After being a buzzword for almost 30 years, economic globalization has become a target for criticism following the global economic downturn. Neoliberal economic laissez-faire and free market dogma are being widely questioned. The era of small government is over and suddenly we rely on the government to save the economy, hoping that big and capable government will intervene. Deregulation and liberalization are out of date and are replaced by legal regulations on market transactions and investment. Also, trade protectionism is ready for a comeback.
It is against this backdrop that Barack Obama, who proposes big government, was elected US president. No wonder he claims that he wants to “make government cool again.”
Facing the global economic downturn brought about by free market fundamentalists’ push for globalization, other countries are adopting similar measures. Since the effectiveness of monetary policies is limited, they respond with other fiscal measures, like expanding public infrastructure projects and boosting social security systems. Since the Great Depression of the 1930s, we have seen an economic development pattern. Whenever economic laissez-faire and small government policies are in trouble they are replaced by Keynesian big government policies and vice versa. The development from the Great Depression to the expansive New Deal policies of former US president Franklin Roosevelt on to Neoliberalism and economic globalization, and the resurrection of Keynesian theory clearly highlights this historical dialectic.
No wonder Nobel Prize laureate economist Paul Krugman said Obama would find the situation similar to Roosevelt’s New Deal. Krugman warns that saving the economy through massive expansion of government expenditure would provide opportunities for corruption and abuse of power. If Obama cannot prevent this, his plan for saving the economy will fail. The success of Roosevelt’s New Deal lay in his prevention of corruption, pork barrel policies by members of Congress and attempts by politicians to use huge budgets to secure votes.
President Ma Ying-jeou (馬英九) is likely to face similar difficulties as he pushes for a NT$500 billion (US$15 billion) public infrastructure project, bailout plans to the tune of trillions of NT dollars and enormous fiscal expenditure aimed at expanding domestic demand. But we have not seen any independent monitoring mechanism for this. The Special Investigation Panel of the Supreme Prosecutors’ Office and the Control Yuan are busy handling the corruption cases of former officials while ignoring the fact that trillions of NT dollars in special budgets may offer government officials a chance to line their pockets.
In addition, there is reason to believe that a substantial proportion of the hundreds of billions of NT dollars allocated to public infrastructure projects might have been used for “pork barrel” projects, to secure grassroots support, or even to buy votes. The handling of money for the bailout plans is still opaque. There is no fair and transparent review mechanism or independent monitoring system to supervise spending, and nobody can ensure that taxpayers’ money will not be given to private enterprises illegally.
The public must understand that Taiwan will not get a second chance if these plans to save the economy fail. Worse, neoliberal criticism claims that great expansion of the government’s role and functions is unhelpful and will only encourage authoritarian rule, destroying freedom and democracy. Ma’s government is rapidly moving toward an authoritarian system marked by corruption and the abuse of power.