The Chinese Nationalist Party (KMT) often blames the poor global economic climate for Taiwan’s sluggish economy, thereby shrugging off the responsibility borne by a ruling party that controls all branches of government. It is true that bad worldwide economic conditions will have a negative impact on the economies of all countries. However, subjecting the government to the principles of comparative performance evaluation is a good way of assessing how competent and diligent it really is. Sad to say, Taiwan’s economic performance lags behind that of most of its competitors.
Is the KMT really fit to govern? The “consensuses” that were announced when the National Conference on Industrial Development organized by the Ministry of Economic Affairs concluded on Dec. 21 are a useful starting point for discussing its competence in managing the nation’s economy.
The common thread connecting the “consensus” policies is the restriction of wages paid to workers. Examples include relaxing the minimum wage requirement for foreign migrant workers; relaxing regulations governing work hours, fixed-term employment contracts, dismissals and severance; and so on. From these “consensuses” one can see that not just the ministry, but the KMT too, govern the country according to the idea that economic development is purely a matter of companies making profits.
This mentality ignores that there are two ways in which companies can make money. The first is to increase revenue by producing added value on goods and services. The second method is to cut costs by holding back wage increases, and by demanding more subsidies and tax cuts from the government.
Businesses that successfully apply the first method will be able to raise employees’ wages, so that company owners and their employees prosper together. The first method requires entrepreneurs to have vision and courage, while only dimwitted bosses make money by using the second method.
When a governing party follows the same kind of ham-fisted policies as those dimwitted bosses, for example by helping company policymakers by cutting wages and providing tax breaks and subsidies, it will inevitably lead to two highly undesirable results.
The first is that such policies cannot make companies or nations more competitive. On the contrary, they will encourage company policymakers to be negligent and lazy, and in the long run become even more dimwitted. Dimwitted bosses will keep thinking of ways to cut wages even further, thus generating a vicious cycle under which Taiwan’s economy and wages will keep going from bad to worse.
The second unwelcome result is that they make income distribution unequal, which in turn leads to class conflict.
Who is to blame for Taiwan being bogged down in this sorry situation? Who else but those who hold power — the head of state and the heads of companies. After all, they are the chief executive officers of government and business organizations.
However, what about us common people — where does our responsibility lie? We hold shares in government institutions. As government shareholders, we have the responsibility to promptly replace this ham-fisted party and bumbling chief executive who have proved incapable of setting out a road map to a brighter future for Taiwan.
An important task for the next government chief executive, whoever that might be, will be to draw up a set of competitive rules that will quickly eliminate inefficient businesses.
Lin Wei-shong is an associate professor in the Department of Business Administration at National Taiwan University of Science and Technology.
Translated by Julian Clegg