Politics of Position: The Perverse Effect of Internal Labor Market Reform

Abstract

The anemic performance of Taiwan’s SOEs was criticized by the domestic opposition and American advisors; even the economic officials who had hands-on experience were not satisfied with it. While the former two camps were in favor of privatization, the latter demonstrated a statist faith in “rationalizing SOEs” (gongying shiye jiyehua), with the internal labor market reform promoted in the early 1960s as the most important attempt to revitalize the ailing state sectors. This chapter analyzes how this well-intended reform backfired because it failed to address the root causes of ethnic discrimination and party-state domination.