There is a Taiwanese saying that goes: “Man has two legs, money has four.”
As Taiwan’s economic bubble formed, this adage was often used to describe a situation in which it was easier to get rich by investing than through genuine hard work.
Indeed. In the past, Taiwan’s export-led economy benefited from Taiwanese industriousness and a fondness for saving money.
A plentiful supply of capital allowed Taiwan to gradually change from labor-intensive to capital-intensive industries. When capital-intensive industries became the dominant motivating force in the economy, shareholders — as providers of capital in a market economy — received a greater portion of the fruits of economic development than employees.
In reality, however, not everyone can become a shareholder.
According to figures compiled by the Directorate-General of Budget, Accounting and Statistics, Taiwan’s nominal economic growth for the period 1998 to 2007 was 36.77 percent, but the average disposable income for each family only grew by 5.49 percent over the same period. It is clear, therefore, that most families did not get much of a share of the nation’s economic growth.
There was a period in which Taiwan’s information and electronics industries enjoyed strong growth and were hungry for talent. Companies in these sectors attracted technical personnel through profit-sharing arrangements that turned employees into shareholders. This created a layer of families comprising the scientific and technical elite — with no entrepreneurial background.
Unfortunately, the development of capital-intensive industries was limited by a lack of core knowledge and technical content. The information, electronic, petrochemical and other industries of which we were once so proud today face immense challenges as the international economic downturn squeezes profit margins.
Even white-collar technological employees who previously used specialist knowledge to get a share of the profits now face forced leave without pay and even unemployment. It seems that the only ones left in the winning circle are entrepreneurs with cross-sector mobility or political influence.
If government policy continues to give disproportionate protection to the interests of entrepreneurs, and if corporate responsibility to society does not become a widely accepted value, then the gap between rich and poor will continue to grow.
A one-sided policy of promoting economic growth by encouraging the development of capital-intensive industry instead of nurturing knowledge and technology-intensive manpower is one of the reasons for the growing rich-poor divide we see today.
Now, with the economy in recession, the cumbersome and inefficient nature of capital-intensive industries makes it hard to push through tax reform. The only thing that can be done is to call on the government to understand the importance of a knowledge-based economy.
The government should invest in creating a market environment and an education system that favor innovation, allowing people to realize their potential through innovation and creativity, to enjoy a share of the benefits of economic growth and to live and work in prosperity and dignity through the fruits of their labor.
This would be the best kind of education for families and for society in general, as opposed to government propaganda on “morals” and “good taste” that tells people how to live their lives.
Tristan Liu is a consultant for Taiwan Thinktank.
TRANSLATED BY JULIAN CLEGG
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