Mon, May 26, 2008 - Page 8 News List

Misguided economic policy will hurt nation

By Allen Houng 洪裕宏

President Ma Ying-jeou (馬英九) won the presidential election by playing the economy card. Many of his promises, such as increasing economic growth to 6 percent, or cutting the rate of unemployment to 3 percent, were criticized as impossibilities during the campaign since Taiwan has little chance of beating the odds when the international economy is sluggish. Ma’s government also faces challenges from inflation and soaring commodity prices. However, the Achilles’ heel of his government is not his impossible economic promises, but the fact that the direction of his economic policy is mistaken.

If the government pursues these policies, it will increase deindustrialization and unemployment, reduce consumers’ real income, erode the middle class and increase the number of poor. Civil unrest and public discontentment will follow.

Ma’s thinking follows typical neoliberal economic and globalization ideas: the government should intervene in and administer markets as little as possible in order to create a single globalized free market to facilitate global pillaging by trans-national corporations. His so-called “opening” is really privatization and deregulation aimed at allowing markets to operate freely.

Neoliberalism has always insisted that the government must not intervene in markets because markets are all-powerful, and can automatically resolve their own problems.

Ma believes that all market intervention by the government is a form of containment. However, Ma’s theory is immoral: he considers all governmental policies regulating markets in order to care for the welfare of the lower and middle class as a form of “containment,” “isolationist” and not “open.”

This purposeful misleading by sleight-of-word is not presidential behavior.

Many top economists have long claimed that there are a multitude of problems connected to neoliberal economic globalization. The theory has been in practice since the early 1980s, and its mainstays are deregulation, completely liberalized markets, privatization of all industries — including government-owned firms — and the reduction or cancellation of social welfare payments.

Argentina’s painful experiences serve as an example. In the 1990s, the IMF and the World Bank named Argentina the paragon of developing nations. To accede to the demands of those two institutions, Argentina greatly deregulated its economy, lowered tariffs, privatized government enterprises and cancelled many social welfare measures. Initially, the economy did indeed improve.

However, after more demands from the IMF in 2000, Argentina’s economy quickly collapsed. This, along with social unrest, led the Argentine president to declare national bankruptcy and admit that neoliberal economic globalization had destroyed his country.

A M-shaped society is emerging around the world, including in Europe and North America. Many academics believe this is the result of globalization. Premier Liu Chao-shiuan (劉兆玄) has admitted the beginning of a M-shaped society in Taiwan and listed the strengthening of the middle class as a priority.

Solving the problems caused by a M-shaped society and strengthening the middle class are not goals that can be achieved through more globalization, but by more comprehensive regulations to curb trans-national corporations’ plundering.

Ma and Liu obviously do not get this point. Massive deregulation will not invigorate the public, but corporations. Is Ma’s public made up entirely of corporations?

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