March 17, 2013, by Editor

Mind The Gap

By Paul R. Katz.

One of the most striking aspects of Taiwan’s 2012 presidential election was the contrast between campaign financing, with Ma Ma Ying-jeou 馬英九 earning widespread support among local business leaders (especially those with sizeable investments in China), while his opponent (DPP presidential candidate Tsai Ing-wen 蔡英文) attracted outpourings of smaller donations from the citizenry in the form of piggy banks full of coins. At the time, I characterized the election as featuring The People vs. The Machine, “with the implications of victory for either side being profound indeed when it comes to the future of Asian democracy”. Well, we know which side won, and the results are not at all pretty.

Ma’s rule has been predicated on promises of prosperity due to closer links with China, including annual economic growth of 6%, per capita income of $30,000 and unemployment of 3 percent. However, while more open ties with China have resulted in direct flights and large numbers of Chinese tourists pouring money into the local economy, the benefits of such trends often appear limited to those with leadership roles in related enterprises. For the majority of Taiwan’s people, the past year has been one of stagnating or even declining standards of living. Despite the Ma administration’s predictions of a 4.58% economic growth rate for 2012, Taiwan’s overall performance ended up being worst among both the 4 Asian Tigers and 12 major Asian nations. Unemployment was the highest in East Asia, especially among young people, and wages declined to levels not seen in 14 years, with college graduate fortunate enough to find a job earning as little as NT$22,000 (approximately US$700) per month. The result is that Ma’s approval ratings have fallen to the teens. Even the Lunar New Year crowds that used to show up for his red envelopes have dissipated.

The recent decline in Ma’s popularity was sparked by a cavalcade of rising prices, beginning with hikes in government-subsidized fuel and electricity rates (油電雙漲) that have proven devastating to lower-income families. Prices for a wide range of consumer goods are continuing to spiral upwards, with no end in sight. The impact of these price hikes has been especially troubling due to the growing income gap between the wealthy and the poor, which began to expand in 2009 following Ma’s election and has remained nearly steady (or even worsened) ever since. The months following Ma’s reelection have seen the income gap skyrocketing to a historic high, with higher prices and stagnant wages pushing ever more families below the poverty line.

Some of this misery is the result of economic trends, but larger structural inequalities are at work as well. While some have noted that Taiwan’s tax system is full of loopholes for wealthy investors, far more attention has been devoted to a crisis in the national pension system (年金制度). On the one hand, this system is heading towards its own “fiscal cliff”, with concerns that it could go bankrupt during the next couple of decades. On the other hand, the entire system is heavily weighted in favor of civil servants, who enjoy far more generous benefit packages than laborers, and at rates that their peers in other developed countries would envy. Taiwan’s newest cabinet is working on a reform scheme, but how far it will go in terms of addressing systemic imbalances remains to be seen. A related issue involves the often lavish year-end bonuses granted to government employees (which can range between 3 and 4 times their monthly salaries), while nearly 5 million workers get no bonuses at all. Plans to scrap some of these bonuses have caused considerable controversy, especially among their beneficiaries, many of whom are die-hard KMT supporters.

While the Ma administration continues to agonize over pension and bonus reforms, it showed far less compunction in spending NT$20 million to sue unemployed workers charged with failure to repay loans given to them nearly two decades ago after their employers shuttered their factories and fled the country without paying their wages. Some evidence indicates that these funds were in fact grants, but in any case there is no way that these laborers could repay the money, so a group of them responded on February 5 by lying across the tracks at Taipei Main Station, disrupting travel for thousands of commuters. Ma chose to label the entire incident as a “legal problem”, which may be technically accurate, but gives the impression that the government is more interested in its budget and regulations than the welfare of maltreated workers.

Perhaps all this sounds familiar? In some ways, Taiwan resembles America after eight years of Republican rule, with the gap between the wealthy and those less fortunate growing ever wider, and the promised “trickle down” never materializing. In the U.S., however, one clear priority for President Barack Obama’s second term is to level the playing field. In Taiwan, the Ma administration may be uttering similar rhetoric, but hardly evinces the same sense of mission. Take for example the issue of the minimum wage (基本工資), held largely in place due to the deteriorating economic situation and fears of reduced profit margins, with highly adverse consequences for the working class, and especially young people. Now, at last, there is talk of raising it, but hardly the sense of urgency and commitment seen in Obama’s State of the Union address, the relevant section of which reads as follows: “It could mean the difference between groceries or the food bank, rent or eviction, scraping by or finally getting ahead…In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while C.E.O. pay has never been higher”.

Somehow, one can never quite imagine Ma or any member of his cabinet saying such a thing, or even thinking it. Most of the current political elite (including a sizeable percentage of mainlanders) were born with silver spoons in their mouths and groomed at the best schools here and abroad, ascending the ladder of success without having to deal with more mundane matters like buying groceries, filling their own gas tank, or paying a utility bill. Such elites often lack any understanding of how much of the populace struggles to get by on the equivalent of US$1,000 per month (or less), and in some ways seem little different from another group of elites in Rome, recently described as being “at a remove, very much involved in protecting their power and comfort”. This can be seen in Ma’s quest to preserve his position as KMT Chairman at all costs.

While a few extremists show no love for their island home (consider the case of one individual who penned a now infamous essay referring to Taiwan as a “Demon Island”), the majority of these elites simply seem out of touch. Such behavior starts at the top, with Ma exhibiting a peculiar proclivity for reciting passages from Mencius 孟子 (see for example the Office of the President website). One account (see this YouTube video, starting at the 2 minute mark) describes Ma as quoting the following from the “King Hui of Liang” (梁惠王) chapter to an audience of fishermen in order to persuade them to throw back any small fry: “If you do not interfere with the busy seasons in the field, then there will be more grain than the people can eat; if you do not allow nets with too fine a mesh to be used in large ponds, then there will be more fish and turtles than they can eat” (不違農時,穀不可勝食也;數罟不入洿池,魚鱉不可勝食也; see p. 51 of the 1970 D.C. Lau translation). The number of fishermen who actually understood these lines has yet to be determined.

Other signs of the ruling elite falling out of touch include minor matters such as the current Premier claiming to be an avid baseball fan but proving unable to identify any of the star players from the national team when shown their photos, or a plan to design a new “Taiwan happiness index” (台灣幸福指數), one criteria for which includes having a flush toilet in one’s home. More serious instances involve the government’s insisting on moving forward with construction of the Fourth Nuclear Power Plant (核四), despite massive protests against the decision and grave concerns about the plant’s safety.

Fortunately for Taiwan, the world economy seems to be picking up, and in turn the island’s exports are starting to rise and more firms seem interested in hiring new workers. However, the extent to which any recovery will contribute to erasing the gaps described above remains to be seen. While it is hardly fair to blame politicians for economic trends often beyond their control, one can at least expect them to have the vision and the courage to try and rectify the situation. It is no single politician’s fault that such inequalities exist, but it is inexcusable to lack the ability to appreciate their severity, fail to take the lead in shaming society for allowing them to exist, and bumble in proposing concrete solutions, particularly when a politician has already won reelection and will never have to run for office again.

Paul Katz is a Research Fellow at the Institute of Modern History, Academia Sinica in Taiwan.

Posted in Taiwan