[이상직 변호사의 창의와 혁신] 〈41〉Can companies solve problems in the public sector?

[이상직 변호사의 창의와 혁신] 〈41〉Can companies solve problems in the public sector?

Publication date: 2024-10-21 16:00 Updated: 2024-10-21 09:10

Lee Sang-jik, attorney at Pacific Law Firm (author of ‘Digital Living’)

The political world demands that mobile communication companies reduce communication rates when there are important events such as elections and government inspections, saying that this will ease the burden of communication costs on the public. What is the reason? We do business by borrowing frequencies, which are national resources. Profit is generated in the domestic market rather than overseas exports. It requires government approval, registration, and is subject to various regulations. Large-scale communication facilities are needed. It is a monopoly market where new entry is difficult. However, despite numerous reasons, there is no legal authority to interfere with private companies’ rates. If we want to support people’s communication expenses, we must do so from the national budget. Why does this happen again?

In the past, most people’s rights were subject to the state. The focus was on preventing violations by the state of physical freedom, freedom of privacy, and freedom of the press. As democratization and society became more complex, the demands of the people increased in variety and became difficult for the state to resolve. With economic development, the role of corporations is becoming more important and has a significant impact on people’s lives. These include guaranteed wages necessary for livelihood, industrial safety, and personal information protection. The state passed on to corporations through legislation the duties and expenses previously performed by the state to promote the interests of the people. Although unprofitable, there are communication services for remote areas and remote islands and development funds financed by corporate contributions. Now, in addition to protecting customers and shareholders, companies must also realize social value. We carry out activities under names such as social contribution and environment, society, and governance (ESG). The problem is that such activities are far from the company’s main task of generating profits. It is considered a cost and ends up being nothing more than a show off.

Illustrated by Lee So-yeon

In this situation, can difficult problems in the public sector be solved through corporate innovation? Let’s look at Michael Porter’s argument. Problems that the public sector cannot solve, such as natural disasters, the gap between rich and poor, infectious diseases, and climate warming, can be solved through corporate innovation. It can be changed to a cost-saving and profit-generating model. When companies deploy robots to disaster sites to rescue lives and receive compensation, profits are also generated. If information technology (IT) companies support private computer education by covering the costs, they can secure future customers while solving the public sector problem of training IT personnel. In the early days of the mobile phone market, handset subsidies were a social contribution that allowed many people to enjoy freedom of communication and were a way to increase new customers. Michael Sandel‘s counterargument to this is also formidable. If you try to solve public sector problems in a commercial way, market harm will also occur in the public sector. When companies privatize the public sector, they put public infrastructure, such as safety, at risk to preserve deficits or generate profits. When deploying a robot to a disaster site, it may be limited to passive rescue in order to avoid losses. Who is right? In order to introduce corporate innovation into the public sector, businessmen are sometimes elected as president, members of the National Assembly, and ministers and vice ministers. There are some success stories, but most of them are assimilated into vested politics or caught up in economic interests and show an unsightly appearance. ESG is being introduced to public institutions as well, just as the private sector is doing. Could it be that the existing problems were not solved because there was no ESG? Just because other people’s clothes look cool doesn’t mean you will be cool when you wear them. Costs such as labor costs only increase.

What should I do? First, we must seek independent innovation measures in the public sector. Although technological innovation is emphasized, we must keep in mind that technology is only a means of innovation and that the subject of innovation is people. A work environment that is not swayed by politics is a priority. Public officials must be allowed to do their work. The scope of immunity should be expanded and incentives should be provided for active administration to solve problems. Dereliction of duty should be punished more severely than abuse of power. Although corporate innovation is not a panacea, it has played a significant role in economic development. It is also important to use companies to solve problems in areas that the public sector cannot solve on its own. What we need to be wary of is the fraudulent waste of the nation’s money through ‘mere innovation’ caused by collusion between politics and business.

Lee Sang-jik, attorney at Pacific Law Firm (author of ‘Digital Living’)