As numbers don’t necessarily reflect economic reality, Premier Wu Den-yih (吳敦義) is attempting to use an unconventional approach to track economic activities to get a feel of the public pulse. But his favored references — such as the stock index, restaurant revenues and the number of cargo trucks on freeways — could be a guise to cover up his and the new Cabinet’s limited knowledge of macroeconomics, as well as a lack of vision to shape economic policies.
During an interview with the Chinese-language United Evening News on Thursday, Wu said that traditional economic measures, such as GDP, the unemployment rate and the consumer price index, to some extent fail to truly reflect how the public feels about the economy.
Wu said that government officials should look into alternative measures, such as those mentioned above, because they are easily understood by the public.
Wu’s new approach sounds appealing, but it is doubtful that current economic data and traditional methods had anything to do with falling public support for the government.
The informal indices the new premier suggested are interesting, timely and easy to grasp. But they have their limitations, because they reflect the economic climate in the short term and can be twisted by abnormal, unexpected factors in some cases.
What is of interest is that Wu recognized a vital truth — that the new Cabinet must satisfy public needs when drafting economic policies. Wu rightly understood that this is key to political stability, which in turn is crucial to economic growth and long-term prosperity.
The question is whether Wu and his new economic team — composed of old Chinese Nationalist Party (KMT) technocrats, none of whom possess a strong knowledge of macroeconomics — have gained a real understanding of what the public needs and what kind of economic progress the nation should be pursuing.
The economic challenges facing Taiwan now are its over-dependence on China, a fast deteriorating labor market, weakening household income and a record public debt that needs to be remedied to sustain the nation’s competitive sovereign credit ratings. An excessive emphasis on exports to drive economic growth also deters private investment in domestic services, which could help transform the nation’s economic structure.
Unfortunately, despite all the talk of “coming to terms with the reality of public opinion” and “doing its utmost to address public interests,” there’s no signs of a slowdown in President Ma Ying-jeou’s (馬英九) push to sign an economic cooperation framework agreement with China even after the Cabinet reshuffle.
A look at the new Cabinet shows that the government has ditched academics — who it thinks are idealistic and have little connection to reality — as it drafts the nation’s long-term economic development and reform program. Instead, the government favored technocrats like Tsai Hsun-hsiung (蔡勳雄), the new chairman of the Council for Economic Planning and Development (CEPD); Shih Yen-shiang (施顏祥), the new economics minister; and Lee Sush-der (李述德), the finance minister.
This selection also makes it clear that senior officials who could have initiated financial reforms and aided the nation’s economic transition are gone with the departure of Paul Chiu (邱正雄) as vice premier and Chen Tain-jy (陳添枝) as CEPD chairman. It also implies that new economic team in Wu’s Cabinet is unlikely to steer new policy initiatives, but will only carry out the administration’s existing policies.
This begs the question of whether Ma has a clear vision on financial and economic policies.
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