Recently there have been many clashes over the preferential interest rates given to public sector workers, and the controversy centers around the concept of fairness.
People working in the private sector question why the government subsidizes their public sector counterparts to such a high degree, whereas public employees, who enjoy interest rates of 18 percent on their savings complain about what they see as rather flimsy pensions.
Civil servants are also angry that the nation's leaders, who already receive high salaries, are so well looked after even after their terms in office end.
Fairness is a relative concept, and people from different income groups will have their own ideas of the definition.
Whether it's the 18 percent interest rate given to former Chinese Nationalist Party (KMT) chairman Lien Chan (連戰) to that of a retired elementary school teacher, all of it comes from the national coffers: In other words, these civil servants are being supported by every single taxpayer in the country. And of these taxpayers, it's those in their 20s and 30s who have it the worst.
This group of people, who have been part of the workforce for less than 10 years, have seen Taiwan's economy plateau, and the government begin to lay off civil servants. This meant that anyone looking for a career as an elementary school teacher has had to fight for these jobs wherever they were available. And even if they manage to find themselves a place in the public sector, they will not be getting the 18 percent preferential interest rate 25 or 30 years down the line, unless the pace of reform turns out to be very slow.
These people are making a considerable contribution to our society. In the next two or three decades they will be the ones driving Taiwan's economic development, while at the same time paying for the 18 percent subsidized interest rates of retired civil servants.
Even worse, they will also be required to foot another 18 percent bill to prop up the explosion of consumerism in Taiwan. This second 18 percent refers to credit card and cash card interest rates.
Thanks to the promotions like the "George and Mary" card, cash cards have become popular in Taiwan. At present the annual interest rate for credit and cash cards is between 17 percent and 20 percent, and domestic credit and cash-card debt now stands at NT$800 billion (US$23 billion). Statistics also show that the average personal debt for credit and cash-card users is as much as NT$600,000.
Consumer finance has already become a major source of revenue for financial institutions in Taiwan, and is the next financial bubble waiting to burst.
Two years ago, South Korea had a similar financial crisis.
In the US, between 1997 and 2002, the total value of credit issued by US credit-card companies rose to US$3 trillion. In addition, credit card debt rose to US$730 billion from US$550 billion during the same period of time.
In the US, each household has an average of 12 credit cards. Sixty percent of the card holders have outstanding debts and each household owes around US$10,000 to credit-card issuers.
Since the 1990s, credit card debt has increased among the poor. At the end of the last century, one-third of low-income households spent more than 40 percent of their income paying off their debts while middle-income households forked out only 20 percent of their income on debt repayments.
Americans, Koreans and Taiwanese are all in the habit of living in the red, with young people in particular falling into this kind of spending pattern.
We can attribute the last financial crisis to business tycoons such as Wang Yu-yun (
This kind of game may well be all the rage, but it is a very dangerous game to play.
The bubble created by the 18 percent annual interest rates will one day burst. If that happens, it is the public that will have to bear the responsbility to pay for the government's Financial Restructuring Fund -- whose revenues will come from all the tax-payers -- to solve all the resultant problems.
Or will we decide to just let the banks go bankrupt?
Furthermore, when the banks can no longer sustain customer debts, the domestic consumer market is sure to slump.
The impact of the 18 percent annual interest rates is going to be as devastating as that of the preferential interest rates for public servants.
I believe that it is going to prove very difficult to push through financial reform. However, if we do nothing but allow the crisis to take hold, forming a new burden for our children, then it is us that will be held responsible.
Ku Er-teh is a freelance writer.
TRANSLATED BY PAUL COOPER AND DANIEL CHENG
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