As the head of South Korea’s top libertarian think tank, the Center for Free Enterprise President Kim Chung-ho could be forgiven for feeling like a lone voice in the wilderness. Self-proclaimed libertarians are few and far between in Korea a fact of which Kim is only too aware.

“Libertarians are a real minority in Korea. We were regarded as lunatics, crazy guys,” says Kim of his and a number of like-minded individuals’ decision to found the think tank in 1997, in the midst of the Asian financial crisis.

“We wanted to spread libertarian ideas to Korean society because I think it is the solution for the prosperity of Korea. Even though the general public didn’t believe so, we believed that.”

Central to the CFE’s aims is the promotion of free market ideas, such as those of Milton Friedman and Frederick Hayek, which advocate limited government and increased personal freedom.

Kim is adamant that such policies are essential for Korea to achieve strong economic growth, a position that President Lee Myung-bak championed prior to his election in 2007 and the global financial crisis in 2008. But Kim, who voted for Lee, doesn’t see the president’s stated belief in the free market being reflected in his current policies.

“In the beginning, he tried what he promised: cut taxes, reduce regulation and go for the FTAs with the United States. He was very bold and he seemed to be very courageous,” says Kim.

But, according to Kim, Lee too easily caved into pressure from his opponents on the left including those who took to the streets during the 2008 demonstrations against U.S. beef imports.

“They got to the street and protested. The number of people that got to the street was huge. He just surrendered to those left-wing protesters. After that he gave up all the promises … that were made during the campaign. And nowadays he competes with the opposing parties (to be more left-wing).”

One of the CFE’s targets of criticism has been Lee’s program for the poor, part of his vision for a so-called “fair society.

“(Cutting welfare) promotes economic growth. Economic growth creates the employment. Jobs are for the poor. In the very short term the direct welfare seems to be good for the poor, but after one or two years the redistribution policy destroys the jobs. And it is very harmful to the poor people in the end,” Kim says.

But what about the fact that by European and, even U.S, standards, Korea’s spending on social welfare is low, coming second last among OECD countries?

“It’s a matter of relativity. We need growth. Western European countries have a huge welfare system, right? But when they shrink it a little bit, then the economic growth will increase a little bit,” he says.

Scandals

Kim supports some welfare for the poor, but not as he accuses Lee of implementing welfare for everyone.

“But the current trend is welfare for everybody. Even the rich people. Even those people who live in the Gangnam area,” he says.

With the economy among the CFE’s biggest concerns, it is no surprise that Kim has strong views on the upcoming G20 Seoul Summit. Much of the summit’s agenda will focus on strengthening banking regulation and creating a global financial safety net. Unsurprisingly, Kim thinks this direction is misguided.

“I don’t like banking regulation because, especially the banks of Korea, (they) are still too regulated compared to the other advanced countries’ banks. They always look to the government before they make very important decisions.”

Kim argues that banks are often involved in financial scandals not because of too little government oversight but because of too much.

“They are too close to the government. They are too close to the politicians. The current case of Taekwang and C& (Group) ... is the same phenomenon because still the government controls many aspects of the economy, especially the banking sector. So businessmen are seduced to form secret money (funds) to bribe the government officials, or the bank officials or the politicians.”

But what about economists, such as Nobel Prize-winner Paul Krugman, who contend that too little regulation in the banking sector was largely responsible for the financial meltdown in the U.S., which then spread globally?

“I don’t think bank regulation was the problem,” says Kim, “the problem was the very bad management of the monetary policy. Printing money, that’s a bad solution, it’s a very makeshift solution for the situation.

“What Greenspan (Alan Greenspan, the former chairman of the U.S Federal Reserve) did was to manipulate the monetary supply … even though he is a self-announced libertarian. The actual monetary policy was against libertarian policy.”

Like other strict free market advocates, Kim also blames governments’ decisions to bail out banks as encouraging excessive risk-taking with loans and investments.

Although the CFE which Kim says is not aligned with any political party deals primarily with economic matters, Kim’s own libertarian views carry over to social issues as well. One such issue is prostitution.

Kim says the current government is being hypocritical by ignoring how widespread prostitution is and that attempts by previous governments to shut down red-light districts have only made the situation worse.

“For the last ten years, the progressive or left-wing government has struck down the red-light districts and at first people applauded, but after one, or two or three years, the prostitution went all over Korea cyberspace, officetels and apartment buildings.”

“I think that if prostitution was legalized and was restricted to some place, then other places would become cleaner,” he adds.

Kim thinks it would better if there were politicians who would come out in favor of legalization, but concedes that no politician is ever likely to want to touch the issue.

“In Korean society, no politician like that would get votes.”

By John Power (john.power@heraldcorp.com)