Why Were 7,800 People Driven Out onto the Streets?

The saying that “the road to hell is decorated with roses” cannot be emphasized too strongly. This is especially true when it comes to economic policy. Nevertheless, people are still dazzled by the beauty of the roses, mistakenly believing that “heaven” awaits at the end of that road, and they continue to follow it. Populists, in turn, use that very misconception as an easy source of political support.

Yet something has happened that has laid bare the consequences of a policy whose effects once seemed too distant to be seen. It is showing many people that the road adorned with roses and mistaken for the path to “heaven” is in fact the road to “hell.” That policy is the recently enacted amendment to the Higher Education Act, commonly known as the “Lecturer Act.”

“Lecturers Working Part-Time at Convenience Stores Instead of Teaching.” That was the front-page headline of a daily newspaper on September 2. The biggest reason lecturers are taking convenience store jobs instead of teaching is the Lecturer Act. Of course, the reason for revising the law sounds noble enough: job security for university lecturers and better treatment and benefits. To that end, universities are required to appoint lecturers for at least one year, guarantee reappointment procedures for three years, and also provide severance pay and enrollment in the four major social insurance programs. Naturally, this increases labor costs for universities and sharply restricts their freedom in hiring, dismissing, and managing lecturers.

The impact of the Lecturer Act, which increases universities’ burdens and restricts their freedom, clearly shows how market regulation provokes reactions in the market. First, universities have responded by reducing the number of lecturers in order to cut costs. The number of lecturers fell from 58,546 in the first semester of 2018 to 46,925 in the first semester of 2019—a decrease of about 11,600, or fully one-fifth. Second, universities have filled only the minimum number of absolutely necessary positions through systems such as adjunct professorships, which are subject to relatively less regulation and therefore impose relatively lower burdens, including no need to provide the four major insurance plans or severance pay. Compared with 2018, the number of adjunct faculty members increased by about 4,400 in 2019. In other words, some of the 11,600 lecturers who could not find lecturer positions were at least able to return to teaching in this way. Excluding them, about 7,800 lecturers were, quite literally, “thrown out onto the street overnight.”

It would be a serious mistake to think that the harmful effects of the Lecturer Act now visible before us are the whole story of its “unseen consequences.” The damage we happen to be able to observe at present is only a very small part of the whole. For example, over the medium to long term, the Lecturer Act will lower the quality and competitiveness of university education in Korea, and that will in turn directly reduce the competitiveness of university students. And this decline in the competitiveness of universities and students will lead to further harm, including a decline in the competitiveness of the Korean economy as a whole. That is why the classical liberal scholar Bastiat warned as far back as more than 170 years ago that every policy has “seen consequences” and “unseen consequences,” and strongly urged us to pay attention to “what is unseen.”

This kind of market response and its results are phenomena common to all anti-market policies. Yet the response of the government and political circles, as we have seen again and again, consists only of stopgap measures. In other words, the government and politicians try to contain the damage caused by their own anti-market policies through fiscal spending or yet more regulation. As for the damage caused by the Lecturer Act, the government has stepped forward saying it will try to offset it by allocating a budget of 140 billion won. In effect, it is proposing to treat only the wounds visible on the surface while leaving the underlying cause of the illness untouched. Because the government and political establishment almost always respond in this way, it is hard not to worry that before long a revised bill may emerge that actually tightens regulation on the adjunct faculty system, which universities are now using as a desperate expedient.

Are anti-market policies that produce such harmful effects limited to the Lecturer Act alone? Although their side effects are now known to some extent, the minimum wage system and reductions in working hours have also shown—and will continue to show—the very same side effects that the Lecturer Act has revealed. We must not only immediately repeal the Lecturer Act, which has laid bare the true nature of anti-market policy in broad daylight, but also actively move to abolish anti-market policies and regulations decorated with roses, such as the minimum wage and reduced working hours. The courage to honestly admit policy failure and change course is not a kind of courage that just anyone can muster.

Hyeokcheol Kwon

Vice President, Center for Free Enterprise (CFE)

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Original title: 7,800명은 무슨 연유로 거리로 내몰렸는가?

Author: Hyeok-cheol Kwon

Date: 2019-09-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=12&idx=21851