Thailand Set For Return To 'Thaksinomics'

[steveromagnino]

You have set yourself up as the oracle, wise in all things statistical, knowledgable on all things to do with economic policies, condescending in your comments to other who dare to disagree, and yet you can make a most unscientific comment (really just an opinion) about the micro loan policy, which I maintain to have been a success.

When called to justify your remarks, you have just fobbed me off.

You attempt to drag the subject of growth of household debt in Thailand into the same argument, (they are quite different) to smear the micro credit scheme and muddy the waters.

The growth of household debt was due to the supply of easy credit by banks willing to take land titles as collateral due to rapidly rising land prices. yes much of this credit was wasted by unsophisticated borrowers, but the micro credit scheme was quite different. Specific uses for the funds had to stated in the application, and it had to be allied to an enterprise, like a farm or business.

I know because I advised some community members as to whether the loan would be able to be repaid from their current operating cashflow minus expected increased productivity.

I am sure there would have been the odd rort to the scheme but by and large it was well administered.

All 'facts' are really only opinions; it is just that some opinions are supported by analysis, statistics and research (e.g. the earth is not flat), while others are personal view points (I think the moon is made of cheese, supported by watching Wallis and Grommit).

In analysing the effect of the village fund, I think my personal experience counts for less than the rigourous analysis of people far more knowledgeable than myself.

At no point have I been trying to be condescending or fobbing anyone off. I apologise if I have appeared condescending.

You claim that household debt is unrelated to rural poverty or productivity, and that I am merely attempting to 'smear' the success of the village fund program by linking the two.

Let me start by stating that any person, company or society can use debt to leverage their ability to earn, so of course debt is not in itself a bad thing. Debt for a company provides free cash flow, the lifeblood of a business (cashflow is king, not profitability in the short term). But that cashflow from debt needs servicing, to be repaid.

http://www.apeaweb.org/confer/hk07/papers/nakornthab-suwan.pdf

Thammasaht academics in 2006 their analysis identified that farmers carry a higher level of debt than the majority of Thai households and noted that as long as commodity prices remained high, farmers would be ok, however they would be adversely affected should the prices of their crops drop (hence the PT promise of crop pledging returning).

They identified that this growth in borrowing could be partly explained by the village fund, which issued 1 year loans. I personally would add that every time a government provides cheap borrowing and bail outs for farmers, they continue to allow people to engage in a non productive enterprise supported by the Thai tax payer.

And this begins the start of a trend in findings...that the village fund did inject credit previously unavailable into the system, at a relatively low interest rate, because it was a tax payer loan, not a 'for profit and logical' bank loan. Many people borrowing from it were unable to increase their productivity during the period of loan, resulting in increased debtthereafter. Or that the borrowings were used for other purposes than productivity increases - repaying old loans, consumption, etc.

Survey by The Thai Chamber of Commerce found:

Household expenditure increased by 7.6%, with much of the borrowing used to increase expenditure on non productivity items; 40% of borrowing was to repay other debt (i.e. government money used to repay private sector loans; 20% used for buying luxuries; 5% used for productive investment;

I summarise that the remaining 35% was used for the purpose of business (72% agricultural) of which the majority was used for the day to day business of farming (fertilizer, stock, seed, etc) and thus not actually a productivity investment but rather a free cash flow injection.

http://wesscholar.wesleyan.edu/cgi/viewcontent.cgi?article=1527&context=etd_hon_theses

A student writing a well put together thesis (which means each claim at a non PhD level usually needs to be supported by a literary review comprising previous body of work in the same subject field and able to be scrutinized at an impartial level to remove opinion not supported by fact) comments that yes, the village fund has positive effects, but the major flaws were:

- rushed implementation without clear objectives or policy

- short term loan duration (1 year) meant borrowers would often need to borrow from high interest sources to repay the original loan

- household debt increased by about 50%+ while productivity growth (GDP) increased by around 5%, meaning the increase in debt was not supported by an increase in productivity (refer back to TU research, farmer productivity measured by GDP growth in their sector, can mostly be explained by crop price increases, or by the subsidy effect of crop pledging)

- savings rates during this period did not increase as might be expected if productivity gains resulted in more money made and set aside

- consumption expenditure increased from 25 to 31.8% (phones, motorcycles, liquor etc - stuff not related to farming); at the same time as the fund opened a new line of credit; in other words at least some of the money was used to buy more stuff

Or perhaps you prefer the analysis of Harvard

http://www.cid.harvard.edu/neudc07/docs/neudc07_s3_p08_boonperm.pdf

Where their research clearly indicates a growth in consumption expenditure and increase in debt higher than growth in productivity (i.e. we are looking at a person borrowing more, and being a little more productive, but spending more money than ever on things that don't help productivity (e.g. cell phone, motorcycle, etc).

We can look at a study commissioned by IIRC the Bill Gates Foundation by Townsend and Kaboski who conclude:

http://www.robertmtownsend.net/sites/default/files/files/papers/published/StructuralEvaluation2011.pdf

"This paper uses a structural model to understand, predict, and evaluate the impact

of an exogenous microcredit intervention program, the ThaiMillion Baht Village Fund

program. ....Simulations from the model

mirror the data in yielding a greater increase in consumption than credit, which is

interpreted as evidence of credit constraints. A cost-benefit analysis using the model

indicates that some households value the program much more than its per household

cost, but overall the program costs 20 percent more than the sum of these benefits."

They comment

"funds were disbursed to and held at the Thai Bank of Agriculture and Agricultural Cooperatives,

and funds could only be withdrawn with a withdrawal slip from the village fund committee.

Residence in the village was the only o„Scial eligibility requirement for membership, and

so although migrating villagers or newcomers would likely not receive loans, there was no

o„Scial targeting of any sub-population within villages. Loans were uncollateralized, though

most funds required guarantors. Repayment rates were quite high; less than three percent

of funds lent to households in the first year of the program were 90 days behind by the

end of the second year. Indeed, based on the household level data, ten percent more credit

was given out in the second year than in the first, presumably partially reflecting repaid

interest plus principal. There were no firm rules regarding the use of funds, but reasons

for borrowing, ability to repay, and the need for funds were the three most common loan

criteria used. Indeed many households were openly granted loans for consumption."

Nation reported it as:

http://www.nationmultimedia.com/2008/08/05/national/national_30079745.php

NIDA on the other hand has some great personal experiences, including both some true success stories of the type you are in contact with daily, but also horror stories as well:

http://journal.nida.ac.th/journal/attachments/%E0%B8%99%E0%B8%B4%E0%B8%94%E0%B9%89%E0%B8%B2_22_final_.pdf

Or we can paid heed to the words of Time magazine:

Michael Schuman, “The Common Touch,” Time Magazine, Monday, January 31, 2005

Much of the money borrowed was used to pay off other, high-interest debt

or to cover school fees. In a small number of cases, loans were wasted on

mobile phones and motorbikes. Though officially the repayment rate on

these micro-loans is nearly 100%, in some cases, borrowers are turning

to predatory loan sharks to raise money to pay back the government.

Though the fund has helped the poor to a degree, it doesn’t serve the main

purpose that people can use this money to generate income and have a

better living

Or that newspaper we don't list here (Saturday, February 9, 2008):

"The principles of populist policies are good but too costly, so good

management is needed to ensure worthwhile benefits from budget

spending. TRT’s populist schemes just gave

money to the people without teaching them how to use it efficiently.

As a result, fewer than half of the village funds initiated by TRT have

survived to date."

Or perhaps you prefer to listen to the World Bank

http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2009/07/21/000158349_20090721132749/Rendered/PDF/WPS5011.pdf

"A propensity

score matching model finds that Fund borrowing in

2004 was associated with, on average, 1.9 percent more

income, 3.3 percent more expenditure, and about 5

percent more ownership of durable goods. These results

are broadly consistent with the results from instrumental

variables models (where the identifying instrument was

the inverse of village size), which however show a smaller

(marginal) effect. Households that borrowed both from

the revolving fund and from the Bank of Agriculture and

Agricultural Cooperatives gained substantially more in

terms of higher income than those who borrowed from

either one or the other or from neither."

- higher borrowing means higher income, but still higher spending

- people who borrow from multiple sources (i.e. the people who could get a loan anyhow) tend to perform the best; the village fund really was the lender of last resort (as a function of the bad term, and the lower 3Cs criteria to lend (collateral, character, capability to repay)

CONCLUSION

You stated that there were many measures to ensure lending only went for economic purposes, and yet many, many sources talking to villagers across the Kingdom of Thailand find this is not the case.

Economic indicators further indicate a growth in spending and debt that does not match a 'lending only for economic purposes' policy.

The personal villager experiences show many borrowed to pay back old debt, other reasons than economic purposes, while analysis indicates that at least some ended up more in debt when they paid back the village fund than when they stated.

Meaning that yes, the village fund can state that it increased productivity of the rural poor. Certainly household debt has grown also with the growth of cheaper credit; instead of informal borrowing at 50%, formal borrowing rates are more of the 8-12% range, even credit card debt only 20%. And more people borrowing.

We can conclude that the village fund was a new source of cheap credit, and the most productive performers in the village fund tended to also borrow from the BAAC at the same time, so it really wasn't opening up credit to those who didn't have it before if they were truly productive, rather it was lending to the productive at cheaper rates....or lending to basket cases.

So in fact...we can look completely at household debt, expenditure, consumption and productivity as a single data set...and look at the effect of the village fund on this.

My personal conclusion looking at the data and analysis above, is that by issuing a new source of household debt to people who did not use it for productive enterprise but for consumption, repairs to their houses, etc supported by each other source listed above, reflected in the soaring sales of motorcycles, phones and liquor during this period:

A LOT OF THE MONEY WAS USED FOR CONSUMPTION NOT PRODUCTIVITY

This is in stark contrast to the reason why the fund was set up:

"The village fund is used to create economic activities in the village. Through these

economic activities, income is generated. Through more income generated, there will be more

economic activities. With more activities, there will be employment. Consumption, growth and

multiplier effects will follow. The village can stand on its own feet."

-- Thaksin Shinawatra, Prime Minister of Thailand, September 8, 2003

Edited July 19, 2011 by steveromagnino

[animatic]

Game, Set, Match!

Only thing left is the attempted flaming.

Edited July 19, 2011 by animatic

[steveromagnino]

Thank you Animatic.

I don't have much time these days to post on Thaivisa, so a quick 10 min reply as above isn't able to capture all the data available including the Thai language source stuff; at least it means my viewpoint is not a solitary one.

I place most faith anyhow in what the economist who designed the Village fund for TRT (and a staunch Thaksin supporter) told me a couple of years ago; the village fund cannot on any measure really be called a success, although there were success stories within it. Too much credit, too little control, introduced too fast...and most importantly....offered to people with too little knowledge to understand the concept of borrowing and credit control.

I don't doubt some villages made it work; there are many that didn't. Statistics on a macro view support that.

Perhaps most interestingly, there was a clear correlation with villages given additional funds and villages who voted TRT. I can dig that info out at some time in the future, should others be interested in it. Given that it mostly was not used for productivity and the productivity amounts given were mostly used in agriculture, it is no wonder the south were left seething about this....they didn't share in the windfall benefits of the village fund, but like all Thais including urban Thais, they were left shouldering the massive tax bill for all the money that wasn't repayed, and the cost of supporting non collateralised debt lending at below market rates.

I don't begrudge paying 1m+ baht in income a year, but i do get frustrated when it is given in the WRONG WAY to people who need help. Again, there is Zero point in giving money to people who are engaged in subscale production; they will just end up losing it and worse off. A paradigm shift is needed, moving the poor away from dependency on governtment schemes.

Microcredit is absolutely a key measure for this....but not implemented the way the village fund was. Grameen provides the best model for it....and their interest rates are in the double digits which should tell you straight away...this was never microcredit...it was a bribe. Grameen bank financing comes from deposits from the same people/community who borrow (or thereabouts). It is sustainable, prudent lending with a proper market interest rate and genuine commitment to making people pay the loans back and a long term lender structure for the community. Thailand has equivalent schemes...very common in the south of THailand. And very very different to the village fund scheme.

Edited July 19, 2011 by steveromagnino

[koosdeboer]

You have set yourself up as the oracle, wise in all things statistical, knowledgable on all things to do with economic policies, condescending in your comments to other who dare to disagree, and yet you can make a most unscientific comment (really just an opinion) about the micro loan policy, which I maintain to have been a success.

When called to justify your remarks, you have just fobbed me off.

You attempt to drag the subject of growth of household debt in Thailand into the same argument, (they are quite different) to smear the micro credit scheme and muddy the waters.

The growth of household debt was due to the supply of easy credit by banks willing to take land titles as collateral due to rapidly rising land prices. yes much of this credit was wasted by unsophisticated borrowers, but the micro credit scheme was quite different. Specific uses for the funds had to stated in the application, and it had to be allied to an enterprise, like a farm or business.

I know because I advised some community members as to whether the loan would be able to be repaid from their current operating cashflow minus expected increased productivity.

I am sure there would have been the odd rort to the scheme but by and large it was well administered.

All 'facts' are really only opinions; it is just that some opinions are supported by analysis, statistics and research (e.g. the earth is not flat), while others are personal view points (I think the moon is made of cheese, supported by watching Wallis and Grommit).

In analysing the effect of the village fund, I think my personal experience counts for less than the rigourous analysis of people far more knowledgeable than myself.

At no point have I been trying to be condescending or fobbing anyone off. I apologise if I have appeared condescending.

You claim that household debt is unrelated to rural poverty or productivity, and that I am merely attempting to 'smear' the success of the village fund program by linking the two.

Let me start by stating that any person, company or society can use debt to leverage their ability to earn, so of course debt is not in itself a bad thing. Debt for a company provides free cash flow, the lifeblood of a business (cashflow is king, not profitability in the short term). But that cashflow from debt needs servicing, to be repaid.

http://www.apeaweb.org/confer/hk07/papers/nakornthab-suwan.pdf

Thammasaht academics in 2006 their analysis identified that farmers carry a higher level of debt than the majority of Thai households and noted that as long as commodity prices remained high, farmers would be ok, however they would be adversely affected should the prices of their crops drop (hence the PT promise of crop pledging returning).

They identified that this growth in borrowing could be partly explained by the village fund, which issued 1 year loans. I personally would add that every time a government provides cheap borrowing and bail outs for farmers, they continue to allow people to engage in a non productive enterprise supported by the Thai tax payer.

And this begins the start of a trend in findings...that the village fund did inject credit previously unavailable into the system, at a relatively low interest rate, because it was a tax payer loan, not a 'for profit and logical' bank loan. Many people borrowing from it were unable to increase their productivity during the period of loan, resulting in increased debtthereafter. Or that the borrowings were used for other purposes than productivity increases - repaying old loans, consumption, etc.

Survey by The Thai Chamber of Commerce found:

Household expenditure increased by 7.6%, with much of the borrowing used to increase expenditure on non productivity items; 40% of borrowing was to repay other debt (i.e. government money used to repay private sector loans; 20% used for buying luxuries; 5% used for productive investment;

I summarise that the remaining 35% was used for the purpose of business (72% agricultural) of which the majority was used for the day to day business of farming (fertilizer, stock, seed, etc) and thus not actually a productivity investment but rather a free cash flow injection.

http://wesscholar.wesleyan.edu/cgi/viewcontent.cgi?article=1527&context=etd_hon_theses

A student writing a well put together thesis (which means each claim at a non PhD level usually needs to be supported by a literary review comprising previous body of work in the same subject field and able to be scrutinized at an impartial level to remove opinion not supported by fact) comments that yes, the village fund has positive effects, but the major flaws were:

- rushed implementation without clear objectives or policy

- short term loan duration (1 year) meant borrowers would often need to borrow from high interest sources to repay the original loan

- household debt increased by about 50%+ while productivity growth (GDP) increased by around 5%, meaning the increase in debt was not supported by an increase in productivity (refer back to TU research, farmer productivity measured by GDP growth in their sector, can mostly be explained by crop price increases, or by the subsidy effect of crop pledging)

- savings rates during this period did not increase as might be expected if productivity gains resulted in more money made and set aside

- consumption expenditure increased from 25 to 31.8% (phones, motorcycles, liquor etc - stuff not related to farming); at the same time as the fund opened a new line of credit; in other words at least some of the money was used to buy more stuff

Or perhaps you prefer the analysis of Harvard

http://www.cid.harvard.edu/neudc07/docs/neudc07_s3_p08_boonperm.pdf

Where their research clearly indicates a growth in consumption expenditure and increase in debt higher than growth in productivity (i.e. we are looking at a person borrowing more, and being a little more productive, but spending more money than ever on things that don't help productivity (e.g. cell phone, motorcycle, etc).

We can look at a study commissioned by IIRC the Bill Gates Foundation by Townsend and Kaboski who conclude:

http://www.robertmtownsend.net/sites/default/files/files/papers/published/StructuralEvaluation2011.pdf

"This paper uses a structural model to understand, predict, and evaluate the impact

of an exogenous microcredit intervention program, the ThaiMillion Baht Village Fund

program. ....Simulations from the model

mirror the data in yielding a greater increase in consumption than credit, which is

interpreted as evidence of credit constraints. A cost-benefit analysis using the model

indicates that some households value the program much more than its per household

cost, but overall the program costs 20 percent more than the sum of these benefits."

They comment

"funds were disbursed to and held at the Thai Bank of Agriculture and Agricultural Cooperatives,

and funds could only be withdrawn with a withdrawal slip from the village fund committee.

Residence in the village was the only o„Scial eligibility requirement for membership, and

so although migrating villagers or newcomers would likely not receive loans, there was no

o„Scial targeting of any sub-population within villages. Loans were uncollateralized, though

most funds required guarantors. Repayment rates were quite high; less than three percent

of funds lent to households in the first year of the program were 90 days behind by the

end of the second year. Indeed, based on the household level data, ten percent more credit

was given out in the second year than in the first, presumably partially reflecting repaid

interest plus principal. There were no firm rules regarding the use of funds, but reasons

for borrowing, ability to repay, and the need for funds were the three most common loan

criteria used. Indeed many households were openly granted loans for consumption."

Nation reported it as:

http://www.nationmultimedia.com/2008/08/05/national/national_30079745.php

NIDA on the other hand has some great personal experiences, including both some true success stories of the type you are in contact with daily, but also horror stories as well:

http://journal.nida.ac.th/journal/attachments/%E0%B8%99%E0%B8%B4%E0%B8%94%E0%B9%89%E0%B8%B2_22_final_.pdf

Or we can paid heed to the words of Time magazine:

Michael Schuman, “The Common Touch,” Time Magazine, Monday, January 31, 2005

Much of the money borrowed was used to pay off other, high-interest debt

or to cover school fees. In a small number of cases, loans were wasted on

mobile phones and motorbikes. Though officially the repayment rate on

these micro-loans is nearly 100%, in some cases, borrowers are turning

to predatory loan sharks to raise money to pay back the government.

Though the fund has helped the poor to a degree, it doesn’t serve the main

purpose that people can use this money to generate income and have a

better living

Or that newspaper we don't list here (Saturday, February 9, 2008):

"The principles of populist policies are good but too costly, so good

management is needed to ensure worthwhile benefits from budget

spending. TRT’s populist schemes just gave

money to the people without teaching them how to use it efficiently.

As a result, fewer than half of the village funds initiated by TRT have

survived to date."

Or perhaps you prefer to listen to the World Bank

http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2009/07/21/000158349_20090721132749/Rendered/PDF/WPS5011.pdf

"A propensity

score matching model finds that Fund borrowing in

2004 was associated with, on average, 1.9 percent more

income, 3.3 percent more expenditure, and about 5

percent more ownership of durable goods. These results

are broadly consistent with the results from instrumental

variables models (where the identifying instrument was

the inverse of village size), which however show a smaller

(marginal) effect. Households that borrowed both from

the revolving fund and from the Bank of Agriculture and

Agricultural Cooperatives gained substantially more in

terms of higher income than those who borrowed from

either one or the other or from neither."

- higher borrowing means higher income, but still higher spending

- people who borrow from multiple sources (i.e. the people who could get a loan anyhow) tend to perform the best; the village fund really was the lender of last resort (as a function of the bad term, and the lower 3Cs criteria to lend (collateral, character, capability to repay)

CONCLUSION

You stated that there were many measures to ensure lending only went for economic purposes, and yet many, many sources talking to villagers across the Kingdom of Thailand find this is not the case.

Economic indicators further indicate a growth in spending and debt that does not match a 'lending only for economic purposes' policy.

The personal villager experiences show many borrowed to pay back old debt, other reasons than economic purposes, while analysis indicates that at least some ended up more in debt when they paid back the village fund than when they stated.

Meaning that yes, the village fund can state that it increased productivity of the rural poor. Certainly household debt has grown also with the growth of cheaper credit; instead of informal borrowing at 50%, formal borrowing rates are more of the 8-12% range, even credit card debt only 20%. And more people borrowing.

We can conclude that the village fund was a new source of cheap credit, and the most productive performers in the village fund tended to also borrow from the BAAC at the same time, so it really wasn't opening up credit to those who didn't have it before if they were truly productive, rather it was lending to the productive at cheaper rates....or lending to basket cases.

So in fact...we can look completely at household debt, expenditure, consumption and productivity as a single data set...and look at the effect of the village fund on this.

My personal conclusion looking at the data and analysis above, is that by issuing a new source of household debt to people who did not use it for productive enterprise but for consumption, repairs to their houses, etc supported by each other source listed above, reflected in the soaring sales of motorcycles, phones and liquor during this period:

A LOT OF THE MONEY WAS USED FOR CONSUMPTION NOT PRODUCTIVITY

This is in stark contrast to the reason why the fund was set up:

"The village fund is used to create economic activities in the village. Through these

economic activities, income is generated. Through more income generated, there will be more

economic activities. With more activities, there will be employment. Consumption, growth and

multiplier effects will follow. The village can stand on its own feet."

-- Thaksin Shinawatra, Prime Minister of Thailand, September 8, 2003

Always looking forward to read your posts.

[Pi Sek]

<snip>

I place most faith anyhow in what the economist who designed the Village fund for TRT (and a staunch Thaksin supporter) told me a couple of years ago; the village fund cannot on any measure really be called a success, although there were success stories within it. Too much credit, too little control, introduced too fast...and most importantly....offered to people with too little knowledge to understand the concept of borrowing and credit control.

I don't doubt some villages made it work; there are many that didn't. Statistics on a macro view support that.

<snip>

I really liked your post, pure logic in the face of propaganda. Why can't the Thai press, or the Thai political parties for that matter, take a leaf out of your book?

With regards to the village scheme, the solution actually lays within your post: "Too much credit, too little control, introduced too fast...and most importantly....offered to people with too little knowledge to understand the concept of borrowing and credit control."

So, it could have worked under different circumstances, just like the 30 Baht healthcare scheme could have also worked under different strategies - the problems there were very similar to the village fund problems, namely that it was rushed in to practice when it simply wasn't ready (which Chuan Leekpai chose not to do, before the scheme was highjacked as Thaksin's idea) and so it didn't work and had to be scrapped before it could do any more damage to public health. Again, the reasons for this was not improvement of the country's public sector services, it was to win votes at the cost of public health standards.

The argument I hear from a lot of pro-Thaksin types is that "You've got to start somewhere", and they have a point. I just don't agree with starting with something that you already know isn't going to work - I think it's better to plan out solutions to the issues first, especially when you know what the issues are.

To be honest, a properly administered "village fund", which was geared to economical benefit as Thaksin told us in 2003 and not at extending the feudalist network as we witnessed, is a good idea. But you have to clear corruption first, otherwise the "administration" - at national, regional, provincial, district and sub-district levels - will take advantage and the ones to lose out will be the masses of poor.

I've said it before, and I'll say it again - I'm no Red Shirt but I care far more for the Red Shirts' plight than Thaksin ever did.

[steveromagnino]

yes, I believe many of the TRT ideas were probably correct in principle (microcredit, continued expanded healthcare, debt rehabilitation for SMEs, etc) although some were simply stupid yet done for popularity reasons (war on drugs, restraint on foreign retail, paying back the IMF with more expensive sources of funds, 1 million cows, registration of the poor) while a few were simply stupid on first glance, yet hugely profitable to some on a more detailed look (deliberate interference in telecom deregulation, attempt to nationalise then immediately privatise the skytrain, rushing the airport project, new capital, bird flu coverup, searching for Japanese treasures from the 2nd world war, most of the FTAs signed without any real oversight and almost all highly beneficial to a few connected industries, etc).

The problem is because of Thaksin's style (authoratative quick decision maker) with an entourage of yes men, jao por upcountry thugs and technocrats who saw him as the new Jesus Christ, he never heard or never chose to hear anything that didn't support a 100 day implementation of things.

The 30b healthcare plan, for instance, was implemented and the following year an RFP went out to source an IT system capable of administering it, and yet the system requirements even 1 year after the system was ALREADY running weren't even known! Madness, but tax payer funded madness and therefore quite acceptable in a country where taxpayer funded means to most people money that has fallen from the sky that previously would have still fallen but not where they were standing.

And which to some degree is true...except that under TRT it rained cash everywhere, as long as you were part of the party. Otherwise, as the people who didn't vote for TRT or businesses not aligned with TRT discovered, you were in a drought.

As a tax payer, it's a pretty lousy deal any time the government decides to hand cash to people to do something stupid. THe crop pledging scheme can only be described in these terms. If the farmers were selling at market rates in the long term, they would be bankrupt. So, instead, the government steps in and pays an above market rate for them to grow rice, which will then be left to rot if market prices fail to reach the above market rate they paid the farmer. The world as a whole is the net loser. The same farmer also receives 30b/free healthcare; interest free loans with debt forgiveness schemes and a village fund to borrow from; their kids get a tablet PC; etc etc;....and best of all, they only pay VAT. That's their contribution to get all this cash back.

As one of the people writing the cheques, I simply question whether this is the best longterm approach to moving Thailand from poverty. A more sensible idea is:

- shift subscale farmers into more productive enterprise (which is happening anyhow, now the majority of the Thai workforce is not in the fields

- pay market rates for what the remaining farmers operating with economies of scale in 40 rai+ farms produce, with an insurance scheme only to protect in the case of climate problems (productivity) or market slumps (supply/demand)

- provide ALL members of the kingdom of Thailand with equal means tests social welfare, removing the net from those who don't need it

- run the country with reduced government, saving tax payer money

- reduce the tax rate, but increase the numbers who pay tax

- use the money from taxes on infrastructure and long term competitiveness, NOT short term handouts

Shortterm, this strategy will have a little pain. Similar to the pain in 1999-2000.

But long term, this is what it would take to be a successful economy.

Having millions of farmers who work productively only 1/4 of the year and even that time being subscale and inefficient, while giving them money to buy farm equipment etc which does not actually help them be more productive due to their subscale operation, is simply creating an underclass of dependents who will never stand on their own two feet.

Of course, my opinion here is based on being both a tax payer, and also my position as part of a family owning land in one of Thailand's poorest Isaan area.

There is a lot of evidence showing that less than 40 rai farms are subsistance farming with a strong correlation of poverty. The answer is to consolidate and move the owners into a better line of business.

Edited July 19, 2011 by steveromagnino

[animatic]

...And which to some degree is true...except that under TRT it rained cash everywhere, as long as you were part of the party. Otherwise, as the people who didn't vote for TRT or businesses not aligned with TRT discovered, you were in a drought...

And even natural disasters like floods that caused deaths and destruction wasn't sufficient cause to reopen the money tap a little because they weren'y TRT voting regions... till the international press got word of the disasters, then kindly father Thaksin did his PR thing to show how he was paternally helping all Thais. TOTAL B.S.

Edited July 19, 2011 by animatic

[steveromagnino]

Bit odd to describe the tsunami and floods as a drought, but it was in a 'money' sense.

Not only were almost all aid workers, doctors and researchers I spoke to sure that the numbers who died in the tsunami far higher than claimed; but almost universally they stated that Thaksin's refusal to accept foreign aid and lack of assistance provided to the Thais who suffered was not the right way the situation should have been handled.

Flood and other situations were similar.

The south were almost vindictively punished except regarding the tourism income.

Even TRT's attempted clamp down on foreign ownership commencing in early 2006 (and part of the nationalistic typical anti foreign rants that politicians recycle with nauseating regularity) ended up being a bit of punishment; I wrote a little about this in another thread, when someone attempted to blame the coup on foreign ownership issues for real estate, can't remember the link.

[lannarebirth]

I dispute steveromagino's "facts" and it would be clear to anyone that they are subjective and selective.

e.g. the bulk of small rural loans were spent on televisions, motor bikes or booze!

You cannot be serious?

the loans were applied for specific purposes and had to be spent on those purposes, I know this is how they were administered in our Amphur.

you conservatives need to wake up and smell the roses.

the times are a changing...

[YOu got that from when I said:

"I only know of the villages where my family hails from, and it was viewed as a wonderful source of cheap money for motorcycles, phones, consumerables, booze, and this is borne out by the economic performance of the companies who supplied those items in the period of the village fund. My own personal experience is mostly that it wasn't a success as you claim"

Certainly not a fact, although I don't think the strong performance of mobile phone and motorcycle companies during this period nor the massive growth in household debt in the same period is disputed.]

If you wish for me to write that more simply....I can do so.

I welcome any hard evidence to the points raised so we can set out the real 'facts' as you describe them (please leave personal experiences at the door if you wish to discuss 'facts'). I admit my viewpoint is based on what I do for a living, including statistics, dealing with senior policy makers (including some of the people responsible for the TRT policies of the past that you are commenting on) and is often 'big picture'.

"I have read and reread my posts and nowhere have I insulted anyone."

Your deliberate and childish insult was already removed from the thread...it doesn't mean you didn't say it. FYI describing people as you did with an A substituted for the I is both more amusing and more relevant, especially for the female posters.

As the saying goes, on the internet no one knows you are a dog. All we have are what each member writes or says. Instead of stating 'well you lot are wrong' you may get further by pointing out the specifics of where we are all wrong in a constructive discourse, and from there we can all be a little smarter as Nurofiend points out, rather than descending into a 'well I don't agree with you, and that's that' approach which is not exactly enlightening (although can be quite amusing). :jap:

YOu got that from when I said:

"I only know of the villages where my family hails from, and it was viewed as a wonderful source of cheap money for motorcycles, phones, consumerables, booze, and this is borne out by the economic performance of the companies who supplied those items in the period of the village fund. My own personal experience is mostly that it wasn't a success as you claim"

You have set yourself up as the oracle, wise in all things statistical, knowledgable on all things to do with economic policies, condescending in your comments to other who dare to disagree, and yet you can make a most unscientific comment (really just an opinion) about the micro loan policy, which I maintain to have been a success.

When called to justify your remarks, you have just fobbed me off.

You attempt to drag the subject of growth of household debt in Thailand into the same argument, (they are quite different) to smear the micro credit scheme and muddy the waters.

The growth of household debt was due to the supply of easy credit by banks willing to take land titles as collateral due to rapidly rising land prices. yes much of this credit was wasted by unsophisticated borrowers, but the micro credit scheme was quite different. Specific uses for the funds had to stated in the application, and it had to be allied to an enterprise, like a farm or business.

I know because I advised some community members as to whether the loan would be able to be repaid from their current operating cashflow minus expected increased productivity.

I am sure there would have been the odd rort to the scheme but by and large it was well administered.

In a village where my wife owns land, 100% of the fund disappeared into the pockets of the puyai baan and some members of his extended family. I don't disagree with you that maybe they filled out some forms to loot that money, but that doesn't negate the fact that the money's gone and not a satang has yet been repaid. I don't expect it ever will and I'm kinda leaning towards thinking they're about to take a double dip.

[Crushdepth]

I dispute steveromagino's "facts" and it would be clear to anyone that they are subjective and selective.

e.g. the bulk of small rural loans were spent on televisions, motor bikes or booze!

You cannot be serious?

the loans were applied for specific purposes and had to be spent on those purposes, I know this is how they were administered in our Amphur.

you conservatives need to wake up and smell the roses.

the times are a changing...

[YOu got that from when I said:

"I only know of the villages where my family hails from, and it was viewed as a wonderful source of cheap money for motorcycles, phones, consumerables, booze, and this is borne out by the economic performance of the companies who supplied those items in the period of the village fund. My own personal experience is mostly that it wasn't a success as you claim"

Certainly not a fact, although I don't think the strong performance of mobile phone and motorcycle companies during this period nor the massive growth in household debt in the same period is disputed.]

If you wish for me to write that more simply....I can do so.

I welcome any hard evidence to the points raised so we can set out the real 'facts' as you describe them (please leave personal experiences at the door if you wish to discuss 'facts'). I admit my viewpoint is based on what I do for a living, including statistics, dealing with senior policy makers (including some of the people responsible for the TRT policies of the past that you are commenting on) and is often 'big picture'.

"I have read and reread my posts and nowhere have I insulted anyone."

Your deliberate and childish insult was already removed from the thread...it doesn't mean you didn't say it. FYI describing people as you did with an A substituted for the I is both more amusing and more relevant, especially for the female posters.

As the saying goes, on the internet no one knows you are a dog. All we have are what each member writes or says. Instead of stating 'well you lot are wrong' you may get further by pointing out the specifics of where we are all wrong in a constructive discourse, and from there we can all be a little smarter as Nurofiend points out, rather than descending into a 'well I don't agree with you, and that's that' approach which is not exactly enlightening (although can be quite amusing). :jap:

YOu got that from when I said:

"I only know of the villages where my family hails from, and it was viewed as a wonderful source of cheap money for motorcycles, phones, consumerables, booze, and this is borne out by the economic performance of the companies who supplied those items in the period of the village fund. My own personal experience is mostly that it wasn't a success as you claim"

You have set yourself up as the oracle, wise in all things statistical, knowledgable on all things to do with economic policies, condescending in your comments to other who dare to disagree, and yet you can make a most unscientific comment (really just an opinion) about the micro loan policy, which I maintain to have been a success.

When called to justify your remarks, you have just fobbed me off.

You attempt to drag the subject of growth of household debt in Thailand into the same argument, (they are quite different) to smear the micro credit scheme and muddy the waters.

The growth of household debt was due to the supply of easy credit by banks willing to take land titles as collateral due to rapidly rising land prices. yes much of this credit was wasted by unsophisticated borrowers, but the micro credit scheme was quite different. Specific uses for the funds had to stated in the application, and it had to be allied to an enterprise, like a farm or business.

I know because I advised some community members as to whether the loan would be able to be repaid from their current operating cashflow minus expected increased productivity.

I am sure there would have been the odd rort to the scheme but by and large it was well administered.

In a village where my wife owns land, 100% of the fund disappeared into the pockets of the puyai baan and some members of his extended family. I don't disagree with you that maybe they filled out some forms to loot that money, but that doesn't negate the fact that the money's gone and not a satang has yet been repaid. I don't expect it ever will and I'm kinda leaning towards thinking they're about to take a double dip.

It was more accurately known as the 'village headman political support fund'.

[tommyboy928]

Thaksin unveils 3 megaprojects-land reclamation along Bangpakong and Tajean rivers, high-speed train, new water source construction /TAN_Network

Yes , and most of it will be a fantasy this prodjects .

Rice price need be set then to warrantied pay out to the farmer on a set price, and the Exporter /dealer also..

But was thinking its the world marked that decide this price on the marked. So if but price higher than marked price, then all other country sell out what they have ,and buy from Thailand if all others is empty..

will see in a year how this good thinking will go..

[letitbe]

Peau Thai Voodoo economics, believe me Thailand will be a basket case in SE Asia within 10 years, Not an Economic Brain Cell worthy of the name amongst them

Kindly share your credentials if you want people to believe you. Otherwise, we would probably be better off believing someone who has made a fortune that far exceeds the net worth of all TV members combined.

hey how do you know how much were all worth ive got trillians of zim $ and possibly once Taksin creates his own zimbabwie here ill have trillians of Baht. In meantime my paultry around 160 million baht is mostly flying away to better places and will return once Taksin is gone so maybe a long long holiday

[hellodolly]

As usual, the anti-thaksin brigade misses the whole point. The article is pointing towards generally good times for the country and the economy, albeit with certain inflationary concerns. The greatest risk to Thailand is now political turmoil. And yet, the anti-T gang is still criticising the new Govt and unable to look to the future.

You are a funny man

Did you ever stop to think that what you call the anti-thaksin brigade is really concerned for Thailand. It is all well and good to promise every body they will be rich in 6 months that if they are not making 300 baht a day they will. that there children will receive a form of computer to play games on. Credit Cards given to people who do not qualify for them. College grads receiving a high starting salary weather they are qualified or not all the civil servants to be well compensated. And the list goes on and on and on.

How about telling us how they intend to do this with out making things worse. Driving the inflation rate up to the a pont where 300 baht a day will buy less than 200 baht a day today dosen't seem like a good idea to me.

The long and the short of it is if you are going to proclaim to the nation stupid things expect some to say you are being impractical.Give us some thing practical.

Edited July 19, 2011 by hellodolly

[letitbe]

Not one actual economist, not on Thaksins payroll EVER said Thaksins economics plan, AKA Thaksinomics, was sustainable in a functional way, more than short term. It was labeled by most as a populist PR exercise using public funds and nothing more. Letting it continue would have only exposed it's structural flaws, and Thaksin's economic ineptitude, which at this point might have been a good thing, if his quest to absolutely consolidate power in his hands wasn't running concurrently.

thats whole problem which taksin supporters dont understand. Letting him get power back is very dangerous and so is not letting him. I dont think problem will go away until he dies to be honest since others are nowhere as clever as him at manipulating and getting total power. what would ZImbabwie be without Mugabwie, Germany without Hitler, Iraq without Saddam, Cambodia without pol pot and rest. We will all have ot live with whatever and both options are almost certain to lead to disaster for Thailand for next 5-20 years. We can only hope Taksins wings can be clipped somehow or he turns out to just be content with robbing place blind. IMO he has shown he will not stop until he has complete absolute 100% power and he turns Thailand into his own state or he dies in the attempt or I guess a coup which next time will not be bloodless or most likely a civil war. Their are very few other possibilities and hoping it will be Ok is like victims of all power mad megalomaniacs refusing to accept reality. Best prepare for worst since it is almost certain.