The Cabinet has been acting like ants in a wok over recent trouble in the stock market. Now, Vice President Vincent Siew (蕭萬長) has suddenly come back to life as head of the government’s financial and economic advisory team. Does he stand a chance?
Siew’s proposals over the past few days have been riddled with problems. The Cabinet met with Siew and President Ma Ying-jeou (馬英九), and after being given some advice, it happily announced that the stock transaction tax would be halved and that this measure was a brilliant way of saving the stock market.
Unfortunately for the Cabinet, the measure was heavily criticized for interfering in the market. In sacrificing NT$60 billion (US$1.9 billion) in tax revenue for the year, the government managed to give the market a mere one-day boost. The measure also gave foreign investors an opportunity to sell off stocks, while retail investors once again found themselves locked in by falling prices.
Siew also suggested that Taiwan learn from China and Singapore and organize Formula One contests as a way of boosting the economy, in the process revealing himself to be a complete outsider on racing matters: He was unaware that the two countries are not able to keep the events up and running.
Yet Siew is still the Chinese Nationalist Party’s (KMT) only choice for such intervention, indicating that there is a serious lack of talent within the party.
FIGHTING, NOT RULING
The pan-blue camp has always said that the pan-green camp is capable of fighting but incapable of ruling.
This is not inappropriate: After living through the White Terror and the Martial Law era, many died or went to prison. When the pan-green camp finally won power, reputations were destroyed by the activities of former president Chen Shui-bian (陳水扁).
The KMT regained power with hardly a fight thanks to the public’s dislike of Chen. However, it has been equally inept in office and quickly tarnished its reputation.
There have been leaders who could both fight and rule, such as Tang Dynasty emperor Li Shimin (李世民), Qing Dynasty emperor Kangxi (康熙) and, in modern times, those who brought about the Meiji Restoration.
Leaders who only know how to fight are more common, as with the leaders of the French Revolution and Mao Zedong (毛澤東). Soviet leader Joseph Stalin and some emperors of the Han, Song and Ming dynasties didn’t really begin their period of rule until they had executed most or all of the officials who had done the fighting for them.
Although the former government did appoint some outstanding government and party officials that contributed to the social security system and general industrial transformation, Chen and other key leaders, while adept at fighting, did not know how to rule and failed to promote a sufficient number of capable people.
This was why they had to step down in shame after eight years.
The KMT thinks it did great job of running Taiwan before the DPP took office, and that it was so blessed with capable leaders that retaking power would be a simple thing. Unexpectedly, the result has been a mess, and in the ensuing panic many mistakes have been made, inciting the stoking of public discontent. What went wrong?
LIKE BANDITS
The Democratic Progressive Party’s (DPP) “revolutionaries” were like bandits. They had no time to prepare themselves for taking power, not to mention alter the habit of undercutting their own support. While Chen did manage to tame this kind of behavior, he became so dominant that people only saw his despotism and incapacities, not his achievements.
The KMT, on the other hand, only understands authoritarian, not democratic, rule. It lives in the past and does not understand the world today.
One important reason for the public’s disappointment and the KMT’s problems is Siew himself. It was he who proposed the unrealistic “6-3-3” promise. In the 1990s, he headed, at different times, the Council for Economic Planning and Development, the Ministry of Economic Affairs, the Mainland Affairs Council and even the Cabinet itself, thus dominating the nation’s financial and economic affairs.
The average economic growth rate over the period was greater than 6 percent and unemployment was lower than 3 percent. Recalling the glorious past, he believed the “6-3-3” policy could be implemented.
But past economic growth had been supported by the US’ Internet bubble and an asset bubble that Siew had created through a mixture of government relief and investment expansion programs.
This bubble resulted in almost NT$2 trillion in bad loans, which exposed the 6 percent growth rate as hollow. The “6-3-3” policy is based on this kind of policymaking, and naturally does not stand up to scrutiny.
Another source of disappointment is that the public used to believe that when Taiwan relaxed economic and trade restrictions on China-bound investment, it would benefit from China and become a small giant on the shoulders of a big giant, as Siew once said. This bubble has burst, too.
During its period of authoritarian rule, KMT policy on business depended on two things: US and Japanese technology and a huge US market on the one hand, and a strong leader who could back policy until implementation on the other.
RELIANCE, NOT STRENGTH
Today, since it believes the US is no longer reliable, the government must rely heavily on China, but does so without seeking to strengthen its position. With China also proving rather unreliable, more problems follow.
In addition, officials dare not make decisions without the backing of a strong leader, and they lack confidence without such support. Sometimes, the Cabinet even dances to the tune of powerful political commentators.
Because Siew is talking loudly and assertively at this point, the Cabinet is asking for his support. Yet he has let the cat out of the bag by proposing surprising policies that just aren’t feasible.
But, it seems, he is the Cabinet’s only choice, and with this fact comes the conclusion that Taiwan’s economic development will likely slow to a crawl.
Lin Cho-shui is a former DPP legislator.
TRANSLATED BY EDDY CHANG
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