Though Nobel prize-winning economist Paul Krugman has been saying since the mid-1990s that there is no such thing as national competitiveness, many countries, including Taiwan, are still obsessed with how they rate against other countries.
The IMD World Competitiveness Yearbook released by the Switzerland-based IMD business school is often more important to countries than their own constitutions and influences, even deciding public policy and governance, restricting political discussion and, even worse, dictating what people in societies around the world think and do.
The cross-strait service trade agreement that President Ma Ying-jeou’s (馬英九) administration recently signed with China provides us with a chance to look again at international competitiveness.
First, consider what Mainland Affairs Council (MAC) Minister Wang Yu-chi (王郁琦) said about the agreement. Wang said that people in Taiwan’s service industry, like hairdressers, are highly competitive because they emphasize quality and skills, develop their own unique styles and give their utmost in their jobs, which combines to create a strong loyalty among their customers.
According to Wang this means they do not need to worry about competition from Chinese service providers.
Probably Wang forgot to mention that parts of the local service sector are not as optimistic as he is about the cross-strait service trade agreement. This is because what they may face in the future could be a total collapse of their industry and wholesale displacement of their lives.
Wang also believes that when it comes to fighting for market share in China, Taiwanese companies will have a great advantage over other foreign investors.
He also said that the main point is that Taiwan is an economy focusing on foreign trade, which means that it cannot adopt a closed-door policy or avoid competition, which would exclude Taiwan from the trend toward global economic integration.
This is where the key to the problem lies.
In the face of global competition and market liberalization, the big question, even for those who are traditionally viewed as being a part of the local service industry, is whether Taiwan has any sound policies in place to protect domestic industry and labor.
What Taiwanese businesses need is for the government to make the best choices in this global, capitalist system that is based on the division of labor, instead of a government that is merely aimed at making itself feel better about its poor performance spouting empty talk and promoting pipe dreams.
Since only some industries may possess international competitiveness, the government should stop its claims that opening up the domestic market has anything to do with international competitiveness.
It should also stop giving Taiwanese the false sense that they are being looked after and will receive benefits with this latest agreement, because this is not how things really are.
Just as Joseph Stiglitz, another Nobel prize-winning economist, once said, “everyone influenced by globalization has the right to know who is making what decisions and when they are making them.”
According to Stiglitz’s guideline, the way that the Ma administration recently negotiated and signed the cross-strait service trade agreement is, without a doubt, the worst example a government could possibly set.