Tuesday, November 25, 2008

Increased Public Works: A Magic Pill to Save the Economy

Increased Public Works: A Magic Pill to Save the Economy
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
November 25, 2008

The economic situation is critical. The government continues writing new prescriptions for the nation's economic ills. Each prescription has its own effect. The government is issuing 83.5 billion NT in consumer vouchers. This can be likened to a shot of adrenalin. Meanwhile, a four year 420 billion NT increase in public works can be likened to a magic pill. Therefore the distinction between the two policy prescriptions is merely procedural and technical, and one of chronological priority. There is no room for hesitation regarding increased public works. The ruling and opposition parties must realize this.

Yesterday the Executive Yuan held an interim session. It passed special regulations relating to consumer vouchers and increased public works. It considered the urgency of issuing consumer vouchers. Two measures to stimulate domestic demand were not included in the package. This avoided linkage that might have delayed its passage. The Executive Yuan's change of heart may have been a compromise due to political considerations. But it was necessary. After all, consumer vouchers are a relatively simple policy prescription. They are a one-time proposition. They are immediate, comprehensive, socially acceptable, and have few lasting after-effects. By contrast, increased public works require long term commitment and increased responsibility. They must be implemented by a variety of government agencies. The allocation of public resources must be subject to close supervision. They must be discussed and evaluated. They should not and may not be rushed.

Given the current economic situation, increasing public works must not be delayed. This can be viewed on three levels. First, the magnitude of the global financial crisis has exceeded expectations. Traditional countermeasures against the business cycle have not been able to cope. The accepted solution is a cocktail of currency and fiscal policies. But each policy has its limitations. Any such cocktail must be specially mixed to suit each nation's circumstances. Only then can the impact of each policy be tracked, followed up, and multiplied. The government must jumpstart the economy.

Take consumer vouchers. The spending of 83.5 billion NT can awaken demand, increase production, reduce unemployment, and slow economic decline. But once it's spent, it's gone. The government cannot continually issue consumer vouchers. Therefore, they must be followed by increased public works and other measures. Otherwise, the time bought with consumer vouchers will be wasted. Therefore the two must go hand in hand. This is why the Executive Yuan wanted to link the two in the first place.

Secondly, public works don't merely jumpstart the economy. Public works will be a major contributor to economic growth next year. According to the Directorate General of Budget Office's latest forecast, the private sector has flamed out. A quarter of next year's 2.12% growth will come from increased government investment, as much as 0.55%. This means that if the government delays investment, or reduces investment, the economic growth rate next year will have difficulty remaining above 2%. Economic recovery will also be delayed. Therefore as far the government is concerned, the DGBAS forecast is a mission that must be accomplished. To accomplish this goal, the government must increase investment to over 20%. Public works must proceed both rapidly and in full force.

Thirdly, we must return to the root of public investment. The real value of bridge construction and road construction is to promote production and improve living standards. Therefore the benefits of economic growth brought about by public works is merely incidental. Public works are one of the government's tools to revitalize the economy. Attention is often focused on the expansion of demand, neglecting its original purpose. Rebuilding Taiwan's public infrastructure stores up energy for a future recovery. Improving the living environment promotes increased consumption. An increase in consumption can become a source of economic growth. Therefore investment in public works have regenerative power, and serves many purposes.

The economic situation has deteriorated rapidly, highlighting the intensity of the global recession. This must not be overlooked. Just as businesses must weather the storm, we too must tough it out. Only then can we make a comeback. We must not second guess ourselves. The opposition party, as it provides checks on the ruling administration, must not resort to politically-motivated obstructionism. The consumer vouchers are an adrenalin shot. Follow through by approving increased public works, as soon as possible. Only such a policy will be effective.

We must remind the Executive Yuan of lessons learned from hard experience. Government investment has made a positive contribution to the economy in only two years out of the past ten. An economic recession began in the third quarter of this year. Increasing local infrastructure to expand domestic demand was not as effective as anticipated. Promoting public investment is not merely for the sake of the budget. The key is execution. The Executive Yuan must engage in self-examination. It must explain its policies. Only then can it persuade the public.

2008.11.25 02:18 am

經 濟情勢危急,救經濟藥方不斷,但各有其效;一次發放八百卅五億元的全民消費券,如果是強心針;四年動支四千二百億元的擴大公共建設,就是讓經濟再起的續命 丸。所以,兩大政策的特別條例切割,僅是流程處理的技術問題,絕非輕重緩急的選擇,擴大公共投資沒有任何遲疑的空間,朝野都應有此認知。

行 政院昨天舉行臨時院會,通過消費券特別條例及擴大公共建設特別條例;考量消費券發放的急迫時效性,兩項擴大內需措施沒有包裹立法,以免彼此牽制,影響立法 時程。行政院態度上的轉變,儘管是出於政治考量的適度妥協,但卻是必要的;畢竟,消費券的政策內涵較為簡單,其一次性、立即性、全民執行的特色,令其社會 接受度高,後遺症也較少。相對的,擴大公共建設的推動,具有持續性、擴散性,並因由政府部門執行,須受公共資源分配的監督,以致需有一定的評估及討論過 程,不應也不能急就章。

可是,以現今的經濟情勢,擴大公共建設也絕對是慢不得的,這可以分成三個層次來說明。一是全球實體經濟受金融海嘯 衝擊的速度、深度都超乎預期,傳統的反景氣循環對策已難以應對,組合多項貨幣、財政政策工具的「雞尾酒療法」則成為主流。但是,每項工具均有其限制,必須 依各國狀況安排推動的順序,讓各個政策的效益得以展現、接續,進而相乘,使政府提振景氣的點點星火得以燎原。

就以消費券為例,八百卅五億 元花下去,可以喚醒一點需求、增加一點生產、減少一點失業、延緩景氣惡化之勢,但花完就沒有了,政府也不可能一直發;所以,必須要有擴大公共投資等其他措 施接上去,否則消費券爭取到的一點救命時間就白費了。因此,兩者應是相輔相成,這也是行政院一開始想要綁在一起做的主因。

第二個層次是, 公共投資已不只是點火景氣的角色,還將成為明年經濟成長的主角之一。根據行政院主計處的最新經濟預測,由於民間部門熄火,明年百分之二點一二的經濟成長率 中,有四分之一是來自政府投資的大幅成長,達零點五五個百分點;這意謂,如果政府投資延遲、縮水,明年經濟成長率就會連「保二」都有困難,景氣復甦也將延 後。因此,主計處這項預測對政府而言,已是「使命必達」的目標;而要達成此一目標,政府投資就須增加二成以上,此時推動擴大公共建設方案不只慢不得,還要 卯足全力。

第三個層次是回到公共投資的初衷。基本上,造橋、鋪路等公共投資的真正價值是在促進生產及改善生活,因建設投入所帶來的經濟成 長,則僅是附帶效益;不過,由於公共投資經常成為政府振興景氣的政策工具,以致一般只關注它的擴大需求效果,反而忽略了其原始意義。故而此時建設台灣的公 共環境,也是在蓄積今後迎接景氣回升的實力;其對生活環境的改善,更有助於促進消費,而消費的增加又成為經濟成長的來源。因此,公共投資是具有再生循環性 的,此時做建設更是一舉多得。

近期各項經濟指標急速惡化,凸顯出這一波全球經濟大衰退來勢洶洶,而且是不可輕忽,就像企業度年關一般,挺 過這一關,才有再起之機。因此,現在沒有瞻前顧後的條件,也期望在野黨的監督勿流於政治意氣之爭;既然給了消費券這劑強心針,就不要半途而廢,也要儘速核 定擴大公共建設這顆續命丸,如此政策效益才能一貫。


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