Thu, Sep 24, 2009 - Page 8 News List

Nothing new in Wu’s economics

By Wu Hui-lin 吳惠林

Premier Wu Den-yih (吳敦義) has admitted that economics is not his forte, but this did not stop him from announcing the new concept of “grassroots economics” after he took office.

Ordering the establishment of “grassroots economic benchmarks,” Wu said that these would be more relevant to our daily lives and provide a better indication of how the economy is doing by looking at things like the stock market index, business in restaurants and entertainment venues, air freight and even the amount of container trucks on the roads.

Three days after the announcement on Sept. 13, the Council for Economic Planning and Development gave Wu a briefing on the new benchmarks and said they would include information on the business of restaurants, public security, the throughput at commercial ports, the number of cars driving on the roads and consumer confidence.

Shortly after this, Vice Premier Eric Chu (朱立倫) visited the council and urged them to assist the Directorate-General of Budget, Accounting and Statistics (DGBAS) to create, within one month, a cost of living index that applies more closely to the average person. In future, aside from providing unemployment data, the DGBAS would also provide data on employment opportunities.

The point of the premier’s talk about grassroots economic benchmarks was the quick establishment of a new set of economic gauges. Some people have remarked that the concept of grassroots economic benchmarks is similar to what is referred to in Japan as the “street corner index.”

Such indexes may be interesting, but because no consensus can be reached on their content, they should be limited to occasional announcements by academics or private research organizations for reference purposes. However, they are not appropriate for publication by government.

We already have information on the sectors that Wu and Chu proposed creating benchmarks for. In particular, the DGBAS, the Council of Labor Affairs and private human resource agencies already have a great deal of information on cost of living and employment opportunity. There is no need to belabor the issue by creating a new set of benchmarks, in particular as there are no guarantees that they will truly reflect the living situation of the average person.

As some commentators have noted, the grassroots economic benchmarks Wu proposed include the stock market, restaurants and the number of container trucks on the roads. Those with money to invest in stocks and to eat at restaurants, or who are concerned with container trucks, have nothing to do with poor people struggling to make ends meet.

The public is most concerned about deteriorating law and order, education and unemployment. As for the request that a new cost of living index that better reflects the situation of the average person be established, we already have access to lots of statistics and various methods for processing this data, such as increases in the unemployment rate and the reduction in work hours per capita.

The consumer price index (CPI) looks at more than 400 items, including housing rent and tuition fees.

This is quite complete, and can be further divided into urban and rural subsets, or to contrast high and low income earners.

If the new Cabinet’s proposal is a move toward the adoption of the so-called “happiness index” and the abandonment of pure economics as a gauge, then there might be something worthwhile to it.

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