Amcham is always very vocal in praise of Taiwan’s democracy and furthermore that it is of major economic importance. Stable countries are just better for investment. And yes, Taiwan is stable and certainly a million times more than China where property rights have little legitimacy under the law.
But there are major problems as the piece below explains. However, the problem is a LACK of democracy and transparency. In other words, the stronger Taiwan’s democratic process and institutions are, the more stable it will be, the more efficient its government, and the better its business environment. A return to authoritarian rule would only worsen the innefficiencies.
[quote]Commentary: Democracy Makes an Economic Difference
Taiwan is rightfully proud of its election successes over the past decade, especially the rise of a multiparty system and a peaceful change of government. Yet much remains to be done before Taiwan can attain what could be termed a mature democracy. In particular, look at the current state of democratic institutional development in the Legislative Yuan (LY) and its impact on the economy.
Since 1992 when a major reorganization created the LY as we now know it, the lawmaking body has fought a losing battle for respect. Melees on the floor of that institution have made Taiwan (in)famous around the world for having one of the most disreputable congresses anywhere, and coverage of those fisticuffs on prime-time international TV news has detracted from whatever admiration for Taiwan’s democratic achievements was developing around the world. The evolution of proper decorum on the floor and in committees is an essential step for public respect, but even more serious problems loom out of sight of the cameras.
Students of the U.S. Congress know that the committee system in the Senate and House of Representatives is the heart of their operational activity. But in Taiwan, the committee system virtually guarantees inefficiency and ineffectiveness. Each three-year legislative term is divided into six sessions, and legislators typically switch to a different committee each session. And instead of a single chairman, the Taiwan system has three conveners, usually each from a different party, who take turns as chair. A new set of conveners is chosen each session. This process allows more legislators to gain “face” by holding a leadership title, but it prevents the development of experienced and sustained committee leadership. The chairs rarely stay in position long enough to gain expertise, nor do they develop the respect of their peers for knowledgeable conduct of committee affairs. Without a seniority system, LY members have little incentive to build expertise in any key standing committee. This inevitably lessens the quality of legislation, and that in turn has direct impact on the health of the economy and the quality of the investment environment.
The effectiveness of the committees is further diminished by the practice of holding frequent “interparty negotiations” on bills before they move to the LY floor. This ad hoc institution, which routinely overrides or circumvents action by the committees, means that virtually all major legislative decisions are made behind closed doors by senior party representatives – contravening the fundamental democratic principles of transparency and accountability. If a compromise bill is agreed upon, it typically goes straight to the LY floor for automatic passage without discussion or roll-call vote. Legislators who might be subject to criticism for having conflicts of interest are thus shielded from public scrutiny.
What is astounding to an outside observer is that Taiwan’s voters have not been more vocal in expressing opposition to this procedure. Is this black-box approach to legislation so successfully veiled that most people are ignorant of what is being done in the name of the democratic process? Whatever the case, the absence of lawmaking transparency leads directly to a loss of public trust – and investor trust as well. If not corrected, this form of political subterfuge could wreak havoc on Taiwan’s efforts to consolidate its democracy. It certainly undermines claims that Taiwan offers an ideal government model for other budding democracies to emulate.
Is the situation hopeless? No. A positive development in recent years has been the rise of effective non-government organizations as legislative watchdogs. The Taipei Society and the Taipei chapter of the anti-corruption group Transparency International are good examples of institutions monitoring the excesses and errors of government organs. Think tanks are also becoming more non-partisan and are developing more sophisticated public information programs. Promoting transparency is a first step toward strengthening Taiwan’s nascent democratic institutions.
A host of essential bills bearing on economic issues – including energy policy, national health-insurance reform, telecom-media convergence, corporate bankruptcy/reorganization, and executive-branch restructuring – are now in the pipeline for legislative attention. Swift action, unimpeded by excessive partisan squabbling, will be needed to deal with them – especially when Taiwan’s competitors in the region are working feverishly to restructure their tax systems, regulatory bodies, and investment incentives, all to Taiwan’s competitive disadvantage. Taiwan’s people can vote directly for their legislators; investors vote with their feet. The past six years of a log-jammed LY have not built investor confidence in Taiwan’s near-term future.
Taiwan has been remarkably successful in the past, despite its diplomatic isolation, because of its strong economy. It has mattered to the rest of the world because it has been a powerful economic player with direct relevance to and integration with the global marketplace. But the speed and quality of Taiwan’s democratic consolidation are directly linked to the sustainability of its economic strength. Beyond the benefits of political maturity and stability, bolstering Taiwan’s democratic institutions is also the way to ensure that Taiwan remains a vital force in the global economic arena.
[/quote]
