Thursday, March 14, 2013

Taiwan's Income Inequality Disappearing in the Media

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Gravel trucks ceaselessly feeding the maw of the construction-industrial state.

A couple of related pieces out tonight. First Jennifer Chen in WSJ offers a paean to the greatness of Taipei, which actually has a connection to a truly silly article from Bloomberg that sent waves of amused contempt rolling through the intertubes. The WSJ piece on Taipei says:
Since the late 1990s, the municipal government has focused on improving the quality of life in this city of 2.6 million. “Taipei is a city known for its friendliness and rapid development of technology,” Mayor Hau Lung-pin said in 2010 during the launch of a beautification campaign. “We want to turn it into a beautiful city.”

“Everyone knows that Taipei is a city with a good lifestyle, but that’s not enough,” Lin Chong-jie, the director of Taipei’s Urban Redevelopment Office, said. “We want to make Taipei’s place in Asia clearer, and one of the ways of doing so is becoming a creative city.”
What a coincidence! The article conveniently begins with the KMT administration of the city, which resumed in the late 1990s after Chen Shui-bian's single term as mayor. I'm sure there is no politics there.

And another, deeper coincidence. In the piece are featured a couple of cafes and design locations, and note how the piece has a focus on creativity and design. Can you guess? The city of Taipei is currently submitting a bid to the World Design Capital competition for 2016 (here). The bid application of course emphasizes the design and creativity infrastructure and organizations of the city. I'd bet money that the cafes and other places mentioned by name in the article will be in the city's bid. Nice to get a little free advertising in a global news organ about your city's awesome design and creativity facilities and atmosphere.

One comment in the piece really struck me:
Welcome to the new Taipei. Other Asian cities might compete on building the flashiest skyscrapers or glitziest shopping center. But the Taiwanese capital, once a typical ’80s Asian Tiger boomtown, is forging a different path.
Most of the piece is excellent and on point (and a pleasure to read, obviously well-written and edited), but this remark shows a lack of understanding. Taipei in the go-go days was a boomtown, but it was never a typical Asian boomtown. The high rises and slums of other Asian boomtowns passed Taipei by, because in the 1970s and 1980s income inequality in Taiwan was shockingly low. In Governing the Market at the end of the 1980s Robert Wade observed that Taipei was crowded with low buildings and mostly free of skyscrapers, so that anyone looking at Seoul with its steel-and-glass symphonies might suppose that South Koreans were rich and Taipei'ns poor. But the opposite was true at that time: Taiwanese had a lot more money. In reality, skyscrapers are not a symbol of wealth, but of rampant wealth inequality. Just look at how much more unequal income is in Hong Kong, and how much taller its buildings are....

Now in fact Taipei is becoming a boomtown, with new apartment buildings going up and older, historic, and traditional structures being eradicated. Taipei's high-rise boom is a symptom of growing wealth inequality. This boom is driven by the ongoing property bubble which in turn is fueled by Taiwan's growing wealth inequality. Always unmentioned in pieces like this is another aspect of income inequality: regional inequalities. Taipei lives well because the rest of Taiwan has been starved for development funding to feed Taipei.

Taipei's reflection of the growing wealth divide in Taiwan linked the WSJ piece in my mind to the Bloomberg piece, which is titled: Taiwan Shrinks Wealth Gap as Xi’s China Communists Struggle. Bloomberg usually turns out center-right Establishment political analysis which is fairly reliable within its agenda, and occasionally a really good piece, but seldom do they publish outright comedy gold like this comparison of Taiwan and China. It's like a primer in how to craft an obvious political attack that looks like a news report, while failing to meaningfully comment on the host of problems stemming from Taiwan's failure to tax its wealth properly, as well as totally misunderstanding Taiwan. It's not often the media serves up its propaganda so artlessly. Why O why can't we have a better press corps?

The title is absurd on its face; income inequality in Taiwan has been on the increase for three decades. But Bloomberg says:
As Chinese President Xi Jinping completes his nation’s leadership succession this week, Taiwan may offer a model for his campaign to bridge a wealth gap that threatens to undermine Communist Party legitimacy. Taiwan’s Gini coefficient, a measure of inequality, was 0.342 in 2011 compared with China’s 0.477 and the 0.4 level used as a predictor for social unrest.
...and further down....
In Taiwan, the Gini coefficient hit 0.350 in 2001 and has since hovered around its current level of 0.342. Its income gap is now lower than Hong Kong’s, which reached 0.537 in 2011, and Singapore’s figure of 0.482 that same year. In January, the head of China’s statistics bureau said the Chinese income gap narrowed for the fourth straight year in 2012, to 0.474 from 0.491 in 2008.
Anyone can download the Excel file from Taiwan's stats agency and look. The gini has risen steadily since the early 1980s after falling steadily during the 60s and 70s, reaching its lowest point in 1980. The .350 in 2001 was an outlier, probably due to the recession at the time. I discussed this before here. Here is the data....

1981 0.281
1982 0.283
1983 0.287
1984 0.287
1985 0.291
1986 0.296
1987 0.299
1988 0.303
1989 0.303
1990 0.312
1991 0.308
1992 0.312
1993 0.315
1994 0.318
1995 0.317
1996 0.317
1997 0.320
1998 0.324
1999 0.325
2000 0.326
2001 0.350
2002 0.345
2003 0.343
2004 0.338
2005 0.340
2006 0.339
2007 0.340
2008 0.341
2009 0.345
2010 0.342
2011 0.342

If you mentally remove the .350, you can see how the gini climbs from around .32 in the 1990s to around 3.4 a decade later, .02 a decade -- just as it did from the 1980s to the 1990s. Bloomberg has selected the most useful year for its discussion of Taiwan's income inequality. 2001 is the only year it could have selected that would show income inequality to be meaningfully lower now than a decade ago. It's all coincidence, I'm sure.

Never mind that the numbers for China are even more contestable; several knowledgeable friends pointed out that recent work shows the gini in China to be above .60, though I do not know what studies they refer to. Or that China's gini was probably excellent, since everyone was poor, until the boom days began in the 1990s.

Bloomberg then goes on to praise Taiwan's health insurance system, which truly is one of the world's best and deserving of praise. It then contrasts that with China's, to make its crude political point. At which point everyone started laughing at the irony, because we all know what the business interests in the US that Bloomberg writes for think of national health insurance. Ditto for the commentary on the social safety net, which elites in the US are busily attempting to gut. And ditto for the massive US income inequality (Bloomberg's editors on that).

The article does mention Taiwan's income tax situation, but without any reference to the problem of the rich being woefully undertaxed, something which drives other things they mention, underfunded pensions, the underfunded health insurance system, and housing prices. *Sigh*

Finally I had to love the way that the article mentioned that two pro-independence leaders were prosecuted for corruption....
In Taiwan, former President Chen Shui-bian is serving a 20- year jail term for bribery. Another former leader, Lee Teng-hui, faced embezzlement charges in 2011. Taiwan also introduced a luxury tax in 2011 that imposed a 10 percent sales levy on goods such as yachts and furs.
....no mention that the current KMT President was also prosecuted for corruption and that no one disputed government funds from public accounts found their way into his private accounts. But can't have everything, I suppose.

One outstanding kudo to them -- Bloomberg mentions the political affiliation of one of the groups they cite. Great work; not every news agency bothers to do that. But on the whole, I hope we don't see any more transparently political editorializing like this.

ADDED: An anonymous commenter further noted on the WSJ piece:
In the WSJ piece, note that Monocle magazine gets a mention.

Monocle's editor in chief is Tyler Brûlé, who also runs Winkreative, the PR agency that runs the American and European campaigns of Taiwan's tourism bureau. (Quite pleasant to see on the side of a London double-decker, I must admit.) The article looks like a real win for both of Brûlé's businesses.
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15 comments:

Readin said...

"It's not often the media serves up its propaganda so artlessly." Come back to the states and follow the Washington Post or NPR's coverage of illegal immigration.

But nonetheless the Bloomberg article was pretty awful. I wonder how much the KMT paid for that advertisement.

Jennifer Chen's WSJ article is perhaps more understandle as less an issue of corruption and more just plain bias. She does say her parents were Chinese.

Back on the Bloomberg article, you express some surprise that Bloomberg would speak favorably of the NHS and social safety net despite the claim that they are center right. I find that even newspapers that tend center-right editorially still find themselves heavily staffed with center-left and far-left writers. For some reason journalism just seems to attract more people from the left. The article doesn't come out and say directly that having a safety net and having government health care are good things, it just presumes it as though it were something everyone agrees with. That suggests to me that it wasn't a deliberate editoral comment so much as a result of the worldview of the writer who didn't even consider that it might be controversial.

I think your comment about skyscrapers in Taiwan is interesting and insightful. When I first came to Taiwan I knew it was very crowded and I knew Taiwan was pretty far along in its development. I was surprised then to see that there were very few really tall buildings. The Daiya Baihua (Asia Department store)across from the train station was the tall building in town and in recent years it has become a barely noticable dwarf. Your idea that the lack of skyscrapers resulted from income equality makes a lot of sense and is something I will definitely keep in mind.

Michael Turton said...

Back on the Bloomberg article, you express some surprise that Bloomberg would speak favorably of the NHS and social safety net despite the claim that they are center right. I find that even newspapers that tend center-right editorially still find themselves heavily staffed with center-left and far-left writers. For some reason journalism just seems to attract more people from the left.

The journalists are generally liberal on social issues. But the editors are gatekeepers for the Establishment and are center-right to the core; they sniff out what the Establishment wants said and then reproduce that. The key factor, i've decided, in becoming an editor is the sensitive antennae to detect what the Establishment wants.

The striking thing about the Bloomberg piece is that in the US it cheerleads for the kind of serfdom that Chinese suffer -- Based on Bloomberg, US corporate elites must clearly be deeply envious of the Chinese social safety net -- but then it has no trouble in supporting a national health insurance system in the Taiwan-China debate. It's the unashamed hypocrisy of Bloomberg on one hand citing Taiwan's human-centered policies as a point in its favor against China, and then opposing those same policies in the US.... that's what struck me.

But of course what really struck me was the totally erroneous presentation about Taiwan :)

Michael

Anonymous said...

Taiwan's healthcare system is not without faults. Healthcare workers are one of the least compensated among developed nations. There are no systems to track those who "physician shop" or those who abuse the inherent largesse of cheap healthcare by getting multiple and needless prescriptions. Taiwan's healthcare system works by keeping wages low for healthcare professionals like Nurses and Physicians. Physicians are under constant threats of lawsuits as the public sees physicians in negative light when extreme, life-prolonging measures are not undertaken. Furthermore, unlike the US which funds medical and pharmaceutical research both with public and private sources, Taiwan's healthcare system only has to concentrate on the job of providing services. Third, Taiwan does not have an open border and large number of illegal immigrants who use its healthcare and social services. Taiwan's healthcare system would never work in the US for the reasons mentioned above, and many more.

Anonymous said...

In the WSJ piece, note that Monocle magazine gets a mention.

Monocle's editor in chief is Tyler Brûlé, who also runs Winkreative, the PR agency that runs the American and European campaigns of Taiwan's tourism bureau. (Quite pleasant to see on the side of a London double-decker, I must admit.) The article looks like a real win for both of Brûlé's businesses.

Michael Turton said...

Thanks Anon.....

Michael Turton said...

Taiwan's healthcare system is not without faults. Healthcare workers are one of the least compensated among developed nations. There are no systems to track those who "physician shop" or those who abuse the inherent largesse of cheap healthcare by getting multiple and needless prescriptions.

Physician shopping is one of the best parts of the system. Overuse is serious, that should be corrected in 2.0. Compensation is a serious problem.

Furthermore, unlike the US which funds medical and pharmaceutical research both with public and private sources, Taiwan's healthcare system only has to concentrate on the job of providing services.

LOL. Totally wrong. Taiwan does quite a bit of medical research.

Third, Taiwan does not have an open border and large number of illegal immigrants who use its healthcare and social services. Taiwan's healthcare system would never work in the US for the reasons mentioned above, and many more.

Taiwan's medical system would work fine in the US, thanks.

Michael

Anonymous said...

Just a quick side note. Taiwanese medical research is nothing compared to the resources devoted from American public/private sectors.
Medical/Pharmaceutical research has evolved into an extremely capital-intensive business that only few transnational corporations can afford.
The best Taiwanese companies can do is to create an advantage in some specific parts/processes in the entire pharmaceutical industry, just as we did in the semiconductor industry.

Anonymous said...

Taiwanesd healthcare does concentrate only on providing care. Research is not an emphasis and that is not a knock against that that type of system but merely fact. Taiwan isn't even in top 50 nations in terms of research spending and scientific journal citations.

The types and complexities facing the restructuring of American healthcare system are daunting even for experts who have studied it for years and also for those of us who have worked in the field. None of us believe a specific system, even Taiwan's much lauded one, can work as well here as it does in its corresponding nation. One of those issues facing healthcare burden here are large number of illegal immigrants and birthright citizenship. I am all for amnesty and decriminalizing being here illegally btw. But this is just one issue that a homogenous nation like Taiwan does not have to consider when healthcare debate arises. That said, Taiwan has a good system for its unique population and needs.

Jen

Michael Turton said...

Taiwanesd healthcare does concentrate only on providing care. Research is not an emphasis and that is not a knock against that that type of system but merely fact. Taiwan isn't even in top 50 nations in terms of research spending and scientific journal citations.

In terms of paper output, Taiwan is in the top 20 in both pharmaceuticals and clinical medicine. In terms of research fudning as a share of GDP, Taiwan is several times that of the US. In terms of highly cited papers, Taiwan ranks in the top 25 in pharm and clinical research. This information is easily available from the internet.

The US already has a "universal" system called medicare. That is how I know it can be done, because it already has been done. The problems the US faces are political and could be overcome, if anyone among the nation's elites actually gave a shit about the future of the nation.

Michael

Readin said...

"The US already has a "universal" system called medicare. That is how I know it can be done, because it already has been done. The problems the US faces are political and could be overcome, if anyone among the nation's elites actually gave a shit about the future of the nation."

I sometimes wonder if our problem is our success. If you're a leader in a small nation you have to worry about the survival of the nation. Sure you can be corrupt, but if your corruption damages the nation too much or you simply ignore large problems the nation can quickly sink taking you with it.

America has such a large GDP, such a large military, and such influence in the world that it is hard to imagine it sinking anytime soon in a way that takes the elites down with it.

This wasn't the case as recently as the Cold War where American leaders knew that if they didn't do a decent job we might face a destruction that would affect everyone. This would fit well with the often stated theory that America always needs an external enemy.

I think to some extent this applies to the population as well. With life so easy and the government providing so much, people have no need to pull together so they work against each other while much voting is based not on what is good for the country but on how to get the most government hand-outs. I think the high immigration rate plays a role because it seems to me that in conversations I have it is immigrants more often than natives who express this attitude of selfish voting.

Readin said...

Regarding the NHS, it is not impossible for the government to comme up with a good system for sommething - a government is just as capable as any organization of developing something good. The problem is the lack of competition and innovation over the long haul. What is the motivation of the NHS to find a better way of being organized? Where is the competing organization trying to outdo the NHS with new ideas? How do we see which new ideas are better if there are no experiments? In a proper experiment, remember, there is always a control to be compared against what is being attempted. But there is only one NHS, it cannot be both the control and the new thing at the same time. If the NHS says something is good and starts to do it, what competition is there to compare to to prove that it really is good or that it isn't so good after all?

Michael Turton said...

Readin, there's plenty of pressure on the NHS to improve. Internal pressure from employees over low pay and long hours, for example. External and internal pressure over systemic and individual corruption. Public pressure over funding of the NHS. Etc. An agency in a democratic state faces plenty of pressure for change and reform. Look at the US, where we have a somewhat competitive health insurance system that is the worst in the developed world across most indicators. Where the US is good, as in the actual performance of surgery, the health insurance firms don't have any influence -- instead it is the university training and government oversight systems that have performed in an outstanding way.

Michael

Mike Fagan said...

Regarding the NHS, the point is not that it lacks a "control condition" against which to judge experimental results, but that its' sheer size effectively disables private alternatives from operating at economies of scale that result in prices some of us mere mortals could actually afford.

Our lives might be playthings for the political gods to "experiment" with - but they ought not to be, and to frame the conversation in those terms is a mistake.

Readin said...

You're right that in a democratic society there are pressures. However there is still the problem of things being done only one way making experimentation difficult.

And there is the problem of the pressure being difficult to focus.

When I choose to buy a computer from Dell, all I get is the computer. I don't have to buy my groceries from Dell also - I can choose from several stores in the area.

Having selected groceries from Wal-mart, I can go shopping for a new shirt and choose from many different brands, and having selected a brand I still usually have a choice of several different stores from which to purchase that brand.

Compare this to my government choice. I vote Republican because I oppose racism. Then I want to oppose sodomy laws so vote Democrat on sodomy. I realize that to reduce the deficit we need to cut spending so I vote Republican on spending. The deficit is so bad now that we'll need to increase taxes too, so I vote Democrat on taxes. Now on immigration I want a wall built and a strong border patrol so I vote Republican on border security. Once that is in place I think amnesty would be good so I vote Democrat on eventual amnesty. Of course I oppose amnesty prior to the border security so I vote Republican on immediate amnesty.

Well no, I don't actually get to make all those choices. Nearly everything is controlled at the federal level where I get to vote for one President, one Representative and two Senators, and they don't even divide responsibility up much they're mostly responsible for the same things.

So, if I decide I don't like medicare, how do I make that clear at the voting booth? It's not like buying a shirt and pants where if the shirt is good but the pants are I can keep buying the same shirt brand but change the pants brand.

Now of course this problem is familiar to Taiwan as well. I've pointed out that Taiwanese don't really want freedom from China because they re-elected Ma. You've said there were other issues such as corruption. Taiwanese can't vote DPP on freedom and KMT on corruption. And if the NHS starts to have trouble during the middle of a military crisis, they can't vote one way on the military and another on NHS.

The idea that a democracy allows the kind of pressure that can keep bureacracies (I'll never learn to spell that word) from degrading is a nice theory but in practice voting is simply too blunt an instrument to keep government behavior in check in more than just a few key areas.

Anonymous said...

Pretty much anything you see in the media about Taiwan is either paid for by Taiwan or indirectly supported by junkets and media handlers. Other examples include the prominence of Taiwan in Wallpaper, documentaries on discovery about Taipei101 and the Hsuehshan Tunnel, and the flurry of stories about cycling Taiwan's East Coast. I'm sure there are many more. No one is interested in Taiwan, so the government has to promote it (which I think is basically fine) but the political undertones of some stories and the usefulness of this coverage at home is objectionable. The government picks the stories and tries to control who gets interviewed etc. with mixed success.

MF