Even-handed, wrong-headed
The Taipei Times’ recent overall coverage of economic developments displays an attempt at even-handedness that belies a misunderstanding of the nature of what is happening.
On the one hand, your readers are told that Taiwan relies excessively on exports to, and other investments in, China and that there is in contrast a pressing need to “stimulate” domestic demand.
On the other hand, they are told that further depreciation of the NT dollar is necessary to boost Taiwan’s export economy.
You do not have a coherent stance on economic affairs and consequently are of no help to your readers.
Taiwan’s export economy will continue to contract for a long time yet. That is because the US Congress’ “stimulus bill” will fundamentally alter the basic political and economic premises of that country over the coming years. The consequences of that alteration, which is now in progress, will eventually be catastrophic for world trade.
In that context, a chief danger to the Taiwanese people is the risk of the government furthering an inflationary monetary policy in the coming years, not merely to give aid to the export economy and save jobs that cannot be saved, but to pay for massive increases in domestic security expansion.
What better way to thwart such a potentiality than by a shift to a stable monetary system with the abolition of the central bank — such as would be required either under a system of free banking or a revival of the now forgotten gold standard?
Contrary to popular opinion, the technical difficulties of effecting such a transition are far from insurmountable — indeed, they are not overly complicated.
The chief difficulty lies with legal and political barriers, not the least of which is the assured opposition of the government together with a great many exporting industries.
Yet, if enough public pressure were brought to bear on these interests, it may be possible to force them to accept a change in the monetary system. It is therefore high time for a complete change in your overall editorial policy.
MICHAEL FAGAN
Tainan
A rude awakening
The Directorate General of Budget, Accounting and Statistics has released its latest “shocking” prediction: Taiwan’s GDP will experience an historic decline of 2.97 percent this year. The last quarter alone witnessed a drop of 8.36 percent.
This newly released figure serves as a rude awakening for President Ma Ying-jeou’s (馬英九) government. After all, it optimistically projected 2.5 percent economic growth last month.
In response, many Cabinet members, including Premier Liu Chao-shiuan (劉兆玄), have stepped up efforts to ensure that the public retains confidence in the government.
But foreign investors and commentators, including the Hong Kong-based CLSA and The Economist, share a pessimistic view on the Taiwanese economy.
CLSA predicted that Taiwan is on track for 11 percent GDP contraction. Although Council for Economic Planning and Development Vice Chairman Hu Chung-ying (胡仲英) rushed to dismiss the forecast and labeled it as “exaggerated,” Ma’s administration should re-think its posture.
This month’s edition of The Economist noted that Taiwan’s output dropped by 32 percent in the last year and exports declined by 44 percent in the year to January.
Recent economic developments in Taiwan have proved to be the antithesis of what Ma envisaged and promised in his prominent “6-3-3” campaign slogan. Instead of realizing this vision, the Taiwanese economy has suffered frightful damage, most notably the plummeting of the Taipei Stock Exchange.
In an attempt to reverse the trend, the government implemented a voucher program, offering NT$3,600 to each person. The vouchers, which scored a modest result in Japan in the 1990s, attracted headlines in Taiwan for a few days before losing their magic touch.
Ma is facing an adverse international economic environment. He shares a similar fate with South Korean President Lee Myung-bak, who has been unable to deliver on his campaign promises. But Lee has reshuffled his Cabinet and publicly apologized twice. In contrast, Ma briefly apologized for Taiwan’s poor economic performance in a TV interview.
When a democratically elected president talks of lofty goals, he should methodically outline the steps that will translate them into reality. When facing setbacks, a responsible leader admits to mistakes and adjusts policy in accordance with the national interest.
THOMAS CHOU
Seattle, Washington
It’s worse than they think
Taiwan’s leadership misunderstands the world financial crisis. This is no ordinary recession because the bad financial instruments that originated in the US (and then sold around the world) amount to US$100 trillion, not the less than US$10 trillion in the US housing sector that the derivatives were based on.
The Taiwanese economy is inordinately dependent on exports, and those bad investments will substantially curb other country’s imports. Taiwanese banks are holding a tremendous number of bad loans.
In Japan, the bursting of the housing bubble meant that a similar problem with bad assets stalled economic activity for a decade.
In other words, in addition to continued steep declines in exports, the Taiwanese banking system is in no shape to fund an economic revival.
Of course, like almost all governments, Taiwan’s leaders are going to continue to bury their heads in the sand rather than honestly admit to the true scope of the problem.
Recently, it was predicted that Taiwanese GDP would drop more than 10 percent this year, but rebound in the second half of the year.
Poppycock.
With that amount of bad international debt and a badly damaged banking sector, plus continued weakness in demand for exports, you will be lucky to have only one lost decade like Japan in the 1990s.
On behalf of the US, I apologize.
BRAD ARNOLD
Saint Louis Park, Minnesota
To The Honorable Legislative Speaker Han Kuo-yu (韓國瑜): We would like to extend our sincerest regards to you for representing Taiwan at the inauguration of US President Donald Trump on Monday. The Taiwanese-American community was delighted to see that Taiwan’s Legislative Yuan speaker not only received an invitation to attend the event, but successfully made the trip to the US. We sincerely hope that you took this rare opportunity to share Taiwan’s achievements in freedom, democracy and economic development with delegations from other countries. In recent years, Taiwan’s economic growth and world-leading technology industry have been a source of pride for Taiwanese-Americans.
Next week, the nation is to celebrate the Lunar New Year break. Unfortunately, cold winds are a-blowing, literally and figuratively. The Central Weather Administration has warned of an approaching cold air mass, while obstinate winds of chaos eddy around the Legislative Yuan. English theologian Thomas Fuller optimistically pointed out in 1650 that “it’s always darkest before the dawn.” We could paraphrase by saying the coldest days are just before the renewed hope of spring. However, one must temper any optimism about the damage being done in the legislature by the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP), under
As Taiwan’s domestic political crisis deepens, the opposition Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) have proposed gutting the country’s national spending, with steep cuts to the critical foreign and defense ministries. While the blue-white coalition alleges that it is merely responding to voters’ concerns about corruption and mismanagement, of which there certainly has been plenty under Democratic Progressive Party (DPP) and KMT-led governments, the rationales for their proposed spending cuts lay bare the incoherent foreign policy of the KMT-led coalition. Introduced on the eve of US President Donald Trump’s inauguration, the KMT’s proposed budget is a terrible opening
US President Donald Trump on Monday gave his inauguration speech. Although mainly directed at US citizens, his words were subject to global scrutiny by leaders and others wanting to understand more about his intentions for his second term. The US has been Taiwan’s strongest ally since the end of World War II and Trump’s first term brought many welcome advances in Taiwan-US ties. Still, many Taiwanese are concerned about what Trump’s second term will mean for the nation, especially after comments he made concerning Taiwan’s national defense and semiconductor industry. During Monday’s address, Trump said that the US “will once again consider
RSS