Perceptible Economic Improvements Require Local Employment and Social Welfare
China Times editorial (Taipei, Taiwan, ROC)
November 13, 2012
Summary: The public on Taiwan is wracked with anxiety. Individuals and businesses have lost hope for the future. The Ma administration has become the target of public criticism. But the public does not expect much from the opposition either. The entire nation has lost its sense of direction and optimism. It has been sapped of its vitality. This newspaper plans to publish a series of editorials suggesting the direction the economy and cross-Strait interaction should take. We hope administration officials will consider them and act upon them. We hope they will enable the public on Taiwan to overcome difficulties and find a way out of their current plight.
Full Text Below:
Preface: The public on Taiwan is wracked with anxiety. Individuals and businesses have lost hope for the future. The Ma administration has become the target of public criticism. But the public does not expect much from the opposition either. The entire nation has lost its sense of direction and optimism. It has been sapped of its vitality. This newspaper plans to publish a series of editorials suggesting the direction the economy and cross-Strait interaction should take. We hope administration officials will consider them and act upon them. We hope they will enable the public on Taiwan to overcome difficulties and find a way out of their current plight.
Between 1970 and 1980, the ROC government was forced to with withdraw from the United Nations. It was forced to break off relations with the United States. These were major setbacks. It was also hit by two energy crises. Its current plight does not begin to compare. Yet it was able to negotiate these crises. It survived these difficult times. It could do so because people were willing to work together and possessed an indomitable spirit. Contrast then with now. Conditions on Taiwan now are far better than they were back then. Public enthusiasm and industry vitality have not diminished. The problem is a lack of general direction and forward momentum.
Taiwan's survival and growth are rooted in its economy and democracy. Economic development must be sustained, and democracy must be consolidated. These are the two cornerstones of ROC national growth. The government must take into account both internal and external conditions. It must establish guidelines and a direction, policy objectives and priorities. It must build consensus through the democratic process. It must make clear where individuals and businesses on Taiwan are headed. It must offer a vision for the future, and a concrete blueprint for its realization.
The Ma administration has drawn up numerous policy plans, including the Golden Decade Plan and the Economic Momentum Promotion Plan. These may be well-intentioned. But they were drawn up behind closed doors. out of touch with the pulse of society. The result of its armchair strategizing has been policies whose impact remain imperceptible. They were full of sound and fury, but signified nothing. What Taiwan needs most is a change in direction, towards a more feasible way of doing things. It must start by addressing economic issues that bear on people's lives. People are suffering. Their real wages have regressed to what they were 14 years ago. Consumer prices are rising. Housing prices are soaring. The economy is declining. Their jobs are no longer secure. Young people in their twenties and thirties are having trouble finding jobs. Salaries are low. They are afraid to get married. Those already married are afraid to have children. They are afraid their pensions may dry up. They have no hope for the future. These economic circumstances can hardly be blamed exclusively on the "macroclimate."
Sustainable economic development must be consistent with public welfare and local Taiwan conditions. The economy has grown nearly 4% per annum over the past decade or so. The government must ask itself why real wages have not increased accordingly. Two years ago the economy improved. The growth rate was a record 10,88%. So why has it remained imperceptible to the public? The answer is that the economy is overly dependent on exports in the ICT and other industries. It is overly dependent upon Mainland factories, upon low-cost, low margin, OEM exports. As a result fluctuations in the economy lead to disconnects in employment, wages, and economic growth. Income disparities arise. Corporate social responsibility becomes decoupled from local Taiwan development.
The government must change its thinking about industrial development and economic growth. It must promote a new model that integrates job growth and public welfare. It must establish testable long-term and short-term goals and detailed plans for implemenation. It must supplement this with educational reform and human resources policies. It must rekindle public hope and enthusiasm. It must unite the power of change and progress. It must move toward a new economic vision. Its policies cannot be exhaustive. The ruling administration must have a clear sense of priorities. It must not muddy the waters. It must not announce today that it is doing this, then tomorrow that it is doing that. It must not change its direction from day to day. If it does, it will never reach its destination. It must establish a new direction for the economy. This is its most important task. Merely providing cheap land, tax incentives, and cheap foreign labor, cannot bring about change and hope.
Distributive justice is also essential for sustainable economic development. The gaps between rich and poor, urban and rural, North and South continue to expand. The tax system remains unfair. Housing prices are too high in the major cities. Social welfare resource allocations are inequitable. Central and local fiscal revenue and expenditure allocations are disproportionate. Closely related to these are concerns over hidden debt in national labor insurance, and pensions for military veterans, civil service employees, and public school teachers. These highlight the problem of resource allocation and generational justice. They endanger the country's fiscal health and long term economic growth. Without drastic reform, fiscal and economic crises will quickly emerge.
But the promotion of economic growth runs counter to scrimping and saving on public welfare. Tax reform and the redistribution of resources will inevitably lead to social and class antagonisms. Therefore the government must establish a direction for reform. It must establish priorities. This will enable economic revival and distributive justice to go hand in hand. It should consider convening a National Conference to deal with highly sensitive pension fund reforms and other fiscal and distributive justice issues.
Democracy is another cornerstone of Taiwan's survival and growth. Is the most effective weapon against Beijing's reunification tactics. Mainland China has risen. Taiwan must promote cross-Strait peace and development and establish cross-Strait free trade. Cross-Strait economic integration has accelerated. But the government must assure the public that it is committed to maintaining Taiwan's economic primacy. It must assure them that Taiwan will not become "Hong Kong-ized." The government must offer a clear vision of cross-Strait peace and development. This will avoid unnecessary doubts and internal opposition. Once cross-Strait policy goals are clear, a new climate will emerge. Social cohesion will be significantly enhanced.
In short, a new direction will increase forward momentum. This is the first task of the ruling administration. It is also the way out of our current policy quagmire.