Tuesday, September 18, 2012

Taiwan’s squandered 12 years

A vendor trades her wares at Xingtian Temple
Tackling entrenched interest groups will not be easy and will have political costs domestically. But, this needs to be done 

For 12 long years, every administration that has occupied the Presidential Office has failed to do what was necessary to ensure the nation could keep pace with a rapidly changing world. The cost of such inaction is becoming increasingly salient and will become heavier still, with the risk that Taiwan will become obsolete not as a result of political isolation, but from an irreversible exodus of brainpower and capital. 

Former president Chen Shui-bian’s (陳水扁) Democratic Progressive Party (DPP), which came to power on May 20, 2000, after 53 years of uninterrupted Chinese Nationalist Party (KMT) rule, came in as a left-of-center party, proposing a more socialist alternative to the conservatism of the KMT. 

However, neither the unfavorable context that arose from the Sept. 11, 2001, terrorist attacks, nor Chinese obstructionism or the party’s lack of ruling experience can fully account for the little that the Chen administration, over the two four-year terms it was given, had to show when it comes to modernizing Taiwan. And the KMT, which unseated the DPP in 2008 on promises it would “revitalize” Taiwan’s economy after eight “wasted years,” has not fared any better. 

My op-ed, published today in the Taipei Times, continues here.


Michael Fagan said...
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Michael Fagan said...

(My html tags went missing)...

"That is not to say that more equitable wealth distribution or protecting certain sectors of the economy are intrinsically wrong policies..."

No need to worry - your article makes no such claim, and you are not likely to lose your friends on the Left any time soon. The complaint is not against a more equitable (platykurtic) distribution of resources, but the means to pursue that end, which, let's be honest, is systematic theft. Were a more platykurtic distribtion of resources to emerge from a free-market order, then there would be no complaint.

"However, much more could and should have been done to bring Taiwan into the 21st century by creating a business environment..."

(Emphasis mine). The tacit assumption there that the State should "create" a better business environment is an important error on two counts.

The elementary fact, stripped to bare essentials, is that the State does not and cannot "create" since its powers of action lie along three principles: theft, punishment and prohibition. At best, the State can merely "redirect" (euphemism) resources to a more productive use - although this is usually not the case.

The two errors:

1) The use of the term "create" implies that the State has direct responsibility for economic success. It does not. To defend the politicians for once, it is not directly their fault if the aggregate measures of the economy improve or retard. The reason for this is that, in their capacity as "public servants", they are not the people who are actually engaged in the production of value. They are merely the people who put various badly designed obstacles in the way. Feeding the electorate mushroom-words like "create" only induces the hallucination that material and ethical progress can be outsourced to career politicians - people of limited intelligence and knowledge, but often unlimited ambition. It is important not to do this because that hallucination gives people an easily-accessible and generalizable excuse not to act morally on their own powers (consider the constant urges of silly little girls for the government to set up "rescue shelters" for the abandoned animals when what those animals actually require is a real home with real owners who really care about them). It is a psychological habit that a future CCP-KMT government would find especially convenient.

2) It perpetuates unrealistic expectations and, through the disappointment of those expectations, cross-generational disillusionment and apathy. At best, the people running the State can merely reduce its' taxation, legislative and regulatory apparatus either toward a generalized reduction in scale (e.g. spending cuts, tax cuts, elimination of subsidies) and aspect (e.g. repeal of legislation granting its most salient predatory powers, relinquishing of monopolies etc), or they can redirect the actions of the State so as to achieve a different pattern of economic incentives around which new interest groups will coalesce (usually themselves of course - and this therefore presupposes a DPP electoral victory). The first of these is harder and generally speaking is still "unthinkable" (which is one reason why I am blacklisted), the second option is easier and allows its advocates the luxury of appearing "pragmatic" and "non-ideological" but it preserves the source of the problem.

And that is the real problem, and the real choice: the systematic theft and prohibition of Statist means, or the systematic voluntary cooperation of the market. There can be no third solution, only various incompatibilities of the two.

I am only sorry that there appears to be nobody more intelligent and articulate than me to says this sort of thing - which is perhaps explained by a point your article makes about disincentives to the top entrepreneurs to come to Taiwan.