their neighbors. This reduces the number of regulations, but it doesn’t change anything. The government needs to work with the private sector and the market.”
-Yoon Seok-yeol on the government’s regulatory reforms one year in
“I think the direction is the same. However, it is unfortunate that the government has established a new task force for regulatory innovation, which is headed by the prime minister and composed mainly of retired government officials. It would have been nice to empower the 25-year-old and well-established Regulatory Reform Commission. I’m not sure it’s appropriate to consider retired government employees as regulatory reform experts. They are more likely to be used to avoiding new problems than new solutions.”
-Stephen B. Wagner, CEO of the New York Times On the need for government regulation in some areas, many believe that the government should correct market failures.
“Just as it is wrong to assume that markets are infallible, it is also wrong to assume that governments have good intentions and are a force for good. No government is benevolent and competent. When governments try to force markets, whether through policy or institutions, there are always problems. Governments and markets can and should work together. When government tries to get ahead, things go wrong. Market failure as a rationale for government regulation and intervention is also problematic. It denies the existence of real markets in favor of a perfectly competitive market that doesn’t and can’t exist. It’s not just a theory, it’s a very dangerous theory. It’s a false argument.”
-Regulatory reform is seen as a way to favor big business.
“Regulatory reform is being viewed as a corporate grievance settlement. Regulatory