PHUKET: Thailand’s leading think tank has proposed a “survival strategy” for the nation: an exit from the current economic and political distress by transforming the country into a “welfare state” that would help bridge wealth and income disparity.
The Thailand Development Research Institute (TDRI), led by its chairman, Dr Nipon Poapongsakorn, says the group’s research has found that disparities in income and assets are the main cause of the ongoing political conflicts that could spiral into a crisis.
He says the way out is to reform the economy by creating a welfare state that would help close the gap between rich and poor, thus reducing social and political conflicts.
The suitability of such a policy could prove problematic for Phuket. The island province, a sparkling national asset, derives its celebrity from notions of yachts, ‘top-end’ villas, entrepreneurship and the powers of investment and economic opportunity – all things incompatible with welfarism.
The TDRI’s findings are said to show that Thailand’s richest citizens have 69 times more assets than its poorest. In addition, about half the country’s population lacks job security.
The Thai economy’s current market system fails to deliver equal access to bank credit, knowledge and natural resources. This is because the state functions like a business conglomerate that monopolizes commerce, the think tank says.
Only a handful of politicians and business people benefit from the monopoly, and the current tax structure does not help reduce wealth concentration among the privileged.
Wealth concentration has a significant correlation to political power, as seen in the Thaksin experience in which a business tycoon entered politics, dubbed himself a CEO, and got driven out of office by a coup amid widespread perceptions of abuse of power for massive personal financial gain.
“The more assets they have, the more the motivation for businessmen to come to power,” Dr Nipon says.
He goes on to quote research finding that companies run by the Shinawatra family in 2004, for example, were providing shareholder returns 140 percent higher than other leading companies. The research also shows that companies having connections with government ministers were enjoying bottom lines 18.5 percent higher than others.
The TDRI research was presented yesterday at a seminar organized by the Thai Journalists’ Association and the King Prachadhipok’s Institute.
The TDRI conclusion that a welfare state is the answer for Thailand, on the basis that only such a system can bring sustainable democracy to the country, will almost surely be a subject of ongoing debate over the next few months.
Welfarism has produced the virtual bankruptcy of some notable entities over the past few decades, Sweden, New York City and Los Angeles among them. And it has seduced many others to the brink.
While market economies rarely deliver equality across even the majority of a national population, they might well be preferable to the rude and cynical populism that underpinned the Thaksin years.
Even in moderation, populism, let alone outright welfarism, brings rising public debt, falling direct investment, higher taxes and an erosion in its host country’s ability to compete internationally.
These known consequences may not be what Thailand needs as it attempts to emerge from the current slump on par with the currently favorable prospects for most of its Asian neighbors.
— Nation / Gazette News Pool