Time for some local commentary, Taiwan style. I am of course referring to The Economist’s coverage of President Ma Ying-Jeou, now all over the media here in Taiwan. He was described as an indecisive “bumbler” in TE, which got translated as “ben dan” = dumb egg in the national news over here. It’s a storm of publicity at the moment, and here’s my take.
- CTFO, Taiwan… It’s not like the stuff was a longer, well researched brief in TE or got website publicity from its placement. It wasn’t even on TE’s front webpage! Yet it has nearly 800 comments, and for whatever reason I just spent my entire dinner watching some prime time news discussing it. Don’t you have anything better to do?
- Perhaps the news “rabidly disowning it and egg-pelting The Economist” would have been a better description than “discussing it”. They didn’t really actually even defend the President despite in all likelihood being more or less controlled under his media apparatus, but well, I guess that news station still want some viewers afterwards. Snippets include: “What right do you have to be so arrogant and write a missive from Britain about our economy?” and “Yes, he’s a bumbler, but given the US pressures/Japan island dispute/export market slowdown/anything else that’s not our fault, this is unfair international reporting.”
- Most of those viewers strike me as fairly un-pleasable. Naturally, the internet reaction and sample of people interviewed on TV isn’t exactly the “man on the street” statistical research you want to do to avoid selection bias. Still… THIS is the nation accusing Japan of nationalism? Takes one to call one, I guess… A popularly elected President more or less regularly gets called a traitor whose only wish is to reunite with China and collect favours with the CCP from signing free-trade agreements. Excuse me, but how much does China export to Taiwan relative to the other way around? Which invests more in the other? Do you really think that closing up shop is going to benefit you, or that maintaining free trade with China is a nation-undermining plot to undermine the rights of the Taiwanese?
I am not agreeing with everything President Ma is doing, but lets look at it from a wider view.
- Except for Japan and Korea, Taiwan is the wealthiest Nation proper in Eastern Asia. This discounts Singapore and Hong Kong because they are cities, and not nations in my view. They also have too many special circumstances to allow for proper comparison.
- The government has a very low debt level by international standards, at 40.8%. Rising to meet other GDP shortfalls via spending, of course, but the financial situation of Taiwan and its government is good overall.
- Current account surpluses averaging around 10% of GDP during Ma’s tenure vs. long-run average of 6.8% and against the backdrop of a global slowdown in trade.
- The Gini coefficient was 32.6% in 2000, which is horribly old data, I know, but the most recent and somewhat official numbers I can get points to a worst-case scenario of 38%, and more likely in the 34-36% region as inequality does continue to grow, but does still not resemble a move towards an all-or-nothing economy.
Of course, there are flip sides to this, which include that the powering of the trade is exactly the thing that brings increased income inequality via privately held companies and that the growth of the Taipei area happens to the detriment of the rest of the island. Furthermore, nearly any investment short of property is more or less likely to fall flat (government bond yields are among the lowest in the world! Corporate debt markets – not there yet! Stock market is a casino.) but either there are deeper reasons why the data is lying or the public media outcries are more populism than presentation.
There is a general problem however, which is in a way contributing to making Taiwan a great nation: There is nearly no way to earn your way to prosperity unless you own something that produces wealth. A middle income earner – meaning you have 10 years of work experience and likely a family to support – can expect NT$ 50′-70′ monthly. Fresh graduate means nothing as 98% of your year is in the same batch, so you’re either from the top 5 universities or get a Masters’/PhD pronto, or accept NT$23 000 per month for a few years, which is the average graduate salary after 16 years of study that would put my former European classmates to tears. To put things in perspective, I eat for NT$10 000 monthly alone and my rent and other housing costs is around NT$18 000 monthly. If you want to own property and enjoy the “ride up” of the property market, go ahead. Plunk out NT$50 million (US$1.7 million) for an average 500-1000 sqft apartment depending on location. Rents are “this low” because everyone disregards the 2% rule and just holds for appreciation. The main purpose of renting the place out as far as I can divine is to avoid mold growth and related expenses.
Why does this contribute to make Taiwan successful in a way? It’s populated with very adaptive and insightful people, (so I will maintain my ideas of sampling bias over the TE comments, although their sentiments are echoed in the opinions of the very people I believe makes this a wonderful island) who are trained in capitalism and exports. People are trying to start companies here right, left and centre to escape the income trap, and I do believe that given all the initial conditions, Taiwan has the ability to be one of Asia’s entrepreneurial leaders. Meeting people that speak good English here is an excellent illustration of that: their parents often own businesses operating internationally and emphasize their children’s ability to run export businesses. In Taiwan the main pressure of rich and successful students isn’t to acquire a high-value degree and get a stable job at a big company – it is to start their own company that is better than their parents’ offering so they can do what they themselves want to do. I believe its’ current growth model will serve it a lot better than the South Korea version in the long run, although examples do abound of much needed reform even here in Taiwan.
Count your blessings, count your business opportunities. To those with ideas and initiative to see them through goes the spoils, to the rest… keep complaining if you think it will do you any good. I doubt replacing President Ma will.