A Glimpse into Ma Ying-jeou's Economics
Election campaigns in the blogging era are great because they force politicians to show how stupid they are. Ma Ying-jeou gave a classic example the other day when he tried to show up the DPP administration's failure to impose price controls by saying that "Chiang Ching-kuo controlled oil prices. If the DPP can't do it, let the KMT do it."
The pro-Taiwan blogosphere had a field day. As this Executive Yuan chart shows (from Tseng Wei-chen), consumer prices spiked wildly under the younger Chiang's rule: 47.50% in 1972, 19.1% in 1979, and then 16.32% in 1981. The spikes in 1972 and 1981 were of course both direct results of the first and second oil crises. To the extent that Chiang did control oil prices, it was by subsidizing state-run industries at the expense of the taxpayer at a time when Taiwan's economy was not only state-directed, but also almost completely cut off from the outside world.
Ma's economic vision is a conservative one that looks back to the golden age of the 1970s and 1980s under Chiang. His objective, in other words, is to return to an era in which the state dominated a closed economy. But his gaffe on controlling oil prices shows how unrealistic this is. Taiwan's economy has been profoundly globalized during the past two decades, and the state simply cannot set prices as it once did.
What's more interesting is the profound disjunction between this unrealistic objective and the proposed means of achieving it. Remember that Ma's main policy proposals are allowing direct transportation links with China and removing the 40% investment cap. Just how is that going to get us back to the golden era?
China is not going to agree to the non-existent 1992 Hong Kong consensus and Ma will not have the political capital to accept the One China Principle without putting it to a vote. Even if he can, direct links with China mean more globalization and therefore less control over the domestic economy than we have now.
In all likelihood, what we will get is a lifting of the 40% investment cap. And everyone can see I'm sure how allowing what remain of Taiwan's industrial base to relocate to China will get us back to the good old days when the omniscient great man could control prices.