Mon, Oct 13, 2008 - Page 8 News List

The government’s aloof policies

By Yang Wei-Chung And Lee Wen-Chung 楊偉中,李文忠

Faced with a grim economic crisis, US Republican presidential candidate Senator John McCain and his Democratic rival, Senator Barack Obama, are engaging in intense debate. McCain, with close ties to big business, has increasingly made remarks that run counter to public sentiment, proposing continued deregulation of the financial system and reliance on free markets.

At a time of chaos on global financial markets, shrinking domestic demand and aggravated poverty and social conflict, McCain’s statements deviate from the social and economic realities facing the average citizen. No wonder Obama jumped on McCain’s economic proposals, asking him: “Senator, what economy are you talking about?”

One point of contention in the US financial bailout is the question of which social group profits and which group loses.

In the same way, it is important to consider who will be the beneficiaries of Taiwan’s attempts to contain economic and financial damage. The Cabinet and the Presidential Office’s economic advisory task force have proposed a series of measures to revive the economy, such as halving the securities transaction tax, reducing the inheritance tax and providing a blanket guarantee for private deposits.

The global economic crisis and soaring energy and food prices have led to a deterioration in living standards.

Between January and August this year, the average unemployment rate, the number of weeks of unemployment and the number of people laid off because of closures have hit three-year highs. In the same period, the unemployment rate for college graduates jumped to 4.16 percent, the highest level since 1978. In August, each job seeker had an average of 0.79 job opportunities, the lowest level since July 2001. In addition, local wage earners saw their income decline by 2.72 percent in real terms in the first seven months of the year, the worst decline in 28 years.

We do not mean to attribute the declining economy and public suffering to the government on this basis alone. However, a government that boasts of the ability to feel the pain of the people must take a serious look at its policy priorities: Whose pain are they feeling, and whose distress are they relieving?

It is true that the government’s policies are aimed at protecting the disadvantaged and promoting employment growth, but judging from policy strength, focus and effectiveness, these measures are still at the discussion stages or implemented perfunctorily.

Even the Chinese Nationalist Party’s (KMT) own think tank admits that the results of measures for caring for the disadvantaged and for stimulating consumption have been limited.

More importantly, in its eagerness to save the stock market, the government has intervened in a free market by activating the National Stabilization Fund and prohibiting short selling for two weeks. When it comes to price hikes in electricity for household use, however, the government stresses “a return to the market mechanism.”

This double standard is transparent to a public whose distress the government is trying to relieve.

Meanwhile, it is questionable that halving the securities transaction tax and reducing the inheritance tax — measures worth tens of billions of dollars that mostly benefit wealthy people — will achieve the goals of accelerating capital flow. Without supplementary measures, these actions will increase social injustice and eat up money needed for educational and social policies.

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