Tuesday, April 24, 2007

Look into Your Hearts, and Leave Us a Little Seed Corn

Look into Your Hearts, and Leave Us a Little Seed Corn
China Times editorial
translated by Bevin Chu
April 24, 2007

Comment: The following China Times editorial evokes mixed feelings. On the one hand, I empathize with the China Times editor. When I say I "empathize," I mean I identify with and understand the editor's situation, feelings, and motives. Politicians should behave in the responsible manner the editor wishes they would.

On the other hand, I sympathize with the China Times editor. When I say I "sympathize," I mean I feel pity, sorrow, and compassion for the editor's distress. I feel pity, sorrow and compassion for the editor's distress because I have come to realize that politicians who seek elective office in democracies and other monopolistic states will never behave in the responsible manner the editor wishes they would.

The Chinese have an expression: 緣木求魚 yuan mu qiu yu. It means: "climbing a tree in search of fish." As you can probably guess, the expression refers to the fruitless act of looking for something where it will never be found.

Expecting politicians of any stripe to behave in the responsible manner the editor wishes they would is an example of "climbing a tree in search of a fish."

The vast majority of people alive today are under the spell of the democratic myth. They genuinely believe that democracy's raison d'etre is to protect the rights of the ordinary citizen.

They don't realize democracy's actual reason for being is to enable ambitious politicians to exercise limitless power and remake the world in their own image, at the ordinary citizen's expense.

Once one understands democracy's actual reason for being, one will never again make the mistake of "climbing a tree in search of fish." One will never again labor under the delusion that one's "democratically-elected leaders" have any interest whatsoever in looking into their hearts, or leaving us a little seed corn.

Central Election Committee Reform must not be Undermined

Look into Your Hearts, and Leave Us a Little Seed Corn
China Times editorial
translated by Bevin Chu
April 24, 2007

As the legislative elections loom, the spectacle of ruling government and opposition lawmakers recklessly promoting pork barrel legislation in their struggle for re-election is being repeated once again. On the one hand, they slash taxes. On the other hand, they expand welfare benefits. Tomorrow the Legislative Yuan will review the "Temporary Act for Welfare Subsidies to the Elderly." Ruling and opposition lawmakers are eagerly pushing for increases. In a single breath, they have proposed 25 versions. The smallest proposed increase is 4000NT, the largest 10,000NT. They apparently consider the nation's finances child's play.

Meanwhile, the Executive Yuan is making it up as it goes along. If someone asks for an inch, the Executive Yuan gives a mile. The Ministry of Interior led the way by proposing a draft for a "National Annuity Law," attempting to combine Welfare Subsidies to the Elderly, Welfare Subsidies to Farmers, and other welfare benefits into one, sacrificing a smaller sum to prevent lawmakers of all stripes from increasing Welfare Subsidies to the Elderly.

This scattering of dollar bills to buy votes has not stopped at Welfare Subsidies to the Elderly and a National Annuity. A little earlier, the Legislative Yuan had already proposed abolishing the inheritance tax. The Ministry of Finance (MOF) also responded by making it up as it went along. The MOF announced day that it was considering reducing the maximum rate for the inheritance tax and the gift tax by half, substituting tax exemptions and tax deductions with a "Basic Living Expense," and drastically reducing the individual income tax. This was another case of giving a mile when someone asks for an inch.

That's how it is this year, and that's how it has been in years past. In March 2004, we held a presidential election. In November 2004 we held a legislative election. In January of that year, the Legislative Yuan passed the amended land tax bill after three readings. It implemented a one half reduction of two year property appreciation taxes, unconditionally extending it for one year. Later, in February of that year, the Blue Camp Lien Soong ticket posted advertisements pledging that if it was elected, it would drastically increase government employees and teachers' salaries, by an amount equal to "two national incomes." The Green Camp Democratic Progressive Party took one look, and Central Personnel Administration Chief Lee Lee Yi-yang immediately wrote out a check, guaranteeing that he would increase the military, civil service, and teacher salaries by three percent

Both the Blue and Green camps, both the ruling and opposition parties, are of one mind on this. Both add fuel to the flames, both encourage the unhealthy practice of exchanging dollar bills for votes. Even conservative former Kuomintang Chairman Ma Ying-jeou indicated the other day that he approved increased Welfare Subsidies to the Elderly. As the onrushing wave carries everyone along in its wake, the only ones remaining are the Directorate-General of Budget, Accounting and Statistics and and handful of clear-headed legislators such as Wang Jung-chang, standing their ground, appealing to the ruling and opposition parties to step on the brakes and not neglect the nation's finances.

Nobody opposes the social welfare system. Providing adequate care to the elderly, the weak, the disabled, elderly widows and widowers, and the poverty-stricken, is the government's responsibility. However social welfare should not be coercive egalitarian redistribution of wealth. Not all the elderly are poverty-stricken. Not all farmers are in financial straits. Without greater discernment, the expenditure of vast sums, not based on actual poverty, but on age, will only make it harder to conserve resources and to look after poverty-stricken people who truly need to be looked after. Currently the central government spends 80 billion NT every year on Welfare Subsidies to the Elderly and Welfare Subsidies to Elderly Farmers. If one still wishes to increase benefits, be aware that every time Welfare Subsidies to the Elderly are increased 1,000 Yuan, the burden on the state treasury increases 10 billion Yuan. Every time Welfare Subsidies to Elderly Farmers are increased 1,000 Yuan, the burden on the state treasury increases 84 billion Yuan. At the same time, the National Health Insurance system teeters on the brink of collapse, insurance premiums keep increasing, the scope of health insurance coverage keeps diminishing, safeguards to poor patients keep shrinking, and the effectiveness of medical health insurance treatment keeps declining. Put simply, it is a case of robbing Peter to pay Paul!

The reason this kind of pork barrel legislation, which reduces tax revenues even as it increases benefits, appears at election time, is that the beneficiaries are clearly defined, while the victims are not. Reducing taxes may allow certain taxpayers to feel that their tax burden has been lightened. Increased benefits may allow certain recipients to increase their income. Conversely, the financial shortfall created by reducing taxes while increasing benefits has no clearcut victims.

Theoretically, the financial shortfall can be made up by issuing government bonds, but eventually bonds must be repaid by means of tax increases. The problem is, a nation endures, and its central government never goes bankrupt. Therefore the day of reckoning on which the shortfall must be made up by means of tax increases constantly recedes into the future. Therefore, regardless of whether one is reducing taxes or increasing benefits, the shortfall can always be covered by issuing bonds. No need for any specific target to bear the burden created by pork barrel legislation. Therefore, no matter whether one is reducing taxes or increasing benefits, every kind of pork barrel legislation is theoretically a Zero-sum Game. But in practice, so long as the government does not collapse, it's a "heads I win, tails you lose" proposition. Because of this, ruling and opposition party political figures have unscrupulously resorted to pork barrel legislation, undermining the nation's finances and sapping the nation's vitality.

This resort to pork barrel legislation every time an election rolls around, is already deeply ingrained in Taiwan's election culture. Frankly it's going to be difficult to rectify this trend. To expect ordinary citizens to spontaneously awaken and resist the temptation to exchange votes for dollar bills is wishful thinking. The only hope is that ruling and opposition party political figures will look into their hearts, reach a consensus, abide by a gentlemen's agreement, and refrain from cutthroat competition. One needs to realize that if one resorts to pork barrel legislation to buy votes, one's opponent can do the exactly the same thing. Whether one engages in cutthroat competition or not, makes no difference as far as votes are concerned, but a major difference as far as the nation's finances are concerned. The Blue and Green camp "Princes" need to be clear on this. Instead of cutthroat competition, they ought to declare a truce, and leave a little seed corn for the nation's future!

Original Chinese below:

拿出良心 為國家財政留點老本吧








理論上,財政缺口可藉由增發公債暫時填補,但公債最後終究須靠增稅才能償還。問題是,國家永續存在,中央政府不會破產清算,所以,這「終究須靠增稅償還」之日,永遠遙遙無期。所以,無論減稅收還是增支出,都可以靠發行公債軋平財政缺口,無需特定對象承受錢坑法案所造成的犧牲。於是,不論減稅收還是增支出,各種錢坑法案理論上是正負相抵的「零和遊戲(Zero-sum Game)」,但實際上,只要政府不倒,都是無本生意,只有正面收益,而無負面損失。正因為這項特色,朝野政治人物多年來才會如此肆無忌憚,亂挖錢坑,把國家財政挖得千瘡百孔,元氣大傷。


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