Municipal financial strategy responses to fiscal austerity: The case of Taiwan

Sima Guang, a historian of the Northern Song Dynasty, once admonished his son: ‘It is easy for the frugal to become extravagant, but very difficult to reverse the process.’ Centuries later, the context for considering the virtues of frugality has grown from ‘regulating the family’ to ‘governing the country’. In the interests of providing social security and income redistribution, welfare spending—for example, on social assistance, unemployment insurance and medical insurance—has increased exponentially and has substantially extended the role of governments. The beginnings of local government autonomy in Taiwan could be characterised as a type of state guardianship, because