There is no free lunch in the economy

Audio report: written by reporters, read by AI

Lee Sang-ryeol

The author is a senior editorial writer at the JoongAng Ilbo. 

The number of workers at small and medium-sized enterprises taking on second jobs rose from 277,000 in 2020 to 379,000 in 2025, a 37 percent increase, according to the Korea SMEs and Startups Institute. The shift followed the introduction of the 52-hour workweek. There had been little change between 2015 and 2020. While the Covid-19 pandemic may have contributed, the policy’s impact cannot be overlooked. As many experts had warned, a measure intended to prevent overwork has instead pushed many workers into taking on additional jobs after hours.

As in most areas of life, there is no free lunch in the economy. Policies that appear beneficial often impose hidden costs on others.

Even as a stock market boom continues despite the ongoing Iran conflict, those without homes, particularly people preparing for marriage, face growing difficulty securing rental housing. Supply has sharply declined. As of March 18, jeonse (lump-sum deposit) listings in Seoul’s Seongbuk District had fallen 91 percent from a year earlier, dropping from 1,427 to 128, according to the real estate data platform Asil. Similar declines of around 80 percent have been recorded in districts such as Jungnang, Nowon, Gwanak and Gangbuk. Monthly rentals show a similar pattern. With fewer listings available, prices have risen. The average monthly rent for apartments in Seoul exceeded 1.51 million won last month, posing a significant burden.

The rental shortage in the Seoul metropolitan area is largely the result of last year’s Oct. 15 measures. The land transaction permit system, which requires two years of mandatory residence, was widely expected to reduce rental supply. Those concerns are now materializing. The policy’s core aim was to curb transactions. Combined with the end of a temporary suspension of capital gains tax surcharges, apartment prices in Seoul’s Gangnam, Seocho and Songpa districts have declined. However, the burden has shifted to tenants in need of housing.

Economic policy must be assessed not only by its intended outcomes but also by its side effects. In many cases, side effects outweigh the benefits. Examples include the income-led growth policy and the 52-hour workweek under the Moon Jae-in administration, as well as cuts to research and development budgets under the Yoon Suk Yeol administration.

More recently, the passage of judicial reform bills has concentrated power across the executive, legislative and judicial branches. This consolidation is now extending into economic policy. As gasoline prices surged following the Iran conflict, the government introduced a price ceiling, the first such measure in about 30 years. The Fair Trade Commission has also ordered flour producers accused of price collusion to revise their pricing structures.

Price intervention can produce immediate results. It may win public support from those struggling with rising living costs and carries elements of populism. However, the longer-term consequences are more complex and potentially harmful.

First, price controls can distort the market’s adjustment mechanism. Rising prices typically suppress demand and encourage supply responses. When prices are artificially constrained, these signals are weakened or disrupted. As a result, shortages can persist or even worsen.

Second, intervention can undermine corporate autonomy and reduce economic vitality. If price controls lower corporate profits, companies may cut back on investment. This can lead to slower growth and weaker domestic demand. For this reason, successive administrations since democratization have generally avoided direct price intervention.

Plans to compensate oil refiners for losses have also sparked controversy. Determining losses requires estimating expected profits and examining cost structures, which are often treated as sensitive corporate information. For companies, disclosing such data can be burdensome and may raise concerns about confidentiality.

The current combination of high oil prices and a weak currency recalls the 2008 subprime mortgage crisis in the United States. At that time, international oil prices exceeded $140 per barrel. Yet the administration of former President Lee Myung-bak did not adopt price ceilings. Instead, it lowered fuel taxes and reduced tariff rates, measures considered more consistent with market principles and less disruptive to price signals.

The reintroduction of price ceilings after three decades reflects the expanding role of government in Korea’s economy. In times of crisis, the state’s responsibility to protect livelihoods naturally grows. Even so, there is concern that repeated intervention may lead consumers to become accustomed to government-controlled prices. An economy in which the state dominates price formation may struggle to sustain efficiency, innovation and long-term growth.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.