Think-tank Calls For Welfare State

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TACKLING NATIONAL ILLS

Think-tank calls for welfare state

By TDRI’s ‘survival strategy’ research finds disparities in income and assets are major

Published on September 13, 2009

THE NATION ON SUNDAY

The country's leading think-tank has proposed a "survival strategy" - an exit from the current economic and political distress by transforming the country into a welfare state that would help bridge opportunity and income disparity.

They believed this would address the root causes of the current political conflicts that have pushed the country to the brink.

The Thailand Development Research Institute led by TDRI chairman Dr Nipon Poapongsakorn said the institute's research had found that disparities in income and assets was the main cause of the ongoing political conflicts that could spiral into a crisis.

He said the way out of the political crisis is to reform the economy by creating a welfare state that would help close the gap between the rich and the poor, and thus reduce social and political conflicts.

The research findings showed that the richest had 69 times more assets than the poorest. In addition to 10 per cent of the poorest people, about half the country's population lacked job security.

The current market economic system fails to bridge economic inequality and the state also adds salt to injuries for failing to provide equal opportunity for everyone to access financial credit, knowledge, natural resources because the state represents a large business conglomerate that monopolises businesses. Only a handful group of politicians and businessmen access to business privileges and benefit from the monopoly. The current tax structure does not help reduce assets and wealth concentration.

Wealth concentration has a significant correlation to political power as the country has seen business tycoons enter political arena.

Not only does political power protect business interests and concessions. Being politicians in power means they can write regulations to expand their own political and economic base and make rules that penalise business rivals. This makes business of politicians distort the market economy. This is the case especially in a country that lacks political stability.

"The more assets they have the more the motivation for the businessmen to come to power," Nipon said.

Nipon also quoted a research by Dr Somkiat Tangkitvanich, which found that in 2004, companies run by Shinawatra family provide 141 per cent better return than other companies.

The research also found that companies having connections with ministers enjoy 18.5 per cent higher profit than other companies.

The economics presented the research at a seminar organised by the Thai Journalist Association and the King Prachadhipok's Institute at a Bangkok hotel.

He said a welfare state was the answer because the system could bring sustainable democracy.

While the market economy failed to provide economic equality, extreme populist policies may trigger a coup or revolt by the rich because they would be hardest hit.

Two economic crises in 13 years have made populism popular and every party is forced to adopt the policies. However populist policies bring about great public debt and a lack of fiscal transparency.

A welfare state also helps the middle-to-lower class manage their "risk" caused by fluctuating income, unexpected expenses since they do not have enough savings and liquidity or financial resource to turn to for help in times of financial troubles.

The country also has a group of people that the state and NGOs cannot extend a helping hand to such as the disabled, the homeless and the elderly if the country is still run under the current economic system, Nipon said.

-- The Nation 2009/09/13

[harrycallahan]

Extreme and simplistic, and sounding like it's been ripped from Karl Marx for Dummies. Can't these think-tankers see that change needs to be incremental? Suggest a more generous welfare system by all means but jumping to welfare state in one step will never happen, so don't waste your time entertaining the concept. You probably don't even want that anyway, you want opportunities for people, so stimulate industry in the way your Asian neighbours are. Work on making Thailand a place that people want to do business with and in.

[animatic]

I agree with a modulated incremental improvement.. of course that calls for national income to pay for this...

Not only does political power protect business interests and concessions.

Being politicians in power means they can

write regulations to expand their own political and economic base

and

make rules that penalise business rivals.

This makes business of politicians distort the market economy.

This is the case especially in a country that lacks political stability.

"The more assets they have the more the motivation for the businessmen to come to power," Nipon said.

Nipon also quoted a research by Dr Somkiat Tangkitvanich, which found that

in 2004, companies run by Shinawatra family provide 141 per cent better return than other companies.

The research also found that companies having connections with ministers enjoy 18.5 per cent higher profit than other companies.

This pretty much hits it right on the head with a 10lb hammer.

John Henry is smiling somewhere up above.

Some of the other stuff is too simplistic yes.

With out national resources there is nothing to 'redistribute' no matter what hand wringing goes on.

But the basic comment of more fully addressing the needs of the lowest income groups is not changed

by this somewhat poorly stated think tank thought train.

What is not addressed is dealing with Thaksin's political machine's cynical stoking

of these fires within the poorer classes for his own 141% greater profits than all others....

And therein ties the current to the historical.

Edited September 13, 2009 by animatic

[Thai at Heart]

Admirable idea, but not practical in Thailand's current economic situation.

However, there are hundreds of small tweaks to the law that could be implemented such as minimum wages, social protections for jobs, agricultural pricing, land taxation that could be made that could improve the lot of the poor. However, they can't be implemented for various reasons including business influence at government level and corruption.

If they simply made private companies pay the income taxes they were supposed to, the government would be swimming with so much money they wouldn't know what to do with it.

[givenall]

Admirable idea, but not practical in Thailand's current economic situation.

However, there are hundreds of small tweaks to the law that could be implemented such as minimum wages, social protections for jobs, agricultural pricing, land taxation that could be made that could improve the lot of the poor. However, they can't be implemented for various reasons including business influence at government level and corruption.

If they simply made private companies pay the income taxes they were supposed to, the government would be swimming with so much money they wouldn't know what to do with it.

This is just a band aids. Every one want to continue to improve their live, and eventually these will not be enough and continue to support the welfare state is impossible due to limited resources. Then will be extreme changes and revolution

[RKASA]

Wealth consolidation in Thailand didn't start with and will not end with Thaksin, he was just a good student of the art.  It begins with a parliamentary spoils system of winner takes all and its been abused from a time prior to Thaksin's birth and continues today in his self imposed exile.  

All the inputs to production are controlled by the bangkok elite as well as the price of the output and they reap the middle profit with little or no effort.  Its a slightly progressive slave state to many, and a welfare state will only ensure the slaves are fed.  

The bulk of the government in Thailand has never been here to help the people, it only serves the current overlord in its own self interest, the overlord position is held by simply arranging the removal of the last one.   

Its always called rescuing democracy when its done.

[animatic]

That 'extreme changes and revolution' are thought of as viable solutions is PART of the problem.

By encouraging this as the only way to move things ahead more equitably; read faster,

it openly makes the potential dislocations larger and more difficult, because of the

slippery slope fear of gradual, but concrete, workable, changes becoming a French Revolution style torrent.

This just stokes the fear of graduated changes more acutely.

It is seen clearly that changes MUST happen, but revolution is by far the worst way to accomplish this,

because historically, 'revolutions' harm the poor the most, before a new equilibrium is found

from the chaos that it creates.

And historically it's clear that the people that Start and RUN revolutions,

are decidedly NOT people who run countries well for ALL the people in them.

Edited September 13, 2009 by animatic

[Scott]

I have no idea where this country is going: Yellow? Red? Democracy? Communism?

Oh, wait, maybe just going around in a big circle.

[JR Texas]

stimulate industry in the way your Asian neighbours are. Work on making Thailand a place that people want to do business with and in.

You said it above...........Thailand's neighbors are surpassing Thailand each year in terms of annual GDP growth. It might surprise readers to learn that Cambodia has one of the highest annual GDP growth rates in the world.........Vietnam is also growing at a high rate.........so is Malaysia.........etc. Thailand is way behind now.

Why? Because they are thwarting investment..........they have created an anti-business climate (along with their anti tourism and anti expat climate). They should stop it now and introduce a level playing field and real investment incentives to attract, not just large investors, but small scale investors who can come in with new ideas and spark some creativity.

[Chunkton]

Welfare States are the road to economic ruin, just look no further than the UK. All they do is create parasitic voter blocks who forever then vote for who offers them the most. Small spending governments generally create better economic conditions than those that spend like there is no tomorrow, just look at the crumbling US Empire. The more special interest groups a government creates the more they have to carry favor with them all and the less they can actually achieve if hard decisions are required.

Thailand needs changes, but this is not the answer.

[ThNiner]

Why? Because they are thwarting investment..........they have created an anti-business climate (along with their anti tourism and anti expat climate). They should stop it now and introduce a level playing field and real investment incentives to attract, not just large investors, but small scale investors who can come in with new ideas and spark some creativity.

World Bank has just ranked Thailand 12th among 183 countries (up from 13th last year) in terms of ease of doing business. I guess foreign people who do matter in terms of real investing in Thailand, see Thailand a bit differently from some people on here then.

World Bank names Kingdom 12th-best economy for doing business

[Chunkton]

stimulate industry in the way your Asian neighbours are. Work on making Thailand a place that people want to do business with and in.

You said it above...........Thailand's neighbors are surpassing Thailand each year in terms of annual GDP growth. It might surprise readers to learn that Cambodia has one of the highest annual GDP growth rates in the world.........Vietnam is also growing at a high rate.........so is Malaysia.........etc. Thailand is way behind now.

Why? Because they are thwarting investment..........they have created an anti-business climate (along with their anti tourism and anti expat climate). They should stop it now and introduce a level playing field and real investment incentives to attract, not just large investors, but small scale investors who can come in with new ideas and spark some creativity.

Good points JR, but many Thai businesses are protected by government monopolies and as such are noncompetitive dinosaurs. Even our old mate Taksin rose to riches on such monopolies. And of course these are the very elite that don't want to see any change to upset their guaranteed cash flow, but they are also stifling internal Thai competition and creativity.

Thailand the land with such huge potential and no one able to fight the vested interests and lead it to that end. Can't see it changing.

[animatic]

Welfare States are the road to economic ruin, just look no further than the UK. All they do is create parasitic voter blocks who forever then vote for who offers them the most. Small spending governments generally create better economic conditions than those that spend like there is no tomorrow, just look at the crumbling US Empire. The more special interest groups a government creates the more they have to carry favor with them all and the less they can actually achieve if hard decisions are required.

Thailand needs changes, but this is not the answer.

Pretty much sums up Thaksin's appeal and staying power.

In the USA it was the special interest BUSINESS groups that have caused this crumble.

The average joe votes on one or two social issues, politics is local.

He that can corral many different local issues wins the day.

But to do so the big business interests must be stroked and pleased first.

It was big oil and insurance, arms/defence and a few others that kept Bush in office for 2 terms.

It was touch and go in many constituencies about his 2nd term.

If not for the war AND big big money the turd would have been toast.

He then paid them back with the jiggered 2008 oil price tripling.

Not expecting the knock on affect of trashing the investment scene...

The little people trying to make ends meet is not the recipients of the greatest wastage of USA government funds,

but the special interests of LARGE corporate groups.

I still haven't figure World Banks take on this.

But Thailand wants great and grand investments like car factories or textiles.

Not teachers, or musicians, or your average retiree supporting a wife and her family.

There are no significant kick backs involved in that last scenario.

Edited September 13, 2009 by animatic

[bigbadmamasan]

For a moment I thought the byline read 'think tank'

It really reads 'drink tank'

Drunk Tank more like it.

Another giant sucking sound

[KevinBloodyWilson]

Thai think-tank eh?

It's spot the contradiction in terms time folx.

[selftaopath]

Extreme and simplistic, and sounding like it's been ripped from Karl Marx for Dummies. Can't these think-tankers see that change needs to be incremental? Suggest a more generous welfare system by all means but jumping to welfare state in one step will never happen, so don't waste your time entertaining the concept. You probably don't even want that anyway, you want opportunities for people, so stimulate industry in the way your Asian neighbours are. Work on making Thailand a place that people want to do business with and in.

A "financial expert" just stated on CNN that capitalism does not work without TRANSPARENCY. Now where can this be found in LOS (Lack of Sanctions)?

[animatic]

Extreme and simplistic, and sounding like it's been ripped from Karl Marx for Dummies. Can't these think-tankers see that change needs to be incremental? Suggest a more generous welfare system by all means but jumping to welfare state in one step will never happen, so don't waste your time entertaining the concept. You probably don't even want that anyway, you want opportunities for people, so stimulate industry in the way your Asian neighbours are. Work on making Thailand a place that people want to do business with and in.

A "financial expert" just stated on CNN that capitalism does not work without TRANSPARENCY. Now where can this be found in LOS (Lack of Sanctions)?

Transparency in the Land Of Smiles?? Lair Of Scorpions, Land of Shinola....

Protect those dinosaurs as long as possible.

[selftaopath]

stimulate industry in the way your Asian neighbours are. Work on making Thailand a place that people want to do business with and in.

You said it above...........Thailand's neighbors are surpassing Thailand each year in terms of annual GDP growth. It might surprise readers to learn that Cambodia has one of the highest annual GDP growth rates in the world.........Vietnam is also growing at a high rate.........so is Malaysia.........etc. Thailand is way behind now.

Why? Because they are thwarting investment..........they have created an anti-business climate (along with their anti tourism and anti expat climate). They should stop it now and introduce a level playing field and real investment incentives to attract, not just large investors, but small scale investors who can come in with new ideas and spark some creativity.

I agree. Many believe however the rich/powerful do not want to SHARE in anything. They are greedy/self serving, selfish, and don't appear to genuinely care about Thailand or its people.

[selftaopath]

Why? Because they are thwarting investment..........they have created an anti-business climate (along with their anti tourism and anti expat climate). They should stop it now and introduce a level playing field and real investment incentives to attract, not just large investors, but small scale investors who can come in with new ideas and spark some creativity.

World Bank has just ranked Thailand 12th among 183 countries (up from 13th last year) in terms of ease of doing business. I guess foreign people who do matter in terms of real investing in Thailand, see Thailand a bit differently from some people on here then.

World Bank names Kingdom 12th-best economy for doing business

While this may be true, it is also true that GOOGLE wanted to bring business to Thailand but the powers in place could not/would not work with this company. Consequently GOOGLE easily decided to go elsewhere - and not far from Thailand - but in a country that saw the benefits to having such a large company employing people locally. Pity. There are many capable Thai individuals who could now be GOOGLE employees.

[TAWP]

No Thanks, to any form.

[dutchguest]

At the moment i.m.o. the parasites in Thailand sit at the top. Employing Burmese or underpaying Thais and getting extremely rich themselves. The same to a large extend in western countries. Think of the bonusses of bancers while bancs go bancrupt.

Their must be some balance. So tradeunions are necessary in Thailand and i.m.o. also some form of social security. I think people who are well fed, housed and healthy can be more creative and productive, while hungry people are easy victims for exploitation.

[JR Texas]

Why? Because they are thwarting investment..........they have created an anti-business climate (along with their anti tourism and anti expat climate). They should stop it now and introduce a level playing field and real investment incentives to attract, not just large investors, but small scale investors who can come in with new ideas and spark some creativity.

World Bank has just ranked Thailand 12th among 183 countries (up from 13th last year) in terms of ease of doing business. I guess foreign people who do matter in terms of real investing in Thailand, see Thailand a bit differently from some people on here then.

World Bank names Kingdom 12th-best economy for doing business

That is interesting........sorry it took me so long to respond. I am, frankly, surprised. I wonder if this "good news" is related to big business and not small business. Small business generates far more jobs (contrary to popular belief).

The World Bank ranks things as it sees fit...........and I respect what they have to say........but money talks. Apparently, given investment figures and trends, most investors are ignoring the World Bank and are taking their money and jobs to neighboring countries.

This is clearly reflected in annual GDP growth rates over the past decade.

If I were a small investor, I would not even consider Thailand......way too many hoops to jump through and the "game" is heavily rigged to maximize the probability you will fail.

[Thai at Heart]

stimulate industry in the way your Asian neighbours are. Work on making Thailand a place that people want to do business with and in.

You said it above...........Thailand's neighbors are surpassing Thailand each year in terms of annual GDP growth. It might surprise readers to learn that Cambodia has one of the highest annual GDP growth rates in the world.........Vietnam is also growing at a high rate.........so is Malaysia.........etc. Thailand is way behind now.

Why? Because they are thwarting investment..........they have created an anti-business climate (along with their anti tourism and anti expat climate). They should stop it now and introduce a level playing field and real investment incentives to attract, not just large investors, but small scale investors who can come in with new ideas and spark some creativity.

Good points JR, but many Thai businesses are protected by government monopolies and as such are noncompetitive dinosaurs. Even our old mate Taksin rose to riches on such monopolies. And of course these are the very elite that don't want to see any change to upset their guaranteed cash flow, but they are also stifling internal Thai competition and creativity.

Thailand the land with such huge potential and no one able to fight the vested interests and lead it to that end. Can't see it changing.

Korn hits the nail on the head perfectly.

http://www.bangkokpost.com/economicmidyear2007/Korn.html

Today, only two out of the top 20 companies listed on the SET are companies that can be said to face free competition. The need for such a wide-ranging Foreign Business Act also betrays our sense of insecurity.

I wonder if he will have time to challenge the situation?

[dkstoney]

Just shut up and consume.

[sassienie]

A welfare state Thailand would be bad news for us ex-pats.

We would have to pay all the increased taxes required to fund a welfare system, such as on fuel, food, goods, transport, health care and services, but would not be entitled to any of the benefits.

Edited September 15, 2009 by sassienie

[plachon]

A welfare state Thailand would be bad news for us ex-pats.

We would have to pay all the increased taxes required to fund a welfare system, such as on fuel, food, goods, transport, health care and services, but would not be entitled to any of the benefits.

Spoken like a true elite...........and this is what keeps welfare reform from happening in most countries........the rich protecting their interests and actively maintaining an eternal underclass, destined to serve and be seen, not heard.

Actually, how do you know that it would be expats expected to pay "all the increased taxes" and it would not be paid for out of increased income taxes on all high earners, as is the case in most countries with a functioning welfare state. As the situation stands in Thailand, the poor pay far more taxes proportionately than the rich, who have all the means and mechanisms with which to avoid paying tax (vide Ample Rich and concealed assets game of the Shinybutts).

If there was a graduated scale of income tax that was universally and fairly enforced, it would not impact expats any more than Thais, but would even out one of the most sloping football fields in the world as far as income distribution goes, by allowing a welfare cushion for the poorer members of society. Is that such a bad goal?

[mc2]

a welfare state really is the long term solution, and the sooner it happens the better.

[EffectiveAnger]

I have no idea where this country is going: Yellow? Red? Democracy? Communism?

Oh, wait, maybe just going around in a big circle.

I think so too. By studying the history of the prime ministers in this country, I can see the circle. There seems to be a fight between the elite here about what ways to lean (east/west idealism) and the ethnic 'Thai' are really out of the loop in this power struggle. So many of them feel disenfranchised by the whole system. Indeed, they have been. With more education than they have ever had before, they are starting to learn and gain a voice.

"The Thailand Development Research Institute led by TDRI chairman Dr Nipon Poapongsakorn said the institute's research had found that disparities in income and assets was the main cause of the ongoing political conflicts that could spiral into a crisis.

He said the way out of the political crisis is to reform the economy..."

I agree that economic reform is certainly necessary and I also think the country is on the verge of a serious crisis. And if history is anything to go by, I think there will be a revolt.

[animatic]

We are already seeing this increase in taxes, direct and indirect on farangs.

All of it no, not likely, but much more, or disproportionate amounts who knows,

yet the idea of blaming foriegners for the problem always works

in such a arch-nationalist society.

Edited September 16, 2009 by animatic

[hammered]

A welfare state is a good idea and would do a lot to lessen feelings of unfair divisions. However, it cannot be an unplanned rush job and the costing and tax to support it needs to be planned and a move to a welfare state will necessitate a redeveloped tax system understoood by all too.