Over at KBC...

Over at Korea Business Central, I am the author of the latest "Korea Economic Slice." I've posted it below for posterity, but feel free to excoriate me in the KBC comments section here.

A Paper-Thin Defense Against Political Hobgoblins in Korea

“The whole aim of practical politics,” wrote the American humorist H.L. Mencken, “is to keep the populace alarmed – and hence clamorous to be led to safety – by menacing it with an endless series of hobgoblins, all of them imaginary.”

The corollary is that a nation’s constitution – if indeed the nation is to be one of free individuals – must be the first line of defense against the wanton invocation of such crises, which the political class conjures chiefly as a way to increase its own power. As the ongoing tension between the Korean government and large discount retailers has shown, however, the authors of Korea's constitution did their best to avoid the sort of hard choices that must be made if citizens are to be free within a rule of law, rather than subject to the arbitrary and capricious rule of those who wield political power at any given moment.

Article 119 of the Korean Constitution begins by stipulating that the nation’s economy is to be predicated on “a respect for the freedom and creative initiative of enterprises and individuals in economic affairs.” Since the 1990s, large retail chains like E-Mart, HomePlus and Costco have steadily become the shopping stop of choice for many Korean consumers, who flock to the stores for various reasons, including convenience, selection, and quality. Not once during this time has a customer found herself kidnapped off the street and forced to buy her staple items from one these big box outlets. By applying their creative initiative, the individuals who manage and staff these stores have offered consumers an appealing shopping experience, and consumers have exercised their freedom to spend their time and money as they please. Such shifts in consumer preferences, hardly a new phenomenon, have meant that the owners of smaller, more traditional shops have had to either adapt or close down, just as the makers of traditional Korean clothes had to do when people began to prefer jeans and sneakers.

Such a preference for these megamarts, however, does not accord with the worldview of those whom economist Thomas Sowell has referred to as “the Anointed,” that is, elite members of politics, academia, and the media who believe that ordinary citizens are simply not as bright or as compassionate as they are. How else to explain the vast numbers of consumers flocking to large retailers instead of to small and traditional markets? Don’t these consumers know that a more fulfilling shopping experience, as defined by the Anointed, can be had at back alley vegetable stalls, which are slowly disappearing thanks to those soulless behemoths on the boulevard?

This, cry the Anointed, is a crisis!

The solution? Forbid large retailers to open new stores in certain regions and sectors; pressure them to refrain from selling certain items; and force them to close their doors for two days each month in an attempt to force consumers to patronize small markets. As justification for such interventions, the Anointed need only look at the second half of Article 119, which states that the state has the authority “to regulate and coordinate economic affairs in order to maintain the balanced growth and stability of the national economy, to ensure proper distribution of income, to prevent the domination of the market and the abuse of economic power, and to democratize the economy through harmony among the economic agents.” As added legal ammunition, policymakers point to Article 126, which, though it initially promises that the state will control neither the property nor the management of private enterprises, nevertheless grants the government the power to seize control of such outfits in order to meet “urgent necessities” within the national economy.

In other words, bureaucrats and politicians – the tip of the Anointed’s spear – have full authority to disrupt any pattern of peaceful exchange which does not conform to their notions of propriety. Those seeking political power most often do so out of a belief that they are qualified to boss others around, and it is a rare politician indeed who eschews additional accretions of state authority. It comes as no surprise, then, that in the eyes of the Anointed, the economy is forever “unbalanced” and short on “harmony,” thus necessitating “urgent” government action. Cloaking their proclamations in language designed to incite panic and tug at public heartstrings, the political class, ignoring the Constitution’s nod to economic and personal freedom, have arrogated to themselves the power to decide when, how, to what extent peaceful human interaction will be permitted.

At its core, a nation’s constitution is a recognition of the fact that the state holds a monopoly on the legal use of violent force, a power which may be necessary but which is also inherently dangerous and which thus must be constrained. This is particularly relevant in a country like Korea, where a history of colonialism and dictatorship should make citizens especially leery of granting any government – whether of the left, right, or center – the power to arbitrarily thrust itself into the private affairs of individuals. Yet, as the government’s punishment of large retailers shows, Korean citizens are once again losing their freedoms to political hobgoblins, against which the country’s constitution offers no protection.