The stumbling economy, said People First Party chief James Soong (
Many people genuinely think that if the DPP had not taken office last May, the economy would be its usual sprightly self. This shows not so much how the government has mishandled the economy, thus bringing it into recession, but rather how it has mishandled the presentation to the public of how the recession came about. And it has managed to do this despite the simplicity of the story.
That story is as follows: the previous KMT government believed, against all the basic tenets of economics, that US demand for high-tech products would grow forever. It was wrong. Now, as that demand falls precipitously, we have to pay the price for the KMT's economic naivety.
That's the basic message. Of course people are going to respond that it's no good blaming the KMT, what are you going to do to "put things right" -- though it might be worth pointing out that Taiwan does not have a God-given right to 6 percent annual growth.
And the answer to this is that correcting the short-sightedness of the KMT will take time. As this paper has pointed out before, Taiwan needs to diversify its markets away from the US, its manufacturing base away from electronics or even, and this is the big one, its economy away from manufacturing. This is common-sense stuff and we can expect to hear it all again at the Economic Development Advisory Con-ference general meeting which starts on Friday. And in this vein it might be added that the call to open economic links with China is an attempt to deal with all these issues, both to find another enormous export market and to shift Taiwan away from manufacturing toward providing services for a Chinese manufacturing hinterland.
For these changes to Taiwan's economic model to come about will take time. There simply is no quick fix that is within Taiwan's power to accomplish. In the short term we just have to hope that the Americans will start buying computers again. In the long term we have to correct the economic shortsightedness and immaturity that put us in this position.
At its heart, the story of the downturn is simple: the KMT got it wrong, now we are paying the price.
So why can't the DPP get this message across? Not only that but the message that it does get across is often stupidly self-defeating -- think of Council of Labor Affairs Chairwoman Chen Chu (
Partly it is simply lack of confidence. The DPP was never really interested in economics and never developed an economic policy worthy of the name. That the central problem of its first administration should be the economy is bad luck.
But the government is also affected, like the rest of the country, with profound ignorance about what to do in a recession. The reason for this is simple: there hasn't been one in living memory. Nobody in government or senior management in Taiwan today has lived through a recession -- unlike any of their counterparts in the large industrial economies -- and they don't know what to do. Hence the panic, hence the missed message.
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