# How did Sean Lien's family become so rich, checking the math

Sean Lien and his father Lien Chan have always maintained that their family’s good fortunes has nothing to do with the fact that since coming back to Taiwan, all 3 generations have been government officials (well, at least trying to hit all 3). They denied the fact that Sean Lien’s grandfather was in charge of land reforms in the Taiwan Provincial Chief Executive Government (臺灣省行政長官公署) had anything to do with it. Lien family’s official claim is that Lien Chan’s mother, Mrs. Zhao Lankuen (趙蘭坤), was so good at investing, after taking a loan, she bought several real estates around Taipei, and put them up for rent. The wealth just accumulated via Mrs. Zhao’s talent in investments.

Here’s an interesting article that examines this claim by doing some math:

My rough translation goes:

In the 1989 tax data released by Lien for election purposes, Lien has 6 pieces of land, totalled at 20,250 ping, valued around 20 billion NTD. In the next 10 years, the average rate of return of Lien family’s investing is over 20%, that’s according to Lien Chan himself. Before even taking compound interest into consideration, Lien family is doubling their money every 5 years.

But let’s put aside how the legendary Mrs. Chao were putting up Warren Buffett like numbers. From 1945, the year Sean Lien’s grandfather arrived back in Taiwan, to 1986, the year Sean Lien’s grandfather past away, that a good 41 year. If Lien family makes a 20% return annually, in 41 years that would be 820%. Since Lien Chan inherited 20 billion NTD, simple math would tell us that, 20 billion / 820 %, would mean in 1945, Mrs. Chao and the Lien family started out with a capital of 2,439,000,000 (2.4 billion) NTD.

Even if the Lien family somehow got insane compound interest, and Mrs. Chao makes 20% return annually for 41 years, meaning Lien’s family worth increased 1,763 times over 41 years, Mrs. Chao would still have started with an initial capital of 11.34 million NTD. The monthly salary of a teacher in Taiwan back in 1945 is 35 NTD, very high ranking public officials makes about 150 NTD. 11.34 million NTD would still be an ridiculous amount of money. Lien family claimed Mrs Chao sold 3 akkers (甲) of farmland and took out loans as their initial capital. However, in 1945, 3 akkers of farmland is unlikely to worth more than 100,000 NTD.

Lien’s family also repeated claimed by the time Sean Lien’s grandpa, Zhendong, returned to Taiwan, the Lien family is basically broke. Sean Lien’s great grandfather apologized to Zhendong for not being able to leave him with anything. So even with loans, how did Mrs. Chao get an initial capital of 2.4 billion NTD, a ridiculous amount of money in 1945?

The author gave several possibilities, I’ll list a the more plausible ones:

1. Using his position on several land reform committees, Lien Zhendong managed to turn previously Japanese government/NGO/private property into his own. THere were people doing that, the one who got caught was the 1946 Jiayi Chemicals case, where some official tried to bag 300,000 worth of property.

2. The inflation between 1945 to 1949 forced many people to drop their properties inexchange for materials. Between 1945 and 1949, the old TD’s value dropped 40,000 times. The corruption of the KMT government, 228 and forcing civilians to exchange gold for Jinyuanjuan have all contributed to this. When NTD came out, the exchange rate was 1 NTD for 40,000 TD. Money worthed less than trash. People could only depend on exchanging of goods. With Lien Zhendong’s position in the provincial government, he might have control over certain materials and exchanged them for economic resources such as land.

3. They borrowed it. Mrs. Chao would have bought the land, rent it out, and afterwards go to the bank to get a second mortgage. Using the borrowed money and buy new real estate and stocks, and make money on the compound interest. If they loaned 100,000 from the bank, and bought a lot of real estates around 1945, by 1949 when the value of the TD had dropped 40,000 times, from the perspective of buying power, the Lien family only paid the 1945 equivalent amount of 2.5 TD. In exchange, the land that Lien’s family bought with their mortgage would have lost relatively little value. This would be legal back then, and leveraged human disaster to make a profit, it would also require Lien Zhendong’s economic degree and high ranking public position (great relations with the banks) to pull off.

4. Leveraging the information Lien Zhendong would get from his position. Lien family’s wealth mostly were gained through real estates. Lien Zhendong was a member of the land reform committee (the only one with Taiwanese background.) Lien Zhendong could have clued his wife into which real estate to invest. Lien’s family would often purchase farm lands as “independent farmers” even though for 4 generations no one in the Lien family has ever worked the farm. Many of those farmlands were allowed to be rezoned when Lien Zhendong was the Minister of Interior.

5. Lien Chan possibly didn’t pay any inheritance tax. Many sources point out that when Lien Zhendong passed away, Lien Chan didn’t pay any inheritance tax, which was 50% back then. In 1983, Lien family was taxed around 50 million NTD. They were ranked No.16. among the tax payers. That means Lien family makes over 100 million annually. Lien Chan inherited 20 billion NTD in 1986, regardless of whether or not he paid the inheritance tax, as a public official, he should make clear how much inheritance tax he paid. If Lien family set up foundations or hedge funds or trusts to avoid taxes, that should be made clear to the voters.

I think it’s probably a combination of all of these. No. 3 is probably why they excelled above and beyond any other KMT officials in terms of accumulating wealth.

I am not about to dig into the details of the Lien estate…nor do I care…

But as a math and economics major, this quote from your post: “If Lien family makes a 20% return annually, in 41 years that would be 820%.” hurts me… That’s not how investment returns are calculated…You can’t just take the annual return and multiply it by the number of years invested.

I was a lit major and that stuck out for me too. Nt2 billion at 20% return would reach 20 billion in about 16 years i think.

However it is bizarre to me that in an era of gross inequality that is only getting grosser that anyone would not be concerned where a family got its wealth. And when a family of civil servants acquires that much wealth the burden of proof is on them to show how it was acquired.

[quote=“Taiwanguy”]I am not about to dig into the details of the Lien estate…nor do I care…

But as a math and economics major, this quote from your post: “If Lien family makes a 20% return annually, in 41 years that would be 820%.” hurts me… That’s not how investment returns are calculated…You can’t just take the annual return and multiply it by the number of years invested.[/quote]

The author assumed they invested everything, because if he didn’t it would mean Lien family’s initial capital would be even higher to account for the rapid accumulation of wealth.

Reading on, the 11.34 million is the proper calculation if you assume 20% interest compounded annually. 20% is a VERY high rate of return, but there is nothing “insane” about assuming compound interest. It would be insane to assume anything but compound interest.

even accounting for the compound interest would still leave Lien family with a unreasonable high initial capital as the original article says.

[quote=“hansioux”][quote=“Taiwanguy”]I am not about to dig into the details of the Lien estate…nor do I care…

But as a math and economics major, this quote from your post: “If Lien family makes a 20% return annually, in 41 years that would be 820%.” hurts me… That’s not how investment returns are calculated…You can’t just take the annual return and multiply it by the number of years invested.[/quote]

The author assumed they invested everything, because if he didn’t it would mean Lien family’s initial capital would be even higher to account for the rapid accumulation of wealth.[/quote]

Okay, but that doesn’t effect the calculation of interest. The present value of 20 billion NT at 20% interest over 41 interest periods is 11.34 million (a number the post’s author later quoted, calling it “insane compound interest”). It’s not “insane compound interest.” It’s just normal compound interest.

[quote=“Taiwanguy”][quote=“hansioux”][quote=“Taiwanguy”]I am not about to dig into the details of the Lien estate…nor do I care…

But as a math and economics major, this quote from your post: “If Lien family makes a 20% return annually, in 41 years that would be 820%.” hurts me… That’s not how investment returns are calculated…You can’t just take the annual return and multiply it by the number of years invested.[/quote]

The author assumed they invested everything, because if he didn’t it would mean Lien family’s initial capital would be even higher to account for the rapid accumulation of wealth.[/quote]

Okay, but that doesn’t effect the calculation of interest. The present value of 20 billion NT at 20% interest over 41 interest periods is 11.34 million (a number the post’s author later quoted, calling it “insane compound interest”). It’s not “insane compound interest.” It’s just normal compound interest.[/quote]

It is normal but no one makes that over a 41 year period.

Again the burden of proof is on the Liens. It’s really a no-brainer that the family used their position to acquire wealth. It’s frankly pathetic this doesn’t interest you. Weren’t you crowing that CBS is in jail because he is a criminal yet here when the appearance of graft and corruption is massive you want to shrug it off as mei banfa.

even accounting for the compound interest would still leave Lien family with a unreasonable high initial capital as the original article says.[/quote]

Okay, so they were fairly wealthy to begin with. I don’t know where their wealth came from. At this point in time, I don’t think it really matters.

even accounting for the compound interest would still leave Lien family with a unreasonable high initial capital as the original article says.[/quote]

Okay, so they were fairly wealthy to begin with. I don’t know where their wealth came from. At this point in time, I don’t think it really matters.[/quote]

As hansioux wrote the grandfather says they returned to Taiwan broke.

Doesn’t matter? Ok can you tell us when the cut off date for what does matter is?

With a local mindset I guess it really does not matter.

even accounting for the compound interest would still leave Lien family with a unreasonable high initial capital as the original article says.[/quote]

Okay, so they were fairly wealthy to begin with. I don’t know where their wealth came from. At this point in time, I don’t think it really matters.[/quote]

As hansioux wrote the grandfather says they returned to Taiwan broke.

Doesn’t matter? Ok can you tell us when the cut off date for what does matter is?[/quote]

I don’t know. I think it’s doubtful that Sean or possibly even Chan know what happened with their estate in the early 40’s. If someone has a legal case to make against the Liens, more power to them. If not, what am I supposed to do with this information? Be angry at someone because MAYBE their grandfather juked the system and profited greatly from it? Seems weird to me.

I don’t even like Lien. He’s ran a joke of a campaign up there.

[quote=“Taiwanguy”]

I don’t know. I think it’s doubtful that Sean or possibly even Chan know what happened with their estate in the early 40’s. If someone has a legal case to make against the Liens, more power to them. If not, what am I supposed to do with this information? [/quote]

If one is serious about Taipei development and sees the toxic state the so called “city redevelopment” is currently in, I would say the right course is not to vote the real estate tycoon into office.

[quote=“Taiwanguy”]…I don’t know. I think it’s doubtful that Sean or possibly even Chan know what happened with their estate in the early 40’s. If someone has a legal case to make against the Liens, more power to them. If not, what am I supposed to do with this information? Be angry at someone because MAYBE their grandfather juked the system and profited greatly from it? Seems weird to me.
[/quote]

Weirder that it doesn’t bother you. The burden of proof is on a family of civil servants to show how they acquired an enormous amount of wealth over a 4 decade period when they were not involved in business.

Basically it is A-Ok with you that a family games the system in the post-war period and the descendants of that family get to live sweet comfortable lives forever, live in the best neighborhoods, go to the best schools (even when they are complete mediocrities), get sinecures in monopolistic businesses, and furthermore get to influence political culture so they are never made to pay for this, either socially, or even financially with higher estate taxes?

Sounds good to me. Bring on entrenched inequality. It’s good for everyone.

[quote=“Mucha Man”][quote=“Taiwanguy”]…I don’t know. I think it’s doubtful that Sean or possibly even Chan know what happened with their estate in the early 40’s. If someone has a legal case to make against the Liens, more power to them. If not, what am I supposed to do with this information? Be angry at someone because MAYBE their grandfather juked the system and profited greatly from it? Seems weird to me.
[/quote]

Weirder that it doesn’t bother you. The burden of proof is on a family of civil servants to show how they acquired an enormous amount of wealth over a 4 decade period when they were not involved in business.

Basically it is A-Ok with you that a family games the system in the post-war period and the descendants of that family get to live sweet comfortable lives forever, live in the best neighborhoods, go to the best schools (even when they are complete mediocrities), get sinecures in monopolistic businesses, and furthermore get to influence political culture so they are never made to pay for this, either socially, or even financially with higher estate taxes?

Sounds good to me. Bring on entrenched inequality. It’s good for everyone. [/quote]

It’s not A-Ok with me that it happened, but it happened (maybe, we aren’t even sure about anything in this case). Assuming that Sean Lien’s grandparents did something illegal at the time, what can we do about it now? I’m sure it would be no easy task for even the Lien’s to get detailed records of grandma’s financial transactions in the early 40’s.

My father-in-law is fairly well off, and I’m pretty sure that after he passes, it’s not going to be easy or even possible to trace the origins of all of his wealth (it’s spread out all over in accounts in Taiwan and abroad). If we ended up inheriting a decent part of his estate and then decades down the road someone comes up with some accusations that some of that cash was made with investments from questionable sources, what would I be able to do about it? Would I give the money back? No way…unless there was evidence and a legal case brought up about it.

So I say to the Lien wealth issue, if someone has enough of evidence to make a legal case against the Lien estate, more power to them. If not, I don’t care about this issue since we are not talking about anyone alive today doing anything illegal.

No, we are talking about people having it all for generations to come on illegal gains. Surely that must bother you somewhere in your American land-of-equal-opportunity heart?

In any case the issue now is that people like the Chans are gaming the system with their asymmetrical wealth and access to power so that they will remain wealthy in perpetuity.

So while yes we have to accept that the Chans are now rich, we don’t have to accept a social and financial policy that says they get to be rich for the end of time and every single Chan gets to have a big apartment and a fancy education because grandpa was a thief.

It’s pretty flipping simple but the issue of inequality just goes over so many people’s head as all they can think about is, well, there is no crime here we can prosecute.

No need to go after the Chans for crimes. Just tax them so their unequal and unearned share of wealth is redistributed back into the society they ripped off. And even if they didn’t rip anyone off, intergenerational transfers of great wealth are anti-democratic and destabilizing.

Otherwise, sure, just admit outright you like the idea of entrenched inequality.

No, we are talking about people having it all for generations to come on illegal gains. Surely that must bother you somewhere in your American land-of-equal-opportunity heart?

In any case the issue now is that people like the Chans are gaming the system with their asymmetrical wealth and access to power so that they will remain wealthy in perpetuity.

So while yes we have to accept that the Chans are now rich, we don’t have to accept a social and financial policy that says they get to be rich for the end of time and every single Chan gets to have a big apartment and a fancy education because grandpa was a thief.

It’s pretty flipping simple but the issue of inequality just goes over so many people’s head as all they can think about is, well, there is no crime here we can prosecute.

No need to go after the Chans for crimes. Just tax them so their unequal and unearned share of wealth is redistributed back into the society they ripped off. And even if they didn’t rip anyone off, intergenerational transfers of great wealth are anti-democratic and destabilizing.

Otherwise, sure, just admit outright you like the idea of entrenched inequality.[/quote]

You’re equating two different things. I entered this conversation talking about the “issue” of how a family became wealthy two generations ago and how I don’t think that’s particularly relevant to the current political race. That has nothing to do with how I feel about economic inequality.

Tax them? Tax who? The Liens? All wealthy? All those who receive significant inheritances?

Can you not see a conflict of interest, a family that got rich from massive property holdings of unknown origin (which they still hold), didn’t pay inheritance tax to any great degree, and now they want to put one of their own as Taipei mayor , meanwhile the father is running around China with his mates, the same China that wants to absorb Taiwan as soon as possible.
Apart from the guy having no obvious qualifications to be Taipei mayor, the above issues would give voters pause in most countries, they have a history there of making money from political connections, China has a lot of money that it could throw in the pot to sweeten any deals.

It would appear to me that the Lien family became rich the same way that Chen Shiu-bian’s family became rich.

And only one family gets punished.