The uproar over the Wenlin Yuan (文林苑) project continues. I won’t add to the commentary, but will instead focus on housing justice, a key issue.
The reason this project has caused such a ferocious reaction is not that property rights are inviolable, nor is it only because of the forced demolition by the Taipei City Government.
A more important reason is that the government has long neglected to restrict real-estate speculation and allowed laws and policies that strongly favor developers. Furthermore, local governments have frequently used industrial zones and science parks as an excuse to expropriate land from poor farmers. Such long-standing violations of land justice have caused a buildup of resentment. In recent years, many students and academics who do not own houses have become involved in the struggle to protect land justice, and herein lies the key to the issue.
The project is in a part of town where land prices have soared because of proximity to an MRT station. This is why developers initiated the project. As with road construction in the past, the metro rail system has been a major factor in pushing up real-estate prices in Taipei. Public transport construction is funded by taxpayers, but the enormous profits accruing to the surrounding landowners go to a small group of people.
Given Taiwan’s low taxes, the profits from real-estate deals are a major reason why the tax system is unfair. A disproportionate part of the tax burden falls on wage earners, who help finance transportation infrastructure construction, while real-estate speculation makes owning a house a distant dream. Unfair taxes, combined with housing injustice, put a lot of pressure on wage earners.
This brings to mind a similar historical example. In the late 19th century, the mechanization of agriculture boosted wheat output in the US and reduced production costs, while the development of steamships reduced transportation costs dramatically. This made the price of US wheat in Europe very low, which made it increasingly difficult for many European farmers to make ends meet and in the end forced them to emigrate. The same ships that brought the wheat that destroyed their livelihoods carried the farmers to the US. Since the ships did not have to return empty, the shipping companies’ profits increased and further cut the cost of wheat transports, while the farmers became a major source of cheap labor in the US.
Today, the government uses taxpayers’ money to build the MRT system, a modern transport development, most users of which are wage earners with no chance of evading taxation. As the MRT pushes up real-estate prices, it is also pushing wage earners out of the city and forcing them to commute on the MRT.
A similar phenomenon occurred in London. To stop this from negatively impacting the city, the developers of big projects, assisted by the British government, are required to sell some apartments to people such as nurses, bus drivers and underground drivers, at low prices
However, this policy has not had much real effect. Taiwan’s problem is that our government will not even do that much. Instead, it chooses to strongly support land and money games. The profits from the land value increases end up in the pockets of developers and landowners, with no noticeable return to the public. The government doesn’t even dare to levy reasonable taxes on these exorbitant profits.