When President Ma Ying-jeou (馬英九) clarified his “6-3-3” economic platform (GDP growth of 6 percent, 3 percent unemployment and per capita income of US$30,000) by saying the targets were to be achieved by 2016, his statement provoked accusations of reneging on election promises and sparked a sell-off on the stock market.
On Sept. 5, he again changed his tune, saying: “The US$30,000 target was always set to be achieved by 2016. The other two targets can be achieved within my first term.”
What Ma is telling us is that while we have to wait until 2016 for the US$30,000, his government will have a go at reaching the other two goals by 2012.
I find myself doubting whether Ma really understands his own policies, or what his repeated adjustments really mean in economic terms.
First, with regard to the economic growth rate, the original target of Ma’s election platform was presumably to maintain an average annual growth rate of 6 percent for four years, rather than to achieve 6 percent growth only in the last year of his term.
Leaving decimal points aside and speaking in terms of simple interest, if GDP were to fall 6 percent for each of the first three years of Ma’s term — thus shrinking 18 percent over the whole three years — only to grow by 6 percent in the fourth year of his term, would that mean that Ma’s economic policy had achieved its target? Of course not, because Taiwan’s economy would have declined by 12 percent during Ma’s presidency. Any president with such a record would surely be kicked out of office.
If, on the other hand, Ma means that he can maintain 6 percent growth on average over four years, then the target is unattainable. Why? Because if the growth rate falls below 6 percent in the first year, then it gets that much harder to achieve 6 percent average growth over the four years.
For the first 12 months for which Ma can be held accountable, that is, from his inauguration on May 20 to May 20 next year, it is already clear that the economy will grow by less than 4 percent. That means that growth would have to be 6.7 percent or more in each of the following three years to reach an overall average of 6 percent. Judging by Taiwan’s economic performance in recent years, GDP will not grow by 6.7 percent annually for those three years.
Second, Ma wants to bring unemployment down below 3 percent, which of course means keeping it below 3 percent on average over the four years, rather than only in the last year. To illustrate the point: if the unemployment rate in each of the first three years of Ma’s presidency were to be 10 percent, and then in the fourth year it were to come down to 3 percent, it would mean that many people were unemployed for the first three years and only found work in the fourth year. In Taiwan’s case that would not be an admirable achievement, but rather a miserable one, so it cannot be what Ma has in mind.
What we have seen, though, over Ma’s first 100 days in government, is that the employment situation keeps deteriorating. The target of bringing unemployment down far enough in the next three years to achieve an average of less than 3 percent for Ma’s term is, therefore, mere wishful thinking.
Third, if Taiwan’s per capita income for this year is US$18,000 and the figure grows by 6 percent each year, then in 2016 it would be US$28,689 — not far short of the promised US$30,000. If, however, the target is not met, then real per capita income would not reach US$30,000 even by the end of a second term in office, 2016.
In conclusion, either Ma is fooling himself or he is trying to fool the rest of us.
Lin Chia is an independent commentator.
TRANSLATED BY JULIAN CLEGG
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