Market Dictatorship

Korea Times (Seoul, Korea), April 19, 2001 | Go to article overview

Market Dictatorship


Since the launch of the Kim Dae-jung administration more than three years ago, foreign tourists are longer worried about their safety on the streets as few demonstrations calling for political freedom took place.

Under the previous authoritarian regimes, violent street demonstrations and singanature-collection drives became a normal part of life for Koreans.

Now, teargas manufacturers have fallen on hard times as demand has fallen to a negligent extent.

As soon as Kim was declared the winner of the 1997 presidential election, his first message at his home in Ilsan, north of Seoul, was that as President, he would in parallel pursue a democracy and market economy.

He said that without democracy, the market could not function in a free and competitive way. In other words, without a fully functioning free market, there would be limits in furthering democracy.

During the past three years, President Kim has devoted himself to promoting democracy and human rights in Korea. Few Koreans would challenge the view that democracy in Korea has progressed under the leadership of the 2000 Nobel Peace Prize winner.

Curiously enough, however, different types of signature-collection drives and protest rallies are occasionally held here these days. The protesters' demands are not political freedom, freedom of the press and the release of prisoners of conscience, but economic justice, fair competition and anti- monopolistic corporate business practices.

Professor Lee Phil-sang of Korea University said despite great progress in political freedom, Korea has not disengaged itself from what he calls market dictatorship.

In his view, market dictatorship refers to heavy-handed government intervention, an antiquated imperialistic corporate governance system and monopolistic practices.

Under the Kim administration, dictatorial elements have been lingering in the economy and the financial market. This does not mean Korea is not moving toward a freer, more mature and open economic system.

There are many examples that lend credence to certain elements of a market dictatorship. Last week, the government ordered pension funds to invest in stocks. Many people are worried that they might experience reduction of their monthly pension after retirement if the pension funds squander away their money through stock investment.

The market reacted harshly against this dictatorial policy initiative.

Immediately after the announcement, the stock market took a nosedive.

Nationalizing major Seoul-based banks was not the intention of the Kim administration. Due to the unprecedented financial crisis in 1997, the government had no choice but to nationalize these major banks.

However, the government was shortsighted enough to place a few insolvent banks under the umbrella of a financial holding company. It ordered the merger of two major banks -- Kookmin and Housing & Commercial Bank. It is questionable whether a merged bank will maximize a synergistic effect in view of the fact that the merger plan does not include any layoffs and shutdown of inefficient branches.

The merged bank might turn out to be a cowboy in the banking market as it exercise monopolistic influence in setting interest rates and other service fees for customers.

Another example pointing to the prevalence of a market dictatorship is the government's behind-the-scene instruction to banks to roll over maturing corporate bonds for debt-ridden companies.

The government also jawboned creditor banks to keep afloat the troubled Hyundai Construction and Engineering (HEI). …

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