News of the Occupy Wall Street movement is grabbing the attention of people everywhere. What has gone wrong with the US, which likes to think of itself as the dominant power in the world? Will Taiwan follow in its footsteps?
Observers have long been anxious that the gap between rich and poor in the US has grown so wide that it may become a threat to democracy. The book Winner-Take-All Politics was a bestseller in the US last year. Its authors make the point that since the 1980s, a series of policies that favor the rich have eroded the broad middle class that forms the foundation on which US democracy depends.
Modern democracy originally promised to guarantee basic living standards for the public and it offered the chance of upward social mobility, but these conditions have become decreasingly realistic in recent times as global capitalism runs amok. That is the background to the Occupy Wall Street movement, launched by marginalized sections of US society who feel the need to voice their anger.
Taiwan, it seems, faces similar challenges. Figures released by the Ministry of the Interior show that although Taiwan’s economy grew by more than 10 percent last year, the number of households falling below the poverty line exceeded 110,000 for the first time and the number of people who are members of such households rose to 273,000. Both figures are record highs and show that poverty is becoming a much bigger problem.
There are three major factors behind the widening wealth gap in Taiwan:
First is that income earned through work keeps falling year after year as a proportion of the GNP, so the working class is not getting its fair share of the fruits of the nation’s economic growth. Statistics show that since 1992, despite continued growth in Taiwan’s GDP, wages have tended to stagnate. The fruits of economic growth have mostly been harvested by those who hold the capital. To make matters worse, badly thought out tax cuts and exemptions have further widened the gap in income between labor and capital holders.
The second factor is a faulty tax structure which does not generate enough revenue for social welfare provisions. Although the government’s social welfare spending now accounts for close to 20 percent of total government spending, it is still not enough to cover the steadily rising welfare demand for things such as childcare and long-term care. Income redistribution in Taiwan relies mainly on various types of welfare payments, which make up about 90 percent, rather than tax revenue.
Third, deregulation of the labor market has caused the number of working poor to increase and work conditions to deteriorate. Flexible employment practices have led to more people doing atypical kinds of work and have caused work conditions to deteriorate rapidly. Problems include falling wages, labor intensification and a greater risk of redundancy. There are far fewer quality job opportunities available than there used to be.
Those in government must wake up to the results of the widening gap between rich and poor. Taiwan is losing its human resources and economic competitiveness. As time goes on, political and social upheaval could follow. The riots that broke out in France and the UK not long ago and the ongoing Occupy Wall Street movement give a clear warning of what might lie ahead. It is a warning that should not go unheeded.
Lue Jen-der is convener of Taiwan Thinktank’s employment and social security unit.
Translated By Julian Clegg
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