Chang Jing-wen Column: Taiwan's Unique Illness—When Every Dollar the Government Saves for You Becomes a Mortgage Payment for Real Estate Developers

Deutsche Bank's annual 'Mapping the World's Prices' report uses a standardized framework to compare the cost of rent, housing prices, salaries, coffee, McDonald's meals, iPhones, fuel, and movie tickets across 69 global cities, converting all into U.S. dollars for direct comparison. In this report, Taipei appears prominently—especially in the latest edition released in mid-July—where the numbers reveal an extreme structural contradiction, like a cruel yet honest mirror.

Taipei ranks 35th among 69 cities. The latest global urban quality-of-life report presents a starkly contradictory image: Taipei boasts world-leading healthcare (1st), excellent safety (4th), and top-tier transportation and low daily living costs. Yet, overall quality of life ranks only 35th—awkwardly mid-tier.

Breaking down the data reveals the cause: Taiwan’s low ranking is dragged down by an almost-bottom 'price-to-income ratio' (66th globally, 4th from last) and lagging wages (49th, with local purchasing power at 50th).

More alarmingly, the report notes that Taipei’s disposable income after rent has declined by a staggering 35.8% over the past decade—evidence that salaried workers’ real, freely spendable wealth is being eroded at an alarming rate by real estate.

Why does a society with top-tier public healthcare, extremely low crime, and relatively low prices still feel oppressive? French economist Thomas Piketty’s core warning in 'Capital in the Twenty-First Century' offers the most solid macroeconomic footnote to Taiwan’s absurd reality: when the rate of return on capital (r) consistently exceeds economic growth (g), wealth accelerates toward asset holders, and society’s incentives shift from 'value creation' to 'competing for existing assets.'

r>g in Practice: The Extreme Gap Between Asset Inflation and Wage Stagnation

Piketty’s famous formula r>g describes how wealth inequality intensifies when capital appreciation (r) far outpaces real economic and wage growth (g). This is precisely what Taipei’s data reflects.

On the capital side (r), central Taipei’s housing prices reach $12,841 per square meter (about $42,450 per ping), ranking 15th most expensive globally—on par with New York and London. Mortgage burdens are 1.6 times higher than in New York, ranking 17th globally. Ultra-low mortgage rates (2.3%) and minimal holding taxes create highly attractive leverage for capital, pushing asset prices (r) to global highs.

Yet on the labor side (g), Taipei’s wages rank only 49th, with local purchasing power at 50th. This means real wage growth has been left miles behind asset price surges. For most salaried workers, the pace of wealth accumulation through labor can never catch the tail lights of asset inflation. The ironclad fact that disposable income after rent has plummeted 35.8% over ten years further proves that workers’ labor output is being无情 consumed by the housing price black hole.

A Shift in Incentives: When Rent-Seeking Outperforms Production

Piketty’s deepest warning is that capitalism’s most dangerous moment isn’t when no one profits, but when the way of profiting changes—when holding assets becomes more profitable than working, and rent-seeking more advantageous than production, causing severe resource distortions.

Deutsche Bank’s latest report highlights an unbelievable phenomenon: Taipei ranks 15th most expensive to buy a home, yet average monthly rent for a three-bedroom apartment is only about $1,541 (58th globally), with gross rental yields estimated at just 1%–2%, among the lowest worldwide.

In a healthy market, such low rental yields should deter investment. Yet in Taiwan, capital continues to flood into real estate. The reason is simple: in an environment of low interest rates and extremely low holding taxes (where property and land tax bases have long deviated from market prices), the purpose of owning property is no longer 'rental income' (productive return) but 'capital gains' and 'tax avoidance on assets.'

When the tax burden of owning an older home may be lower than that of a car, and property appreciates while cars depreciate, smart capital avoids high-risk, innovation-driven real industries (production) and instead floods into stocks and real estate for preservation and arbitrage (rent-seeking). Society’s most talented people and capital are lured into争夺 existing land and assets, not creating new value.

The Absurd Capital Subsidy: The More Developed Public Systems Become, the Heavier Private Asset Pressure Feels

This is the report’s most cruel and alarming structural betrayal: every dollar the state saves for the public through public resources ultimately becomes a mortgage or down payment for the asset class.

What Taiwan prides itself on are 'public goods'—healthcare (1st), safety (4th), and subsidized utilities like water, electricity, fuel, and mass transit (MRT monthly pass ranks 48th cheapest)—all supported by robust institutions and government spending. These public resources appear to precisely reduce individuals’ 'daily living costs.'

Yet under a skewed asset structure, this well-intentioned policy becomes an extreme mechanism of wealth transfer:

Government maintains top-tier 'public goods' (healthcare 1st / safety 4th / utility subsidies) ↓ Salaried workers’ daily living expenses and basic survival pressure drop significantly ↓ Savings in disposable income do not translate into improved 'local purchasing power' ↓ All are sucked dry by endlessly inflating 'private asset prices' (housing 15th most expensive / mortgage burden 17th globally)

The more the state subsidizes healthcare, transport, and utilities to save people’s survival costs, the more this 'public dividend'—created by society as a whole—seamlessly becomes底气 for landlords and asset owners to raise rents and prices.

The breathing room salaried workers gain in the public sphere is instantly consumed in the private asset market. The result: the more developed public systems become, the heavier the exploitation and oppression by private assets on salaried workers feels.

No Marriage, No Children, Just Small Joys: Young Generations’ Calm Risk Avoidance Under Institutional Exploitation

It is precisely within this contradictory structure—'public goods subsidize daily life, private assets drain the future'—that Taiwan’s youth have developed a highly intelligent individual rational strategy: pursue small joys, avoid marriage and children.

The report implies a cruel double reality.

At the individual survival ceiling, we can call this the 'small joys defense line': thanks to world-class healthcare, top safety, affordable transit, and cheap dining, a single salaried worker can maintain a 'basic life' comfortably. After work, a bowl of ramen, a cup of specialty coffee on weekends, gym sessions, and one or two overseas trips a year—all are possible within the public subsidy safety net.

But the moment a single worker attempts to cross the chasm of family formation, asset exploitation begins. The instant young people try to take that step—buy a home, get married, have children—they are forcibly dragged from the consumer side enjoying public dividends into the extraction side of the asset class. A 30- to 40-year massive mortgage instantly drains both partners’ disposable income for half their lives.

'Traditional Family Path' Work and earn → Buy home and marry → Raise next generation ↓ Fall into high housing costs and asset exploitation (mortgage consumes half a lifetime of happiness) ↓ Become fuel for the r>g structure

'Youth Individual Risk Avoidance' Work and earn → No marriage, no children → Enjoy small joys and public goods ↓ Refuse to switch to the asset exploitation track ↓ Use 'no marriage, no children' to achieve nonviolent non-cooperation with a distorted structure

When the price of starting a family is pushing oneself into a deep abyss of class decline and economic suffocation, pursuing small joys and avoiding marriage and children is not generational fragility or indifference—it is the youngest generation’s most清醒 and most tragic collective risk control under an extremely skewed system.

Distorted Tax Structure: Heavy on Labor, Light on Capital

Piketty’s ultimate solution is a 'progressive capital tax' to curb endless capital concentration. Yet Taiwan’s current tax system stands precisely opposite to Piketty’s warning. Overall, capital gains bear minimal burden: property holding taxes remain low, and securities capital gains are nearly tax-exempt. Moreover, Taiwan’s tax revenue is primarily shouldered by labor income: over 70% of personal income tax comes from salaried workers’ 'wage income.'

This 'heavy on labor, light on capital' tax policy is equivalent to the system itself giving r>g a green light. The government taxes labor heavily while subsidizing public goods—yet these public efforts ultimately flow entirely to the asset side, further inflating housing prices, and ultimately contributing to Taiwan’s globally worst low birthrate tragedy.

Escaping the 'Rent-Seeking Society,' Returning to Value Creation

Taiwan ranks 35th in quality of life in Deutsche Bank’s report—not because Taiwanese people aren’t hardworking, but because our 'institutional incentives have turned public'