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Spread of populism

Dec 19,2018
Seoul had to redistribute a press release on its plan to sign a contract with T Map, SKT’s mobile taxi-hailing service, to help passengers find taxis easily in three congested areas, which included Gangnam District in southern Seoul and Hongdae District in western Seoul, during the year-end season. The problem was that the city went ahead with a press conference on the project without consulting with T Map, even though the service calls for a considerable subsidy from SKT. After T Map complained about the press briefing, Seoul deleted the part on the provision of the mandatory subsidy and other sensitive areas. The episode illustrates Mayor Park Won-soon’s resort to populism at a cost to private companies.

The fiasco reminds us of the over-the-top populist policies of the Moon Jae-in administration, ruling Democratic Party (DP) and some local governments. Under the liberal government, policies aimed at securing funds by forcing the corporate sector to bear some costs or by wasting taxpayer money are being drawn up one after another.

Zero Pay, which will go into service Thursday, is no exception. Seoul is obstructing free competition in the mobile pay market by rolling up its sleeves to help mom-and-pop stores through the new pay service. If small merchants use the service, they don’t have to pay fees for their use of the service. After they showed lukewarm interest in the service, the city is now desperately trying to get subscribers by hiring agents. If the city pushes the policy, it will most likely end up wasting tax money.

The ruling party and the government are the same. They excessively lowered the usage charges for mobile pay services for the self-employed with the catchphrase of improving their livelihoods. Such steps are nothing but price regulation. Thanks to the move, Lee Hae-chan, chairman of the Democratic Party, received an award from mom-and-pop store owners, but some credit card companies suffered critical losses.

The spread of populist policies by Seongnam Mayor Lee Jae-myung also rings alarms. It is fortunate that Gangwon’s plan to offer 26.4 million won ($23,370) in allowances to each new child to help ease our ultra-low birthrates has been suspended. However, Seoul’s similar plan to hand out benefits to the self-employed with low incomes and Gyeonggi’s scheme to do the same for the young were already budgeted.

The government and the DP should remember that anti-market policies will inevitably fail because they only weaken the competitiveness of the private sector.

JoongAng Ilbo, Dec. 19, Page 34