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
Concerns that the US might abandon Taiwan are often overstated. While US President Donald Trump’s handling of Ukraine raised unease in Taiwan, it is crucial to recognize that Taiwan is not Ukraine. Under Trump, the US views Ukraine largely as a European problem, whereas the Indo-Pacific region remains its primary geopolitical focus. Taipei holds immense strategic value for Washington and is unlikely to be treated as a bargaining chip in US-China relations. Trump’s vision of “making America great again” would be directly undermined by any move to abandon Taiwan. Despite the rhetoric of “America First,” the Trump administration understands the necessity of
US President Donald Trump’s challenge to domestic American economic-political priorities, and abroad to the global balance of power, are not a threat to the security of Taiwan. Trump’s success can go far to contain the real threat — the Chinese Communist Party’s (CCP) surge to hegemony — while offering expanded defensive opportunities for Taiwan. In a stunning affirmation of the CCP policy of “forceful reunification,” an obscene euphemism for the invasion of Taiwan and the destruction of its democracy, on March 13, 2024, the People’s Liberation Army’s (PLA) used Chinese social media platforms to show the first-time linkage of three new
If you had a vision of the future where China did not dominate the global car industry, you can kiss those dreams goodbye. That is because US President Donald Trump’s promised 25 percent tariff on auto imports takes an ax to the only bits of the emerging electric vehicle (EV) supply chain that are not already dominated by Beijing. The biggest losers when the levies take effect this week would be Japan and South Korea. They account for one-third of the cars imported into the US, and as much as two-thirds of those imported from outside North America. (Mexico and Canada, while
The military is conducting its annual Han Kuang exercises in phases. The minister of national defense recently said that this year’s scenarios would simulate defending the nation against possible actions the Chinese People’s Liberation Army (PLA) might take in an invasion of Taiwan, making the threat of a speculated Chinese invasion in 2027 a heated agenda item again. That year, also referred to as the “Davidson window,” is named after then-US Indo-Pacific Command Admiral Philip Davidson, who in 2021 warned that Chinese President Xi Jinping (習近平) had instructed the PLA to be ready to invade Taiwan by 2027. Xi in 2017
RSS