Imagining a Post-Pandemic Taiwan: It’s time to discuss a restart (Part 2 Meso perspective)

Written by Chan-Yuan Wong and Kyoung M. Shin.

Image credit: 10.16 總統出席「台灣區工具機暨零組件工業同業公會第五屆第二次會員大會」by 總統府/Flickr, license CC BY 2.0

It is indisputable that Taiwan’s restrictive emergency policies have successfully brought the coronavirus under control and gave Taiwan the enviable status of a “virus-free haven.” Although one may argue that outcome should be used to measure “success” and “failure,” it is not the only criterion to evaluate public policies. Even from a purely economic efficiency point of view, how the outcome is achieved is equally important—that is, the measure of the associated costs and resource inputs. To effectively control the spread of the coronavirus, Taiwan has essentially taken a page out of its old “developmental state” playbook. In an exemplary display of its old self, this meant, first and foremost, mobilising resources and concentrating them into the hands of a few technocrats. And, of course, doing so without humouring dissenting voices. Certainly, other kinds of actors are involved as well. For instance, health professionals are endowed with a certain level of authority to work with ordinary citizens to disseminate information about good personal hygiene habits and discourage panic buying. Nevertheless, the central technocrats are given unparalleled authority—and arguably even public trust— to orchestrate and steer pandemic-related policies. This strategy has proven to be “effective” thus far. However, unintended consequences are arguably already surfacing, and we have reasons to be concerned that more may be on their way.

In the public sector, for one, there are always competing priorities with respect to public policies. Undoubtedly, public health is an important area of public policy—perhaps even the most important under the current circumstances. Yet, when we put so much resource into one specific public policy, we are leaving precious little aside for other policies or public goods, some of which may prove to be far more critical in the long-run. For instance, to name just a few, what will be the ramification of the current concentration of resources to fight COVID-19 for education? For public infrastructure? For environmental imperatives? For international relations? We are not arguing that these should be prioritized over COVID-19 per se. Rather, we feel it is critical to give a space to these questions as Taiwan considers a restart from this pandemic.

In fact, as wealth of research across many disciplines have shown (e.g., economics, public administration, organizational studies, management), when resources are concentrated and managed in a top-down fashion, varieties of principal-agent problems arise that ultimately undermine the efficient use of resources. One issue that has already arisen in Taiwan—but has often been overlooked—is inefficiencies and redundancies. Based on our preliminary research, anytime someone enters Taiwan from abroad, especially if the said person is a foreigner, it appears that four to seven government agencies at different levels of the hierarchy are involved in monitoring the person. It would not be shocking if there are in fact more. It appears that, for all the publicity about AI, big data, and technology, Taiwan has chosen its pandemic responses to be extremely labour-intensive. The volume of human resources administering the processes per case seems to be relatively high, even when state-of-the-art technologies are deployed. What those multiple agencies and administrators do are often completely redundant and superfluous. For instance, in one recent interview, a representative from a local police department has divulged to us that local police bureaus are mandated to implement what can be roughly translated as “three-layer responsibility system.” In simple terms, it means that three different personnel from three different offices in the same local police department are required to make contact with and monitor the single individual in question every single day. More often than not, those three officers do not communicate with each other. One cannot help but ask, is this really the best use of limited resources, including human capital?

Furthermore, when one area is suddenly flush with resources, it often invites rent-seekers and new groups of vested interests. It is plausible that the reason why there is so much redundancy in COVID-19-related policy works may be precisely because they have created numerous rent-seekers and vested interests. If history has taught us anything, once such institutional actors are created, it is extremely difficult to remove them. Once in place, they tend to continue to divert limited, valuable resources away from other policy areas, or undercut or delegitimise other public policy efforts. In short, concentration of resources can mean a drainage of resources away from other public policy imperatives. Arguably, Taiwan is already starting to face such ramifications. It  has already announced that next year there will be a moratorium on the public servant salary increases. What that might precipitate for Taiwan’s bureaucratic capacity is anyone’s guess—the same bureaucracy, one may add, that previous scholars have heralded as one of the drivers of Taiwan’s miracle. The Taiwanese government has announced that there will be an increase of government expenditure in 2021 and projected a budget deficit of USD 6.83 billion for the year.

Concentration of resources has not been limited to the public sector. On the private sector side, it is worth noting that in the aftermath of the pandemic, notwithstanding its reputation as one of the more equitable industrialized nations in the world, Taiwan has walked on a path eerily similar to those countries in which the rich have become the biggest beneficiaries (e.g., US). While small businesses and individual entrepreneurs are falling by the wayside, behemoths such as TSMC have actually become bigger. In fact, TSMC has been carrying out an unprecedented level of scaling up and expanding during the pandemic, gobbling up the supply chain not only abroad but also domestically in Taiwan. The global demand for electronic gadgets during the pandemic has made TSMC an indispensable chip supplier for major ICT firms around the world. What kind of post-pandemic growth and economic structure Taiwan envisions should be up for a constructive public debate. Instead, Taiwan’s technocrats have enabled TSMC to attract unprecedented amount of resources from both the public and private sectors. In the meantime, the implementation of border control and restriction of human flows have brought much of service business operations to a halt. Many small businesses, whose investments and assets were specific to tourism (i.e., high asset specificity), are severely disrupted. Re-purposing the stranded assets naturally requires new capital. But, with so much resources being funnelled into only a select few, there does not seem to be enough to go around. These businesses may not see the day of restarting in post-pandemic Taiwan—if they can remain at all. By de facto “selecting the winners,” Taiwanese technocrats may be jeopardizing the prospect of balanced, equitable, and inclusive growth in post-pandemic Taiwan. If such a future is what the Taiwanese citizens want, our raising a concern may be a moot point. But, we have yet to see a genuine debate of this sort in the public discourse.

Once upon a time not so long ago, Taiwan’s model of dispersing resources and opportunities to more equitably cultivate indigenous, home-grown entrepreneurship was celebrated globally, both in academic and policy circles. It used to be an antidote to one-size-fits-all growth models. Against this historical backdrop, the current turn of events in embracing national champions is a curious move. From a portfolio management perspective, too, diversification of resources/assets means diversification of risks. Channeling all financial resources into the hands of a few hand-picked giant companies is tantamount to betting that there will be no risks in the future. Such a decision today may straightjacket Taiwan’s dynamic capabilities for decades to come.

We do not dispute that public policy priorities have to change in tandem with changing circumstances. Mobilizing and dedicating resources to fight the current pandemic, in this sense, is commendable.  Many countries around the world would do well to learn lessons from Taiwan. Yet, as Taiwan looks to a restart, it also needs to consider the potential longer term ramifications of the decisions being made today. We have highlighted a number of concerning trends on the horizon in this article. We hope this can be a catalyst for a much-needed debate.

Kyoung M. Shin is an Associate Professor at the Institute of Technology Management, National Tsing Hua University, Taiwan.

Chan-Yuan Wong is an Associate Professor at the Institute of Technology Management, National Tsing Hua University, Taiwan.

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