Government urged to be a referee, not a player
By Kim Jae-kyoung
The English Premier League is now the most successful soccer league in the world. As the favorite among soccer fans, it attracts a lot of world-class players and massive investments from abroad.
There are several reasons behind its overwhelming success, such as the market being open to the outside, unique marketing efforts and free competition. However, there is, although often disregarded, another important factor ― quality referees.
When watching any matches in the League, you can easily realize that they are much faster and more dynamic than those in other leagues. It is because the League retains many top-tier players but referees' roles should not be underestimated.
Not all but in most matches, referees are almost "invisible" throughout the games. This means they try to minimize intervention to let players fulfill their ability.
They only step in when there are serious fouls. They have no hesitation in throwing red cards to dirty players. They are well aware that they should play a "supporting role," not a "starring role" because if they try to control the game it could take vitality away from players, spoiling the entire game.
This reminds me of the "Invisible Hand," a term coined by economist Adam Smith in his book "The Wealth of Nations" to describe the unobservable market force that helps the supply and demand of goods in a free market to reach equilibrium automatically.
This should send an important message to President Moon Jae-in and his administration in that most of their economic and financial policies are against this basic principle of a market economy.
Since the Moon administration took office in May 2017, it has tried to meddle in almost everything in the name of creating a "fair" economy.
It used taxpayers' money to create jobs in the public sector rather than offering incentives for companies to make fresh investments and hire new employees.
Despite concerns from the private sector, the government decided to raise the minimum wage again by 10.9 percent to 8,350 won in 2019. This followed a 16.4 percent increase to 7,530 won in 2018.
Another example is the Ministry of SMEs and Startups' decision to prevent small Korean firms from selling products manufactured overseas through IM Shopping, the state-run home shopping channel.
The ministry has defended its decision claiming that the move was aimed at keeping more factories at home and creating more jobs here, but experts said that it is a clear protectionist measure to keep jobs in Korea, which can only harm the Korean economy.
Also, the government has forced credit card firms to cut transaction fees up to 1 trillion won ($875 million) to help the self-employed and small businesses.
These measures have good intentions but they are all backfiring. They have failed to achieve intended outcomes. Instead they have produced a number of side effects sending Asia's fourth-largest economy into a worse position.
Job markets have stayed in the doldrums. Corporate investment and consumer spending remain sluggish. Despite the government's efforts to ensure fair distribution of wealth, income disparity has been worsening under this administration.
It seems the Moon administration believes it should step in because the economy is moving in the wrong direction so the "invisible hand" of the market can be guided by the "visible hand" of the state.
But they should realize that the more the government is trying to have control over the market, the worse the economic situation will be. History teaches us that a government can never beat a market in the end. In this regard, it is critical for the Moon administration to change its policy approach.
The best solution to fix the economy is leaving the market controlled by the invisible hand. In 2019, the government should step back and focus on playing the role of a "good referee," not a "player," if it really wants to foster innovation and rehabilitate the economy.