Friday, June 27, 2008

The Government Must Beware the Impact of Fuel and Electricity Price Increases in July

The Government Must Beware the Impact of Fuel and Electricity Price Increases in July
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
June 27, 2008

The pain from the May 28 fuel price increase has yet to recede. But alarms from twin increases in fuel and electricity prices on July 1 are already sounding. When stagflation is rearing its ugly head, the DPP is proposing yet another agitprop "Tax Rebate Wealth Sharing" initiative. Will the Liu cabinet make a wiser decision this time? We are all waiting with bated breath.

The opposition DPP is screaming about tax rebates and wealth sharing. The ruling KMT on the other hand, is busy calculating price increases. The character of the two political parties is as different as night and day. The former thinks only of currying favor with voters, without regard for the long-term consequences. The latter thinks only of balancing the books, and seems oblivious to people's feelings. If the two parties were to complement each other's weaknesses, the DPP would act a a little more responsibily and rationally, and indulge in a little less vainglory and populism. The KMT would display a little more sensitivity, and a little less stolidity. Only then would the public on Taiwan cease being victimized by both camps.

In normal times, fuel and electricity prices would be adjusted regularly according to a reasonable formula that reflected production costs. They would of course conform to the iron laws of the marketplace. They would also allow businesses to remain in step with the global economy. But the situation facing Taiwan today can hardly be termed normal. Internally, energy and important raw material prices were artificially held down during the Chen Shui-bian era. Allowing prices to resume their market levels too rapidly would inflict too much pain on the public. Externally, the global economy is mired in stagflation. Any little misstep by the government could spell danger, with incalculable consequences.

In fact, during the last fuel price increase, We reminded the new administration that must not lose touch with public sentiment merely because it won a landslide victory in the presidential election. Unfortunately, the cabinet was firmly committed to the "immediate and full restoration of market prices." The result is its current dilemma. Market prices have not been "immediately and fully restored." The only thing immediately and fully restored has been public discontent. The rapidly eroding reputation of the cabinet is not the only cause for concern. The stock market's continued decline reflects inadequate momentum in Taiwan economy. Add public pessimism over inflation, and the atmosphere hardly conducive to government efforts to rally public morale. The twin increases in fuel and electricity prices scheduled for July 1 are bound to provoke intense public dissatisfaction. The current lull is merely the calm before the storm. It is not something for which the Liu cabinet can control. The only question is whether the Liu cabinet knows what it's in for.

An economy poised atop a slippery slope has been staggered by a one-two combination from the global energy crisis and stagflation. No government is going to find it easy to deal with such a matter. The Liu cabinet includes numerous experts in economics and finance. But that doesn't mean it's prepared for this sort of massive internal and external change. This group of administators is too elitist in its nature. Most worrisome is its lack of sensitivity to public opinion and its lack of flexibility in the face of changing conditions.

The Government must be guarded in its response to this wave of price hikes, for three reasons.

1. Consumer Prices. Changes in fuel, electricity, water, and fertilizer prices are the ones most likely to trigger price fluctuations further down the line. Once the price mechanism kicks in, it sweeps across everything in its path. The impact is irreversible. When the Ma administration took office it announced in advance its timetable for various price increases. This not only fueled expectations of price increases, it was tantamount to a self-fulfilling prophecy. Once a spark touches off a prairie fire, it will inevitably be blamed as the cause.

2. Public Psychology. After one month of wear and tear, the new administration has lost its original lustre. Most people are still willing to give it a chance. But their patience is wearing thin. This must not be ignored. May consumer prices rose 3.71 percent. Core Consumer Prices reached a new nine-year high. By contrast salaries have not increased for years. Taiwan is already mired in the swamp of stagflation. When public doubts about "Things improving immediately" increase, yet the government remains unaware of the warning signs, its reactions are much too tardy.

3. Political Promises. The biggest promise Ma Ying-jeou made to the people during the election was its promise to revive the economy. Taiwan's economy is currently in decline, with no signs of improvement in sight. The government has focused its attention entirely on price increases. This inverts priorities and leaves it open to charges of being a "Price Hike Cabinet." Besides, constantly stressing SOE revenues while neglecting the public's economic hardship, amounts to a display of callous indifference. If public indignation comes to a boil, and the government throws it another bone, that will restore neither public confidence nor consumer prices. The DPP is demanding "tax rebates and wealth sharing." This of course is transparent political opportunism on the part of sleazy politicians. But the Ma administration's efforts to balance the books for SOEs on the backs of the general public is equally foolish.

Assessing the current situation, the Ma administration must be especially leery of the impact of its July 1 fuel and electricity price increases. Its response must be measured. In particular, the economy must receive a full injection of new blood, allowing the market and public confidence to rally. It must not allow society to remain mired in the pessimistic atmosphere of stagflation.

2008.06.27 03:01 am


在 野黨嚷著退稅分錢,執政黨卻埋頭盤算著漲價,兩個政黨性格簡直異如天壤。前者一心只想討好選民,不顧國家社會的長期後果;後者卻只顧追求行政枝節的平衡, 似乎未能回應人民的感受。兩黨若能彼此互補一下,民進黨多一點責任理性、少一點浮華民粹,國民黨多一點普羅感應、少一點學究冬烘;那樣,台灣人民才不致兩 邊受罪。

若在正常時日,油電價格根據合理公式定期反映成本,當然最符合市場經濟的穩健法則,也能讓企業經營與國際經濟節奏合拍。但台灣今 天面對的情勢,能否稱為「正常」?從內部看,能源及重要原物料價格在扁政府時代經過一番扭曲,短期內要全部漲足,民眾的痛楚將極深重;向外看,全球經濟正 陷入一波「停滯膨脹」風暴,政府決策稍一偏失,即可能將台灣推進危險地帶,後果難以逆料。

事實上,在上次調漲油價之前,我們即曾提醒新政 府不可憑恃選舉之大勝而失卻對社會現實感的掌握;可惜,當時內閣卡在「一次漲足」的思維框框中,進退失據。結果是其實並未「漲足」,民怨卻已沖天。一個月 來,讓人擔心的不只是內閣聲望的滑落,股市連續下挫反映了台灣經濟的動能不足,再加上民眾對物價飛漲所表現的悲觀,這種種氣氛,都不利於政府再採取衝擊民 生士氣的決策。亦即,七一油電雙漲注定要承受強烈的民意反感,眼前的寧靜過後,將是什麼樣的風暴襲來,恐怕不在劉內閣的掌握之中,唯不知劉內閣對此有無正 確的感應。


我 們之所以呼籲政府務必謹慎因應這波漲價,主要理由有三:第一,就物價論物價,最容易引發物價連鎖波動的,莫過於油、電、水、肥等公用事業價格;其漲價機關 一旦啟動,就是橫掃百業,無法逆轉。馬政府未上任即已預告各項費率漲價時程,不僅助長預期心理,也形同以物價「推手」自居;一旦野火燎原,必定成為眾人怪 罪的「禍首」。

第二,從民眾的心理看,政府的新銳之氣經過一個月磨損,已失去原先的光華。多數人雖仍抱持著善意期待,但人們受苦的耐心禁 得起多少挫折,實不容高估。五月份消費物價上漲百分之三點七一,核心物價漲幅更創下九年新高,對比薪資多年未漲,台灣實已踩在停滯膨脹的泥沼裡。當社會上 對於「馬上就會好」的質疑聲浪越來越大,政府若還察覺不出其中警訊,未免太過遲鈍。

第三,從政治承諾和決策選擇看,選前馬英九給人民最大 的承諾,是要重振經濟。現在,台灣經濟頹勢未見起色,政府卻把全副重心放在調漲價格,不僅本末倒置,也只會招來「漲價內閣」之譏。而且,一味強調公營事業 營收,卻輕忽民生疾苦,這展示了什麼施政仁心?何況,萬一決策招致民怨沸騰,政府再另拋利多去平息眾怒,恐怕也搶救不回民心和物價。民進黨要求「退稅分 錢」固然是政治投機客的近利思維,但馬政府以全民痛苦為代價替公營事業的財務爭平衡的做法,不也愚不可及。


No comments: