Greece is the cradle of democracy, and while using a referendum to choose its fate would seem to be in line with the democratic idea that the public should be master, it is instead a Greek tragedy directed by politicians.
The euro crisis began in 2010. The other PIIGS countries — Portugal, Italy, Ireland and Spain — have had to accept austerity measures and have seen their fiscal situations improve, while Greece is sinking and seems beyond help. This is why Greek complaints that its economy has faltered because of austerity are not persuasive. The crisis is a complication of Greece’s problems.
Since the beginning of the euro crisis, the concern that Greece might default has kept coming back, but most of the Greek debt has been shifted to eurozone institutions: The private sector now carries less than 20 percent of the debt. The firewall is in place and will prevent a Greek default from spreading. Above all, the Greek economy makes up just about 2 percent of the eurozone economy and its debt is 2.5 percent of eurozone debt.
If it defaults, the impact on international financial markets can be controlled. This is also why its international creditors — the IMF, European Central Bank and EU — knew what they wanted during bailout talks instead of offering concessions.
Greek politicians ran out of options, opting for a referendum to pass their responsibility to the public. Greece has become a scoundrel nation that will not pay its debts; its referendum was a tragedy.
Greece is far away and its debt crisis might seem irrelevant to Taiwan, but the main sources of the tragedy are Greece’s pension system, which has destroyed its fiscal policy, and populist, manipulative politicians issuing irresponsible welfare pledges. These are very similar to what is going on in Taiwan.
A comparison of debt and pension woes in Taiwan and Greece shows that the situation in Taiwan is not much better than Greece’s.
Debt constitutes 170 percent of Greek GDP. By late April, debt from every government level in Taiwan, including hidden debts such as civil servant pensions and labor and farmers’ insurance, stood at NT$25 trillion (US$802.26 billion), or NT$1.07 million per Taiwanese — 156 percent of Taiwan’s GDP.
Pension payments make up 25 percent of Greek spending. Pension payments in Taiwan are forecast to reach 23 percent of spending by 2025.
Furthermore, Greece’s high salary replacement rate of 100 percent has been cut to 56 percent, while in Taiwan, the salary replacement rate for civil servants ranges from 89 percent to 102 percent.
Greece’s retirement age of 57 is to be pushed back to 67, while the average retirement age of Taiwanese civil servants is 55.
Taiwan is an aging society, a serious problem. People over the age of 65 make up 12 percent of the population and are forecast to reach 20 percent by 2025, echoing the situation in Greece. The proportion of employed young people is shrinking alongside salaries, making it difficult to shoulder the costs of retirement and welfare. A report from the Ministry of Civil Service shows that if pension payments are not changed, the military retirement fund could be bankrupt as early as 2018, the teachers’ fund by 2026 and the civil service fund by 2029. The labor insurance fund that pays the labor retirement pension is forecast to be bankrupt by 2027.
It is not impossible that the Greece of today will be the Taiwan of tomorrow. Furthermore, if Taiwan undergoes a fiscal crisis, international realpolitik means that the nation would not be able to get help from international organizations.
It would find itself in a worse situation than Greece. This is why the calls for pension reform are sounding anew.
Tragically, Taiwan’s government is behaving in the same vicious manner as the Greek politicians. Greek politicians are unwilling to make cuts in welfare, pension and other government spending or to increase taxes, and they are using a referendum to keep the public uninformed.
President Ma Ying-jeou (馬英九) keeps emphasizing the importance of pension system reform, but the reform talk is just a ruse. By the time he steps down, he will just breathe a hypocritical sigh of regret and lament that he never managed to push through the reforms.
Most Taiwanese are rational and passionate about reform. Opinion polls show that 82 percent of workers and 79 percent of civil servants support changes in the pension system, which makes it clear that those who oppose reform are in the minority.
The government and opposition parties must tap this national mood to complete pension reform as soon as possible to resolve the risk of fiscal bankruptcy and save Taiwan from sinking by resolving conflicts between generations and social classes.
Translated by Perry Svensson
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
Former president Ma Ying-jeou’s (馬英九) trip to China provides a pertinent reminder of why Taiwanese protested so vociferously against attempts to force through the cross-strait service trade agreement in 2014 and why, since Ma’s presidential election win in 2012, they have not voted in another Chinese Nationalist Party (KMT) candidate. While the nation narrowly avoided tragedy — the treaty would have put Taiwan on the path toward the demobilization of its democracy, which Courtney Donovan Smith wrote about in the Taipei Times in “With the Sunflower movement Taiwan dodged a bullet” — Ma’s political swansong in China, which included fawning dithyrambs