Former President Chen Shui-bian (陳水扁) needed six years to drive his popularity ratings below 40 percent. President Ma Ying-jeou (馬英九) managed the feat in just two months. Public confidence in the government is now close to collapsing.
Premier Liu Chao-shiuan (劉兆玄) has said that Singaporean officials are envious because Taiwan’s inflation figures are much lower than theirs, and the second-best in Asia after Japan. Vice Premier Paul Chiu (邱正雄) says economic fundamentals are good and that foreign investors are optimistic. The government blames its problems on rising global raw material costs. Even if all these claims are correct, they will do nothing to improve public confidence.
The Chinese Nationalist Party (KMT) only has itself to blame for the public’s hopes being so high.
The huge discrepancy between economic realities and public expectations is the direct result of the KMT’s election strategies during its time in opposition: they demonized Chen’s Taiwan, saying it was an abyss of suffering. Chen even helped a bit by wooing now Vice President Vincent Siew (蕭萬長) and current Straits Exchange Foundation Chairman Chiang Pin-kung (江丙坤) and saying that a good economy wouldn’t necessarily translate into voter support. Still, the public believed that Chen’s government performed badly.
The Democratic Progressive Party (DPP) government tried to defend itself, saying that Taiwan’s economic growth equaled South Korea’s, and that although average income did not reach the same level as in South Korea, inflation and poverty figures were much better than in South Korea, Singapore or Hong Kong. Because of the KMT’s demonization tactics, the public did not buy these arguments.
The problem for the KMT government is that the public now rejects its explanations by applying the same standards to Ma’s government. This is even truer since the situation under Ma is worse than it was under Chen.
The KMT’s demonization of Chen was based on two arguments. First, the nation’s average economic growth rate during the KMT era was more than 8 percent and China’s economy is currently growing at a rate of more than 10 percent. No matter how you looked at it, Taiwan fell behind.
Second, the KMT created the impression that everything depended on China. If Taiwan took its China medicine, everything would be fine and every industry would prosper. There was no reason to fear the US subprime crisis, global inflation and other international difficulties: The China panacea would improve economic growth, and lower unemployment and inflation figures — Ma’s 6-3-3 election promise — while the stock market would break through the 20,000 point mark. These daring promises excited the public, and because the DPP refused to buy into this reasoning, everyone began waiting for the KMT to lead Taiwan out of the chaos.
None of this has happened since Ma took office. In just two months, public hope has been replaced by a threefold confidence crisis.
First, there is a sincerity crisis. There is a suspicion that Ma issued election promises willy-nilly simply to win the election, and there are also suspicions that Chiu will support the market with the help of the government’s four major funds and NT$8 trillion (US$263 million), and that he keeps saying that foreign investors are positive about Taiwan’s economic prospects despite the fact that they are on the selling side day after day.
Second, there is a crisis of ability and confidence. The government has been very uncertain in its dealing with inflation, the plunging stock market and the inaugural cross-strait direct flights. There have also been problems related to the Financial Supervisory Commission and the central bank. All this has caused falling confidence in the administration’s ability to lead and implement policy.
Third, there is a lack of confidence in the nation’s future. This is the most serious problem. There is only one remedy, and it is supposed to be a panacea, but it still is completely ineffectual. This uncertainty has plunged the country into its deepest confidence crisis in decades.
The ups and downs of the stock market are a reflection of the economic situation, but extremely large fluctuations are the result of investor psychology. To everyone’s surprise, the government completely reversed the order of its already planned cross-strait policy to calm short-term investor sentiment, but without any accompanying measures. It also said that it would complete the deregulation of 25 economic and trade areas before year’s end, without being able to specify what these measures would be. This is an even more preposterous version of the Chen administration’s policy of issuing a benefit a week.
Not knowing what to do, the government is shoving a cocktail of medication down Taiwan’s throat, hoping that something will work, while the patient gets more nervous.
The only way for the KMT to save the situation is to put an end to the fairy tale the party itself created, give up its unrealistic fantasies and take a look at reality so it can set up reasonable goals and cross-strait economic and trade policies. This means the party has to admit to its mistakes. While difficult, it is the only way it can save itself.
Lin Cho-shui is a former Democratic Progressive Party legislator.
Translated by Perry Svensson
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