Thu, Aug 29, 2013 - Page 8 News List

Economy depends upon sympathy

Chen Yung-feng 陳永峰

Of late, the government has tumbled into a crisis, with current and former senior government officials all having serious issues with belief and conviction.

They would do well to take a leaf from the book of the French social reformist and philosopher Claude Henri de Rouvroy, the Count of Saint-Simon, who maintained that the driving force behind history was the conviction that the Golden Age lies not behind us, but in the future.

If we believe that the Golden Age lies ahead, then the negative spiral that is causing our present economic and political malaise can soon be neutralized.

It is a psychological state bereft of belief or hope that is at the root of the nation’s current economic and political woes.

Adam Smith, often hailed as the father of modern economics, said something similar 250 years ago.

Smith said that there needed to be sympathy within society if individuals with both aspirations and a sense of justice were to flourish, thereby creating a free and just market.

In a free and just market, productivity increases and only then can there be hope of economic growth. When there is economic growth, tax revenues will likewise increase, making it possible to have a fair and effective government.

A fair and effective government can, through the creation of rules and regulations, and the maintenance of order, strengthen society and foster mutual trust, and this in turn reinforces a feeling of “sympathy.”

That is to say, Smith believed that there could be no economic growth in a society without sympathy, and that neither could such a society produce a fair and effective government.

Economics is about psychology. Politics is about psychology. As soon as society loses its belief in, or hopes for, the economy or politics, it is very difficult to rebuild that trust, or that faith, whether the will is there or not.

If Smith is to be believed, for Taiwan to free itself of this spiral of negative reinforcement, it has little alternative but to re-establish a sense of mutual trust among members of society.

Chen Yung-feng is executive director of Tunghai University’s Center for Japan Area Studies.

Translated by Paul Cooper

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