Wednesday, February 18, 2009

A Warning From The Book The Wealth of Nation

The recent economic situation in Taiwan is getting worse, as everyone knows. Economy will of course eventually recover...but many people in Taiwan I believe are not only anxious about economy, but indeed about the fate of the whole nation. There is a paragraph in the book The Wealth of Nation that makes me worry more, or rather, confirm more about my worry about where KMT is taking Taiwan. It's common knowledge that KMT is quite close to most big cooperation, and a lot of times KMT listen to business people, to get more support during election...A few examples are the recent direct link between Taiwan and China, and the current plan for CECA. KMT did all these quite forcefully, without much discussion in legislatures and in public, even though a lot of people express great concern over those policy. Of course now a lot of benefits of those policy the KMT promised has proven to be false.

But what concerns me is this passage from the chapter Rent of Land: Conclusion in the book. Basically the book separate the society into 3 types of great, original orders from which other orders derived: those who live by rent, those who live by wages and those who live by profit. And it has this to say about each of them:
  • Those who live by rent (TLR):
    "They are the only one of the three orders whose revenue costs them neither labour nor care, but comes to them, as it were, of its own accord, and in dependent of any plan or project of their own. That indolence, which is the natural effect of the ease and security of their situation, renders them too often, not only ignorant, but incapable of that application of mind which is necessary in order to foresee and understand the consequences of any public regulation."
  • Those who live by wages (TLW):
    "...But though the interest of the labourer is strictly connected with that of the society, he is incapable either of comprehending that interest, or of understanding its connexion with his own. His condition leaves him no time to receive the necessary information, and his education and habits are commonly such as to render him unfit to judge even though he was fully informed. In the public deliberations, therefore, his voice is little heard and less regarded, except upon some particular occasions, when his clamour is animated, set on, and supported by his employers, not for his, but their own particular purposes."
  • Those who live by profit (TLP):
    "...But the rate of profit does not, like rent and wages, rise with the prosperity, and fall with the declension, of the society. On the contrary, it is naturally low in rich, and high in poor countries, and it is always highest in the countries which are going fastest to ruin....As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgement, even when given with the greatest candour (which it has not been upon every occasion), is much more to be depended upon with regard to the former of those 2 objects, than with regard to the latter. Their superiority over the country gentleman is, not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his. It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction, that their interest, and not his, was the interest of the public. The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market maybe frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution, and ought always to be listened to with great precaution, and ought always to be adopted till after having been long and carefully examined, not only with the most scrupulous, but wit the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."

These quote are now common knowledge of course. Public mostly dislike political party and government getting too close with the lobbyist from corporations. Monopolies etc are considered a grave danger against fair competition in a free market economy etc. But still, to read it in detail, and the original reasons behind these common knowledge, enlighten me in a sense. And indeed, although it's common knowledge, a lot of people in Taiwan doesn't seem to pay much attentions to this. Taiwanese media etc, also seems to have a tendency to idolize major business leaders in Taiwan into heroes, myth and legend etc. Of course, those business leaders have their merits, and their success story are worthy lessons. But to idolize them might give them too much influence on the public opinion...when their business interests are not exactly align with the public interests and they are still able to persuade the public into following their direction, that could put the country in danger.

But in Taiwan's recent case, it's even more complicated. The recent gravel and sands transport incidents, over blown tourism prediction, and new problems faced by China Airline and EVA air transport (China Airline is Taiwan owned company but called China Air, confusing, but that's the name) can only means 2 things:
  • Ma and KMT are naive to the point that they did a very crappy job in the point that China took a big advantages out of them.
  • They just intentionally want to hustle even those TLP.
I believe it's actually 2 of those things at the same time, ie Ma tried to bullshit during election, but by setting up time lines and overblown target number, he and his government basically flip all their cards open before the negotiation. Their open cards, naivety and false fantasy on China, cause the later problems to occur. I can go further and speculate a theory of conspiracy between people in CPP and KMT, to sell Taiwan out, but that would be too speculative, and probably useless. Suffice to say that CPP and KMT seduced TLP, TLP then convinced TLR and TLW to support KMT...on things that does not align with public interests, but the interests of CPP, KMT and those TLP who didn't get hustled by CPP and KMT.

The important thing is that it's very obvious that China want the control over Taiwan, and Ma's eventual goal is unification with China. Right now they are creating conditions for quite a speedy way. Even the promises Ma made during election are broken. That is why a lot of people are worried.

A year or so ago KMT's Lien announces "unifying KMT and CPP power to subdue Taiwan (Independence)." CPP also said they will use the strategy of "Using TLP to effect Taiwan Politics." I definitely see their strategy at work right now.

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