Friday, 22 July 2011

Monetary Reform > Minimum Wage Reform


The recent complaints from trade unionists over the 5% increase to the minimum wage (mentioned in Friday's edition) were as myopic as they were predictable.

The real threat to the livelihoods of working people in Taiwan has been the long term suppression of interest rates which discourages people from the use of savings accounts and pushes them into the stock market and into property.

Because interest rates have not reflected the real time preferences of savers (they are typically below the rate of inflation) for many years now, this means that there is probably a substantial degree of capital overinvestment funded by artificially cheap credit.

Let us hope that this overinvestment is not kindled by economic exposure to the wake of the looming debt defaults in the U.S., Europe and possibly China. For we must also be mindful of the fact that, like the European PIIGS, Taiwan's government must surely be close to its' "debt-saturation point" with the national debt now at approximately 165% of nominal GDP - due largely to massive, annual over-spends in the government's dominance over the education and healthcare markets.

Any sudden increase in inflationary pressure on the NT$ dollar - by, for instance, a policy of debt monetization or "quantitative easing" as it is euphemistically known - could potentially be catastrophic for the working people of Taiwan who do not have substantial investments in metals to protect themselves with.

The looming prospect of currency collapse in the U.S. and Europe must not be ignored in Asian countries like Taiwan. It is vital for the public to be informed about the relative merits of the various "hard money" monetary reforms such as the gold standard, competing commodity currencies, digital currencies and free banking. Such reforms have recently even been discussed in the UK Parliament, yet in Taiwan the problem of monetary reform receives scant attention.

Here is an opportunity for the Taipei Times to report on something far more significant for the welfare of working people in Taiwan than this or that percentage change in the minimum wage.

Yours freely,
Michael Fagan.

(Sent: Friday 22nd July 2011. Unpublished by the Taipei Times).

Note: The initial sending failed for some unknown reason - on resending it, I toned down the final paragraph, and have done the same here.

No comments:

Post a Comment

Comment moderation is now in place, as of April 2012. Rules:

1) Be aware that your right to say what you want is circumscribed by my right of ownership here.

2) Make your comments relevant to the post to which they are attached.

3) Be careful what you presume: always be prepared to evince your point with logic and/or facts.

4) Do not transgress Blogger's rules regarding content, i.e. do not express hatred for other people on account of their ethnicity, age, gender, sexual orientation or nationality.

5) Remember that only the best are prepared to concede, and only the worst are prepared to smear.