Economic Roots of Angry Youth

Economic Roots of Angry Youth
China Times editorial (Taipei, Taiwan, Republic of China)
A Translation
May 2, 2014

Summary: We hope that the government will realize that many factors are behind the phenomenon of angry youth. But the economy is definitely one of the most important. Economic problems must be resolved immediately. If one fails to appreciate the underlying cause of the public protests, but treats them as isolated incidents, then one fire will follow another. Eventually the fires will be impossible to extinguish. They will burn even more fiercely, and become a prairie fire. By then Taiwan may be mired in unrest akin to the Arab Spring, and people will pay a terrible price.

Full text below:

The student movement is behind public protests everywhere. Every other day protests have obstructed traffic and incited incidents. Their impact on people's lives has become increasingly noticeable. Their demands have become increasingly numerous. New issues may emerge at any moment, one after another. There are two main reasons for this phenomenon. The first is ideology. The other is discontent with the existing social and economic order. These have led to the so-called "angry youth" phenomenon. This phenomenon is not unique to Taiwan. Large-scale protests have taken place in many countries with high youth unemployment, including Egypt, Greece, and Spain. Such protests are unlikely achieve their goals. But the ensuing turmoil has attracted attention and forced their societies to confront the issues.

Two economic factors are responsible for cynical youth. The first is too low salaries. The second is too high prices. The main solution to too low salaries is increased employment. This must be achieved through increased investment in human resources. Past employment growth on Taiwan relied heavily on investment in manufacturing jobs. Manufacturing remains important for the future of Taiwan. It remains the backbone of Taiwan's economy and employment. But manufacturing is increasingly capital intensive. Many international competitors are emerging. Expecting the creation of large numbers of
manufacturing jobs is no longer realistic. For example, tens of billions of dollars invested in a semiconductor plant only creates a few thousand jobs, mostly for high-level engineers. It does little for youth employment.

The service sector deserves attention. It has far more room for job creation. Taiwan's service sector accounts for about 70% of its GDP. But service sector employment amounts to only 60% of total employment. Attempts should be made to bridge the remaining 10% gap. We must increase the demand for manpower services. The most important way is to increase value added service industries. If this is our goal, the Taiwan market alone is not enough. We must go international. The STA could provide a solid foundation for the revitalization of Taiwan's service industries. Many service industries could open up markets on the relatively backward Mainland. They would have an excellent opportunity to grow and prosper, providing many high-paying jobs. But the STA appears to have run aground. Its future remains uncertain.

This being the case, we must attempt to grow our service industries within the existing WTO framework. We must allow service industries to expand outward. We should see how the Ministry of Economic Affairs trained foreign export talent, improved young peoples' English ability, and prepare for internationalization. Only internationalization offers a way out for Taiwan. Only it will enable workers to enjoy world-class salaries.

The second direction is one we have pushed for many times in the past. This newspaper has discussed it in our editorial columns. But so far no one has implemented our recommendations. Most government agencies charged with overseeing the service industries think in terms of "managing" them. This mentality must be changed. They must think in terms of "aggressively investing" in them. They must promote investment and employment. Government agencies charged with overseeing the service industries should set sector based GDP growth targets and employment growth targets. If the agencies mobilize simultaneously, coordinate their efforts, attract businesses, and promote investments, then over time, they will produce results. If they can achieve the above two goals, unemployment rate will decline. Salaries will increase.

Real estate prices are the highest in Taipei City and New Taipei. Ironically, that is also where the most employment opportunities can be found. Current Taipei real estate prices are higher than New York City's. This makes no sense whatsoever. The real estate price to income ratio is 15, among the highest in the world. Rental prices on the other hand, are among the lowest in the world. Clearly real estate prices are much too high. Premier Chiang said he would like the real estate price to income ratio to fall 30%, to a reasonable level. That is not difficult to achieve. All it requires is determination.

Letting the bubble for luxury real estate burst is the first step toward achieving justice in home ownership. It is the most important step. Allow luxury real estate prices to fall, and prices for all real estate will follow. Influencing the price of luxury real estate is actually very simple. Just do three things. First. Tighten home loans for luxury real estate not occupied by the owner himself. In other words, home loans should be restricted for residential real estate exceeding a certain size and certain price per unit of area. They should be reduced from the current 70% to under 40%.

Secondly, change the property tax system. Increase the cost of ownership for those not living in their own housing units, and for ultra luxurious housing units. The actual tax burden for luxury real estate should ought be at least as high as it is for New York City. It should be increased from 1% to 2%. Also, profits derived from the sale of luxury real estate should be calculated according to the assessed cost, and included in consolidated income tax returns.

We hope that the government will realize that many factors are behind the phenomenon of angry youth. But the economy is definitely one of the most important. Economic problems must be resolved immediately. If one fails to appreciate the underlying cause of the public protests, but treats them as isolated incidents, then one fire will follow another. Eventually the fires will be impossible to extinguish. They will burn even more fiercely, and become a prairie fire. By then Taiwan may be mired in unrest akin to the Arab Spring, and people will pay a terrible price.

造成憤青問題的經濟根源需要解決
2014年05月02日中國時報

學運和抗爭到處串連，幾乎每隔幾天就有人阻斷交通、形成事件，對民眾生活的影響日趨全面，其訴求則不一而足，隨時都可能有新議題的出現，一個接著一個滾動而來。造成這種現象有兩大原因，一是意識型態，另一就是對既有社會和經濟秩序的不滿，乃至形成所謂「憤青」現象。這個現象非台灣獨有，在年輕人失業率高的國家，如埃及、希臘、西班牙，都曾經發生過大規模的抗爭。這些抗爭的結果最後很可能都沒有達到目的，但畢竟在過程中引發了很大的動亂，值得重視和面對。

造成憤青的經濟性因素主要有二，一是薪水太低，二是房價太高。在薪水太低方面，主要的解決方式是增加就業需求，而這個必須透過增加投資才能達到。過去台灣的就業成長，主要是依靠製造業的投資所創造的大量就業機會；未來製造業對台灣依然重要，是支撐台灣經濟和就業的主幹，但在製造業日趨資本密集化，諸多國際競爭者不斷出現的情況之下，期望製造業能像以前一樣創造大量就業機會變成不切實際。例如半導體工廠投資動輒數千億，但只能創造幾千個就業機會，而且其中很大一部分是高階工程師，對於一般青年的就業幫助有限。

服務業是一個可以著力的部門，還有創造就業的空間。台灣服務業占GDP的百分比大約7成，但服務業就業只占總就業人口的6成，其中一成的差距就是未來可以努力的方向。要增加服務業人力需求，最重要的途徑就是提高服務業的附加價值，而想要達成這個目標，光靠台灣市場不夠，必須走向國際化。《服貿協議》本來是一個可以振興台灣服務業的良好基礎，讓許多有發展潛力的業者進入服務業相對落後的中國大陸開拓市場，將有很好的機會可以快速成長茁壯，進而提供眾多的高薪就業機會，但現在看來已經觸礁，且前途渺渺，未來充滿不確定。

即便如此，還是應當在既有的WTO架構下盡量發展服務業，讓服務業能夠走出去。應當參考過去經濟部培養外貿人才的訓練模式，加強培養年輕人的英文能力，做好國際化的準備。唯有國際化，唯有走出台灣，才能夠享受國際水準的薪水。

第二個努力的方向是已呼籲過多次，包括本報社論曾論及，但目前為止似乎尚未實施的建議，就是我國大部分的服務業主管機構，還是以「管理」的心態來處理所轄服務業。這種心態必須轉變為「積極招商」的心態，促進投資和就業。每個個主管服務業的部會，均應對其所轄之服務業訂定GDP的成長目標，以及該行業的就業成長目標。如果各部會同時動員，分工協力，朝招商和促進投資的方向走，假以時日，一定可以產生效果。如果以上兩點能夠做到，我們的失業率可望下降，薪資水準即可望上升。

在房價方面，較嚴重的是雙北市，但偏偏也就是就業機會最多的地方。目前台北市的房價比紐約還貴，完全不合理。統計上而言，房價占所得比已經達到15倍，位居世界前茅，而租金房價比卻很低，在世界上吊車尾，可見房價確實偏高。要讓雙北房價像江院長所說，下降個3成，達到合理水準，其實不難，只是要看有沒有決心。

讓豪宅價格的泡沫破滅，是實現住宅正義的第一步，也是最重要的一步。只要能讓豪宅價格下降，所有房屋就會跟著降價。而要影響豪宅的價格，其實非常簡單，只要做到3件事。第一件，要收縮非自用豪宅購屋的貸款，也就是面積超過一定坪數且每坪單價超過一定金額的住宅，其貸款都應該要強力收縮，由現在普遍的7成收縮到4成以下。

第二，要改變房地產的稅制，增加非自用或超額豪宅的持有成本。持有豪宅的實質稅負，至少應當要像紐約一樣，提高到百分之一到二。另外，豪宅轉手所獲的利益，應當照實價課稅，而且納入綜合所得稅申報。

我們希望政府能夠認清事實，憤青現象背後的因素很多，但經濟絕對是其中一個重要的因素，一定要立即解決。如果不重視遠因，而只是單就已經發生的個案，一個接著一個滅火，最後可能會發現不但滅不了火，反而越燒越旺，連成燎原大火，到時候台灣陷入如阿拉伯之春一般的動亂，人民將要付出慘痛的代價。