Haste makes waste

Discussions are underway to legislate compensation for self-employed businesses directly hurt by government's social distancing measures aimed at mitigating the Covid-19 spread. The idea is to subsidize mom-and-pop stores and..

Discussions are underway to legislate compensation for self-employed businesses directly hurt by government’s social distancing measures aimed at mitigating the Covid-19 spread. The idea is to subsidize mom-and-pop stores and other self-employed businesses who were forced to shut down under state-imposed social distancing.

Social restrictions have eased with the reduction of new cases, but damages remain serious for many of the street shops and leisure facilities. Some have gone to defy restriction orders to normalize their business even if they have to pay fines.

The relief program could be desirable, but it requires careful examination and review. It must not be rushed as a populist program ahead of the April 7 by-elections for mayoral posts in two major cities, Seoul and Busan. Prime Minister Chung Sye-kyun reportedly scolded the Finance Ministry when it showed a negative reaction to his proposal for compensation for the losses of small merchants. When Vice Finance Minister Kim Yong-beom pointed out that no governments legislate compensations for private enterprises, Chung slammed, “This country is not owned by the Finance Ministry!”

The Finance Ministry, which must take responsibility for the health of the state coffers, must devise policies based on international norms and the domestic finance state. But Chung stressed that though all reforms face resistance, they inevitably must be pursued. The Finance Ministry also received a bashing in April last year when it opposed a universal relief payout to the people.

But the Finance Ministry must be respected to do its duty and speak its voice. The government and ruling Democratic Party (DP) are pouring out a plethora of antimarket policies — such as a system to force lucrative companies to share their profits with their smaller counterparts, exemption for interest payments for the self-employed and an extension of the ban on short selling in the stock market to satisfy retail investors.

The prime minister who must maintain neutrality for administrative sovereignty has sided with political demands and voiced opposition to a renewal of short sales in the stock market. A bill aimed at subsidizing losses for the self-employed also could be a policy to buy votes in upcoming elections.

To fend off controversy, measures must be made after reflecting balanced views from government offices. Relief should be customized after a thorough examination of the income losses and rents to ensure effectiveness in fiscal aid.