[Market Economy Guide] SME Policy

“Peter Pans” Who Refuse to Become Independent and Want to Remain Children Forever… Excessive Government Protection Prevents Small and Medium-Sized Enterprises from Growing

Almost everyone has, at least once, read Peter Pan as a book or seen it as a film or animation. There is Peter Pan, who lives in Neverland, a place where no one ever grows up, and the fairy Tinker Bell. There is Wendy, the girl who happens to meet Peter Pan one night and goes on an adventure with him to Neverland, along with her two younger brothers. And there is Captain Hook, who opposes Peter Pan and is always looking for a chance to do something wicked. The adventure story that unfolds in the dreamland of Neverland has captivated the hearts of countless children to this day.

Let’s Read Peter Pan

The term “Peter Pan syndrome,” said to be derived from the name of children’s hero Peter Pan, literally refers to a psychological condition in modern people who, like Peter Pan who never grows up, refuse to become adults and want to remain children forever. People with Peter Pan syndrome, often called “adult children,” may be physically mature, yet mentally they still want to be protected and dependent like children. As a result, they struggle to adapt to adult society and tend to display antisocial, irresponsible, and self-centered traits.

The seriousness of Peter Pan syndrome lies in the fact that it leaves fully grown young people powerless and lethargic. Imagine young people, who should be actively engaged in socioeconomic activity, instead shutting themselves away in their own Neverland. Could such a society really develop? As the economy stagnates due to a shrinking labor force and interaction among members of society disappears, cultural progress becomes impossible. Moreover, if they cannot become independent adults and form new households, the very continuity of society may be threatened. In addition, the personal lives of people with Peter Pan syndrome can never truly be happy. Socioeconomic helplessness leads to declining self-esteem and ultimately to a tragic later life. That is why Peter Pan syndrome is regarded as a modern psychological condition that must be treated both personally and socially.

Leaving the SME Category Means a Loss

There is an even more serious case than young people suffering from Peter Pan syndrome in our economy. That would be South Korea’s small and medium-sized enterprises. SMEs with Peter Pan syndrome are firms that deliberately avoid growing into large corporations and seek to remain SMEs forever in order to continue enjoying various benefits under government protection.

Some SMEs not only refrain from hiring workers even when they need employees, but also intentionally split up their companies in order to maintain SME status. In fact, it has been confirmed that 29.5%—nearly 3 out of 10 SMEs that had just surpassed or were about to surpass the SME threshold—avoided doing so. Why are so many SMEs struggling so desperately not to become large corporations? The reason is the government’s support policies for SMEs.

Companies that qualify as SMEs enjoy as many as 160 special benefits across a wide range of areas, including policy financing, technological development support, workforce support, marketing support, and export support. The result is the overwhelmingly high share of SMEs.

There is nothing beneficial about a high share of SMEs in the corporate economy. Most SMEs are less productive than large corporations and offer less employment stability. Their wages and welfare benefits for employees are also lower. That is why so many young people are anxious because they cannot find jobs, yet still avoid working for SMEs.

Giving Free Handouts to Young People Is Also a Problem

If we want to provide young people with high-quality jobs that offer high wages, strong benefits, and stable employment, while also boosting national competitiveness through higher productivity and stabilizing people’s lives, then the share of large corporations—not SMEs—must rise. To do so, efforts are needed to normalize SMEs suffering from Peter Pan syndrome.

First, the concentrated support and special treatment provided to SMEs should be withdrawn. Only when SMEs are made to survive on their own in fair market competition will many of them finally grow into mid-sized firms and large corporations. Second, the regulations and constraints imposed as firms grow from SMEs into mid-sized firms and large corporations should be eased. Only then can companies be given the internal motivation and vision needed to grow further.

■ Food for Thought

There is an even more serious case than young people suffering from Peter Pan syndrome in our economy. That would be South Korea’s small and medium-sized enterprises. SMEs with Peter Pan syndrome are firms that deliberately avoid growing into large corporations and seek to remain SMEs forever in order to continue enjoying various benefits under government protection.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 중소기업 정책

Author: Sung-no Choi

Date: 2019-01-28

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=15&idx=11410