After the election of U.S. President Donald Trump, U.S. stocks rose roughly over 20 percent with the Dow Jones, S&P500, Nasdaq and PHLX Semiconductor Sector all setting record highs. However, last Wednesday the Russia investigation led to U.S. stocks seeing their largest decline since Trump took office, leading some to question whether Trump has already worn out his welcome with Trump himself still facing an impeachment crisis. Meanwhile, in the year that Tsai Ing-wen has held office, the Taipei Stock Exchange has risen approximately 23 percent, and the New Taiwan dollar (NTD) has appreciated 8.5 percent, the strongest in Asia and for now seems to be continuing to move forward. This year’s GDP is expected to break 2 percent, coming out of an awkward 1 percent. However, the Tsai administration is still not satisfied as reforms and administration encounter severe challenges.
After Trump and Tsai took office, the American and Taiwanese economies and capital markets performed very well. However, people of both nations were left without much sense of these changes, thus leaving Trump (in office for 100 days) and Tsai (in office for a year) both facing crises with their low ranks in opinion polls. Where did the problem originate? First, both Tsai and Trump’s personal characteristics and execution style are very different. Trump is from the merchant class, arrogant and dictatorial, less bound by tradition and convention and guided by his own interests. These characteristics often lead to shocking rhetoric, the use of public criticism as a tool for negotiation, the use of slogans such as “America First” and “Make America Great Again” and seizing on the legitimacy of freedom of speech with the intention of putting down the opposition without a fight. By contrast, Tsai is a personality marked by caution and gentle sincerity who has committed few mishaps. Thus, despite being reform-minded, she is very prudently and cautiously strolling forward on the slow path of the current system and social structure. She seeks to pacify wherever resistance is met, hoping to stamp out the greatest obstacle to reform – conflict. However, the difficulty of reform even surpasses that of revolution. By using this conservative approach, not only do we turn around and compromise when we run into conflict, but the chance for reform itself may die prematurely, leaving behind only slogans and ideals.
Furthermore, the greatest difference between these two lies here: Trump’s execution style and policy, while perhaps somewhat controversial, have not called into his question his will and determination for economic growth. Tsai, on the other hand, makes every effort to make her executive style stable, taking things slow and steady, with her reforms gaining majority support in opinion polls. However, her determination and methods for achieving economic growth have received intense skepticism. Furthermore, looking at the same base infrastructure, Trump’s more than one trillion-dollar public construction project, viewed as a remedy to fix the disparity between the U.S.’s national greatness and its lagging basic infrastructure, has a clear goal and is heavily anticipated, with few opposing voices. Also, Tsai’s forward-thinking basic infrastructure funding, at 29 billion dollars (USD), is obviously to compensate for construction disparities between the north and the south, as well as disparities between rural and urban areas. While this is a politically legitimate tactic, it will be impossible to delineate the policy clearly in terms of finances, effectiveness, production costs and social utility. Thus, opposing parties will be led to assemble and form a comprehensive boycott in Congress. Understandably, pension reform has faced resistance from those with vested interests. If the public infrastructure policy turns can’t be upheld or are not convincing to the people, then it won’t be any wonder that the Tsai administration's vigor and capacity to govern will have some people concerned.
Secondly, tax reform is one of Trump’s significant political items, a policy direction centered around tax cuts. Trump’s tax reform views corporate tax reductions and border tax adjustments as carrots (or sticks) to lure overseas companies and capital back to the U.S. Even though tax cuts may arouse the infamy of the upper class and corporations, Trump doesn’t fear the vilification of the outside world and has revealed his determination to firmly implement these measures. Conversely, Tsai has taken what outsiders have termed the “Old Blue” finance team, who take protecting stability as their principal viewpoint. The only concern of the “Old Blue” is the current decrease in tax revenue. The “Old Blue” do not see the post-economic development advances in income and employment, both whose value could actually be strengthened through taxation. Because of this tax reform taking effect, if this area reduces taxes a bit then another area will increase a bit. How can this be called a reform?
This so-called tax reform is nothing but a tax revision. This train of thought naturally produces absurd policies. For example, when the stock market rushed to trade tax cuts, and taxes in general did not drop, it was nothing more than encouragement for investors to treat the stock market as a short term investment casino rather than a capital market for long term investment. What’s worse? The Trump tax cuts are to promoting investment, with his eyes trained on the job opportunities and upgraded salaries that expanded investment could bring. This is a constructive policy. Tsai’s opposite approach of increasing taxes is actually to fill a financial black hole in the social welfare system – for example, increasing the inheritance tax by 10 percent and increasing the tobacco tax by 20 dollars per pack to act as a sort of long-term source of revenue. These revenue sources are consumables in that they are gone forever once they are expended. It goes without saying which tax reform benefits the well-being of the largest number of citizens. In brief, the style of a leader will have a great influence on how a country progresses or falls behind. Trump is brimming with controversy but also strength, and is constantly thinking about doing well economically. In this way, his leadership style is naturally able to excite the will of the American people to revitalize the economy. However, Tsai’s personality is flawless with her characteristic warmth and stability – characteristics which suit the continued preservation of her predecessors’ work. But Taiwan at this current stage conceals enormous challenges and crises, which require a leader who will rally the people, dare to revitalize, and dare to “do.” Tsai and her team must adjust their administrative style as soon as possible to promote progress, complete reforms and promptly cast Taiwan out of this swamp of stagnation and self-squandering.