With the presidential campaign in the final stage, revelations by the media and legislators of secret government workings and policies using public funds -- including plans for the establishment of an arms trading company (Taiwan Goal), an urban renewal company and an international investment company -- have become a source of conflict and public confusion.
Although the government may have funded less than 50 percent of the capital of these so-called private companies, it is still the majority shareholder, making it the big boss and main financier. This makes such companies virtual reincarnations of state-owned enterprises.
State-owned companies are often associated with a party-state. Taiwan and many other developing countries fostered such enterprises based on the theory of development economics and the practical need for rapid industrialization. In the past, these enterprises spearheaded national economic development. Like a hen leading its chicks, these companies silently led Taiwan's economic progress and industrialization.
The government should shake off the old economic development model piloted by the party-state system and embrace neo-liberal economic thinking focused on reducing state intervention and leadership.
Taiwan Goal, the urban renewal company and the international investment company are state-owned enterprises masquerading as private businesses. Explanations of their funding source, company organization, management and investment channels and goals are all questionable and unconvincing. It has also raised concern that the government may have used other means to elude discovery.
During its period in the opposition, one of the Democratic Progressive Party's much-vaunted ideals was to actively promote the privatization of these enterprises to increase the effective use of national resources. After coming to power, the party worked hard to implement these changes. The privatization of China Steel, Taiwan Motor Transport Company, the big three banks (First Bank, Chang Hwa Bank and Hua Nan Bank), China Airlines and Chunghwa Telecom are all part of its successes. But facing the threat of losing power, these ideals were soon dismissed. Instead, several investment firms directed by the government have been secretly formed, in essence resuscitating state-owned enterprises.
Taiwan should learn from South Korea and consider using financial policy tools to foster large private firms. The government should not provide 49 percent of the funding, nor should it appropriate the funds of various government business organizations, or avoid legislative or public scrutiny by investing in secret. Instead, it should support purely private large corporations or multinational firms engaged in foreign investment.
State-owned enterprises or government-invested companies, no matter how powerful, have agency costs that are invisible to legislators and administrators. Taiwan Goal and the proposed urban renewal and the investment company would all have eventually become new versions of the Taiwan Motor Transport Company, Taiwan Railway Administration, CSBC Corp (Taiwan) and Taiwan Fertilizer Company. These new state-owned enterprises will eventually become publicly funded tragedies, as their capital is borne by the public and the government, but profits are enjoyed by the few. Hopefully the government will think carefully over these points before proceeding.
Liao Kun-jung is a professor at National Chung Cheng University's Department of Political Science.
Translated by Angela Hong
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
Ursula K. le Guin in The Ones Who Walked Away from Omelas proposed a thought experiment of a utopian city whose existence depended on one child held captive in a dungeon. When taken to extremes, Le Guin suggests, utilitarian logic violates some of our deepest moral intuitions. Even the greatest social goods — peace, harmony and prosperity — are not worth the sacrifice of an innocent person. Former president Chen Shui-bian (陳水扁), since leaving office, has lived an odyssey that has brought him to lows like Le Guin’s dungeon. From late 2008 to 2015 he was imprisoned, much of this