A Modest Proposal for Hollow Men

Friday October 3, by Jerome F. Keating Ph.D.

For Taiwan, it is now some four years since President Ma introduced the Economic Cooperation Framework Agreement (ECFA) and a year since its "promised land" subsequent cross-strait service trade agreement. The calculated plan of all this has been that it would surely kick-start Ma's Golden Decade. That decade with promises of renewed prosperity would in turn hopefully salvage Ma's bogus 6-3-3 promise of 2008. It has been a long winding path for Taiwan and not without its chorus of accompanying Chinese Nationalist Party (KMT) pundits whose prophetic promise has been the rapture of future economic salvation, a rapture if people will only believe. Unfortunately, however, Taiwan still remains in the shadows of unfulfilled dreams. And one can only think of the lines of T. S. Eliot's The Hollow Men.

"Between the conception And the creation, Between the emotion And the response, Falls the Shadow."

For the shadow of unfulfilled dreams and vague economic promises is what Taiwan has been living under for all six years of Ma's reign. And recently joining the chorus, The Wall Street Journal is only the latest to sully its editorial pages with both the repeated vague promises of fortunes galore balanced with gloom and doom predictions of Taiwan's demise if Taiwan, without proper examination, did not immediately jump on board the great gravy train of trade.

One can only marvel at the extent of ink and words that have been wasted in this vagary of vagaries. It is not that anyone doubts that trade and globalization can be beneficial; it is just that there are good trade deals and there are bad trade deals and to tell the difference you have to examine them carefully. Regardless, each side continues to trot out its "experts" and supporters, but none go to the heart of the matter.

On Ma's side, the creation of his team has not lived up to its conception. Similarly, the response has not lived up to the promised trade emotion. Yet with a track record known more for incompetence and bumbling, the Ma government still ironically presses on with its simple "Trust us (blindly)" motto.

Thus while Ma's team is saying, "Trust trade with benevolent China and we will all prosper." What the other side is saying is the line from the film Jerry Maguire, "Show us the money." Or to paraphrase it in context, "Be transparent and show us how the long term risks to our sovereignty and growth don't outweigh any temporary profit." As a result, Taiwanese still find little solace in the continuing lines of Eliot.

"Between the potency and the existence, Between the essence and the descent, Falls the shadow."

Amidst this shadowy rhetoric, the continued promise of trade potency remains but with no clarity of result, and despite the prediction of a strong economic essence, a descent seems dangerously imminent. The shadow remains. It is with this in mind that I put forth a modest proposal with a more bottom line clarity that could satisfy the calls for transparency and set the stage for rational discussion.

There are some 64 Taiwanese industries on the table that are to be opened up to the People's Republic of China (PRC) and Chinese investment; we leave the 80 some industries that the PRC will open for future separate comment. Further, these 64 industries contain thousands of small and medium-sized Taiwanese businesses that will be at risk. Among these industries are those that involve Taiwan's infrastructure, its telecommunication and printing fields, its freedom of speech and security. All are vital fields with grave potential danger that should not be entered into without proper examination and debate.

Comparing Taiwan and China as two international corporations working a deal the question remains. "How carefully should a medium-sized corporation enter into a deal with a larger corporation especially when that larger corporation continually threatens a hostile takeover if its long range terms are not met?" Does it not make good business sense for the medium size corporation to examine all facets of any deals especially if the larger corporation also seeks to control the other's supply chain?

Enter then transparency. Most admit that among the 64 industries that Taiwan will open to the PRC, there will be some areas that favor Taiwan and others that favor the PRC. But here is the key, no one spells out the vagary of how many and which ones. Continuing the business analogy, a way to do this is to formulate a Boston Matrix to evaluate the 64 in a simple, clear, direct way like a portfolio. Let us consider that the government is the Cash Cow of the matrix; it of course will support all directives of the State and must be protected at all costs. That leaves three remaining matrix categories where the 64 industries can be put on a balance sheet for all to see and be openly discussed and evaluated. Which ones are considered Dogs (losses) that could be sold off or left free for outside investment and control; which ones are Stars (guaranteed winners) that must be protected in their rise and finally which are Question Marks (possible stars or dogs) where outside investment can aid growth or hasten decline.

In Taiwan's vagary of vagaries, no pundits have thus far risked any opinion except to continue uttering the mantra that trade and investment are good. As hollow men they have only provided hollow promises and hollow solutions. But Taiwan's citizens as stockholders in this corporation deserve much more than that.

The proposed portfolio discussion and debate provides each side the opportunity to classify industries and ask for proof from stockholders. It also lets the different industries know how they are evaluated and where they stand in this corporation. Which ones are willing to be sacrificed by the administration if not all? Which are question marks that must be proved? And even with the stars, who owns these so-called star companies? Which owners will benefit most from outside investment? All sides can present their evaluation and some decent results-oriented debate will be fostered. The public in turn can have their own balance sheet to follow the discussions item-by-item, industry-by-industry; they will know where their legislators stand. Such debate has the potential for transparent accountability with a vengeance for Taiwanese stockholders. Unfortunately, up to now, as said, we have only had vague and hollow promises by hollow men.

The coming debate may even point to whether the eight years of Ma will end not with a bang but a whimper. Is Taiwan up to it? ***

*** (Footnote: The results in the upcoming November elections would prove to be the death knell for any hopes Ma had getting his trade deals etc. passed.)