I would imagine that the opening sentence of that editorial will most likely be read at skimming pace by typical readers such that its conceptual error goes unnoticed:
"A Bloomberg article last week about the loss of Taiwanese jobs to China has drawn mixed reactions."See what it is yet?
"...the loss of Taiwanese jobs to China..."
The possessive inflection ("Taiwanese"), when taken in conjunction with the verb phrase within which it occurs ("loss of"), indicates the notion that jobs somehow rightfully belong to the Taiwanese people and that the transfer of these jobs to China is either unfortunate or somehow wrong. This notion is both false and dangerous.
A "job" is a function that one party voluntarily agrees to perform for another party in exchange for monetary recompense. If I pay a worker to perform the function of operating an industrial lathe for me, then he has a job. He acquired that job because I offered it to him, and I was able to do so because I have property rights in the company, factory and machinery, including the lathe. I own the job which the worker is performing because I own the capital equipment necessary to its existence. Since I own the job, I am free to hire whichever worker I might prefer to perform it on my behalf. To describe a "job" with the possessive inflection of "Taiwanese" contradicts this arrangement and implies that the job actually belongs to the broader Taiwanese society - in which case my property rights are fictious and become mere priveleges granted by the R.O.C state (despite its own constitution).
What else could the phrase "...the loss of Taiwanese jobs to China..." mean?
If it was simply meant that the jobs were geographically located in Taiwan prior to their "loss" to China, then why wasn't this expressed as "... the transfer of jobs from Taiwan to China..."? I believe it is because that wasn't the intended meaning at all. I think the writer genuinely believes that jobs somehow belong to the wider Taiwanese society.
In the space of a mere seven-word phrase in his opening sentence then, it would seem that the writer of that editorial has confessed to an embrace of nationalist/socialist* principles of economic organization and a rejection of liberal, capitalist principles. Such a person might attempt to defend Taiwanese democracy without contradiction, but should he or she claim to defend "freedom" or "liberalism" (or to be a "liberal" in the debased, U.S. misuse of the term), then this claim would be false. Such a person does not fight for the freedom of Taiwanese people, but rather, for their own enslavement to the commands of the government in Taipei rather than the one in Beijing.
However, the editorial is interesting for other reasons...
"Others said Taiwan was facing a labor shortage, rather than high unemployment, with the nation’s unemployment rate falling to 4.27 percent in May, its lowest level in 33 months, after peaking at 6.13 percent in August 2009.Leaving aside that repetition of the nationalist/socialist premise ("the nation's unemployment problems"), I think it is correct that comparisons of current unemployment data with data prior to the "financial crisis" offer a better guide to understanding what is going on than comparisons to unemployment data at any arbitrary point during the tenure of the Ma administration. Of course unemployment has not been "solved". However it may also be true that there are labour shortages. This, however, is not a "paradox" as the writer goes on to describe it at the conclusion of the article.
One thing is clear: It is impossible to say that the nation’s unemployment problems have been solved, because the unemployment rate is still higher than pre-financial crisis levels."
My guess would be that unemployment, though falling somewhat, remains relatively high for a number of reasons one of which, as the article points out, is the relocation of "labour intensive" industries to China. However, this can only be one aspect of what is happening since the government in Taipei still imposes restrictions on the nature and extent of industrial and business investments in China. Moreover, the unemployment left behind by capital flight to China should in theory reduce the marginal costs of labour in Taiwan to other kinds of businesses who could then, over time, begin to re-employ these workers in other areas. Perhaps this is happening to some degree now, but there are certainly other things occuring in addition to this - both seen and unseeen - the effect of which is to buoy unemployment.
To begin with, labour costs are driven artificially high by things like minimum wage laws and other long-standing interventions (e.g. immigration controls, licensing rackets and the popularity of State-funded higher "education", all of which restrict the supply of labour). Labour market "rigidity" and "sticky wages" are thus likely to make it difficult for some businesses to offer opportunities for re-employment. This may be exacerbated by other government interventions (e.g. planning laws) which tend to have the effect of increasing the costs and risks of new start-ups. In this circumstance, many people may try to apply for more government jobs and it will always be tempting for a government to expand its powers by instantiating new agencies that require labour (e.g. the TSA in the U.S. along with the broader program of militarization of State and even local police forces).
Additionally, unemployment may be affected by the long-standing availability of cheap finance through the expansion of the money supply (rather than from actual savings), which provides a strong incentive for over-investment** in the production of capital goods. This is because of the temporal nature of production. The profits earned by businesses selling consumer goods directly tend to be far more sensitive to short term changes in consumer demand than those businesses engaged in producing capital goods to be used in the production of consumer goods some years in the future. Businesses of the latter sort (i.e. capital goods businesses) will thus have superior profit margins to those lower down in the production chain; investments in the "high end" of the production chain therefore usually stand to offer far better ROIs than investments in the "low end" of the production chain (i.e. consumer goods businesses). Low interest rates mean that financing such investments becomes sufficiently cheap as to offset their higher investment costs, thus leading to over-investment. The effect this has (or perhaps more accurately, will have) on unemployment levels is perverse, for initially it will tend to reduce unemployment (since demand for labour in the production of capital goods increases) but since it is financed essentially by credit created ex nihilio rather than savings, this effect is illusory.
Because the influx of cheap financing via low interest rates will circulate throughout the economy after its initial use, it will increase inflationary pressures and raise the prices of consumer goods and commodities. The longer this goes on for, the more dangerous it becomes. Should the continuing increase in prices of consumer goods and commodities eventually outpace the rate at which production costs rise, then the apex of the "boom" will have been reached. The change in this ratio will have two chief consequences: first it will mean that the costs of firms producing high-end capital goods will begin to rise more rapidly than their income, resulting in sudden losses; second, it will mean a fall in real wages and thus reincentivize investment in the more "labour-intensive", lower stages of the production chain (the "Ricardo-effect"). Once this contrast in profit margins between the higher and lower stages of the production chain has finally been reversed from what it was initially, then that is the point at which a major landslide of corrective measures is triggered, rippling all the way back down the production chain - measures which will inevitably include forced redundancies in the more "capital-intensive" industries.
That could be the point at which the next "financial crisis" hits and the economy re-enters a period of recession in which unemployment is likely to be much higher than it currently is. Of course, none of the above takes into account the effects of Taiwanese businesses and Taiwanese banks' exposure to the risks of distorted production chains in "other economies" such as China, Europe and the U.S.*** or the sovereign debt crises developing in those countries (including Taiwan itself) - all of which may do more than simply exacerbate the process outlined above, but perhaps even trigger monetary and economic (and thus possibly also political) collapse.
Both labour market and capital market distortions are a result of government interference in the form of myopic regulatory "oversight" on the one hand, and aggressive monetary "easing" on the other hand. Government debt and government spending on top of that add further costs and distortions - both seen and unseen.
All of this comes down to a simple matter of ethical premises: either the means of production (including the medium of exchange itself) are privately owned and self-regulated, or they are collectively owned and therefore
* It amounts to the same thing in this context.
** I use the term "over-investment" to signify investment not derived from actual savings.
*** Pop quiz: what's the difference between "the global economy" and "the Chinese economy", or "the U.S. economy" or "the Taiwanese economy"?
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