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Rent-seeking demands civic action
By Huang Kuo-chang 黃國昌
Rent-seeking is the attempt to increase one person’s share of wealth rather than contributing to actual wealth creation. For a long time, Taiwan has been a rent-seeking society, especially through the use of political power to allow certain individuals to obtain benefits that do not have any productivity value.
The most troubling aspect of this is not simply that it involves a waste of society’s resources, nor that it does not create any additional value. It is that it leads to the unfair and unjust regressive redistribution of wealth. It diverts more wealth into the hands of the wealthy. This redistribution allows a powerful minority to get their hands on public resources and use them for their own cause at the expense of society’s welfare.
Despite the transition to democracy and the establishment of the rule of law, Taiwan remains fertile land for rent-seeking by the rich and powerful. Loopholes in the current system are being exploited, and unjust and unfair behavior is clothed in a mantle of legality. It is also done covertly. Power is used for personal gain using a mechanism that is never explicitly stated but is tacitly understood by the parties concerned.
Rent-seeking through small abuses of power, such as in the separate bribery scandals involving former Cabinet secretary-general Lin Yi-shih (林益世) and Chinese Nationalist Party (KMT) Taipei City Councilor Lai Su-ju (賴素如), anger the public just as they test Taiwan’s judicial system and its ability to investigate and pursue corrupt behavior and liability for breaking the law.
However, the true crisis and intimidating challenge facing the nation now is larger scale, corporate-level rent-seeking that results in considerable gains, to a degree bordering on absurd, for a rich and powerful minority at the expense of ordinary Taiwanese — to the extent that it imperils future of generations.
The behavior is evident at the local and central government levels.
On the local level, powerful officials, and even academics and so-called experts, facilitate the enclosure of land by the government for the benefit of big business or act as rubber stamps for environmental impact assessments. Material benefits gained from forced evictions — of dubious legality — and from improper development mostly finds itself in the pockets of a few. Thanks to the adverse selection effect, the review procedures initially devised to prevent this unjust activity fall foul of Gresham’s law, which states that the bad will invariably drive out the good. That is, academics and experts have an incentive to lend their support to rent-seeking behavior, make it appear as if it were perfectly legal and engineer a situation in which they will profit.
At the central government level, the executive branch, with its special powers over processes such as the consolidation of financial institutions and the licensing of electronic media outlets, is a hotbed for mutual back-scratching between the corporate world with its control over scarce resources and the government. The legislature, with its long-standing reputation as a place where deals are made and where everything is negotiable, is a veritable den of rent-seeking.
Meanwhile, the judicial and control branches of government are responsible for oversight and systemic checks and balances.
However, since those who are supposed to be providing oversight are also on the lookout for ways to line their own pockets or otherwise secure some form of benefit, they too have been known to engage in exchanges with those in power — those whom they should be keeping tabs on — whenever it is possible to do so discreetly. When this happens, there is a risk of a systemic crisis.
A clear example of this was the way in which Prosecutor-General Huang Shih-ming (黃世銘) acted as a political hired gun during the turmoil in September last year, abusing his power and breaking the law by ordering the wiretapping of legislators.
The most serious forum in which rent-seeking is practiced is in the exchanges between Taiwan and China. The most avid China protagonists in politics, business and the media in Taiwan all stand to gain substantial and sizable rewards in China.
As a result, it is not just unscrupulous politicians who are putting the nation’s security and development at risk through the signing the service trade pact, which is skewed in favor of big business over the public.
The so-called business leaders can also, paying scant regard to the real interests of the industries that they represent and caring only for their own personal gain, help the Chinese communists by speaking to people in Taiwan and exerting pressure on the legislature to secure swift passage for the service trade agreement and binding the economy even more tightly to the Chinese market.
The media, which in a democracy should be acting as the fourth estate to keep the government and corporate groups in check, are picking and choosing which stories local media are to report on — or keep a lid on — as a rent-seeking measure. Local media are making sure to find favor with Beijing so that their products can be marketed in China. Far from fulfilling their duties as the fourth estate, they are working as a mouthpiece for Beijing, painting a pretty picture of the totalitarian state and abdicating the media’s social duty.
The cards are stacked against ordinary people. What can they do? How can they save themselves?
From the amendments to the Accounting Act (會計法) to the preoccupation with apportioning blame for September’s political turmoil, it is already painfully clear to the discerning observer that two-party politics is not only not an antidote to the problem, but that it stabilizes the diseased and ailing edifice.
To avoid being exploited by these powerful concerns and their rent-seeking ways, people have to wake up and become more aware of what is happening, rather than simply sitting around, like bleating animals passively waiting for their turn to be slaughtered.
Taiwanese have to be more engaged in the public oversight process, shed light on corruption and replace murky deals with true transparency. They have to breathe new life into the political process, making alternatives possible, so that they no longer have to regard two-party politics as the only viable option.
At a time when two-party politics is unable to fulfill the basic requirements of a democracy and when contemporary politics can no longer adequately reflect the public will, ordinary people have to stand up and reclaim their rights and re-evaluate what they want for the future.
Only when a new politics of the public emerges will there be a way.
Huang Kuo-chang is a research professor at Academia Sinica’s Institutum Iurisprudentiae.
Translated by Paul Cooper
source: Taipei Times
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