Taiwan's Income Inequality Disappearing in the Media

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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Daily Links:

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