[Editor's Note] Going With the Flow

"Those with me will prosper, those against me will perish." Worry not. Here, "me" refers not to any individual, but to the trends of an era. Whether it be companies, governments, or ideas, only those that are on the cutting edge-or at least are keeping up with the times-can hope to prosper and become part of the legacy to the next generation.

What are the global trends heading into the 21st century? Clearly, democracy, economic liberalism, and international cooperation are foremost among them.

Taiwan is in a period of unprecedented reform. Though there are differing opinions on many issues, there appears to be unanimity on general goals. This consensus comes from an understanding of the larger global environment.

In other words, the 21.4 million citizens of the Republic of China are together on the road to democracy, economic liberalization, and international cooperation.

We have discovered that today we can speak freely before the international media, with no taboo subjects. On everything, both positive and negative, everyone has his or her own views and theories. The public in Taiwan is no longer a "silent majority." Some may say that "value systems are confused," or "society is in disorder." But it is not true that there is no moral consensus-we reject violence, corruption, and selfishness. It's just that we no longer think there is only one answer to every question. Our robust civil society is the fruit of democracy. It does not claim perfection. It only claims the courage to pursue a more perfect ideal.

Democratization, economic liberalization, and internationalization go hand in hand. On the one hand it is necessary to look after every link in the domestic economy. On the other, it is necessary to get on track with the international economy, or else be left out. Taiwan's economic reform has been just this way-one step at a time, consolidating before moving on.

Now Taiwan is facing its greatest economic reform challenge-privatization of state-run enterprises. This involves more than NT$18 trillion in capital, directly affects hundreds of thousands workers, and carries profound implications for the whole economy and for every citizen. But this wave of reform almost didn't get off the ground. After several years of talk, little had been done. But after the resolutions of the National Development Conference, and the China Petroleum gas explosion, privatization of state-firms is in the spotlight.

Privatization is often thought to be equivalent to either "corporatization" (adopting private-sector practices) or "increased efficiency." In fact, there is no necessary connection among these elements. It's just that state firms often are less efficient than private ones because they have three burdens to bear: implementing state policies based on non-economic concerns, accepting legal restraints and interference from government agencies, and the human failing of usually performing public tasks more poorly than those involving private profit. Thus people often are dismayed with state firms.

Privatization in fact means simply that the state divests itself of a controlling interest in a company by selling a majority of the stock, or directly selling the firm's assets, to the private sector. Sounds simple. But state enterprises were founded by the state precisely because they have far-ranging importance for all citizens' livelihoods. If the government did not take responsibility for major infrastructure, the private sector-devoid of capital in those early days-could never have done so itself. And it was unthinkable to allow a few people outside the state to control essential goods and services. Thus public ownership of key industries in Taiwan-sugar, salt, steel, petroleum, water, electricity-was based on the needs of a particular era.

But now the economy has grown, and the private sector is strong. All over the world, the state is stepping back from a direct role in the economy to provide economic guidance. Precedents in developed countries support the trend of replacing state-led economics with the law of the market.

Privatization is certainly the trend. But in the process of transition to private ownership, questions remain: Is ownership being fairly distributed? Will corporate monopolies replace state ones? Will there be vicious competition, with the interests of disadvantaged people ignored? Will workers who have given most of their working lives to state enterprises, and the workers' families, be sacrificed?

Every policy, in design and implementation, requires wisdom by the government. It equally requires awareness and supervision by the citizenry. Thus, at this important juncture in the transformation of Taiwan's economy, we feature articles on this vital economic reform, which affects the nation's growth and the people's future. One article is a general discussion of privatization, one examines a specific case study, and a third looks at what is happening to the employees of firms being privatized. We hope readers will gain a better understanding of this subject, and also of today's Taiwan.