Taiwan Does Not Have Fat Cat Syndrome. It Has Red-Eye Syndrome
China Times editorial (Taipei, Taiwan, ROC)
March 19, 2010
The CEO of the Taiwan Asset Management Corporation (TAMCO) lined his own pockets at company expense. The Legislative Yuan Finance Committee took advantage of the resulting wave of populist sentiment. It swiftly passed a resolution capping salaries for the chairmen and general managers of public or quasi-public utilities at 32,000 a month. According to information collected by the legislators, the current annual salaries are: Taiwan Stock Exchange (TSE) 7.63 million, the Gre Tai Securities Market (GTSM) 8.28 million, the Taiwan Depository & Clearing Corporation (TDCC) 5.62 million, the Taiwan Futures Exchange (Taifex) 634 million. Their average monthly salary exceeds 50 million, nearly three times that of ministry heads. Naturally everyone is jealous.
Who are the people occupying the aforementioned positions? They are none other than people such as former Financial Supervisory Commission chairman Sean Chen and former CEPD vice chairman Schive Chi. Besides the FSC chief, those in charge include the president of the Industrial Technology Research Institute under the Ministry of Economic Affairs, and the chairman of the External Trade Development Council. These positions are considered sinecures. The Ministry of Finance also controls a large number of public shares, hence cushy jobs. If these sinecures were monopolized by a tiny coterie of retired officials, outside suspicions would be understandable. When they were in office, they may not have made any extraordinary contributions. Their placement in these sinecures was the result of sponsorship by former superiors, rather than a shining record in the marketplace. Their extravagant salaries would provoke envy, and it would be hard to avoid characterizing their positions as patronage.
The vice-premier has reportedly discussed the issue of salaries for heads of public enterprises. The Executive Yuan raised a number of questions. It asked about the contributions made by those occupying these sinecures. "Were their contributions greater than those of Central Bank CEO Peng Hui-nan?" When challenged using such a high standard, these fat cats would find it hard to declare "My contribution is no less than his." But such comparisons involve a number of blind spots.
First of all, the Stock Exchange and the Gre Tai Securities Market are headed by former cabinet ministers. That is why the Executive Yuan cites Peng Hui-nan in comparison. If the CEO of trhe Taiwan Stock Exchange was not a retired official, but the manager of a private sector securities firm, or a well known foreign business manager, how would his contribution stack up against Peng Hui-nan's? We are used to seeing these job openings as the exclusive domain of retired political appointees. That is why we compare their salaries against those of cabinet ministers. We provide them a salary of 320,000 NTD, twice what a political appointee receives, and consider ourselves generous. But such a perspective assumes that the position is only about patronage. Admittedly, the issue can be demagogued to good effect. But that would be a very narrow view of the matter.
Logically speaking, public enterprises need to be well managed. They are not retirement communities. Morris Chang once served as president and chairman of the Industrial Technology Research Institute. This laid the foundation for TSMC's future. If legislators were to check out "President Chang's" salary back then, they would realize that today's "fat cats" are emaciated by comparison. They don't even rate. If one is determined to manage a public enterprise well, one needs to bring someone of Morris Chang's caliber back to Taiwan. One must offer him an appropriate salary. If we had another chance to create a wafer miracle, the government ought to pay such pioneers salaries over ten times that of cabinet ministers, not two times that of cabinet ministers. Talent has a market value. A manager has a manager's market value. Therefore, when one is seeking out talent, the salaries depend upon the invidual. They should not be set artificially. When one is seeking to put an end to patronage on the other hand, even twice the salary of a cabinet minister is too much. It all depends on one's perspective. It all depends upon how the legislature views the matter.
We favor salary caps for retired political appointees. In fact, we feel their salaries should not exceed those for cabinet ministers. But we do not favor salary caps for the heads of the Taiwan Stock Exchange, the Gre Tai Securities Market, and the Industrial Technology Research Institute. The same job can be filled by different people. Only if one is providing patronage for retired cabinet ministers, will one make comparisons with cabinet minister. If one is recruiting outside talent, one will not think in such terms. Salary caps would of course be irrelevant. Also, if these posts are filled by retired cabinet ministers changing track, the government need only stipulate that a particular individual should have his salary capped. The difference can be deposited in the government's coffers. There is no need whatsoever to limit the salary for the position as such.
The Legislative Yuan views the Taiwan Stock Exchange and the Gre Tai Securities Market as sinecures for retired cabinet ministers. This is a shallow and narrow perspective. Consider Chiu Cheng-hsiung. He retired as Minister of Finance. He then became the CEO of Grand Cathay Securities and the Aetna Commercial Bank. The former vice president of the Executive Yuan is now the CEO of the Yongfeng Holding Company. How do his contributions stack up against those of Peng Hui-nan? Such comparisons are difficult to make. Is his salary capped? Probably not. Is he a fat cat? Probably not. His income is determined by the marketplace. In short, from the perspective of elected representatives, retired officials are all fat cats. But from the perspective of civil society and the marketplace, our elected representatives are all unreasonable. This is the sad reality on Taiwan.