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[Editorial] Stick to principles in fostering market economy

[Editorial] Stick to principles in fostering market economy

Posted December. 31, 2000 17:10,   


Economics is a game of principles and choice. The very foundation of market economy is competition and the market principle is based on that premise. Unfortunately, when the principle which is expressed through laws and standards crumbles, a conflict arises between various elements in the market. As we have become used to discord and confusion in running our economy over the past year, it may be advisable to discuss economic practices for the coming year.

Looking back, it would not be exaggerating to say that the government's policies lacked attention to underlying principles. By aiming to satisfy all economic constituents, the administration may have wreaked havoc on the economy. The endless demonstrations by labor unions buried the principle of sharing the pain of restructuring. In addition, economic theories were shattered as the government focused on the political issue of the elections, resulting in severe resistance to restructuring.

Through it all, social awareness deteriorated and anxiety grew as reforms took a backseat to other concerns and the public had to bear much of the burden of the little genuine restructuring that did take place.

As the government adhered to its please-all policies, the very principle of the free market economy seemed to have lost its very basis. The government's policies lacked a strong foundation in economic principles, which only resulted in greater public disorder and dissatisfaction, a vicious cycle that only prompted more of the same misguided policies.

Reliance on principles promotes fairness and trust. When principle wins out, uncertain please-all policies can be kept to a minimum as social liabilities are decreased and group self-interest lose its foundation. When the principle of making exceptions becomes the rule, uncertainty in the market only grows and the economy is derailed. Only when the government, which is the original author of economic principles, shakes off the temptation to make exceptions can society as the whole hope to overcome the current situation.

From the point of view of those within the market, market principles are precious in that they provide the ability to make accurate forecasts. When the future can be predicted to some extent, economic jitters can be dissipated. Only then can the two main forces, production and consumption, be once again activated and the economy once again steered toward recovery.

It is difficult to re-establish economic principles once they have been undermined, and the longer it takes, the more difficult it is. Let us hope that such government mismanagement does not extend into the new year. Only when each constituent in the economic force adheres to and honors market principles can the Korean economy be returned to the recovery path.