"Free" speech in the "free" world

This is becoming way too familiar a story: Someone badmouths the financial system in a hypothetically “free” country, and gets collared by the authorities.

It just happened in South Korea.

A South Korean blogger pleaded not guilty Saturday to charges that he spread false economic information on the Internet, a news report said, in a case that drew heated debate over freedom of speech.

The blogger, identified only by his surname Park, gained prominence among South Koreans because some of his dire predictions about the global economy, including the collapse of Lehman Brothers, later proved to be correct.

Known widely by his pen name “Minerva,” the mythological Greek goddess of wisdom, the 31-year-old Park was accused of spreading false information on an Internet discussion site last month that the government had ordered major financial institutions and trade businesses not to purchase U.S. dollars.

Kim Yong-sang, a judge at the Seoul Central District Court who issued an arrest warrant for Park following Saturday’s court hearing, said the case “affected foreign exchange markets and the nation’s credibility,” Yonhap news agency reported.

I’m eager to see what kind of evidence Mr. Kim will present to support that cause-and-effect assertion.

Isolated incident? No, we reported last month on the econ professor in Latvia who was questioned for two days after he made disparaging remarks about his country’s currency to a newspaper reporter.

The most disturbing thing about this is that it’s happening in countries that purport to be part of the “free” world. South Korea made the transition from military dictatorship two decades ago; Latvia is one of the Baltic states that were once part of the Soviet Union. In the latest annual ratings from Freedom House (just released today), Latvia’s civil liberties rank the highest possible, 1 on a scale of 1 to 7. And South Korea, 2.

I threw up the caution flag last summer about a vague threat made by a high-ranking government official in this country (still rated 1, for whatever it’s worth). In response to a series of bank runs in California, FDIC Chairwoman Sheila Bair said, “We’re very mindful of the media coverage and blogs in controlling misinformation. All I can say is were going to continue to stay on top of it.”

Nothing came of it; the bank runs never got out of control. Were there any consultations between FDIC and the Justice Department about what statutes might apply in such circumstances? No one’s said so publicly, but I sure wouldn’t rule it out.

Just something to keep an eye on in the year ahead. Because whatever come down the pike won’t be exclusively about the finance sector or the wider economy.

The Daily Reckoning