[Noh Dong-il Column] The Three Judicial Laws, the Yellow Envelope Law, and Social Costs

Chief Editor Noh Dong-il Law and Economics is a discipline that analyzes the enactment, interpretation, and enforcement of laws from an economic perspective. It views law not merely as a 'norm,' but as an 'incentive structure' that changes people's behavior. It posits that law should not remain merely an abstract value like justice, but should instead serve as a means to efficiently allocate the resources of society as a whole and maximize human welfare. In particular, it emphasizes the 'minimization of transaction costs. ' The argument is that the role of law should be an institutional infrastructure that helps the market function smoothly by reducing transaction costs between economic agents.
Even without a law and economics perspective, all laws must ultimately contribute to the minimization of social transaction costs. We must consider ways to build a safer and fairer society at 'lower costs. ' Even in the process of enacting or amending laws, attention must be paid to maximizing the welfare and well-being of the entire nation, not just specific social classes. However, recently, there have been many laws that run counter to this.
The so-called 'three judicial (reform) laws' center on the judicial appeal system, the crime of judicial distortion, and an increase in the number of Supreme Court justices. The judicial appeal system entails the social cost of prolonged disputes and judicial uncertainty. Transaction costs—the time and information-gathering expenses required to finalize legal relationships even after a Supreme Court ruling—are incurred. The crime of distorting the law weakens the 'incentive' for judges and prosecutors to make decisions based on law and conscience. The fear of becoming subject to punishment when investigation or trial results conflict with political interests manifests as a cost that undermines the public good of judicial neutrality. In corporate activities, it also results in rising agency costs, increasing legal risks and litigation response expenses. Nearly doubling the number of Supreme Court justices from 14 to 26 adds massive administrative costs, including personnel expenses and support staff.
774 billion won over five years. 7 trillion won. This depends on whether only personnel costs are considered or if the cost of constructing new courthouses is included. In any case, the introduction of the three judicial laws will lead to a surge in the injection of public capital for the operation of the overall judicial system, inevitably lowering market predictability.
There are no officially compiled figures regarding the additional costs that companies will have to bear due to the implementation of the so-called "Yellow Envelope Law. 8 trillion won) annually, total jobs will decrease by 68,000, and total real consumption will decrease by 10 billion won. Although exact figures are unknown, there is clear concern that it may become difficult to fully recover damages caused by illegal strikes.
Prime contractors face additional administrative and time burdens as they must negotiate directly with subcontractor unions. As subcontractor workers' demands for wage increases are directed toward prime contractors, the burden of labor costs also grows. Costs for responding to strikes and disputes also rise as the scope of industrial action (strikes) expands. Losses resulting from production disruptions and project delays could also snowball. Corporate legal, consulting, and advisory fees are also bound to increase.
It is reported that as of the 9th, just one month after the implementation of the Yellow Envelope Law, approximately 146,000 individuals from 1,011 subcontractor unions, branches, and chapters have demanded negotiations at a total of 372 prime contractor workplaces. In the private sector, 616 subcontracting unions demanded negotiations with 216 prime contractors, while in the public sector, 395 subcontracting unions demanded negotiations with 156 prime contractors. At a press conference on the 13th, Park Soo-keun, Chairman of the National Labor Relations Commission, stated, "The intent of the 'Yellow Envelope Law' is to recognize the status of autonomous resolution so that labor and management can sit down and talk," adding, "So far, things have proceeded smoothly, and the concerns of the business community have not materialized. " This is an all too obvious statement, perhaps even a pointless one. While there are costs incurred by companies due to immediate pressure, there will also be burdens that emerge in the medium to long term. It is a hasty conclusion to claim that the situation feared by the business community has not materialized.
The late Professor Park Se-il, who introduced law and economics to Korea, did not stop at the economic analysis of law but connected it to macroscopic national strategies such as national prosperity and institutional reform. Whether it is the three judicial laws or the Yellow Envelope Law, these are likely laws designed to maximize the welfare of a very small segment of society. However, it is not a means to efficiently allocate the resources of society as a whole and maximize the welfare of all its members. The recognition that law is a necessary tool for macro-level national strategy is precisely what is most needed today by those who create and operate laws.
dinoh7869@fnnews.com Reporter