J. Wang’s press conference

Today KMT Vice Presidential candidate Jennifer Wang 王如玄 held a press conference to answer questions about her investments in military housing. The KMT’s new campaign manager, Jason Hu, insisted that she needed to take this problem seriously. However, my immediate reaction is that she has probably made things worse. In addition to admitting that she bought 12 units, not the 5 she previously stated, there were lots of places left for skeptics to question. Instead of providing full details on each transaction, she merely provided her annual wealth reports to the Control Yuan. Unfortunately, the “Sunshine Law” has been defanged so much that these reports barely reveal anything. They certainly do not list purchase or sale prices, so we have to take Wang’s word on how much profit she made on each transaction. Unfortunately for her, many people are no longer taking her word for anything. The talk shows are awash in people speculating about all the missing details.

 

However, the part of her statement that I want to focus on is about the principles, not the details. To me, this part might be more disturbing. Wang stated the following:

“[Over a decade ago,] I was a lawyer and, in the course of my duties, I met a real estate agent who raised the prospect of this type of investment. At the time, I felt that there was no legal problem, so I made several investments with the real estate agent. However, today after all this controversy, I have looked in detail at the underlying policy goals of the laws, and, ethically, I have let many people down. Actually, I am disappointed in myself. Truthfully speaking, I have failed this ethical test. In addition to apologizing for the controversies caused, after looking in depth at the relevant policy goals, I deeply apologize for buying military residences, an action that is not consistent with the ethical standards that people demand from a vice presidential candidate.”

Thus, according to Wang’s own statement, someone pitched her an idea and she implemented that idea without ever stopping to think about ethics. This is extremely troubling, since the essence of a politician’s job is precisely to make value judgments. Bureaucrats ask, “Can we?” Politicians ask, “Should we?” Voters choose politicians precisely to make subjective decisions that are in line with mainstream values. If Wang is not the kind of person in the habit of asking about whether something is good or bad, she probably should get out of politics.

 

Of course, I don’t believe for a minute that Wang has suddenly, after looking into the policy goals of military housing laws for the first time, discovered that she made an enormous ethical mistake. (I also don’t believe the bosses of Tinghsin and Volkswagen were sincerely sorry about their decisions. I believe they were sorry they got caught and sorry that the exposure of their misdeeds caused financial repercussions.) She knew exactly how the laws were written and how to exploit the loopholes. Am I supposed to believe that she is so oblivious that she never thought about the reason the five year lockout period existed? She wasn’t sorry a week ago, and she didn’t see any ethical problems. No, what happened is that lots of KMT voters became furious when they learned of her investments. It’s not just that she violated the spirit of the law; it’s also that many of them wonder if she exploited unsuspecting deep blue constituents. Deep blue voters think she has failed an ethical test, so she has to appease them lest they stay at home or cast their votes for one of the other parties in the blue camp. Maybe this (and her donation to charity) will satisfy them. However, I suspect this story won’t go away. Too many loose ends remain unaccounted for.

 

[Aside: Wang is relying heavily on her financial reports to the Control Yuan, even saying that if any errors were found she would be willing to accept all legal responsibility. Sounds great, doesn’t it. The problem is that there are no legal penalties for failing to report. By law, if someone points out an error in a report to the Control Yuan, the official has 30 days to correct the error. If the error is corrected within 30 days, there is no penalty. This is why politicians routinely report that they have no bank accounts, securities, or real estate. For example, Soong’s VP candidate Hsu Hsin-ying 徐欣瑩 (who sure seems to have a lot of financial power at her disposal) reported that only she owns a Toyota Corolla. The Sunshine Law is so useless now that It is up to the general public to point out specifically what she is hiding, and then she can simply fill in that item. So when Wang says she will face all legal responsibility, it sounds to me like a weasely lawyer’s statement designed to deceive the listener.]

evolution of the political map and money politics

In the last week before the election, all signs point to a good election night for the DPP. This should be their best local election since the 1997 landslide. Since that particular election is burned vividly into my memory, I thought I’d go back and look at a couple of things that have changed since then. In particular, I want to discuss (1) geography and how the political map has changed (2) the way that money politics is different today than a generation ago.

 

In 1997, the DPP’s victory was almost unbelievable in geographic scope. Taipei and Kaohsiung Cities were not up for election, but all the other cities and counties were. The DPP won nearly every major race. In the south, the DPP held power in Kaoshiung County and Tainan County, they took back power in Pingtung, won a messy four-way race in Tainan City, and their ally, Chang Po-ya 張博雅(now the head of the Control Yuan) won a fifth consecutive term for the Hsu family dynasty in Chiayi City. In the north, the DPP easily retained power in Yilan County, won a tough three-way race in Hsinchu County, somehow held Taoyuan County (where Annette Lu 呂秀蓮 had won the office in a by-election a year earlier), won an outright majority in Hsinchu City, and narrowly edged out the KMT in the biggest prize, Taipei County. The DPP even won in Taichung City and County. They didn’t win in Nantou, but former DPP legislator Peng Pai-hsien 彭百顯 edged out both the DPP and KMT nominees to take that race. It could have been even worse for the KMT. They barely squeezed out victories in Changhua and Yunlin, the two biggest districts they held onto. In terms of numbers of cities and counties that each party won, it didn’t look so bad since the KMT won all the little districts. However, the DPP ended up governing about 80% of Taiwan’s population.

Today, that looks a little strange. The KMT’s last redoubt was in Changhua, Yunlin, and Chiayi County. Today, Yunlin and Chiayi usually can be counted on to vote for the DPP, and Changhua is far from a reliable area for either party. Today it would be nearly unthinkable for the DPP to sweep Taoyuan, Hsinchu County, and Hsinchu City. It seemed far less impossible then. The DPP had held the Hsinchu County government since 1989, and it had been very strong in several elections in Hsinchu City during the 1980s.

Many of us don’t realize (or can easily forget) just how much the political map has changed. In the 1990s, we didn’t talk so much about the blue north and green south. Rather, the DPP had strength in the north and south, but central Taiwan was often thought of as a “democratic desert.” Perhaps the best way to see the changes is to look at the DPP’s vote in national elections over the years.

	national	north	mid-north	central	mid-south	south	E/F
1994	39.4	41.7	33.8	36.3	43.8	40.6	26.3
2000	39.3	37.4	30.0	37.4	49.5	46.2	20.5
2004	50.1	45.9	42.5	50.5	59.6	57.0	29.1
2008	41.6	38.4	32.9	40.5	51.0	49.7	21.8
2012	45.6	42.2	37.4	44.9	57.0	53.6	25.1
(12-94)	6.2	0.5	3.6	8.6	13.2	13.0	-1.2

North: Taipei City and County, Keelung City, Yilan County

Mid-north: Taoyuan County, Hsinchu City and County, Miaoli County

Central: Taichung City and County, Changhua County, Nantou County

Mid-south: Yunlin County, Chiayi City and County, Tainan City and County

South: Kaohsiung City and County, Pingtung County, Penghu County

East/Fujian: Taitung, Hualien, Kinmen, Lienchiang (1994: Taitung, Hualien only)

 

Ignore the East/Fujian category; it is much smaller than the other five regions. It is also geographically incoherent.

In 1994, look at how close the other five regions were to each other. From the weakest to the strongest, the difference was only 10%. Moreover, the north was actually a better region for the DPP than the south. Today that is unthinkable. By 2012, the difference between the weakest and strongest regions had grown to 20%, and the south was about 8% better than the north.

Now look at the difference between 1994 and 2012 for each region. The north has barely changed (+0.5%), the mid-north has slightly increased, the center somewhat more, and the mid-south and south have both increased by a whopping 13%. The DPP’s gains over the past generation have come almost entirely in the southern half of the island.

This is what we mean when we talk about the south turning green and the north turning blue. In an absolute sense, the north hasn’t really gotten bluer. However, relative to the national average, the north and mid-north look far bluer than they did a generation ago. The southern half of the island is, of course, much greener. The central region, rather than being a “democratic desert” halfway between DPP bastions in the north and south, has become the bellwether area. As goes the center, so goes Taiwan.

 

You will notice that the mid-south has always been the DPP’s best area in national elections. However, it has not always been the DPP’s best area in local elections. In 1997, when the DPP won nearly everything else, it could not win Yunlin or Chiayi Counties. Somehow the KMT managed to maintain control of local politics in what objectively should have been the DPP’s best area. In the past 20 years, however, the KMT has completely lost this control. This gets me to my second big change in the past generation: money.

Money is emerging as a defining issue in current politics, but it runs on a very different logic today than a generation ago. Now we are increasingly aware of the power of large, multinational conglomerates that have extended their reach through every facet of Taiwan’s society. The old picture of an economy dominated by small and medium businesses (with a lot of family businesses) and a large middle class seems less and less accurate as a description of today’s Taiwan. Moreover, almost all businesses have established extensive ties with China. They either do their manufacturing in China, or they want to access China’s enormous domestic market. Because of these ties, economic inequality is increasingly bound together with identity politics.

A generation ago, businesses were just starting the move to China, and China itself was far poorer, less powerful, and had a much less aggressive foreign policy. The KMT, headed by Lee Teng-hui, was encouraging a Go-Slow policy for businesses toward China. The USA was still by far Taiwan’s most important market and trading partner.

Nevertheless, money in politics was one of the defining issues in the 1997 election. More specifically, the election was all about what voters called black and gold politics. Black referred to organized crime, and during the 1990s organized crime increasingly penetrated local politics. Following the spectacular police crackdowns on organized crime in the late CCK era, crime figures started to run for elected office as a way of gaining legal protection. If a crime boss was in the county assembly and could threaten to cut the local county police budget, the police learned quickly to back off. Minor crime figures ran for township councils, more important ones ran for county assemblies, and the biggest ones ran for the legislature. The ever-increasing presence of organized crime in elected offices led to more and more violence in local politics, larger and more ostentatious brothels and gambling parlors (you couldn’t miss the garish neon lights), and more petty and violent crime.

Local KMT factions had always used local government budgets to feed their electoral machines, and this continued in the 1990s. If you needed to build a road or a school, your friendly local contractor would inflate the budget, skimp on materials, and kick back 10% to the politicians. This could then be recycled back into politics. Candidates amassed huge war chests to buy votes at ever-increasing prices. Organized crime turned out to be very good at vote-buying. On the one hand, they had lots of tough young men who could either buy votes or scare off the vote buyers for rival candidates. On the other hand, they could remind voters who took the money that their ballot box had better have a lot of votes for the right candidate or else…

Anger against black and gold politics came to a climax in the summer of 1997 when actress Bai Bing-bing’s 白冰冰 daughter was kidnapped by a gang. The whole country watched on TV as the police incompetently tried to raid their hideout completely unaware that the gang was listening in on the police radio. When the gang killed Bai’s daughter, the nation was outraged. There was a massive protest in Taipei calling only for President Lee to apologize and Premier Lien to resign. A week before the election, the case flared up again when the last gang member stormed the South African embassy and held the Ambassador and his family hostage. Frank Hsieh 謝長廷 emerged the hero by going in to negotiate the gang member’s surrender and coming out with the Ambassador’s baby. When people went to vote the next weekend, black and gold issues were at the front of their considerations.

Today, even in local politics, money operates in different ways. On the one hand, if you try to play the traditional game of recycling money through local construction projects, it doesn’t work as well. On the one hand, prosecutors have much better tools for sniffing out corruption and more leeway to pursue those cases in court. On the other hand, the presence of organized crime has diminished considerably. There is much less (visible) prostitution and gambling. Vote buying doesn’t work as well as it used to. Perhaps most importantly, administrative reform in 2010 eliminated local township governments in Taipei, Taichung, Tainan, and Kaohsiung Counties, removing a vital source of cash in many of the most prosperous areas of Taiwan.

Of course, building stuff in the old ways is still attractive, but the future might be in the John Wu 吳志揚 Taoyuan model. As Michael Cole has repeatedly reminded us over the past few years, the Taoyuan government is pursuing an enormous development plan around the airport. However, rather than handing off contracts to lots of small time local cronies, Wu has invited big Chinese investors to come in and fund the project. It is hard to know exactly how the money is then recycled, but it doesn’t take much imagination to speculate that these Chinese investors repay the favor with political influence for Wu’s (or allies’) business dealings in China.

This may be simplifying things too much, but it seems to me that the old factional politics that used to be the basis of KMT local power in central and southern Taiwan have simply become much less lucrative. As the money slowed down to a trickle, faction politics were squeezed out by party politics. Since the DPP had always had quite a bit of sympathy bubbling under the surface in the south, once the factions weakened, it was nearly impossible for the KMT to maintain its partisan hold on those local governments. What was left of the factions switched sides and transferred their remaining support to the DPP. In the center where the two parties are much more evenly balanced, the factions have not yet made the same move en masse, but a few people have switched sides. In the north, the DPP had much less support and the factions have not been tempted to change sides. Now in Taoyuan, Wu may have figured out how to marry the traditional construction development state model with the new integration into the Chinese market. This new source of money might allow him and the KMT to maintain and reinforce their coalition of ideological supporters (of whom Taoyuan has always had many) and the watermelon faction who go wherever their economic interests point them.

 

the open revolving door

I’m very worried about the abuses that can occur when ROC officials who negotiate with China also do business in China.  There is a clear motive and opportunity for China to give them special treatment in business dealings in exchange for agreeing to more favorable regulations on cross-straits activities.  An excellent article in the Liberty Times points out that Taiwan facilitates such corruption by not extending the normal revolving door provisions to officials in the Straits Exchange Foundation.  Most officials are prohibited from engaging in business in industries regulated by their ministry for three years after leaving their post.  Since SEF officials are already technically retired, the government’s position is that there is no need to worry about their next jobs.  Of course, this is ludicrous.  SEF officials are not actually retired; they are actively on the job.  However, the more important effect is that since the revolving door provision doesn’t extend to the SEF, it also does not extend to the family members of SEF officials.  Well, that couldn’t possibly lead to anything improper, could it?

shedding light on business dealings in China

I’m very glad to see the recent spate of news about Sean Lien’s 連勝文 financial dealings.  It’s not so much that I care about Lien personally (though that is interesting), it’s more that I want to know much more about how Taiwanese politicians are personally investing in China.  I would like to see a lot more stories like this one, and I’d like to see stories about political figures who are involved in policymaking even if they aren’t planning on running for mayor.

One of the things I am concerned about is whether China is systematically corrupting Taiwanese politicians, especially from the blue camp.  It bothers me tremendously that the very people who are involved in negotiating on Taiwan’s behalf with China are often the recipients of sweetheart business deals within China.  This goes all the way to the top, with former SEF Chair P.K. Chiang 江丙坤 having extensive business dealings in China.  The KMT’s official position is that there is nothing improper about these business interests.  I tend to think that Ma Ying-jeou might do well to heed his own admonition to Tsai Ing-wen over her involvement in the Yu-Chang Biologics case.  In one debate, Ma scolded Tsai that she should have known that there are some things that politicians just shouldn’t get involved in, even if only to avoid the appearance of impropriety.  It was good advice.

However, I fear that the problem is the fact of impropriety, not merely its appearance.  Corruption is very hard to define; my quick and dirty definition is that turning public power into private money is corruption.  Why are the KMT elite getting all these lucrative business opportunities?  It probably isn’t because they are brilliant business leaders.  More likely, Chinese interests are paying them because of their political positions.  How, we might ask, does someone like P.K. Chiang or Sean Lien repay all this good fortune?  They would probably answer that they don’t, because they have not actually gotten any special treatment.  I am skeptical.  Either way, I’d love for the media to throw more light on the subject.