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A New Path for Taiwanese Society

By Legislator Jason Hsu, Legislative Yuan Republic of China (Taiwan)

Government Policy

Published on Crossroads on 2018/08/26 2952 views

This post is available in other languages 中文

A New Path for Taiwanese Society

Chinese to English translation by Wordcorp 一元翻譯.

Over the last three decades, the Internet has been fundamentally changing human behavior.  Today, Internet access is considered an extension of human rights.  A country’s overall competitiveness is even determined by the integrity of its Internet infrastructure. Most importantly, the Internet has made possible the creation of various new types of business models, while overturning people’s understandings and perceptions of industries. Simultaneously, the Internet has changed the interactions and the superior–subordinate relationships among the government (or enterprises), intermediaries, and users.

Uber is a good example. The entrepreneurial business model of Uber not only had an unprecedented impact on the industry, but also provided the opportunity for us to examine bottlenecks in Taiwan’s social innovation efforts.

First, let’s talk about the government. In the past, our national system functioned under a big government mentality. Now, however, with the wide applications of the Internet, if the government still chooses to use a big government mentality in facing social innovation, it is foreseeable that its policy planning will follow a top-down process. When the ones in power have absolute decision-making power, they may determine the methods by which resources are allocated, and monopolize the entire structure and discourse of social innovation. And, every time there is a regime change, a new method and logic will be implemented. Consequently, social innovation will be trapped in an endless cycle.

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The Government Exits: Taking the Helm Instead of Paddling

For social innovation to properly change Taiwan for the better, the government should exit.  It should give up on the thought process of offering unlimited subsidies and resources. Instead, the government should let social innovators create the need themselves, while letting the development of social innovation flow organically. Just as Warren Edward Buffett said, “After all, you only find out who is swimming naked when the tide goes out.” The system’s process of natural selection will be beneficial to the long-term development of social innovation. The government only needs to continuously perfect laws and regulations, create new industries, and fully activate the kinetic energy of enterprises.

In the past, Taiwan’s original industries mostly relied on generous government subsidies. If the government does not step back and change its role from "controller" to "guide", social innovation will end up in an industry ecosystem lacking healthy development. Social innovation cannot continue the past policy direction of "creating parks", "Two Trillion and Twin Star Development", or the large investment of resources in the so-called "Star Industries".  Looking at past experiences, those industries will all just die out in the end.

Moreover, the purpose of laws is to regulate. Under the industry structure over the past thirty years, the government tailored for each newly-rising industry a set of industry development guidelines - a new set of rules for the game. Consequently, the government limited the scope of industry development. But, we must understand that social innovation, as the driving force for social change, is not limited to a single industry; rather, it requires common development in the mentality and thoughts of each industry. Therefore, we do not need to make laws for social innovation. In fact, it does not need special laws.

Benefit Corporation Bill: Paving the Road for Social Innovation

When the government faces a transformation of character, it will naturally feel a sense of insecurity. This insecurity comes from the one with power having to satisfy the society’s expectations to maintain the legitimacy of the regime. Therefore, during the process of the government’s gradual exit, what is needed is a new administrative thought and governing structure, a new hope, and a new law to assist this transition period—the Benefit Corporation Bill (BCB).

The BCB, under the Corporation Law’s structure, not only strives to maximize shareholders’ benefits but also must consider social responsibility, seeking wide and real partnerships between the government and society. The promotion of the BCB has its symbolic meaning. It satisfies the “socialness” of a social enterprise, enabling such enterprises to play a crucial role during the process of the government activating social innovations. In addition, it satisfies the “enterpriseness” of social enterprises, enabling the legalization and achieving the scale for social enterprises. After all, when a social enterprise cannot survive, it will return to the role of a nonprofit organization, taking the old track of relying substantially on government subsidies.

On the other hand, the BCB can provide a new option for introducing patient capital, common company governing, or the model of enterprise development. This is the road Taiwan must take. Through this way, through the large leading the small, an ecosystem will be established. In other words, social enterprises do not need special laws. Social enterprises are still budding. If they are under the limitation or restriction of any laws or methods, their development may very likely be skewed.

We need some reflection.  Taiwan has been promoting the concept of social enterprises for many years. The private sector obviously wields a powerful ability. But up to now, we still cannot find a proper model or an index in the realm of social enterprises. What exactly is wrong with the current system?

Social Innovation as a Long-Term Social Engineering Project

Social innovation is a long-term social engineering project. In past development models, what was large was forever large..."too big to fail."  But that has passed. We need to set an outline for the next generation of Taiwan’s enterprises and industries. The most critical thing is to create fluidity, including the fluidity of capital, technique, and talent.

In the end, we must return to the nature of governance. The government must control the helm instead of paddle. As with all regulations, there are early users, or early adopters. Many early adopters of Taiwan’s social enterprises survived a competitive process and formed groups to a certain extent. Groupings lay the origin of an ecosystem. Therefore, we should prevent the early adopters from being led by wrong methods in their early period, and ending up endlessly relying on government policy on subsidies.

Facing challenges from globalization, Taiwan must turn its attentions to the establishment of a social innovation ecosystem. As a result, the thought process employed by the government must undergo disruptive innovation. Laws and regulations must be transformed from "coach and regulator" into "guide". Long-term planning of a decade, of two decades, or even of a generation is required to establish a new status quo.

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Uber is a terrible example. Taiwan has world class transportation options, thanks to "big government". In fact, Taiwan should be a global model for the benefits of "big government" done well. With plenty of affordable taxis in Taiwan, there is absolutely no need for Uber. Uber is simply using huge amounts of venture capital from outside of Taiwan to bully Taiwan and subvert the democratic process where government regulation and the rule of law protect both consumers and workers. In this piece, Mr. Hsu comes across as completely misguided and not in a position to help Taiwan toward a better future.