Originally broadcast on KBDI-TV channel 12, Denver, April 4, 2008. Filmed at the Public Television Service station, Taipei, Taiwan, March 20, 2008. I interview Dr. Yen Chen-Sen from the National Chengchi University's Institute of International Relations and Dr. Lai I-Chung from Taiwan Thinktank. The one-hour video is here.
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You're assuming that most people on the island would want to fight. This is not necessarily the case. There are plenty of people in Taiwan who very much want to be joined with the mainland. Personally, I think they would be making a mistake, but this is less of a clear cut case as the mainland develops economically. If anything, Taipei seems less economically humming at present than Shanghai and other cites. To put it mildly, this did not used to be the case.
If the Taiwanese were armed when negotiating being absorbed into the mainland, they should be able to obtain better terms than if such negotiations occurred while the Taiwanese people were disarmed.
I have in mind two basic scenarios: (1) The mainland invades or (2) The Taiwanese negotiate some kind of closer relationship that is accepted by the mainland in lieu of invasion.
For both scenarios, the Taiwanese people are in a better position vis a vis the mainland if every household is armed, as in Switzerland (where private ownership of fully automatic machine guns was common, when I last checked).
Note: This is not the same as every household including men who have completed military service. Such training without near universal weapons ownership doesn't help much at the margins.