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?
If electricity price hikes are to reflect international market prices, why did the government not instigate organizational reforms in SOEs some time ago, when it was still subsidizing them?
Why, in the debate on introducing a capital gains tax or a luxury tax on real-estate properties, has the government chosen to disregard the enthusiasm that this policy enjoys among the lower economic rungs of society? Have those industrialists who keep calling for a decoupling of foreign workers’ wages from the minimum wage submitted their planned domestic investment projects for approval yet?
Being overly eager is better than doing nothing, because at least that means the government is thinking about reform. However, because instructions remain unclear, orders come from different directions bringing disorder to the system as a whole, while government officials attempting to carry out reforms in line with what their superiors want, wind up making a mess of things.
If prices go up as a result of government policies, it will not be easy to get them back down and this — coupled with the fall in salary levels which has seen them return to the level they were at 13 years ago — will only add to the public’s suffering.
The government should make sure reforms are in the interest of a majority of the public, especially the more than 54 percent of Taiwanese workers who earn less than NT$30,000 a month, which is approximately 5 million people. Taiwan does not need hourly wages to be decoupled from monthly wages, because that will encourage atypical employment and salaries will go down as a result, not up.
Taiwan cannot allow unscrupulous manufacturers who are pressing the government to deregulate foreign labor and decouple foreign workers’ salaries from the minimum wage to take advantage of the situation and try to squeeze workers’ even further.
Neither can Taiwan allow the privatization of SOEs, in the name of reform, only for corporate groups to come in and create a privatized oligopoly and monopolize the profits from public services.
Most people have some opinion on national defense or foreign relations without really understanding the issues. However, when it comes to domestic affairs, it makes a lot more sense for the public to demand that the government find solutions to the problems that are confronting the public, address the allocation of resources and ensure that the majority are guaranteed basic life quality, instead of this preoccupation with whether GDP happens to be rising or falling.
Lai Hsiang-ling is a social activist.
Translated by Paul Cooper