First,
finance taught me to evaluate a project’s pros and cons without bias. Defined
by the Investopedia as the science
that describes the management, creation and study of money, banking, credit,
investments, assets and liabilities, finance provides me the tools and methods
to appropriate a project’s value. The calculation of the project’s value generally
follows three steps: list out the project’s revenues and cost, discount
the net revenue to adjust for the time value of money, a concept based on the concept
that a dollar today is worth more than a dollar a year from now, and sum up the
discounted values to find the net present value. However, proponents and
opponents of the agreement both presented the costs and benefits with much
bias. For example, based on the protestor’s AMA, the costs heavily outweigh the
benefits.
These
students cited the potential costs to the agreement as the collapse of small
and medium enterprises, the brain drain of local talents, and loss of Taiwan’s
freedom and future, among others. The provided cost and benefit analysis seems
helpful, but it only painted only half the picture. By presenting a lop sided
focus on the short, medium, and long term costs without the same attention to the
benefits, these protestors shrouded people from being able to make a sound
judgment, one based on facts, rather than fear. Business Week’s survey showing
that 80.9% of surveyors say that they lack sufficient knowledge about the
agreement further demonstrate the need for unbiased and complete analysis. Considering
it is already difficult to evaluate the agreement’s costs and benefits when the
information is complete, one should be even more careful and avoid making conclusive
judgments based on inconclusive evidences.
Second, economics
allowed me to identify the reason behind Taiwan’s fragile economy. Just a few
decades ago, Taiwan was one of the four Asian Tigers that shocked the world
with their stellar economic performance throughout the 1960s and 1970s.
However, compared to its Asian Tigers counter parts such as Hong Kong,
Singapore, and South Korea, Taiwan has lost its momentum and confidence. Tormented
by a decade long wage deflation, many frustrated Taiwanese are no longer
dreaming of a bright economic future, rather they just wish to stop the
bleeding. Worried that the increased competition brought by the agreement will
lead to further declines, particularly in local printing, beauty salon,
tourism, and transportation businesses, people forget the agreement also opens
up further opportunities. Due to Taiwan’s shared cultural and language heritage
with China, Taiwanese businessmen have long taken advantage of China’s labor
and consumer market. Yet, as competition intensified, many Taiwanese businesses
are no longer looking at China as the land of opportunity. Selling themselves short,
they concede to defeat before the fight has even begun. It is important to
realize however that Taiwan’s economic insecurity started long before the
agreement. I attribute Taiwan’s economic woes largely to Taiwan’s declining
domestic investments. While Taiwan invests actively abroad, particularly in
China and Southeast Asia, local investments have slowed throughout the years. It
dropped from 34% of GDP in the 1980s to 20% of GDP in the early 2000s. Some may
point out Taiwan’s strong FDI to neighboring countries and the benefits they
bring, however the payoff from these investments seemed to have only benefited
those at the top, the investors and the entrepreneurs.
As a result,
these ventures abroad have not directly benefited Taiwan. As local companies
fail to upgrade their businesses and grow their market shares, their employees
suffer. Since salaries reflect the value of the
work determined by supply and demand, it is no surprise that salaries in Taiwan
have not grown when companies stagnate due to the lack the investments for
transformations. By tracing Taiwan’s economic history, one realizes that the protests
over the agreement are complicated not only by Taiwan’s concern for its
self-determination, but also by the decade long sense of frustration and
hopelessness.
Third, organizational behavior helped explain
Taiwan’s low investment. Despite
Taiwan’s skilled labor pool, strong market, and business friendly government, Taiwan
has suffered from a lack of domestic investments even as the Business Environment Risk Intelligence (BERI) recently
ranked Taiwan's "Profit Opportunity Recommendation" as the third-best
among the 50 major countries covered, after only Singapore and Switzerland. This
phenomenon cannot be explained just through the lenses of finance and
economics; to fill its gap, I looked to organizational behavior, the
study of the way people interact within groups. So how can
organizational behavior help? Its concept of organizational culture, the values and behaviors that contribute to
the unique social and psychological environment of
an organization, help explains factors of Taiwan’s economic insecurity.
Since Taiwan, formally known as the
Republic of China, is isolated with only 22 countries in the world recognizing
its statehood, its expression of nationhood is limited. Furthermore, compounded
by the pressure given by the People’s Republic of China, Taiwanese people have
long come to accept the status quo with China as the best way to preserving
their democracy and society. As a result, Taiwan functions like a country, but
does not think like a country. Since Taiwan cannot always fully embrace its
nationhood, Taiwanese people have trouble forming a cohesive organizational
culture. The fear for China as a threat to their life, liberty, and property,
stemming from the unresolved cross straits issue, has taken root in the very
fabric of the Taiwanese society and changed mindsets and behaviors. For
instance, since it is difficult to guarantee Taiwan’s status decades from now, politicians
and businessmen often act myopically in their self-interest. Politicians and
businessmen aim for short term gains in an attempt to accumulate wealth as
quickly as possible for their families. Rather than building the society or
their companies, they look to minimize risk and maximize short term gains. Such
behavior has led to political gridlocks in which the government has hindered
the society; companies refuse to take risk and fail to develop their opportunities.
The myopic mindset has been particularly hurtful in the cycle of poor wage
growth. Just as Taiwanese businesses are reluctant to invest in new projects,
they are equally unwilling to invest in human capital. Fixed on the high of
instant gratification, companies prefer able bodies ready to contribute rather
than talents who are diamonds in the rough. This culture has led to a brain
drain; as the environment in effect forces Taiwanese talent to pursue
opportunities elsewhere, Taiwan loses its elites that could have reversed such
trends. In short, the lack of organizational culture has contributed much to
Taiwan’s economic woes that fueled the strong reaction against the trade
agreement.
While I evaluated the protestor’s
argument, related to their frustration, and zoomed out to see the bigger
picture, I realized that I have taken elements from finance, economics, and
organizational behavior. After four years studying at a business school, I have
learned to be comfortable juggling concepts across these areas rather than
merely looking at an issue through one specific angle without even referencing
these subjects. After hours of following the news and researching the
agreement, I believe the agreement is a necessary evil. Taiwan needs to open up
itself, engage in market competition, and revive the competitive spirit. However,
the government can play a more vital role in protecting the impacted industries
and helping them transform their businesses. Yet, through the reflection on
this issue, I learned that my education has broadened my approach and my view. In
the end, though I also found my business school’s curriculum to be rigid at
times and certain subjects to be taught too much on the surface, I also learned
to appreciate everything my business school has given me. I cannot tell you
whether it will bring you value, but after four years and some hours writing
this reflection, I can proudly say, it certainly has for me.
