[Lee Jaemin] New technology, the new economy and overregulation

Korea is a “fast” country. Everything is quick and speedy, with one exception: The regulatory framework. By and large, laws and regulations fall way behind technological development in the market. Startup companies’ first encounter is regulatory red tape. How ill-matched for a country that excels in information and communication technology.

The tricky part is, these regulations have legitimate objectives. In particular, they are intended to mitigate risks, known and unknown. The default answer is usually no, instead of yes, to be on the safe side. Naturally, this is an uphill battle for new ideas and new endeavors. Concerns over safety and risk management are part of the job for any responsible government. But if pushed to the extreme, concern becomes overconcern. That is the point where regulation turns into overregulation.

Some recent examples. First, the drone regulations. Under the current regulations, even small, hobby drones (including toys) need flight permits to fly in the “flight regulation zone,” which takes up a significant portion of the Seoul Metropolitan Area. So hobbyists flock to the banks of the Han River to fly them. In response to calls for change, the government proposed new rules in early October. After the necessary hearings and other procedures, the new rules should go into effect early next year.

The new rules are more practical. Toys are OK now. More specifically, drones weighing 250 grams or less (that is, toys and leisure drones) are exempt from regulation. Core aspects of the regulations remain in place, while adjustments have been made according to the weight and capabilities of the particular drone model in question. For instance, flying a drone beyond one’s sight range is still prohibited. So is flying a drone higher than 150 meters without prior permission. Risks to pedestrians and security threats are cited as the main reasons.

Let’s look at another example. Three years after UberX withdrew from the Korean market, protests from taxi companies have flared up again. This time the target is a Korean company launching a web-based carpooling service. Many reasons are cited -- one of which, again, concerns the potential risks. Namely, unregistered or unregulated drivers might engage in illegal activities; more cars on the road during rush hour would mean traffic jams and other problems.

What we see now is just the beginning. With new technology and a new digital economy, many new ideas and business models are being tried for the first time, mostly in the twilight zone of regulation. As we proceed, similar questions will continue to arise. Of course, it remains necessary to ensure that existing industries are not marginalized in a way that threatens the welfare and livelihood of conventional workers. This is a matter that requires extensive national debate.

That said, overconcern as a blanket justification to maintain existing regulations or reject new regulations should be carefully scrutinized. Again, these are all valid concerns. More so considering this country’s unique situation, where so many people live in densely populated residential neighborhoods in the Seoul Metropolitan Area. Add to that the constant national security factor. The real question is not whether there are risks, but whether the risks can be managed and if so, how. In other words, regulations should be carefully tailored and crafted to balance competing goals.

Consider a textbook example of overregulation. In the early days of automobiles in the late 19th century, a UK law required that a man holding a red flag walk ahead of each vehicle. His job was to prevent the car from speeding and wave a red flag to warn the pedestrians and horse carriages nearby.

Reasonable regulations, undertaken to protect public safety, are always welcome and enforcing them is a task that all responsible governments must undertake. Too much concern and the resulting overregulation, however, only stifle innovation. The victims are companies and individuals with new ideas and technologies.


Lee Jae-min
Lee Jae-min is a professor of law at Seoul National University. He can be reached at jaemin@snu.ac.kr. -- Ed.