President Ma Ying-jeou (馬英九) has appointed Vice President Vincent Siew (蕭萬長) as convener of a new panel to advise the Presidential Office on financial and economic affairs. But does Siew really have any bold economic vision? Nothing he has said goes beyond the usual free-market mechanisms, relaxation of laws and regulations, a complete free rein for Taiwanese companies to “go west” and forming a common market with China.
Siew’s policies comply with the fashionable pillars of globalization — deregulation, denationalization and minimizing the role of government. That is as far as his vision goes. Can such a vision really get Taiwan through the current economic troubles?
An article in Thursday’s New York Times asks if the US is any longer the global beacon of unfettered free-market capitalism. In bailing out Bear Stearns, Fannie Mae and Freddie Mac and American International Group (AIG), the US has not just broken the cardinal principles of the free market, but also undermined the US’ authority in any future efforts to sell the idea of economic globalization to other countries.
In the Times article, US financial historian Ron Chernow said the Bush administration, which stands for free market economy, is now doing things even countries that advocate state intervention would not dare to do. These actions will provide excellent ammunition for opponents of the free market.
Whenever the IMF offers to help countries, it always demands that the country receiving aid implement what the IMF calls “structural adjustments,” including deregulation, market liberalization, unfettered exploitation of natural resources, privatization of public assets and state enterprises, reduced tariffs, social spending cuts, and so on.
For example, during the 1997 Asian Financial Crisis, when the IMF pledged South Korea US$20 billion to help it weather the storm, one of the “structural adjustments” it demanded as a condition for the loan was that the Seoul government not prop up troubled banks and companies, but rather allow them to be eliminated according to the workings of the free market. The IMF pushed South Korea to open up its domestic market and thoroughly liberalize its economy.
Now that the US is facing its own financial crisis, however, the US government has transgressed the free-market dogma it has been imposing on other countries by resorting to state intervention on a massive scale. Is the nationalization of giant investment and insurance firms not tantamount to what the French call “economic patriotism?” The Times article was highly critical of the US government’s actions.
If the US government finds itself compelled in the final analysis to act counter to the fundamental principles of its own free-market capitalist creed, what authority is left for the idea of economic globalization, which has been in vogue for the past three decades? Even Republican presidential candidate Senator John McCain declared that he and Alaska Governor Sarah Palin, if elected, “are going to put an end to the reckless conduct, corruption and unbridled greed that have caused a crisis on Wall Street,” while another Times article pointed out that you can’t trumpet the virtues of the free market on the one hand while attempting to protect investors by using state powers to clean up after the greedy gamblers of Wall Street on the other.
As to Ma and Siew — where is their vision? If interventionist policies are necessary for the US government, it proves that an unbridled free-market system cannot work. The Ma government’s policy of economic integration with China is a free-market strategy. Ma and Siew’s real purpose would seem to be political convergence, even if it comes packaged in the guise of economic integration.
Allen Houng is a professor at National Yang Ming University.
TRANSLATED BY JULIAN CLEGG
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
As former president Ma Ying-jeou (馬英九) wrapped up his visit to the People’s Republic of China, he received his share of attention. Certainly, the trip must be seen within the full context of Ma’s life, that is, his eight-year presidency, the Sunflower movement and his failed Economic Cooperation Framework Agreement, as well as his eight years as Taipei mayor with its posturing, accusations of money laundering, and ups and downs. Through all that, basic questions stand out: “What drives Ma? What is his end game?” Having observed and commented on Ma for decades, it is all ironically reminiscent of former US president Harry