President Ma Ying-jeou (馬英九) keeps saying economic growth will narrow the gap between rich and poor. However, unless the government makes some radical policy changes, Ma’s assertion is probably no more than wishful thinking.
First, income distribution has become increasingly unequal over the last decade. Between 1998 and 2008, the richest 20 percent of people saw their disposable household income grow by 7 percent, while the poorest 20 percent saw theirs shrink by 2 percent.
Of Taiwan’s 5.46 million individuals and households filing for personal income tax in 1998, the average income of the richest 5 percent was 32 times that of the poorest 5 percent, but by 2008 the gulf had widened to 66 times.
So the rich have been getting richer and the poor poorer for more than a decade.
In other words, this is a long-term trend and one that does not seem likely to be reversed even if the economy does perk up a little this year.
The second feature of this last decade has been that, as people like to say, “everything keeps going up — everything but our wages, that is.” Paycheck stagnation has swelled the ranks of the new poor.
Figures for the first half of this year show that the average real monthly salary in Taiwan is NT$45,161, which is lower than the 1998 figure of NT$45,596.
Meanwhile, the proportion salaries contribute to GDP continues to fall. By 2007 it was down to 44.5 percent — a new low and much less than that for other countries. For example, it is 55.8 percent in the US, 50.8 percent in Japan and 46.1 percent in South Korea. So not only did salary earners not enjoy the fruits of economic growth — they actually became relatively poorer.
Successive governments over the last dozen years have made three major mistakes with regards the rich-poor gap. First, they have tended to fixate on big investments and big construction projects, while ignoring problems of employment and pay. Second is the belief that as long as GDP keeps growing everyone will benefit equally. Third is blind faith in the workings of the free market, while overlooking the need for complementary measures.
Regrettably the Ma administration has failed to reconsider these erroneous policies and is just giving us more of the same. In signing the Economic Cooperation Framework Agreement with China and in its attitude to a number of controversial industrial construction projects, for example, the government still has its sights firmly fixed on GDP growth. This is true even with regard to higher education, which is the most important way for poor people to achieve social mobility.
This government would prefer to open up the nation’s universities to students from China, allowing them to have a share in our “surplus educational resources” that Ma talks about, rather than give priority to helping relieve the burden on the sons and daughters of underprivileged families who wish to attend university.
The system needs a thorough overhaul. That means not just fixing the holes in our welfare system but, still more importantly, taking concrete measures to ensure that disadvantaged young people do not lose the right to compete on an even playing field.
Beyond that, the government should abandon its narrow approach to economic development, which puts growth before everything else. If it doesn’t, job opportunities will continue to disappear and most people will find their wages stagnant. Under such circumstances, even if economic growth climbed to 10 percent, most people would gain nothing from it.
Leou Chia-feng is a senior research fellow at Taiwan Thinktank.
TRANSLATED BY JULIAN CLEGG
Two sets of economic data released last week by the Directorate-General of Budget, Accounting and Statistics (DGBAS) have drawn mixed reactions from the public: One on the nation’s economic performance in the first quarter of the year and the other on Taiwan’s household wealth distribution in 2021. GDP growth for the first quarter was faster than expected, at 6.51 percent year-on-year, an acceleration from the previous quarter’s 4.93 percent and higher than the agency’s February estimate of 5.92 percent. It was also the highest growth since the second quarter of 2021, when the economy expanded 8.07 percent, DGBAS data showed. The growth
At the same time as more than 30 military aircraft were detected near Taiwan — one of the highest daily incursions this year — with some flying as close as 37 nautical miles (69kms) from the northern city of Keelung, China announced a limited and selected relaxation of restrictions on Taiwanese agricultural exports and tourism, upon receiving a Chinese Nationalist Party (KMT) delegation led by KMT legislative caucus whip Fu Kun-chi (傅崑萁). This demonstrates the two-faced gimmick of China’s “united front” strategy. Despite the strongest earthquake to hit the nation in 25 years striking Hualien on April 3, which caused
In the intricate ballet of geopolitics, names signify more than mere identification: They embody history, culture and sovereignty. The recent decision by China to refer to Arunachal Pradesh as “Tsang Nan” or South Tibet, and to rename Tibet as “Xizang,” is a strategic move that extends beyond cartography into the realm of diplomatic signaling. This op-ed explores the implications of these actions and India’s potential response. Names are potent symbols in international relations, encapsulating the essence of a nation’s stance on territorial disputes. China’s choice to rename regions within Indian territory is not merely a linguistic exercise, but a symbolic assertion
In the 2022 book Danger Zone: The Coming Conflict with China, academics Hal Brands and Michael Beckley warned, against conventional wisdom, that it was not a rising China that the US and its allies had to fear, but a declining China. This is because “peaking powers” — nations at the peak of their relative power and staring over the precipice of decline — are particularly dangerous, as they might believe they only have a narrow window of opportunity to grab what they can before decline sets in, they said. The tailwinds that propelled China’s spectacular economic rise over the past