Sun, Oct 01, 2006 - Page 8 News List

Taiwanese `pain' needsa little bit of perspective

By Darson Chiu 邱達生

Former Democratic Progressive Party chairman Shih Ming-teh (施明德), the leader of the ongoing campaign to oust President Chen Shu-bian (陳水扁), claimed that he heard the anger and felt the pain of the Taiwanese people.

The group of demonstrators following Shih also say that Taiwan's economy is getting worse by the day, and that the people's living conditions are unbearable.

So are Taiwanese really in as much pain as the protesters say?

In order to find out the answer, we need to start off with an objective measure. The misery index created by Harvard economist Robert Barro is widely referred to by theorists and decision makers, and quantifies the quality of life of the "average" citizen.

The index combines unemployment and inflation -- as the two largest evils that threaten our economic wellbeing -- into one measure. The higher the misery index, the worse the people's overall living conditions.

To avoid long-term fluctuations that might bias the outcome, I use the most recent annual data to calculate the index. According to last year's official data, Taiwan's unemployment rate was 4.1 percent, and the inflation rate was 2.3 percent -- so Taiwan's misery index for last year was just 6.4 percent.

Are Shih and his followers right to be outraged by a misery index of 6.4 percent? To determine this, it is necessary to put Taiwan's indices side by side with those of other countries.

Brazil, Russia, India and China -- the "BRIC" economies -- are the leading examples of the world's late-developing or newly developed countries. A report by Goldman Sachs forecasts that, absent significant external shocks, the BRICs could be larger than the G6 nations in less than 40 years.

Based on official data for last year, the misery indices for the BRIC countries were: Brazil, 16.7 percent; Russia, 20.3 percent; India, 13.1 percent; and China, 13.4 percent. The last of these figures is quite rubbery, of course, as China's unemployment figures are based on urban surveys that do not account for rural joblessness. The real rate of unemployment could be as high as 20 percent.

So Taiwanese people can rest easy -- the people living in Brazil, Russia, India and China are a lot more miserable.

Since Taiwan is no longer a developing economy, we might want to compare its economic performance to that of the leading industrialized nations.

Take the largest economy in Europe, Germany. Surprisingly, the misery index of Germany, a fully developed economy, stood at 13.7 percent last year. Taiwan is out in front here.

What about the most powerful economy in the world, the US? The misery index of the US last year was 8.3 percent, and its index last month was 8.52 percent. Compared with Taiwan's 6.4 percent misery index, Taiwanese people again should be happier than US citizens.

What about regional comparisons? South Korea and Taiwan have similar trade and economic structures: Both countries are export dependent and approaching the global production frontier in technological terms. South Korea's misery index last year was 6.5 percent. It seems Taiwan is just a little less miserable than South Korea.

So are Taiwanese really in pain?

By and large, the people should not be in pain, but some certainly believe that they are.

Who has been trying to hypnotize these people? Why do they want to hypnotize them?

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