[Opinion] Causing Speculation

A so-called “second quiz contest” on the subject of the location of Korea’s next new city construction project is fueling speculation.

Minister Lee Yong-sup of the Construction and Transportation Ministry hinted on January 12 that the site would be, “A place that can substitute for the ‘Bubble Seven’ areas.” Maybe he thought that was not enough, so he gave another hint on January 21, saying, “It should be near enough to the affluent southern areas of Seoul to replace them.”

A huge amount of capital has flown into Mohyun-myeon, Yongin and Opo-myeon, Gwangju in Gyeonggi Province. In just a couple of months, housing prices there soared by 20-30 percent, and there are no longer offerings on sale. Lee would not have dared to say: “100,000 out of those who guessed right will be given prize money from the government budget. Please join the ‘new city lottery’ before we announce the correct answer in June.”

In the “first quiz contest” in late October last year, then-Minister Choo Byung-jik of the Construction and Transportation Ministry gave a brief cue: “[It will be] as large as Bundang.” He gave the hint way before consulting with government agencies and thereby triggered speculative housing investment in the Seoul metropolitan area. He was severely scolded by Prime Minister Han Myung-suk and had to step down as minister over a series of policy mistakes he had made.

So what will Prime Minister Han—who is reportedly seeking to tighten discipline in the cabinet—do about Minister Lee? We wonder whether she will let him resign based on precedent, or if she will adjust the level of punishment depending on how large of a speculative bubble the remarks of the construction minister created.

The recent scandals over the remarks of the two ministers were caused by their ignorance. Neither understanding nor recognizing the market flow, the basics of what money is, and human selfishness, they ended up being backstabbed by money and the market. Increasing housing supplies can stifle speculative demands, but at the same time they might become prey to floating funds.

The current administration dismissed the speculative demands, saying they waged a “war against middle-aged women in southern Seoul [who make speculative real estate investments],” but all their policies have proven unsuccessful, failing to identify these speculators’ thoughts and strategies.

Real estate is the only area that President Roh Moo-hyun cited as one in which he was “not good at.” During the press conference last week, however, he went as far as to put the blame for policy failures in the real estate market on “people who bought houses all too early,” let alone the opposition parties and what he calls the “real estate media.” Perhaps the reason why he did not take the blame upon himself was that he had in mind a series of policy failures made by the ministers in charge that only led to more real estate speculations. Given the current administration’s real estate policies had been off the track from the very beginning, those mistakes made on the ministerial level may not be a big deal. We cannot help but wonder: Is the president out of luck when it comes to his ministers, or is it the people who have no luck with his government?

Hong Ko-ni, Editorial Writer, konihong@donga.com