Economic policy experts have warned that the government's reconstruction policies have distorted the allocation of resour-ces and may result in long-term economic moral hazards.
While the government does have a role to play in the on-going efforts to help the nation get back on its feet, it is not fulfilling that role, according to Wu Tsong-min (吳聰敏), an economist at National Taiwan University.
Instead, the government's primary responsibility should be providing goods that private sectors can't provide, Wu said.
"We need the government to take charge in reconstruction work, such as restoring the destroyed roads for agriculture in Nantou or repairing the Shihgang dam (石崗?蠐?," Wu said.
"But the government so far has announced policies which mostly result in involuntary wealth redistribution," he said.
Asked to describe "involuntary wealth distribution," Wu said it "means society's resources are being misallocated."
"When the government is facing financial difficulties, but continues to spend money in the wrong place, then there is a problem," he said.
As an example, he pointed to a pledge by the Central Bank to provide NT$100 billion in low-interest loans to quake victims -- a program Wu said will do little to help.
Wu added that, on its face, there was nothing wrong with "voluntary wealth redistribution," as it is "a way to achieve social equality."
"The public donated tens of billions dollars to quake victims, which is voluntary redistribution and, therefore, achieves efficiency," he said.
Economist Mao Ching-sheng (?羆y生) also took issue with the Central Bank's lending program and said banks shouldn't shoulder housing loans and debts for quake victims.
"The government is using the public budget to help with a selective group's private interests," Mao said.
There is a moral hazard, too.
"People will have no incentive to move away from dangerous areas, as they would expect the government to pay for their losses again if there should be a next time," Mao said.
Economist Chang Ching-hsi (張2M溪) tackled the reconstruction policies from another angle. He said that extraordinary events require extraordinary measures, but the government is changing ordinary laws to cope with a one-time disaster.
And "once the law is changed, and the door is open, it is very difficult to close it," Chang said.
He was referring to news reports that the Ministry of Finance is considering raising a cap that limits how much bond debt the government can issue.
According to the Council of Economic Planning and Development, government bonds issued this fiscal year under the plan would increase to NT$461 billion, which accounts for 17.7 percent of the nation's budget and exceeds the 15 percent cap.
Former Taipei County finance director Lin Chyuan (林?thorn>) said the problem was not worsening government finances but the lack of a comprehensive reconstruction plan.
"The government spends money only to solve problems in the short-term," Lin said. "The quake-victims will have to be able to support themselves financially in the future, which means they need to find a job, and they need to know where their destroyed community is heading."
However, Lin said: "A month has past and there is no comprehensive reconstruction plan, not even a guideline."
According to Lin, different government departments offer reconstruction promises which may overlap with each other and waste useful resources.
RSS