Rumor has it that conservatives stand for free markets, a reliance on oneself and one’s family, and a supposed distrust of government. Like most politicians, however, this Saenuri bunch (dating back to their days as the Grand National Party) has been neither coherent nor consistent in their defense of such principles, attracting well-deserved criticism from the left for pardoning criminal businessmen and from the classical liberal crowd for restricting market competition and trying to pick winners. Yet, while Saenuri politicians may be slippery, they are no fools: they know which way the political winds are blowing and have realized that their inability to articulate their core principles (assuming they have them) has landed them in hot electoral water. Which brings to mind another American humorist, Groucho Marx, who once remarked that “those are my principles, and if you don’t like them…well, I have others.” Just let the Saenuri politicos know what they need to say in order to get elected and they’ll parrot it right back to you.

As Stephan Haggard and Jaesung Ryu pointed out in a Peterson Institute blog post from last week, however, conservatism in Korea, as compared to its American cousin, is different sort of brew. Consider that Park Chung-hee, the dictator who ruled Korea through most of the 1960s and 1970s, is labeled a conservative in these parts despite overseeing an industrial and trade policy that would make left-wing American progressives (and “national greatness conservatives”) sigh in statist envy. Moreover, Korea’s constitution, in stark contrast to that of the United States, hardly bespeaks skepticism about unchecked state authority.

…the [Saenuri Party's] new platform, called “promise to the people,” embraces a welfare-state and the idea of “democratizing the economy.” Progressives in South Korea have long sought to reform the country’s monopolistic chaebol structure; it may seem strange that a conservative party is advancing greater state involvement in the economy. But recall that the party’s standard-bearer is the daughter of Park Chung Hee, a firm believer in industrial policy. The country’s constitution has a surprisingly expansive role for the state, stipulating that “[t]he State may regulate and coordinate economic affairs in order to maintain the balanced growth and stability of the national economy, to ensure proper distribution of income, to prevent the domination of the market and the abuses of economic power and to democratize the economy through harmony among the economic agents” (Article 119, Section 2).

As Gavin Stevens, a character in William Faulkner’s novel, Requiem for a Nun, put it, “the past is never dead. It isn’t even past.” Conservative politicians in Korea – like politicians as a general breed – have always had an affinity for government power, so why should we be surprised by their current contortions as they desperately seek to retain their positions?

]]> http://cfekorea.com/2012/02/20/missionaries-for-cannibals/feed/ 0 idiotscollective http://cfekorea.com/2012/02/20/dr-ken-schoolland-and-friends-cool-new-philosophy-of-liberty-video-jg-newsletter/ http://cfekorea.com/2012/02/20/dr-ken-schoolland-and-friends-cool-new-philosophy-of-liberty-video-jg-newsletter/#comments Mon, 20 Feb 2012 00:54:33 +0000 politikoala http://cfekorea.com/?p=693 ]]> We were featured on Libertarian International Organization’s SMILE blog! According to their website, LIO’s aim is to:

Network, highlight, build Libertarian-interested leaders and self-leadership in home, work, civic life.

In order to achieve these goals, the organization advocates S.M.I.L.E, which is an acronym summarizing the diverse means to spread the Libertarian message.

S- Space/Sea/Eco-Earth Community

M- Machine/Thought servants

I- Individual improvement

L- Life extension

E- Empowering LIO/Libertarian based community project

CFE was recognized on the SMILE blog for our recent video, the Philosophy of Liberty. Originally created by Ken Schoolland and his associates, our remake of the video was intended to make the message of Liberty clearer for a Korean audience.

Thanks again, Ken, ISIL, and LIO!

via Dr. Ken Schoolland and Friends: Cool New Philosophy Of Liberty Video, JG Newsletter.

…seven heads from among the top ten conglomerates in terms of assets were sentenced to a collective total of 22 years and six months in prison since 1990, but all were given suspended sentences. In contrast, just 25% of people from the general public received suspended sentences in criminal cases last year.

Here we have exhibit 1-A in illustration of the fact that South Korea is not a free market. Many of the cases cited in the Chaebul.com report involve political corruption, that is, of corporate heads maintaining slush funds for the purpose of bribing politicians. The expectation, of course, is that such “donations” will lead to preferential treatment and protection from the market, arranged by said politicos, else why would anyone bother bribing them in the first place. The obvious corollary to this truth is that no one bothers to bribe someone who can provide nothing in return. I might try to bribe a police officer to get out of a speeding ticket, but I wouldn’t bother trying to pay off the pizza delivery boy to accomplish the same end.

A few months back, at the peak of the Occupy Wall Street movement, someone posted the following Venn diagram and it bounced through the internet with a quickness.

Both Occupy Wall Street and the Tea Party movements in the United States believe that government-corporate collusion is a threat to the health of the nation’s economy. Each side, however, comes to this belief from a different direction. The Occupy crowd, who in Korea would be among the Hankyoreh‘s likely subscribers, insists that this corruption can be regulated away if only we would get the right people into office and if only these right people were allowed to do the right things. In other words, we should give the government more power.

By contrast, free market types, like the Tea Party and those of us who haunt the halls of CFE, believe that government power is precisely the dung heap which attracts the corporate flies. Quite simply, if you concentrate power in government, you also concentrate the power of those who can afford to lobby the brokers of that power for favors.

As ever, then, identifying the problem seems to be easier than agreeing on a “solution.”

]]> http://cfekorea.com/2012/02/16/dont-like-cronyism-shrink-government-power/feed/ 0 idiotscollective OWS vs. the Tea Party http://cfekorea.com/2012/02/16/cfe-in-the-news-100-korean-economic-experts-urge-end-to-populist-pledges/ http://cfekorea.com/2012/02/16/cfe-in-the-news-100-korean-economic-experts-urge-end-to-populist-pledges/#comments Thu, 16 Feb 2012 01:27:30 +0000 CJL http://cfekorea.com/?p=659 ]]> 100 economic experts urge end to populist pledges

A hundred conservative economic experts urged Monday that politicians stop making election pledges of generous welfare policies at a time when political parties are making a flurry of such promises to garner votes.

Emeritus professor Park Dong-woon at Dankook University, professor Choi Kwang at Hankuk University of Foreign Studies, and Kim Jeong-ho, director of the Center for Free Enterprise, said this in a news conference Monday at the Korea Press Center in Seoul.

They said in a statement, “The ruling and opposition parties are racing to make election pledges to offer overly generous welfare policies ahead of the April 11 general elections and Dec. 19 presidential election,” adding, “We urge politicians to stop making pork-barrel election pledges and to be reborn as sound political leaders with righteous pledges to ensure sound government finances and the future of the country.”

“The (ruling) Saenuri Party is scrambling to follow populist election pledges made by opposition parties in a bid to recover from its policy failures and regain lost popularity, while the main opposition Democratic United Party, only mindful of regaining power, is making a flurry of election pledges to offer highly generous welfare packages,” the statement said, adding, “None of the policies presented specific ways to mobilize resources for implementing policies.”

On a disputed law on savings banks that passed the parliamentary committee for national policy Thursday, the group of experts said, “The measure was devised from a shallow plot that completely disregards the economic principles of capitalism, and cares nothing about the ensuing confusion and chaotic order in the financial market.”

“If government spending is increased unconditionally and without introducing measures to mobilize the necessary funds, it will inevitably end up increasing taxes to be paid by future generations,” they said, warning that Korea could be pushed to national bankruptcy similar to Greece.

Oh Jeong-geun, a Korea University professor who served as a speaker at the conference, said, “In Europe, measures to cut fiscal deficits are being reviewed at the European Union level,” adding, “Korea also needs a strong regulatory measure designed to prevent a fiscal deficit, which cannot be amended whichever politician or political party takes power, and thus prevent government debt from growing further.”

The declaration was signed by 100 experts with a conservative economic ideology, including professors Jwa Sung-hee at Seoul National University, Hyun Jin-kwon at Ajou University, Kwak Tae-won at Sogang University, Oh Jeong-geun at Korea University, Jeong In-kyo at Inha University, Moon Hyung-nam at Sookmyung Women`s University, Min Kyung-kook at Kangwon National University, and novelist Bok Geo-il. “We chose to take part in the declaration to prevent the Korean economy from collapse due to populist policies.”

This article was originally published in the Dong-A Ilbo on February 14, 2012.

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COMMENT FROM CJL: Great! The South Korean election is shaping up to be a battle between the “takers” and the “makers.” It is good to see South Korean economists denouncing populism. As bad as it is that politicians are using taxpayer money to buy votes, there is also a problem that so many South Koreans apparently are ready to sell their votes.

Somehow, though, members of South Korea’s ruling Saenuri Party (formerly the Grand National Party) have decided that they do, in fact, know who ought to be your local butcher, baker, and candlestick-maker.  In an attempt to mold the Korean market to their whims, the Saenuri leadership has put forth a bill that would prohibit large retail stores – such as E-Mart, HomePlus, and Lotte Mart – from opening new outlets in small cities for the next five years. Said Kim Jong-in, a member of the party’s leadership:

“If [we] don’t provide an institutional framework, small and medium-sized retailers are all bound to shrivel up, hiring will be destroyed and welfare demands will grow. There is often talk of market principles, but a market economy’s problems are not always solved by the market and require restraint for a certain amount of time.”

In his essay “Competition as a Discovery Procedure,” the economist F.A. Hayek wrote that “if anyone actually knew everything that economic theory designated as ‘data,’ competition would indeed be a highly wasteful method of securing adjustment to these facts.” In reality, this ‘data’ acts a veil, tricking us into believing that we know more about the economy than we actually do. The purpose of competition is to continually reveal new information about who can do what more efficiently than it has ever been done before, and then to prod the relevant actors into the most rewarding activities. As the title of Hayek’s piece suggests, competition allows us to make these discoveries without the conscious design of any central planner in government – indeed, these central planners are incapable of making such discoveries, only of blocking them.

Consider that in the early 20^th Century, the United States automobile industry was populated by hundreds of small-scale manufacturers, outfits with names like American Chocolate, Hupmobile, American Underslung, Stoddard-Dayton, and Desberon that have long since disappeared into the ether. Eventually, of course, the American auto industry consolidated around three large firms (Ford, General Motors, Chrysler), but imagine if the U.S. government, in a misguided moment of good intentions, had decreed that the myriad small firms deserved protection from their larger rivals. Such meddling may have spared America the Edsel and the Citation, but it just as likely would have deprived us of the ’55 Thunderbird and the ’69 Hurst Olds as well. More importantly, the initial chaos and ultimate amalgamation of the market led to the realization – the discovery – of economies of scale and a vastly better product for the consumer.

What the Saenuri Party is  proposing is not so much a protection of small local retailers, but rather a punishment of consumers who would surely flock to the larger outlets if given a chance. If forced to compete, the smaller stores would likely find they either had to specialize – by offering local, organic products not available at the likes of E-Mart, for instance – or face failure. And by blocking the entry of larger stores into the market, the government is short-circuiting an essential operation of the market economy on which we rely for our ever-improving standard of living.

As Israel Kirzner writes in this Cato Institute Policy Analysis:

“…it is necessary, of course, that entrepreneurs be free to act upon their discoveries — no matter how this may redound to the disadvantage of those who have not themselves made these discoveries. Such freedom to act requires that no entrepreneur be blocked from entry into any line of market endeavor. Freedom of entry is the legal and institutional prerequisite for the discovery procedure of the market.”

Just as there is no use in declaring the winner of the World Cup before the tournament plays itself out, we have no way of knowing who will be the best producer of any particular product or service before the market process takes shape. Unlike the World Cup, however, this market process, blessedly, never ends. If only the Saenuri Party members understood this.

]]> http://cfekorea.com/2012/02/15/competition-is-a-process-of-discovery/feed/ 0 idiotscollective http://cfekorea.com/2012/02/14/casey-lartigue-on-tbs-efm-101-3-at-415-p-m/ http://cfekorea.com/2012/02/14/casey-lartigue-on-tbs-efm-101-3-at-415-p-m/#comments Tue, 14 Feb 2012 04:30:06 +0000 CJL http://cfekorea.com/?p=648 ]]> Casey Lartigue, director of international relations at the Center for Free Enterprise, will be discussing his article “Love and Economics on Valentine`s Day” from 4:15 p.m. on Drivetime on TBS eFM 101.3

Here`s the show, hosted by Sam and Annabelle, the listen live link is on the main page.

Joining again with progressives targeting large companies, the party has “decided to exclude large firms from specific business fields.”

As usual, the well-intentioned goals are loudly stated upfront: “To protect small and middle-sized enterprises.” Stage one is to announce a new policy while highlighting the benefits and ignoring or downplaying the costs and process of enforcement. So many people in media focus on the ribbon-cutting ceremony, signing ceremony or public announcement highlighting the benefits of the policy.

“Conglomerates have often been blamed for eating away at the business items of smaller firms,” said Rep. Lee Ju-young (he’s pictured below with likely presidential candidate Park Geun-hye), the party’s policy committee chairman in a briefing.

It would be more accurate to say that consumers have been “eating away from” smaller firms because they prefer cheaper prices or the “one-stop-shopping” available at big-box stores or large companies. Love you, mom-and-pop, but if I can get everything I want at E-mart, instead of stopping at six different mom-and-pop shops, then that’s what I’m going to do with my money and time.

Representative Park said it intended to “take measures to prevent and limit all the work going to conglomerates.” As usual, the focus is on the intentions. And, again, it isn’t up to her to decide where people can shop.

Not stopping there, the council also will:

• lead a regular inspection on the transactions between conglomerate branches in order to prevent monopolization, placing focus on the top 30 firms. (I doubt this is a good idea, but when a criminal talks, how can I distinguish between the good and bad that he says? The Korean concern with “monopolization” has gone overboard–a good option would be to increase free trade so those companies will be competing with everyone in the world).
• “Those caught on irregularities may face criminal charges, as well as civil ones.” (Ah, yes, arrest somebody, especially before the elections–company executives should be on high alert that politicians need a scapegoat to publicly whip before the voting starts).
• The party also set to legislating exemplary damage compensation, obligating conglomerates to pay back as much as triple the original damages to their subcontractors, should the deal be unfair. (Who is to determine what is unfair?)
• Also, a class action system will be introduced for victims of bid rigging cases, Lee said.
• A class action involves a system in which all victims of a specific case, regardless of their participation in the related legal suit, may receive compensation based on the court ruling. (In other words, more victims, more votes, so make it easier for everyone to take a whack at the chaebol piñata).

In case there was any doubt about why the ruling party has reversed itself on this:

“These policies will be legislated as soon as possible and adopted as the party’s campaign pledges for the upcoming April general elections,” Lee said.

Lee was also quoted in the Joonang-ilbo as calling the policy “economic democratization.” He’s a politician so it isn’t surprising he would say something like that. People already vote with their dollars in the economy every day, they don’t need politicians blocking their choices.

The Joongang-ilbo cites a survey from the Yeouido Institute, the party’s policy think tank. They asked 3,741 people nationwide: “How ethical are large conglomerates and chaebol?”

According to the results released Monday, 74.4 percent of respondents said they believe them to be “corrupt,” a 4 percent increase since a survey in August 2011 asking the same question.

It would have been nice if they had also asked the 74.4 percent if they intended on boycotting conglomerates. If they acted as they talked, then the alleged problems with chaebol would be solved.

Politics is definitely the silly season. In South Korea, politicians are working overtime in their silliness.

CJL

Cash. Some economists say it is the most efficient gift to give. Think back: How many times have you smiled awkwardly when realizing you were receiving another tie, instead of the Madden NFL video game you would have bought with a cash gift? When giving her lingerie (again), do you add, “The gift receipt is there, you can return it if you don’t like it.”

In some cases, you and your sweetheart may be exchanging unwanted gifts. Cash then is a better gift because the recipient can buy what he or she wants (giving gold may be the most efficient of all because governments reduce the value of your money with deficit spending).

Let’s say the economists are correct ― do you want to follow their cold calculations on a day meant for lovers? Economists, predictably, say: “It depends.” In an interview on the site LearnLiberty.org, George Mason University economics professor Chris Coyne argues that a spouse or a long-term mate can get away with giving cash or a gift certificate. But at the start of the relationship, the sender may still need to demonstrate seriousness by sending a thoughtful or expensive gift.

As Coyne explains it in economic lingo, a gift is a “signal” that the sender gives to the recipient of serious intentions when there is “asymmetrical information” (that is, one person has more information than another person in an exchange, such as a car salesman and prospective buyer).

Let’s continue assuming that economists like Coyne are correct. Wouldn’t giving cash undercut the boost that Valentine’s Day gives to the economy, as cited favorably by Duke University professor Dan Ariely?

Not so. Giving cash may even make the economy more efficient than gift-giving. Florists love Valentine’s Day ― according to the Society of American Florists, they can make 40 percent of their annual income during February. The National Retail Federation estimates that the average Valentiner in America spent $116.21 on traditional Valentine’s Day merchandise (almost $16 billion) last year.

But economists often refer to the “substitution effect.” That is, one purchase may be a substitute for another. Derek Thompson of the Atlantic Wire puts it well: “Valentine’s didn’t create economic activity, it just concentrated it.”

You know February 14 is coming up, so you may hold onto to a gift, skip taking your sweetheart out to a concert in September, or save up so you can nibble on overpriced food at a fancy French restaurant on Valentine’s Day. By giving cash, the recipient is more likely to spend the money well, a better boost for the economy than wasted gifts.

Ryan Swift, host of the popular site swifteconomics.com, goes one step further, even denouncing Christmas and other special gift-giving days as a “deadweight loss.” He cites Joe Waldfogel of the University of Pennsylvania’s Wharton Business School, who estimated in his 2009 book “Scroogenomics” that Americans spent $66 billion on gifts in 2007, but that recipients only valued them at $54 billion, producing a deadweight loss of $12 billion to the economy.

So if you receive a gift for Valentine’s Day this year, be sure to thank the giver for the deadweight loss that is dragging down the economy. When you hand the person cash or gold in return, be sure to note that you are helping the economy. Even better ― buy a gift for yourself on Valentine’s Day that you really wanted and advise your (perhaps soon-to-be-ex) sweetie to do the same.

Casey Lartigue, Jr., is director for International Relations at the Center for Free Enterprise in Seoul. His e-mail address is http://cfekorea.com or http://eng.cfe.org.

Sources for this article:

I emailed the company to ask for details about South Korea but haven’t gotten a response yet.

1) I’m not quite sure how they came to the number of 60 announcements per day–if my figurin’ is correct, that would be about 236 days. That must include 24 vacation days based on a 5 day work week.

2) When there are threatened government shutdowns or when I hear about employees having extended vacations, I don’t complain.

3) Globalization is good. Seems it would be tough for any businesses to keep track with all of the new regulations, as well as all of the previous ones.

4) Of course, someone will ask if I am saying there should be no regulations. Of course not, what a stupid question. But 14,215–or 273 per week–sounds like a lot. According to the report: “[T]he majority of regulatory activity, 57 percent, came from the U.S., while the U.K. and Europe made up 22 percent and Asia accounted for 15 percent.”

5) According to the Americans for Tax Reform, “The average American will have to work 74 days in 2010 to pay for the cost of government regulation, which is estimated to consume 18.4 percent of national income.”

CJL

Stores not in compliance will be fined 30 million won.

“Jeonju was the first to adopt the rule Tuesday — the city’s discount outlets and SSMs will close every second and fourth Sundays. Other local authorities such as Wonju, Gangneung, Jinju, Iksan, Busan, Mokpo and Gwangju are also complying.”

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G

Cho Ji-hoon, chairman of the Jeonju City Council, stages a protest near an E-Mart outlet in the city, North Jeolla Province, to call for regular closed days at discount stores, in this file photo from last year. The city recently revised an ordinance to have such stores close twice a month. Seoul City is to follow the move. / Korea Times

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Seoul will also be 1) blocking consumers and 2) businesses from engaging in voluntary exchange at times both sides find agreeable. It isn’t doing this by convincing anyone or waiting for attitudes to change–it is FORCING them to close, at the threat of substantial fines and probably jail if they open up anyway or refuse to pay the fine in full.

Of course, it is possible that the mom-and-pop stores will do better as a result of this so there can be nice newspaper articles documenting it, that shoppers at the big discount stores will stock up on other days rather than waiting until Sunday, that some stores will remain open and pay the fine anyway thereby adding to the money the government can spend on more welfare, or that there will be other good results for the government to cite to justify its latest interference in the market.

But it is another example of me waking up in the morning, checking the news, and learning that some busybodies have plans about how to block people and businesses from engaging in willing exchanges.

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Peter Drucker: “There is nothing so useless as doing efficiently that which should not be done at all.” South Korean politicians are proving that Drucker was correct, efficiently engaging in a campaign against the rights of consumers.

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