Perspectives on the Current Economic Difficulties

Perspectives on the Current Economic Difficulties
China Times Editorial (Taipei, Taiwan, ROC)
A Translation
July 17, 2008

The Ma Ying-jeou administration has been in office less than two months, but it has run smack dab into the worst international recession in 20 years. The timing couldn't be worse.

The public on Taiwan may have been carried away by campaign ads promising that "everything will be better as soon as Ma takes over." This caused the TAIEX to rise disproportionately relative to international indices on March 22. But because international oil prices remained high and the DPP caretaker government deliberately froze gasoline prices, the Ma administration faced sharp pressure to increase gasoline prices the moment it came into office. Even though the Liu cabinet had two months to plan for the announced price hike, it waited too long to implement it. People began hoarding. When the Liu cabinet suddenly moved up the date of the price hike, it shook people's confidence. This was followed controversies over the Minister of Foreign Affairs and other officials' Green Cards. The Tax Reform Commission was suspected of being a rubber stamp. The Su Hua Highway Alternate Plan came under fire. The Premier was booed when he visited the countryside. The Liu cabinet began to look like a beating victim. In addition, the Legislative Yuan's failure to confirm Shen Fu-hsiung, and the dispute over Chang Chun-yen exposed the disunity within the KMT. Finally, the "Housebound President" stepped up to the firing line, and lifted controls on mainland investments. Only to run head on into the Freddie Mac and Fannie Mae debt crisis, which abruptly knocked Ma's countermeasures for a loop. By this time, the public on Taiwan's confidence in the new government was in tatters. This is something the Ma administration must face up to.

Faced with this grim international situation, the President and the Premier will have to rethink their overall strategy. The source of the international economic downturn is continued high oil prices that may reach new highs. Under pressure from increasing oil prices, both the European and US economies are in a downturn. These in turn ensure that the shadow of the subprime mortgage crisis will linger. Some suspect that crude oil prices have been subject to manipulation, and that the bubble will soon collapse. But until oil prices stabilize, the global economy will remain under a dark cloud. Landmines such as the Freddie Mac and Fannie Mae crises will continue to explode. The President and the Premier will have to remain calm. They must not attempt to offer the public unrealistic expectations that "the economy will improve immediately." Only by frankly and honestly laying out the facts of the international situation to the public can they get out from under the populist obligation to "save the stock market and win the confidence of the people." Officials need not go on television to tell people to "buy the dips" or feed them propaganda. They need not hastily introduce one half-baked panacea after another.

During such a downturn, what can the government do? It can seek truth from facts, practice its basic skills, and improve the health of the economy. The "supply side" impact of rising oil prices on the economy will make the total supply curve contract leftward. The Liu cabinet's only response currently is to expand domestic demand. It is attempting to increase aggregate demand. But those who understand the principles of economics know that although expanding domestic demand will help increase income, it will inevitably push up prices. Therefore, the Liu cabinet faces a dilemma. To avoid recession it will have to put up with price increases. To stabilize prices it will have to endure doldrums. The Liu cabinet finds itself on the horns of a dilemma. The increase in domestic demand is the reason it faces a conflict between prosperity and inflation.

If the new government expands domestic demand by repairing funeral parlours and paving roadways, such a policy will merely increase aggregate demand and raise prices. But if the government increases domestic demand at all levels of government, converts to solar panels and replaces energy-consuming equipment, constructs and maintains bicycle paths, speeds up completion of the Fourth Nuclear Power Plant safety check process, or even increases subsidies for those who use public transportation, it will increase domestic demand and aggregate demand at the same time. This will ease the community's reliance on energy. It is tantamount to reducing the impact of oil price hikes and weakening the impact of crude oil supply shortages. Therefore, as long as the government adjusts its pattern of expenditures, it need not remain fixated on its original plan. During the election campaign oil prices had yet to skyrocket. Various carbon reduction and energy-saving equipment expenditures will reduce the conflict between increased prosperity and lower prices.

When we look at other Asian countries under pressure from international crude oil prices, we find that Japan's inflation rate is the lowest. Over the past five months it has remained below 1%. This is because Japan invested a great deal of effort in carbon reduction, energy savings, and the development of alternative energy sources. Japan's efforts in energy conservation and carbon reduction have finally paid off in the era of high oil prices. Japan has to a considerable extent, defused the impact of high oil prices. Taiwan has a small scale free market economy. It will inevitably face wave upon wave of international raw material price increases. If it can calmly face recalcitrant international economic disadvantages, and concentrate on reducing carbon and saving energy, its current difficulties will become an opportunity for economic reconstruction. We cannot revive our economy immediately. But we can reduce carbon and save energy immediately, and thereby reconstitute our economy.

中時電子報
中國時報 　2008.07.17
面對當前經濟困境的幾點看法
中時社論

　馬英九政府上台不及兩個月，似乎碰上近廿年來國際經濟最差的時期，真可以說是「天不時，地不利」。

　三二二之後，台灣民眾也許被「我們準備好了」、「馬上好」的競選廣告衝昏了頭，以致股票市場相對於國際盤形成超漲。但是隨著國際油價居高不下、民進黨看守政府又執行油價凍漲政策，遂使馬政府一上台就面對大幅調漲油價的壓力。劉內閣雖然有足足兩個月的時間做規畫，但在執行時卻又發生宣告漲價之等待期過長、民眾囤積、突然宣布提前等插曲，漸漸動搖了民眾信心。接著，則是外交部長等官員的綠卡風波、賦改會被質疑是大拜拜、蘇花替代道路爭議、閣揆下鄉被嗆等事件，使劉內閣一直處於挨打狀態。此外，沈富雄在立院落馬與張俊彥的個人爭議，也使得國民黨內不團結的爭議表面化。好不容易，宅男總統跳上火線，端出大陸投資鬆綁一道大菜，卻恰好碰上美國房地美與房利美債券危機，猛然打翻了一盤美餚。至此，台灣民眾對於新政府的執政信心似有潰散之勢，馬政府必須要嚴肅面對。

　面對如此嚴峻的國際形勢，總統與閣揆都必須要重新思考其布局與策略。今天國際經濟不景氣的源頭，當然就是居高不下、甚至還有可能再創新高的油價。在石油漲價的壓力下，整體歐美的經濟都不景氣，進而也使次貸、二房風暴的陰影揮之不去。雖然有人判斷原油漲價有炒作的嫌疑，也有泡沫崩潰的預期，但是在油價回復平穩之前，國際經濟就絕對是一片愁雲慘霧，也不時會有諸如二房風暴這一類的地雷會出現。而對這種不利情勢，總統與閣揆都必須要坦然面對，不要企圖再去維持民眾「經濟馬上好」的虛幻預期。唯有把國際情勢的實情攤開，向人民坦白，才能擺脫救股市、挽信心的民粹陰影，不必由官員上電視告訴人民逢低買進或信心喊話，也不必倉卒地推出一張張政策王牌。

　在這樣的低迷時期，政府能夠做什麼呢？我們認為，這是政府實事求是、苦練基本功、改善經濟體質的好時候。油價上漲在經濟上實為「供給面」的衝擊，使得社會的總合供給曲線收縮左移。目前劉內閣唯一的對策就是擴大內需，企圖將社會總合需求往上提升。但是略知經濟學原理的人都了解，擴大內需固然有助於所得上升，但卻不可避免地進一步推升物價。於是，劉內閣面臨的困境是：要避免不景氣就得忍受物價上漲，而要平抑物價就得忍受不景氣，兩者之間糾結難解、進退維谷。但是我們認為，之所以會面對前述景氣與通膨的衝突，其關鍵在於擴大內需的內涵。

　如果新政府擴大內需方案的內容僅是些維修殯儀館、鋪建馬路等支出，則這樣的政策當然就只會推升總合需求、助漲物價。但是，如果政府的擴大內需是用在各級政府全面改裝太陽能板、汰換耗電耗能設備、修建腳踏車休閒便道、加速核四安檢完工時程、甚至提高搭乘大眾運輸之補助，則這些擴大內需項目在推升總合需求的同時，也舒緩了社會對能源的倚賴，形同減少了原油漲價的衝擊，也就減弱了原來供給面衝擊的壓力。因此，只要對支出方式做些調整，不要執著於原來馬蕭競選（當時油價尚未暴漲）時的建設內容，多在各種節能減碳的設備上做支出，則就能減弱景氣與物價之間的尖銳對決。

　環視亞洲諸國，在一片國際原油漲價的壓力下，日本的物價上漲率是最低的，過去五月個都在一％上下。究其原由，就是因為日本先前在節能減碳、開發替代能源上做了許多的投資與努力。日本過去節能減碳的努力，終於在高油價時代得到了補償，使日本相當程度地化解了高油價的衝擊。台灣是個小型開放經濟，將來仍舊不免要面對一波接一波的國際原物料漲價風潮。今天若能平心面對難以扭轉的國際經濟劣勢，潛心在島內推動節能減碳的建設，那麼當前的困境，倒不失為一個修練經濟體質的好機會。我們的經濟恐怕不容易馬上好；但是要不要馬上節能減碳、更新體質，卻仍是操之在我的。