Strange policy to help underprivileged entrepreneurs is ridiculed by the public
South Korea’s top leftist presidential candidate Lee Jae-myung wants to put a quota on restaurants in the country, a move that many are calling bizarre and out of step with the freedom of a liberal, free market economy.
Lee held a meeting with small business owners in Seoul on October 27 when he said, “I am thinking about setting a quota on how many restaurants should be allowed to operate in the country,” Lee said. “I was not able to push ahead with this idea as there were people who say it would violate the autonomy [of the market and people], but I do not think setting quota system is a bad thing.” He added that “opening up restaurants wildly and having them go out of business is not freedom.”
While talking about the harsh conditions that restaurant owners are facing due to COVID-19, he explained, “Restaurants are opening up and going out of business repeatedly and it feels like it is an ‘ant hell.’” The term “ant hell” is often used to describe situations where weak and vulnerable individuals find themselves in. It refers to never being able to escape harsh conditions both societally and financially.
“We need regulations that are good and necessary,” Lee argued. “I guess we need some philosophical discussions on this issue but I do think that we need to adopt the quota system. Freedom to commit suicide due to failure when operating a small business is not freedom.”
South Korea changed the regulation on opening up new restaurants in 1998. Before that, a person planning on operating a restaurant needed to apply by submitting the required documents to the regional government office in charge of the area. The local government reviewed the documents and inspected the facility before approving its operation. Currently, a person can receive a license simply by reporting a plan to the local government.
This law was adopted under the leftist Kim Dae-jung administration to ease regulations on people entering the food service industry. At that time, South Korea was hit hard by the 1997 Asian financial crisis. This was one of the measures taken by the government to stimulate the economy, while helping people who lost their jobs find new businesses to operate. It is true that the regulations on opening restaurants in South Korea are less stringent compared to other developed countries such as the United States, Japan, and many European countries. However, those countries don’t have quotas on the amount of restaurants that can operate, which is what Lee is proposing.
Sung Tae-yoon, an economics professor at Yonsei University, told the Chosun Ilbo newspaper that Lee’s quota system is inappropriate for the current South Korean market situation. “The problem is that it can violate individuals’ right to participate in economic activity,” he said. “His idea to limit the total number of restaurants in the country is inappropriate to the nature of the market economy system.”
As the public criticized Lee’s comments for being too radical and resembling socialist restrictions, his election campaign office released a statement that apparently stepped away from the policy. An official from Lee’s campaign said, “Low-income people who are already experiencing hardship are competing with each other, which is self-destructive, and that is why Lee was considering various options, including the quota system to resolve this problem.” The official added that “Lee’s position is that he had thought about it but not that he would adopt it.”
This is not the first time that Lee Jae-myung has made controversial comments related to South Korea’s economic situation. On October 15, just a few days after he was confirmed as the presidential candidate of the DP, he met with key officials from the party to discuss their election campaign strategy.
At that time, Lee said, “During the Great Depression, President Franklin Roosevelt pursued strong policies that seem communist and socialist, which is difficult for us to imagine at this point.” He added that the reason why the DP won a supermajority in the National Assembly is that the people wanted reform of society without disruption.
Lee argued that he respects President Roosevelt and said that “the high ceiling of the income tax and corporate tax rose up to 92 percent, and he created unimaginable policies related to welfare, job market and tax.” He continued that “this created a 50-year economic boom in the United States.”
Many experts criticized him for describing Roosevelt’s policies as similar to communism. Kim Se-hyung, a senior advisor at the Maeil Economy Newspaper, said that there are many people who argue that the New Deal policies were ineffective in restoring the economy. Kim argued that the reason that the United States was successful in restoring the economy was the boom in the manufacturing industry brought about by World War II. Kim pointed out the fact that Moon Jae-in also said he respects President Roosevelt during his visit to Washington D.C. earlier this year. Kim and many other experts have argued that the pro-labor union policies under the Roosevelt administration hurt the U.S. economy for years. Kim raised concern that Moon and Lee might be trying to say they want to follow Roosevelt’s policy, which could lead to economic stagnation.
While a restaurant quota is emerging as a major attention-grabbing headline, the rest of Lee’s economic policies are likely to be even more dangerous.
