You cannot eat soil, but you can plant crops in it. Using the same logic as Hon Hai Technology Group chairman Terry Gou’s (郭台銘) comment that “Democracy makes no pottage,” the statement that follows should be “but it helps develop the economy.”
Democratic reform does not restrict the economy; it helps economic growth because democracy complies with the rules for a free market. Democratic reform benefits economic development.
The study of political economy does not only confirm the benefits of democracy to a thriving economy, it also says that economic development is beneficial to democracy.
These conclusions have been confirmed through empirical observations.
Political democracy supports transparency and stability in the commercial order and, most importantly, reduces government intervention and guarantees fair competition — the most important components of market economies.
In the planned economies of authoritarian states, the authoritarian government becomes the biggest chief executive in the market, with the power to decide the state of the market — from selecting which products should be produced to supply and demand and which companies should be closed or allowed to remain in business.
All this works against a thriving economy, mainly because people are not free and their only purpose is to support the state and be loyal to the national leader. Both daily needs and their way of life are determined by the government. In authoritarian systems, the public has no needs that the government needs to respect, businesses do not have to prosper and therefore, GDP does not grow.
The growth of China, Vietnam and other booming economies is slowing; political reform will be critical to how they perform next.
Issues like the protection of human rights and the environment, and worries about housing, education, healthcare and income distribution, among others, are difficult strategic challenges that will determine their economic development.
In the global trend toward economic transformation, democratic freedom is the most important driver of growth.
The UN has predicted that industrial structures may be reorganized over the next 30 years, placing the information and service industries at the center of global output.
At the same time, the next industrial revolution will see robots take over the manufacturing industry within 10 years.
Finally, the information industry will be disrupted, with big data alongside cloud technology directing services. These trends require data and creative individuals.
However, creative individuals develop in democracies, which provide the political environment required for the cultural diversity, tolerance and freedom of expression that nurture them.
This nation’s problem grows from the struggles of the manufacturing industry during its economic-structural transformation.
What differs from the global situation is that Taiwanese industry continues to emphasize technological and other hardware-related trends, while international enterprises include population and humanities experts who deal with global demographic structures and diverse national cultures to create new products with their technical departments.
Taiwan is used to a manufacturing industry focused on hardware, but the key to meeting the future lies in creativity, design and application.
Democracy is the strongest future economic driver, because only in an open political system will the economy be able to realize its greatest potential.
Su Tzu-yun is president of the Center for Advanced Technology at Tamkang University.
Translated by Perry Svensson
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