People are not very impressed with President Ma Ying-jeou’s (馬英九) record in office. The reason his approval ratings currently sit at 13 percent is not just because of his perceived “bumbling” and lack of empathy for the public he represents, it is also because his policies are often confused and self-contradictory. This is why he is failing to win the hearts and minds of the public.
The reasons given by the government for pursuing a certain policy in the past miraculously become the reasons why such a policy should not be followed the minute the government comes up with a new policy idea. It then uses the excuse that it initially implemented what was possible concerning the policy, but now it is going to put in place a better option.
Ma’s ill-thought out policies are not only unlikely to achieve what they are supposed to achieve, but give the impression that he is just steering the ship on a whim, for his personal ideological considerations and to fit in with his party’s stance. The question of whether the policies will improve the fortunes of the nation does not seem to come into it.
This is not the time or the place to enumerate all of the mutually inconsistent policies that this government has come up with, but ridiculous propositions which could have, in the past, been easily refuted with a little common sense, now seem to form the underpinnings for major planks of Ma’s policies.
Small wonder a formerly perfectly functioning national apparatus has, in Ma’s hands, started to fall apart at the seams and falter to the extent to which there is a risk that the state could collapse.
Three examples can be given of these strange policy ideas.
First is the government’s support of the Fourth Nuclear Power Plant in New Taipei City’s (新北市) Gongliao District (貢寮).
The government has said that one reason construction of the plant must be completed is that electricity prices will rise if it is not put in to operation, and this will discourage foreign investment, cause companies to relocate and result in a 2,000 point drop in the TAIEX.
However, if an increase in electricity prices will have such a deleterious effect on the economy, why did the government insist last year on increasing electricity prices in stages, saying that there will be yet another hike this year — with a possible floating pricing mechanism implemented — apparently without consideration for the loss of foreign investment, discouragment of companies locating in Taiwan, or the risk of a precipitous drop in the TAIEX?
The government allowed the electricity price increase to help Taiwan Power Co recoup some of its losses without any consideration of the economic impact this would have, but it is now linking electricity prices to the economy because it supports the completion of the Fourth Nuclear Power Plant.
The implication being that if the plant is not completed, the economy will tank. This argument does not hold water, because it was refuted last year when Ma proposed the electricity hike policy.
For the second example, considers how stock markets around the world have started to post new highs — if not since records began, then certainly since the financial crisis — and this is part of a long-term trend. The only stock markets to remain sluggish are those of Taiwan and China. In addition, the transaction volume in the TAIEX has actually shrunk.
Last year the government made a big thing of introducing a capital gains tax on securities transactions, saying that it would make the system fairer. Yet, even before the tax has been introduced, transactions have fallen, meaning revenue from the securities transaction tax has decreased, making it a double whammy for the government.
The market has been calling for the capital gains tax on securities transactions to be scrapped, and for the securities transaction tax to be reduced. However, considering Ma’s track record he will not want to lose face over this. It is unlikely he will scrap the newly announced tax, and will insist on keeping the securities transaction tax at the same level.
The government has already decided to reduce the futures transaction tax, saying that the fall in revenue per transaction will be made up for by the increase in futures transactions that it should encourage. Somehow the government does not seem to register that this kind of thinking should also apply to the securities transaction tax, believing that all it can do is sit back and watch the TAIEX transaction volume shrink.
It has been calculated that the daily transaction amount for the TAIEX when former president Chen Shui-bian (陳水扁) was in power rarely fell below the NT$100 billion mark (US$3.35 billion at current exchange rates), but since Ma started pushing for capital gains on the securities transaction tax, rare has been the day that the TAIEX daily transaction amount has gone over NT$100 billion. Reducing the securities transaction tax might well be just what the doctor ordered.
Dabbling in futures is a high risk investment, and by reducing the tax on futures transactions while insisting on keeping current the securities transaction tax, the government is encouraging investors to put their money in futures and fueling speculation, which is bad for investor sentiment.
The third example is how the Ministry of Finance has promoted mergers between state-owned bodies, yet objected to that between the privately owned Taishin International Bank and Chang Hwa Bank, in which the ministry holds shares.
Mergers between state-owned bodies, the government said, promote the national interest, but suggested that the Taishin-Chang Hwa tie-up was intended as a “Trojan horse” for Taishin, and would go against the national interest.
The Ma administration views mergers between state bodies as benevolent mergers and bends over backward to promote them. However, it regards those between state and private institutions as a form of corporate plunder. As soon as it catches wind of a proposed merger of the second kind it gets hot under the collar. Nobody actually knows where the standards lie.
Financial mergers and acquisitions should be made from professional considerations, and both state-state and state-private mergers should be allowed. There will be some kind of deal possible that suits the interests of all shareholders. It is not about state shareholders, who actually hold less that 20 percent of the shares, calling the shots for the other shareholders who represent an 80 percent holding, or ignoring what private shareholders want.
There are two standards in financial mergers, due to the Ma administration’s insistence on exercising control over the operation of the financial industry, instead of being content with the power of policy creation and oversight.
Meanwhile, under this excessive governmental supervision, the nation’s finance industry can hardly move forward. Like carp forced to forage for the limited pickings in a small pond, they will not perish, but neither will they be able to grow.
The government needs to be consistent, to avoid applying one standard here and another there, and needs to think about the overall situation. It cannot behave as if it has nobody to answer to and that the public have no right to object.
Through communication and public debate, and a respect for public opinion, the government could come up with good policies that are in the interests of the nation.
This is the best way to come up with policy, and it is a shame that the government’s current policy creation model is the exact opposite of this: A single person making all the decisions within a top-down structure in which what officials think is more important than what the public thinks, appealing to empty morality instead of professionalism, applying double standards, insisting on partisan compliance and not tolerating dissent within the party.
All of the above leads to policies that run counter to public opinion and to what the country actually needs.
However, the government insists on forcing such policies upon us. In the end, the public is going to turn its back on this government.
Translated by Paul Cooper