Monday, June 11, 2007

Is Taiwan still a Free Market Economy?

Is Taiwan still a Free Market Economy?
United Daily News editorial
translated by Bevin Chu
June 11, 2007

Comment: The DPP has never been a champion of the free market. Free market activity across the Taiwan Straits is the most potent force for China's eventual reunification.

The DPP's core value has always been tribal solidarity within the context of an artificially concocted "Taiwanese, not Chinese" ethnic and national identity.

Free market processes undermine the DPP's attempts to impose its artificially concocted tribal solidarity on the Chinese people of Taiwan.

To imagine that they would ever champion "free minds and free markets" is to misunderstand them completely.

Is Taiwan still a Free Market Economy?
United Daily News editorial
translated by Bevin Chu
June 11, 2007

Amidst rising prices, TAIYEN (Formosa Salt Company), which has controlled the price of salt for twenty years, announced a price increase. No sooner had the rumor of a price increase spread, than it came to the attention of Executive Yuan Secretary General Chen Ching-chun. A single telephone call from Chen forced Chairman of the Board Chang Lin-ching to retract his statement and guarantee that salt prices would not increase.

Chen Ching-chun said that since salt prices have not risen in several decades, he "could not understand" why they had to rise "at this time." Newly appointed former legislator Chen Ching-chun has a keen nose for politics. He knows that with two elections looming, the ruling DPP cannot afford to suffer electoral losses because he raised salt prices "at this time." The problem is, TAIYEN has been privatized. If we're still living in a world in which a single phone call can veto corporate policy, then aren't all these years of privatization a fraud?

Ironically, on the same day, the Executive Yuan aggressively raised the minimum wage, and ordered a 10 NT Dollar subsidy to businesses. The justification was that "wages had not increased in 10 years." Let's look at the Chang cabinet's logic. The minimum wage has not increased in 10 years, therefore an increase is long overdue. But salt prices have not increased in 20 years, therefore there is no reason why it should be increased now. The logic behind these two policy decisions is flagrantly self-contradictory.

Taiwan's economic growth has been sluggish in recent years. Besides the ruling party's Closed Door ideology, countless other contradictions in the ruling party's logic and deficiencies in the ruling party's thinking, are responsible for throttling Taiwan's economic freedom and economic vitality. When a single phone call from a high official can reverse a major corporation's policy, where is that corporation's independence and sovereignty? When government bureaucrats have the temerity to promote ill-considered "wage subsidies," besides revealing their arrogance of power, they reveal their ignorance about the workings of a free economy.

If the "Invisible Hand" behind the free market is replaced by the "Visible Hand" of sundry bureaucrats, how can Taiwan's economy not be derailed and separated from the free market economy? How can it not depart farther and farther from the international track?

Take intervention in salt prices as an example. Chen Ching-chun's ignorances dwarfs his understanding. First, prices in a free market system are determined by the private judgments of market participants. Chen Ching-chun apparently thinks the government trumps the marketplace, and has the temerity to intervene. Second, when the government meddles in private enterprise, not only does it hinder company operations, it also violates the rights of individual shareholders. Lin Ching's submissive behavior is an obvious dereliction of duty. Third, even assuming the government feels justified in imposing price controls, it ought to submit its proposed intervention to public scrutiny, and refrain from issuing imperial decrees via secret phone calls. Chen Ching-chun should not allow himself to become a secretary general who casually usurps authority.

The hourly wage subsidies are even more brazen. Within a free economy "subsidies" is a dirty word. Only a regime that is both ignorant about economics and arrogant about power would dare to regard subsidies as "government benevolence" that they can claim credit for. They are taking the blood and sweat of taxpayers, doling it out to wealthy cronies, and touting it as an achievement of the ruling regime. This is nothing more than disguised exploitation. Yet the Executive Yuan acts pleased with itself. When a cabinet lacks any shred of honor, what point is there in discussing professional ethics?

If the Executive Yuan's price controls on water, electricity, sugar, salt, and other goods stemmed from heartfelt concern for the public welfare, that would be one thing. In fact they stem from the ruling party's selfish interests. In other words, their current intervention is merely a delaying tactic. As soon as the elections are over, they will allow prices to rise, and public suffering will be more unbearable than ever. The Democratic Progressive Party exchanges long term public suffering for near term party advantage, then spins its behavior as generosity and compassion. Crocodile tears are more real than this.

In the eyes of the Chen regime there is no such thing as a free economy. This is clear from seven years of government intervention predicated upon its Closed Door Policy. Nefarious, behind the scenes manipulation of the economy by newly installed goons Chang Chun-hsiung and Chen Ching-chun has lost its power to shock. We would like to remind the Chang cabinet that if it wants to create a "good guy" image, merely controlling salt prices and increasing the minimum wage is not going to be enough. Three gasoline price increases in a single month has made the public furious. That's the real source of public discontent over consumer prices. If Chen Ching-chun can stop the rise in gasoline prices with a single phone call, then he might be able to deliver the vote.

Chen Ching-chun might claim that oil prices and international oil prices are coordinated by means of an established formula, therefore intervention is impossible. If that's the case, isn't this the answer they've been seeking? The government shouldn't artificially manage oil price fluctuations, shouldn't arbitrarily forbid salt price increases, and shouldn't randomly subsidize wage increases. The reason is the same in every case. Wages and prices should be determined by the marketplace, not by behind the scenes manipulations by government officials!

Make no mistake about it. A political authority may be able to manipulate the market, but it will never be able to outsmart the market. Do we need further evidence, other than the dismal results of the Chen regime's seven years of meddling in the economy?

Original Chinese below:

鹽價禁漲 工資補貼──台灣還是自由經濟嗎?
2007.06.11 02:22 am












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