A Reflection: MBA and the Sun Flower Movement (Part 2)

         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.