Saturday, August 16, 2014

Don't Let Rich People Own Apartments They Don't Live In?

I've been wondering what to write about lately. There are plenty of things to write about, I suppose. The Pope is in town, but I already called him a wolf in sheep's clothing before. I don't need to write another post about that ignorant shaman just to rehash what I had said earlier. There is also the murders/wrongful deaths that have occurred in the ROK Army as well as a spate of suicides. But I also wrote a bit about the military before and I really don't want to talk about this depressing topic again. At least not for a while.

So, with no intent to write anything, I was going through my Facebook feed when I saw a post from Gawker, a website that I had never heard of before, that was shared with the caption “It's just simple economics.”

I don't know how anyone can ever spend a single moment trying to understand the economy and somehow imagine it to be "simple."

Of course I had to give it a read. As expected, it was ridiculous and before I knew it, I wrote a comment. And I kept writing. When I finally hit the “Enter” key, however, I saw that it was long enough to be an actual post by itself. So I decided to repost it here.

(Well, I never denied that I suffer from long-windedness. And no, neither the original article nor my response to it is related to Korea. But, hey, it's economics and economic laws do not recognize national borders.)

So here are the reasons why this article, Don't Let Rich People Own Apartments They Don't Live In” is really “simple” economics, and I do mean “simple” as in “mentally retarded:”

1) There was no mention of the original cause of why so many low income earners cannot afford low income housing – rent control.

2) There was no mention of the reason for why so many corporations purchase property in order to use them as tax shelters – New York has one of the worst business tax climates in America.

3) There was no mention of what such a law would do to landlords. You know, the people that the poor would have to rent from? If landlords can't keep their apartments because they can't afford to pay those high taxes because they don't live in them, then who are the poor going to rent from? Are the poor somehow magically going to find money under their mattresses to buy apartments in Manhattan suddenly?

Every poor person's bed
Image Source

4) There was no proper definition of “public good.”

5) There was no information about who will oversee this “public good” (Does anyone really trust de Blasio or Cuomo or Spitzer or Paterson or Bloomberg or Giuliani to know what the public good is or even know how to achieve it?). There was also no mention that rent control has always been justified as being “necessary for the public good.”

6) There was no mention of how successful (but really, I want to say “unsuccessful” but that seems far too much of an understatement) “confiscating rich people's property for the public good” has been in any country in history that has ever attempted it.

7) There was no mention of how some renters have no choice but to leave for extended periods of time. Like, oh I don't know, military servicemen? And you can bet if there are exemptions made for one group of people, everyone else who can afford it, and their special interest groups (oh you can bet that there will be a multitude of special interest groups) will be lawyering up to get those sweet, sweet exemptions. Because why not clog up the courts more than they already are anyway? What's the worst that could possibly happen?

8) Basically, there was no mention of any kind of cause and effect; like as though people don't adapt and change their behaviors and actions depending on changing incentives and disincentives. Like as though all of this taxing and shaming will somehow magically take place and people will just accept their new lot in life without so much as a complaint. This may be difficult for many of the world's moralizing armchair pseudo-economists to take in, but the fact of the matter is that life is NOT static.

So how might people respond to such changes?  Oh, I don't know, increased taxes on “excess” property could make businesses “rent” said property to their own shell companies or their own employees, who may or may not be full time, or part time, or union, or non-union, or contracted, or non-contracted employees; or just someone's grandparents that they happen to know. Which would then allow them to get tax breaks on top of owning the property.

Believe me, if I can think of such a loophole without even getting paid to do it, you can bet your mother's pension that there are a whole lot of well-paid accountants at Goldman Sachs who will come up with even more ingenious ways to get around those taxes that would make everyone feel like they just got knocked around by Mike Tyson.

Image Source

The original author of this post, Hamilton Nolan, is a raging idiot. Or a really naive fool who can't see beyond his own nose. Or he's a brilliant troll.

The fact of the matter is that there is no such thing as a simple solution for the world's ills. Least of all a simple economic solution. The economy is far too complex for there ever to be a simple solution. If there were, people who are way smarter than us would have thought of them long ago. If anyone ever claims to have a simple economic solution, you can be sure that they are either peddling snake oil or sheer stupidity.

The following is a quote by Murray Rothbard that I have used many times before. I'll stop quoting it when pseudo-economists stop being stupid.

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

Sunday, August 10, 2014

What is “The Will of the People?”

What is this thing that politicians call “will of the people?”

I had earlier predicted that the ruling Saenuri Party would lose the July-30 by-elections. Ruling parties almost never win in by-elections. However, the Saenuri Party has surprised everyone by having won a super-majority in the National Assembly, including a seat in the South Jeolla province, which has been a liberal stronghold for decades. The Saenuri Party now holds 158 out of 300 seats in Korea's unicameral legislature.

Image Source

But does this electoral win mean that President Park or Saenuri lawmakers have gained a mandate of some sort? Only 32.9 percent of eligible voters turned out to vote in the by-elections.

To quote a line from a TV show that I like, it's true that decisions are made by those who show up. And to the victor goes the spoils. But a mandate? To put it mildly, that seems like a stretch.

As for the New Politics Alliance for Democracy (NPAD) Party, with its two co-chairmen Kim Han-gil and Ahn Cheol-soo having all but officially given up their roles as party leaders, the party leadership has fallen onto the shoulders of Park Young-sun. Due to her party's diminishing popularity, in her very first press conference as de facto party chief, she pledged “to do her utmost to rebuild the largest opposition party by winning the hearts and minds of the people, saying that the NPAD 'failed to honor their will.'”

However, what neither Saenuri nor NPAD lawmakers seems to understand is that there is no such thing as “the People.” As much as politicians may wish to simplify everything into quantifiable polls, it does not change the fact that though there are millions of individuals who all have different wants, needs, and priorities; this ridiculous concept of a single blob-like People is actually non-existent.

So what the hell do politicians mean when they talk about “the will of the People?”

Start small and local.
Image Source

However, let's say for the sake of argument that there is such a thing as “the People” and let's say that they have Borg-like characteristics and all have a collective mind.

Is it a good idea to obey their every whim? Yes, one of the central tenets of democratic republicanism is majority rule. But has no one in the National Assembly ever even heard of Tocqueville? His book “Democracy in America,” details the perils of democracy by pointing out the dangers of majoritarianism and mediocrity, and that the people in their ignorance tend to meekly obey despots that are disguised as democratically elected leaders.

Or have they read Tocqueville but decided to embrace all the things that he warned against?

More than majority rule, the most important thing about a stable democratic republic is the absolute importance of the rule of law. And the rule of law requires principles. It requires sober and rational thought. It requires a system of morals and ethics.

What it most certainly does not require is gross and unthinking populism.

Image Source

Wednesday, July 30, 2014

The Trouble with Non-Economists talking about Economics

Murray N. Rothbard once said:

It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.

This maxim applies even more so for academics, who, unfortunately, oftentimes mistakenly presume that possessing superior knowledge in their respective fields of expertise necessarily means that they possess superior knowledge over ALL matters. Perhaps due to vanity, academics tend to suppose that all of their prejudices from A to Z hold value for no other reason than they are academics.

Image Source

Unfortunately, many academics outside the field of economics who possess little to no knowledge about even the basic fundamentals of economics do not hesitate to make sweeping pronouncements about the subject. A good example of this is one Robert J. Fouser, who is an associate professor of Korean language education at Seoul National University.

Now I have never met Professor Fouser and I have never spoken to him. All I know about him is that he is a Korean language professor at Seoul National University. Therefore, since all I know about him is his occupation, I will give him the benefit of the doubt and assume that he is an excellent linguist and an expert in the Korean language. In fact, I will go further and even assume that he is a gentleman whose only wish is for everyone in the world to be happy. However, that does not mean that his opinions about anything outside of his field of expertise carry any more weight than the opinions of anyone else.

That did not stop Professor Fouser from pontificating about the state of the Korean economy or the need for “economic democracy” in his editorial in The Korea Herald.

He began by saying:

Talking to ordinary people is the best way to check the pulse of a nation. Last week, I was lucky to be able to take the pulse of Korea through long talks with friends who also happen to be ordinary people. The talks paint a picture of a nation deeply troubled by worry and self-doubt. Above all, the overwhelming message is that the Korean dream is slipping away.

What sorts of criteria must people meet in order to be considered “an ordinary person?” He does not say. Furthermore, assuming that “pulse of Korea” means “the overall mood of the Korean people,” then is talking to a few friends all that is needed to discover the mood of this entire nation? If that's the case, I think all those people at Pew Research Center should quit their jobs and find more meaningful employment elsewhere.

Image Source

He also adds rhetorical flair when he says, “Opportunity comes through reforms that break down barriers and help create fair competition.”

Just what does “fair” mean exactly? The fact of the matter is that there is no objective standard of “fairness.” What is “fair” tends to be strictly in the eye of the beholder. So what does Professor Fouser mean when he says “fair?” I guess we will never know. But even if we did get to learn what he thinks the word should mean, would it matter? I think not.

Just like so many unemployed hipsters who think that they have “figured out” what capitalism is, Professor Fouser also felt confident enough to give his diagnosis when he said:

The essential problem is that capitalism, particularly the variety that developed in Korea, relies on expanding markets for its prosperity.

Where have I heard that from before? Oh right, it was Karl Marx who said it first in the Communist Manifesto when he said:

The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe. It must nestle everywhere, settle everywhere, establish connexions everywhere.

You'd think that the Ghostbusters would have gotten around to taking care of the ghost of Karl Marx by now.
Image Source

Never mind that capitalism is not actually a conscious living being but merely an idea; an economic system which is defined by the private ownership of property. Never mind that capitalism is merely an economic system that allows people the opportunity to pursue their desire to seek greater prosperity, which is not the same as a need to seek greater prosperity. Never mind that prosperity can be had even without “expanding” to new markets abroad. As long as there are any human needs that are unsatisfied, there is no limit to do business, even within Korea's own humble market.

But why try to explain all that when he already knows what “the essential problem of capitalism” really is?

Then Professor Fouser went on to say:

A relatively small number of nations with technological advantages monopolized high-value goods. These nations boomed because they had a growing consumer and production base at home and competitive advantages in exports... Japan, once known for its massive trade surpluses, has seen a trade deficit for 24 months in a row since June 2012.

What does it mean to monopolize something? A monopoly occurs when a single business entity owns all the market for a given product or service. By definition, there can be no other competitive agent. When was the last time any country in the world had a monopoly on any good? I will await patiently for that answer.

Next, is having a growing consumer and production base and competitive advantages in exports all that are needed to get rich? They are certainly important, but they are not the be-all and end-all of gaining riches. If they were, India would be one of the richest countries in the world, and Switzerland would be one of the poorest! Professor Fouser did not mention a single word about other necessary qualifications that a country has to meet in order to break away from the chains of poverty such as the supremacy of the rule of law, the reliability of institutions, low levels of government corruption, the importance of culture, work ethic, education levels, women's rights, the effects of war and peace, or history.

Even if he had mentioned all of that, he would have only begun to scratch the surface about how some societies get rich while others remain poor. But why worry about such fine details? It's all about the Big Picture, I'm sure.

It's like as though no one in the history of the world has ever attempted to study this subject before!
Image Source

And just what the hell is wrong with trade deficits? If trade surpluses are so great, seeing how the United States ran a trade surplus in nine out of the ten years of the Great Depression, the 1930s should have been a ten-year long party for Americans!

Conventional wisdom seems to go like this – The Japanese economy's performance has been lackadaisical. Japan has had trade deficits for twenty-four months in a row. Therefore, trade deficits must be bad.

Then, using that same logic, seeing how the United States ran a trade surplus for nine out of ten years during the Great Depression, is it correct to say that trade surpluses must be bad?

Neither a trade deficit nor a trade surplus means a damned thing when it comes to the overall health of an economy. There are many reasons, some of them known and others unknown, as to why an economy flourishes or flounders. Trade deficits and trade surpluses are not one of them. This may be difficult to understand for many people but, believe it or not, economies are far too complex to draw simplistic causal connections.

This should be your level of skepticism when someone claims to have a simple solution to fix the economy.
Image Source

So, after having used shoddy research methods, normative statements that can mean anything depending on the reader, and one economic fallacy after another, Professor Fouser finally says:

Focusing on inequality is the first step toward restoring the Korean dream. To do so, Korea needs to move beyond the din of petty politics and revive the national discussion on “economic democracy.”

At this point, I ought to explain how the entire concept of “income distribution” is tendentious; that the concept is flawed from the very start because it takes the existence of wealth for granted, that wealth exists somehow – never mind how it came into existence – meaning that the only thing that people need to be concerned about is that it has to be distributed and apportioned among everyone. Never mind who is going to do the apportioning or how or for whom and damn the morals and damn the consequences!

But nitpicking the arguments that he stated alone were exhausting enough as it was.

I'll say it again. I'm sure that Professor Fouser is an excellent linguist and an expert in the Korean language and a gentleman of noble intent. But perhaps it might be prudent for him (and others) to stick to what he is good at and leave the subject of economics to economists.

Oh, wait.  Never mind.
Image Source

Monday, July 28, 2014

Super Fun Economic Review – Part 2: Partying with Jack Daniel like it's 1999!

As stated in my previous post, both Saenuri lawmakers as well as the Ministry of Strategy and Finance wants to see “adjustments” made to the value of the Won. It's their way of saying that they want to see the value of the currency depreciate.

Well, why does a currency appreciate in the first place? Simply put, it occurs because the currency is in demand. For example, if a country exports a lot, the demand for that currency will go up. There are, of course, other reasons, too, such as increasing (or at least stable) interest rates, an increase in per capital income, a stable government, etc.

So, the value of the Won has been relatively quite high over the past few months.

However, a few really big things have been happening in the world over the past few years that are beyond the Korean government's control. Since 2008, the United States government has injected into its economy close to US$5 trillion in stimulus money while keeping interest rates at nearly zero percent and having the world's largest debt, which has devalued the Dollar somewhat. The Japanese government recently decided to depreciate the Yen. And with several European economies having gone belly up over the past few years (see PIIGS economies), there have been calls by several European governments to depreciate the Euro, and the Euro is expected to depreciate against the Dollar in the next few months.

Congratulations!  You read through that borefest and did't get distracted by porn!  Here's your reward!  Look at those puppies!  LOOK!  AT!  THEM!
Image Source

Everyone is depreciating (or wants to depreciate) their own currencies. It's why Saenuri lawmaker Representative Kim Moo-seong said, “There is a Currency War going on in the world right now.”

So why do governments want to depreciate their own currencies? The main reason why any government would want to depreciate its own currency is for the sake of becoming “more competitive.” With one country after another going through some form of economic contraction or another, governments are trying to increase exports. And the best way to increase exports is by making sure to sell at a cheaper price than other countries. And if you can't make the product cheaper, you can make the money worth a little less.

(Side note: If depreciating a currency makes a country more competitive, shouldn't Zimbabwe be the richest country in the world?)

Move over, Travie McCoy.  I want to be a trillionaire!
Image Source

The problem with depreciation is that it's like having a shot of whiskey. Everyone who is calling for their currencies to depreciate are basically saying, "A shot would really perk me up right now."

Well, it's true. Having a shot of whiskey will definitely perk people up. But the problem with having that shot of whiskey, as any whiskey aficionado will tell you, is that you can never have just one shot of whiskey... If there is any among you who is thinking that this analogy does not work because you yourself do not enjoy whiskey, YOU SHUT UP AND DIE, YOU ABOMINATION!

The fact of the matter is that we live in an interlinked global economy and in such an economy, currencies don't rise or fall in a vacuum. For example, one complaint that the United States always raises against China is the latter's monetary policy, which has kept the Chinese currency, the yuan, artificially low. The Chinese government has pursued such a policy because it ensured that Chinese goods remain cheap, which is one of the big reasons for the trade imbalance between the United States and China. That has provided a steep incentive for the United States to retaliate by lowering its currency as well, which in effect, it has done.

Yet another reward!
Image Source

Countries around the world often see currency wars as a zero-sum game. In reality, it is really a lose-lose game for everyone. For example, unstable exchange rates can deter international investment and slow economic recovery. And of course, currency wars can have secondary political effects as well. Though this may admittedly be a case of post hoc ergo propter hoc, when was the last time that the American and Chinese governments have ever seen eye-to-eye on anything?

So going back to the whiskey analogy, it turns out that people aren't just slamming down whiskey shots just to perk up a bit. They are actually in a drinking competition that's being hosted by Delta Tau Chi (Who got that reference, huh?) and everyone's trying to out-drink each other. And the drunker they get, the more irritable the contestants are getting.

Now it may be an incontestable fact that Jack Daniel's is the best goddamned drink on this side of the Milky Way Galaxy but it is also true that spending a bit too much time with him usually gets people into all manners of trouble.

Just ask this guy!
Image Source

Oh, but what is this that I hear? A question from the audience?

But, John, aren't you by definition saying that as long as people slam down their shots of sweet, sweet Jack Daniel's nectar in moderation, it will perk people up and they won't ever have to worry about getting arrested for indecent exposure in a public park in the presence of four minors and their very angry mothers and one dad? Then isn't it also true that depreciating a currency in moderation can actually work to stimulate an economy, too?”

Well, firstly that's a terrific question, hypothetical reader who is actually really me (and no, it is not sad at all that I am having a conversation with myself).

The answer to the question as to whether or not depreciating a currency works to stimulate an economy is this – Yes and no.

Depreciation works if prices and wages don't adjust to the new economic conditions. For example, let's say that you're a citizen of Country A and you make A$1,000 a month. Now it so happens that your country trades with Country B. It also so happens that in order to improve economic conditions, your country's government decides to depreciate your currency. So, in the past, if your A$1,000 was worth B$1,000, now your A$1000 is only worth B$500.

In this new situation, citizens from Country B can afford to buy more of your things. Now if the prices of your goods and your wages remain the same, depreciation will absolutely work as those suckers from Country B (who conveniently aren't depreciating their own currency for no other reason than to let this hypothetical example work; ceteris paribus, bitch!) stops buying their own stuff and continues to buy your stuff! But it will only work temporarily.

Temporarily” is a very important qualification.

Has this blown your mind yet?
Image Source

It will only work temporarily because eventually, inflation always catches up to depreciation. Let me explain. When the value of your country's currency is artificially depreciated, other people's demand for your goods will go up. And one of the laws of supply and demand is that if demand goes up, so does price.

What that means specifically for you is that your monthly bills are going to come out higher than you're used to. And when prices go up and enough people get upset about it (Hello, labor unions!) it's not long before wages also go up until it catches up with the price and then some.

So, just like slamming down shot after shot after shot of Jack Daniel's, it's not a matter of whether or not a little currency depreciation will perk you up. It's a matter of how long you get to have fun before you wake up the next day with no memory of why you thought it was a great idea to drunkenly text your ex-girlfriend who has been happily married for the past three years that you still love her thirty-eight times while lying next to a one-legged hooker. Not to mention the massive hangover.

Someone should make this app RIGHT NOW!
Image Source

But that's where democratically elected governments come in. Every politician wants to get elected and they want to stay elected. So whenever the hangover is about to set it, they have good news for us partiers! Just a little hair of the dog and you're good to party again like it's 1999!

That hair of the dog usually includes more currency depreciation and more economic stimulus packages. But as anyone who has ever had a destructive love affair with Jack Daniel's can tell you, after a while, even the hair of the dog can't perk you up. You will also need at least a pack of Marlboro’s (Hello, lowered interest rates!) and if it's bad enough, Adderall (Hello, quantitative easing!).

What you slowly begin to realize, however, is that your body is silently pleading for you to stop. You need solid food. You need water. And you need sleep. You need time to recover. You realize that your stress levels are getting higher, your brain function is slowing down, and all that booze and drugs is burning a hole in your checking account, which means that you have to call mom and dad to ask for more money.

Image Source

Now you're in a rut. To reduce your stress levels, you need money so that you can pay your rent and not get evicted; but to do that, you need to call mom and dad to ask for more money and explain to them how you misspent their money (that they had to take out in loans from Repos-R-Us Bank) on booze and drugs instead of studying in the library to get that 4.0 GPA that you swore to them that you would get if they would only just bite the bullet and send you to this overpriced Ivy League college campus.

Now you're having second thoughts. Telling them about all those stupid things you did would disappoint them, break their hearts, make them lose faith in you, anger them, and hurt them. Worse yet, they might stop sending you money and force you to move back in to your old bedroom and get a job at the local paper mill where the highlight of your day will be watching reruns of “The Bold and the Beautiful” on your union-approved hour-long lunch break with those other middle-aged factory lifers who don't like yer kind with all that mumbo-jumbo book learnin'.

Talk about getting stuck between a rock and a hard place, right?

Image Source

This sort of thing also happens in economies and there's a name for it – stagflation. And it's no fun. If you don't believe me, ask Jimmy Carter.

Before you know it, you've become a junkie and have resorted to stealing (Hello, Taxes Against Corporate Surplus Profits!).

So what's the real solution? Well, unfortunately, the real solution is economic as much as it is political. Do you trust the government to have enough discipline to depreciate the currency only when it is absolutely necessary, and not do it any time it is expedient? Do you trust that the stupid college kid really has the willpower to go to only one Delta Tau Chi-sponsored Drinkathon and then spend the rest of his time to make sure that he graduates with a summa cum laude? Or do you think there has to be strong rules and strict morals?

As for me, I don't trust those bastards. But that's just my opinion.

To quote Gandalf the Grey - Fly, you fools!
Image Source

Sunday, July 27, 2014

Korea Needs to Liberalize Its Rice Market

I realize that I said that my next post was going to be my second installment of “Super Fun Economic Review” about the Korean government's increasing hints about depreciating the value of the Won.

Rest assured, that post is coming. However, it's taking longer than I had anticipated.  In the meantime, I wanted to upload this post.

Just today, I read an article in The Diplomat about Korea's refusal to liberalize its domestic rice market to international trade. A few days ago, I also read a very impressive article about this same topic that was written by Eric Deok-jin Song who works over at the Korea-based libertarian think tank, Center for Free Enterprise (자유경제원).

As the article was written only in Korean, however, I have taken the liberty of translating the article into English.

I think that this is a good time to state that I am not affiliated with the Center for Free Enterprise in any way whatsoever. Furthermore, any mistakes in the translation are mine and mine alone.

The first two picture files in this post were from the original post, but I have added the other pictures myself.

Is rice life? How much longer will the taxpayers' money be spent to subsidize rice? Rice has already been losing its status as the country's staple food. From 1995 to 2014 whereas rice production increased about 10%, the amount of rice that has been imported has increased 8 fold. The only two countries in the world that have not opened up their rice markets are Korea and the Philippines. Continuing to subsidize rice is a waste of the taxpayers' money.

The white signboard that the man is carrying reads "쌀은 생명이다," which means "Rice is Life."
Image Source

The Ministry for Food, Agriculture, Forestry and Livestock says, “For the future of the rice market, the best decision that we have made was to begin to import rice, but to impose tariffs on imported rice.”

With the government on one hand that says that the opening up the rice market can no longer be delayed and opposing farmers on the other hand claiming that such a move would cause irreversible harm, the differences between the two sides are sharply contrasted. It should be noted that Korea made a promise to the international community to open up its rice market in the Uruguay Round of multilateral trade talks in 1994.

By claiming that rice is unique to Koreans, the Korean rice market has received “preferential treatment” and has been waived from opening up the market at great cost. What was the great cost? For failing to open up the market, Korea was obligated to import up to 51,000 tonnes of rice in 1995. That obligation has steadily increased and this year, Korea is obligated to import up to 409,000 tonnes of rice this year alone. At the end of this year, Korea's grace period will come to an end. Korea can no longer afford to delay opening up the market.

The first two lines above and below the Korean and the Philippines flags say "The only two countries in the world that have not opened their rice markets are Korea and the Philippines."
The circles and the text in the middle of those circles say "Rice production has fallen from 4,690,000 tonnes to 4,230,000 tonnes.  Korea has had to increase its obligatory rice imports from 50,000 tonnes to 400,000 tonnes.  An average Korean's rice consumption has fallen from 532 bowls per year to 336 bowls per year."
The last line says, "How much longer will the taxpayers' money be spent to subsidize rice? How much longer will we be forced to import rice?  It is time to compete with imported rice."
Image Source

Despite having protected the rice market much more and much longer than any other industry, Korea's agriculture industry has barely survived. Despite continuous large-scale investments, Korea's agriculture industry's competitiveness remains at a standstill. Due to a decline in the number of farming households, more and more people have begun to abandon their farms. As a result, only senior citizens and low-income families continue to live in rural areas, which threatens to shrink Korea's agriculture industry even further. Although rice production has increased somewhat, average income has fallen, which has caused a great income disparity.

Opening up the rice market will provide our agriculture market with new opportunities. Korean agricultural products are popular in China. That is because the Korean brand is considered a trustworthy brand by Chinese consumers. Opening the rice market will not lead to imported rice flooding the Korean market but rather an increase in our exports to overseas markets. Now is the time to increase the rice industry's competitiveness and to focus on the debate of raising tariffs.

Korea's agricultural industry stands at a crossroad. It can either crash as a declining industry tends to do or it can find ways to become a competitive industry. Using competitiveness as a springboard, it has to find the right direction in order to become an advanced agricultural industry. It has to extricate itself from all of its excessive protections and move away from its land-intensive production methods in order to pursue more capital-intensive production methods.

Image Source

The Confederation of Farmers Alliance that has long opposed the opening of the rice market has already begun to engage in all-night sit-ins and other forms of protests. Instead of engaging in unreasonable protests, they have to embrace market principles and the entrepreneurial spirit. In order to transform the industry into a competitive one, and to transform it from one focused on
공자유전 (耕者有田), which is established in Article 121 of the Republic of Korea Constitution which states that “the State shall endeavor to uphold the notion that those who till the land will use the land,” to one that is focused on 경자용전 (經者用田), which is the notion that those who can manage the land can use the land. Furthermore, the regulations and restrictions on the agriculture industry ought to be abolished.

Only this effort can lead to an increase in new capital investment that is needed to increase the industry's competitiveness and establish an international business that can compete globally.

That large businesses are always opposed to entering the agriculture industry in Korea is worrisome. Dongbu Group, which had built a state-of-the-art facilities in a tomato production facility but faced opposition from farmers groups and had no choice but to discard millions of tomatoes. Dongbu Group had even signed a contract to export domestically produced tomatoes to Japan. However, the farmers and the farmers groups opposed this. After having lost millions, Dongbu Group withdrew from the tomato business.

Toyota, the symbol of Japanese manufacturing, on the other hand, has built and is strengthening their agricultural productivity. The agriculture business is gaining strength to becoming a vital business in the future.

Whenever a free trade agreement has been signed be it with Chile, the United States, the European Union, ASEAN, Australia, or Canada, the farmers have never failed to angrily protest. Yet even with the importing of Chilean grapes, domestic grape production has increased. The beef market has been opened but Korea's beef industry has not weakened. It is the same with other agricultural goods. The farmers have begun to improve their quality, scientific methods, and have begun to become more competitive.

Image Source

Although competition and opening up markets can threaten domestic businesses initially, it has in fact strengthened the domestic industry.

Agricultural products have increased in value and improved their income levels. People have to accept this new change and farmers must stop thinking of themselves as farmers and instead think of themselves as “farmakers” and “farmarkets.” Farmers have to accept the entrepreneurial spirit that can only exist within capitalism and only this can ensure the successful development of a competitive agricultural industry.

Image Source