TELL IT AS IT IS
The long-term damage done by populist policies
Pornpimol Kanchanalak


Rubber farmers block a main road and railway line in Nakhon Si Thammarat province yesterday in a bid to force the government to raise domestic prices for rubber.

Like drug addicts, sections of the Thai population are addicted to the government's freebie handouts; the long-term consequences will weaken the whole country

BANGKOK: -- Every government around the world has at one time or another been guilty of creating moral hazard by exploiting expedient populist policies. These policies and legislations are, in essence, "bad economics", but nevertheless are considered to be "good politics". In many developing countries, political parties are engaged in "competitive populism" by trying to outdo what freebies others are offering by offering even more. Economic feasibility and foundation give way to "blockbuster" entitlements that in the longer term do nothing but great harm to the overall livelihood and economic future of citizens, especially those people that the policies claim to be helping.

On Tuesday, "discussions" between rubber planters and government representatives broke down. The rubber farmers have been demanding that the government start buying up raw rubber sheets, smoked rubber sheets and rubber latex sheets at prices almost 30 per cent above the world market prices, which have been consistently falling due to abundant rubbersupplies worldwide. Their demand is based on the fact that if the government is willing to implement, and continue under seever criticism, the price pledging programme for rice farmers, what's the problem of doing the same for them.

The government's argument against yielding to the rubber farmers' demand is quite lame, considering the enormous losses it has incurred by stubbornly continuing with the rice price-pledging scheme, whose total price tag is beyond the wildest imaginings of ordinary people like you and me. The government has told the rubber farmers, with a straight face, that a commodity such as rubber has to base its price on that of the world market.

It is hard to understand the logic of the government's "double standard" when it comes to price-pledging programmes. On day one, this government declared - based on the market observation of a "smart alec" - that it would buy up rice from farmers at almost 100 per cent above world market prices. It also announced the imprudent hope that it could create an international "rice cartel", not unlike Opec for oil, that would push up the world market price of rice. Over a year later, the funds used to support this rice policy are estimated to be over Bt700 billion and counting. Most of it has gone into the pockets of political cronies, including their wives, mistresses, children, relatives and friends.

Meanwhile, Thai rice continues to lose its once leading share of the world market. The market mechanisms of the industry have been destroyed and, worst of all, rice farmers are still in a deep funk. Members of the "Poor People's Congress" are still camping out in front of the Finance Ministry demanding debt waiver from the government.

So, the demand of the rubber farmers is logically valid. The government cannot talk about a world market price with them, because it has completely and deliberately ignored such a standard when it comes to rice. It is not an exaggeration to say that Thailand's best and brightest economists have argued strongly in public and in private against the government's rice price-pledging scheme. But their voices continue to fall on deaf ears.

Then we see a sea of taxis parking at the Royal Plaza demanding remedial measures from the government for floating the price of liquefied petroleum gas (LPG), that will go into effect next month.

Freebies are in great demand, and gone is the pursuit of sound economic policies that should be the top priority of a genuinely good and responsible government.

Freebies are like the steroids that are now the drug of choice for many Thai doctors, including dermatologists and ophthalmologists. Steroids do not cure any disease, they just make the symptoms temporarily disappear and give the patient a false sense of restored wellbeing. What comes after the effects of the steroid wears off is really not a concern of these doctors. Every new visit by the patient means more medical fees for the doctor.

Freebies are highly addictive. As with steroids, alcohol and narcotics, the body wants more as time goes by, not less. More steroids are needed because the body creates the physical conditions that need more of the same. Painkillers with narcotics make the body create more pain so it can crave more narcotics. Alcohol is a downer that requires more intake as a temporary pick-me-up, and a larger amount is needed to feel good again. Drug addicts need increasingly larger doses of their drug to maintain the same high they got when they first started.

At the end of the day, blockbuster free entitlements travel the same path the world over - towards blockbuster damages. The smooth implementation of real reforms becomes impossible when discontent emerges as an obstacle to the short-term pain that can bring about medium- and long-term gain for sectors or industries conditioned for years to a dole-centered economy.

Thailand is not unique in the governance failures that revolve around corruption, wasteful subsidies and inefficient service delivery. Everywhere we look, populism has become a political goose that lays the golden egg of electoral dividends. But, in the same vein, the price every country will eventually pay for this pernicious form of "government for the people" is systemic damage that is not confined to a fiscal burden and strain; it leaves behind a trail of distortions that destroy efficiency and encourage waste and pilferage.

In 2011, two Citigroup economists, Willem Buiter and Ebrahim Ragbari, looked into the likely sources of future global economic growth between 2010-2050. In their analysis of national economic growth drivers, they pointed out the critical importance of avoiding "populist assaults on the incentive to work, save and invest".

With our current government, such assaults started on the rice industry. They are spreading to other industries and sectors. The moral hazard they create will stymie the prospect of sustainable growth and development of the country in the years to come. Governments come and go, but we the people remain, first and last, the real losers.


-- The Nation 2013-08-29

Oh, that's what all the hollering is about with the rubber farmers?
They want free money?
F--- that.

Well look at what happened in the UK, checks were written that could never clear. Now we're in over a Trillion of debt. Once you start down this path it's well nigh impossible to stop as there are that many people who think they are a special case.

In a battle between "good politics and bad economics", bad economics always wins. Always.

And who comes next?

Sugar?, I see Brazil has devalued its currency, a big sugar producer so the price should be on the way down.

Palm oil?

Cassava?

But we must diversify from rice...................into what?

A monster has been created and will not die easily.

Exports are down, the baht is still going down, both public and private debt are way up, fuel and gas prices going up.

So what is the Governments answer?

Borrow more.

Over a year later, the funds used to support this rice policy are estimated to be over Bt700 billion and counting. Most of it has gone into the pockets of political cronies, including their wives, mistresses, children, relatives and friends.

Does this get reported in Thai language in the same way?

And who comes next?

 

Sugar?, I see Brazil has devalued its currency, a big sugar producer so the price should be on the way down.

 

Palm oil?

 

Cassava?

 

But we must diversify from rice...................into what?

 

A monster has been created and will not die easily.

 

Exports are down, the baht is still going down, both public and private debt are way up, fuel and gas prices going up.

 

So what is the Governments answer? 

 

Borrow more.

Apparently corn is the new rubber.

The corn farmers will be joining the rubber revolt

Sent from my Galaxy Nexus using Thaivisa Connect Thailand mobile app

“Apparently corn is the new rubber” will this be like a “thousand little fingers, urging a girl to let go”?

Excellent Article!!

Off topic posts have been removed, this is about the damage done by populist policies in Thailand, not the USA.

Excellent and to the point. Now if you only get it written in thai and into the the thai newspapers

There is an irony here, a while ago this government spouted on about how it was bad for the earth when chemicals were used to help kill off undergrowth etc for planting corn every year.

Their suggestion was to Plant Rubber Trees!

As clearly indicated in the article, the obvious difference is that rubber farming is predominantly located in the southern (Democratic stronghold) provinces, whereas rice farming is predominantly located in the PTP stronghold areas in the Northern and Central regions.

Therefore, as in all other matters, support is provided for their Red Shirt allies, whilst it is denied to their opponents, once again demonstrating this very alarming split in Thai society, which, as I have continually argued, is likely to have very serious consequences when the s*** eventually hits the fan!

why not rubber, why not palm oil, why not cats and dogs..... just schemes for politicians to have more corruption to line their pockets. The only victims here are the hard-working, tax paying, public...go figure!

Rice pledging scheme was just the opening of this Pandora's box. This government is going to get what's coming....

why not rubber, why not palm oil, why not cats and dogs..... just schemes for politicians to have more corruption to line their pockets. The only victims here are the hard-working, tax paying, public...go figure!

 

Rice pledging scheme was just the opening of this Pandora's box. This government is going to get what's coming....

This is just the beginning.

Thaksinomics is getting it's comeuppance

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

There are no butter mountain in Europe.

That's what my Belgian friend always tell me.

Only Chocolate mountains and Beer rivers.

The government's argument against yielding to the rubber farmers' demand is quite lame, considering the enormous losses it has incurred by stubbornly continuing with the rice price-pledging scheme, whose total price tag is beyond the wildest imaginings of ordinary people like you and me. The government has told the rubber farmers, with a straight face, that a commodity such as rubber has to base its price on that of the world market.

What amazes me the most is that almost everybody in PT (Yingluck, Thaksin, Nattawut, Tida... ) has said on numerous occasions:

"We should help the poor rice farmers, they are having a difficult time. People should have understanding for them. blah blah.."

...really sickening.

PTP has opened the Pandoras Box and they can´t close it. We just have to wait and see what´s going to happen.

And who comes next?

Sugar?, I see Brazil has devalued its currency, a big sugar producer so the price should be on the way down.

Palm oil?

Cassava?

But we must diversify from rice...................into what?

A monster has been created and will not die easily.

Exports are down, the baht is still going down, both public and private debt are way up, fuel and gas prices going up.

So what is the Governments answer?

Borrow more.

They will get no help from the US Federal Reserve Bank policy. In fact they are being thrown under the bus as I write.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10272285/Emerging-market-rout-is-too-big-for-the-Fed-to-ignore.html

The government's argument against yielding to the rubber farmers' demand is quite lame, considering the enormous losses it has incurred by stubbornly continuing with the rice price-pledging scheme, whose total price tag is beyond the wildest imaginings of ordinary people like you and me. The government has told the rubber farmers, with a straight face, that a commodity such as rubber has to base its price on that of the world market.

What amazes me the most is that almost everybody in PT (Yingluck, Thaksin, Nattawut, Tida... ) has said on numerous occasions:

"We should help the poor rice farmers, they are having a difficult time. People should have understanding for them. blah blah.."

...really sickening.

I notice that with the worsening of the economy Yingluck is cutting back on her Photo ops.

She may not be the brightest light but she is starting to realize that as uneducated as they are Thai's are starting to see through the corrupt government she heads. She probably dosen't realize it yet but most of her problems stem back to her brother calling the shots. She hasn't quite figured it out yet that his advice and advisers he has gotten for her have nothing to do with the welfare of Thailand.

Another example of long term damage from the government's populist policies:

BBC: Is Thailand’s car buying scheme a wise move?

http://www.youtube.com/watch?feature=player_embedded&v=0p7uq03jb8c

Finally, the truth told by a Thai person who knows and understands what is going on. I would like to make a request to the author Pornpimol Kanchanalak that this article be translated verbatim into Thai language and disseminated to AS MANY THAI PEOPLE AS POSSIBLE, especially those upcountry and the rice farmers. This whole pledging scam must be stopped, cut the strings, take the hit and try to stop the losses, sell as much of the rice as possible for as good a price as possible, take the loss and MOVE ON, try to rehabilitate the kingdom's finances. This will never happen until the PT crooks are out of office and a government with the balls to do what is best for the country instead of themselves is in. Sadly I fear it'll never happen in the land of smiling corrupt crooks...If all Thai people love the king as much as they claim to, they should also love the king's kingdom which means they should do what is best for the country and stop thinking of only theirselves, all Thais are in this together and what is good for the politicians is bad for the country hence it is wrong.

why not rubber, why not palm oil, why not cats and dogs..... just schemes for politicians to have more corruption to line their pockets. The only victims here are the hard-working, tax paying, public...go figure!

Rice pledging scheme was just the opening of this Pandora's box. This government is going to get what's coming....

This is just the beginning.

Thaksinomics is getting it's comeuppance

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

Indeed. They managed to implement a system that worked even worse than the CAP. That really takes some doing.

And who comes next?

Sugar?, I see Brazil has devalued its currency, a big sugar producer so the price should be on the way down.

Palm oil?

Cassava?

But we must diversify from rice...................into what?

A monster has been created and will not die easily.

Exports are down, the baht is still going down, both public and private debt are way up, fuel and gas prices going up.

So what is the Governments answer?

Borrow more.

They will get no help from the US Federal Reserve Bank policy. In fact they are being thrown under the bus as I write.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10272285/Emerging-market-rout-is-too-big-for-the-Fed-to-ignore.html

Everyone is going to feel the pinch when bernanke turns off the taps. How low will the set and the baht go?

One would think that with reports like this, that the wheels are beginning to come off this Government, but no, not until the great unwashed can start to think beyond "self". Sadly, the poor and great unwashed will not understand this report, or even care about it. As long as they benefit today, tomorrow will take care of itself, but it won't. I believe that economically and politically Thailand is on a downward spiral, and the only solution is the emergence of a strong, charismatic and honest leader in the guise of a "saviour". The great shame is, I don't see one - anywhere in Thailand.

http://www.bbc.co.uk/news/business-23875084

why not rubber, why not palm oil, why not cats and dogs..... just schemes for politicians to have more corruption to line their pockets. The only victims here are the hard-working, tax paying, public...go figure!

 

Rice pledging scheme was just the opening of this Pandora's box. This government is going to get what's coming....

This is just the beginning.

Thaksinomics is getting it's comeuppance

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

Indeed. They managed to implement a system that worked even worse than the CAP. That really takes some doing.

Haha! Very true.

Is a carrot still classified as a fruit so the Spaniards can make marmalade?

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

Another example of long term damage from the government's populist policies:

BBC: Is Thailand’s car buying scheme a wise move?

http://www.youtube.com/watch?feature=player_embedded&v=0p7uq03jb8c

Apparently the BBC made a series of such reports including the rice scheme.

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

Another example of long term damage from the government's populist policies:

BBC: Is Thailand’s car buying scheme a wise move?

http://www.youtube.com/watch?feature=player_embedded&v=0p7uq03jb8c

Apparently the BBC made a series of such reports including the rice scheme.

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

Be careful BBC you may be sued for damaging the reputation of Thailand.

 

Another example of long term damage from the government's populist policies:

BBC: Is Thailand’s car buying scheme a wise move?

http://www.youtube.com/watch?feature=player_embedded&v=0p7uq03jb8c

Apparently the BBC made a series of such reports including the rice scheme.

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

 

Be careful BBC you may be sued for damaging the reputation of Thailand.

Rice Scam

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

Another example of long term damage from the government's populist policies:

BBC: Is Thailand’s car buying scheme a wise move?

http://www.youtube.com/watch?feature=player_embedded&v=0p7uq03jb8c

Apparently the BBC made a series of such reports including the rice scheme.

Sent from my Nexus 4 using Thaivisa Connect Thailand mobile app

Be careful BBC you may be sued for damaging the reputation of Thailand.

And you may be arrested and faced with lawsuits for suggesting such possible 'gossiping' outcomes...5555.

This group is going 'tits up' fast (pun intended) with the sagging tits being spearheaded by the prodigious Yingluck herself.

Actually, I didn't think PTP would even make it this far given the cesspool of ineptitude