Mon, Jun 11, 2012 - Page 8 News List

GDP figures in nationwide debate

By Lai Hsiang-ling 賴香伶

GDP is the primary measure of the strength of an economy as a whole. However, perceptions about the ability of politicians to govern the country are based on other criteria, such as the rate of unemployment, the consumer price index and the rate of inflation.

When President Ma Ying-jeou (馬英九) started his second term last month, he said reform was an uphill struggle and a path beset with many difficulties. Perhaps this was because he believes that GDP is the sole pertinent measure of the success of reforms, and that the main reason for his low popularity ratings is rooted in the fact that people think there is not enough wealth to go around, or at least that it is unfairly distributed. This would explain why he has said that the nation needs only four reforms.

The fact is, the public — forgetting for a minute that voters are primarily concerned with the state of the economy — have a very different idea from Ma about the direction that reform should take, both conceptually and in practice.

First, there was the mooted introduction of a capital gains tax on securities transactions. The resulting decline in share prices and a shrinking of the turnover on Taiwan’s stock market —“the window on the economy” — is probably a reflection of how speculators were adjusting their investments to maximize their profits.

Any deliberations by the government concerning the implementation of a capital gains tax should be based on fairness and justice: The decision should not be made based solely on the interests of a small group of investors.

Second, all the public has heard concerning hikes to fuel and electricity prices and the need to reform the management structure of state-owned enterprises (SOEs) to eliminate corruption and collusion between SOEs and private companies, was talk of the need to raise prices — all at once — to reflect market pricing. There has been no thorough restructuring of the industry to address the grievous flaws that exist within it.

Third, a range of social welfare benefits were mooted prior to the election in an effort to secure votes, but it is unclear how the government thought these would be able to help close the wealth disparity gap.

Fourth, the government has been criticized for failing to adequately communicate changes in government policy. Just looking at the number of explanatory meetings that were required to outline the changes made to national pensions and labor insurance policy so that the public could understand how their rights would be affected, makes it abundantly clear that establishing complementary measures and operating procedures is of the utmost importance in explaining to the public how a new policy or changes to existing policy will affect them. Simply calling a press conference or issuing a statement are of little use by themselves.

Over the next four years, Ma’s objectives for political and economic development include establishing a free-trade agreement (FTA) with the US, initiating a set of incentives promoting industrial restructuring and raising the basic hourly wage. There exist a number of conceptual blind spots when it comes to the reform of contentious domestic issues, such as US beef imports, the price of electricity, the introduction of a capital gains tax and wages for foreign laborers.

If, for example, it will be possible to sign an FTA with the US only after the import of US beef containing the leanness-enhancing additive ractopamine is agreed, then why could this not have been done four years ago, or at any time since?

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