Friday, September 21, 2007

Bye bye Sittichai

You couldn't make this stuff up. When people (especially people back home) ask me why I am interested in Thai politics, I frequently point out that it has more twists and turns than an epic movie. This week is just one example.

My friend Sittichai Pookai-yaudom and two other ministers in PM Surayud's cabinet have been found to have violated a graft law. They have all exceed permitted limits in public share holdings. Sittichai is head of MICT, the office that awards itself the status of thought police and moral guardian for the entire nation. Sadly, it seems Sittichai fails to follow his own superior ethics that he imposes upon Thailand.

In fairness to Sittichai, he has already resigned his post to "show transparency". Surely real transparency would be taking him to court and asking him why he only "showed transparency" after he was caught? The other two ministers are delivering the usual squabbling, pathetic and remorseless arguments and obfuscation that we have come to expect from greedy politicians.

The complication is that although the three have clearly committed an offence (and credit to the NCCC for actually pointing it out) they are protected from a clause in the new constitution that exempts them from complying!!!!

So there appears to be no punishment. Surayud has given them 'a week to consider their actions' and it appears the worst any of them will face is resignation. Somehow, that seems unlikely to bother them given their amassed wealth.

I wonder, if Thaksin was found to have committed the same offence,would he be protected by this clause? Would he simply be given "a week to consider" ?

Welcome to the world of Thai politics.

Thursday, September 20, 2007

A brief analysis of Thaksin's article in the Asia Wall Street Journal.

(The Wall Street Journal Asia 2007 Dow Jones & Company, Inc. All rights reserved)

I awoke on the morning of Sept 19 last year to the news that my government - and Thailand's democratic constitution - had been overthrown in a military coup.

Actually he discovered what was happening and made an emergency broadcast and declaration of national emergency as the coup unfolded.
Why does Thaksin tell such untruths? Simple, his only interest is to play the role of the innocent, naive bystander who is the victim. He does this to garner international sympathy to further his cause for political asylum. He knows the past is catching up with him and the extradition struggle is coming.

The coup came as a shock to me and to most Thais.

One year ago I was in New York, preparing to address the United Nations General Assembly on behalf of my nation. I was filled with pride as I looked forward to delivering my remarks. One year before that, I had been overwhelmingly re-elected as prime minister of Thailand. Thanks to the people of my nation, I was the first leader in the near 100-year history of Thailand to be not just democratically elected, but democratically re-elected.

Under my administration, we had cut poverty almost in half, provided universal access to affordable health care for the first time, balanced the budget and paid off our debts to the International Monetary Fund.

True, but all these trends were in place before Thaksin came to power. Poverty rates, IMF repayments and health care were already on the agenda. It could be argued that Thaksin and TRT speeded up these processes but at the expense of other agendas.

In addressing the United Nations, I intended to emphasise to the world the success and maturity of our democracy.

Thai democracy is far from mature. At the risk of repeating myself, independent bodies, press freedoms and opposition groups were all infiltrated and suppressed by Thaksin. This is a man who promoted his relative from three star general to army chief and all of his old friends to the top police spots. In what country is this considered "mature"?

I was never able to deliver my remarks, however, because I awoke on the morning of Sept 19 to the news that my government - and Thailand's democratic constitution - had been overthrown in a military coup.

The coup came as a shock to me and to most Thais.

Me thinks Thaksin is supplying another porky here. Thaksin is only too aware of the workings of the Monarchy and military and he had been locked in a war of words with the highly influential General Prem for some time. There were several signs that all was not well. Let's just leave it at that.

Democracy appeared to have become well entrenched in Thailand following adoption of the Constitution of 1997. Also known as the "People's Constitution," this charter was universally acclaimed as the most democratic constitution in the history of Thailand.

A constitution that was circumvented and cheated many times under Thai Rak Thai.

The people of Thailand have the same democratic aspirations and expectations as the people of other mature nations, and they will not rest until these are restored to them. Regrettably, the military rulers in Bangkok have spent most of the past year worrying not about promoting our nation's economic development or restoring basic rights to the Thai people, but rather about preventing me or anyone sharing my political philosophy from returning to political power.

In reflecting on the past year, I am appalled by the suffering that has been inflicted on the Thai people by the junta's misplaced priorities. I have made clear to all who will listen that I have no desire to again hold political office in Thailand. As a patriot whose first loyalty is to my King and country, I wish only to return to a democratic Thailand to live in peace with my family.

The junta justified the coup in part on the assertion that my administration was corrupt. Once in power, they created a government agency whose sole purpose was to validate this claim by finding me and my family guilty of some form of financial malfeasance. After investigating me for a year, none of the original charges has been sustained, so they have concocted new ones.

Not true. The charge of the Rachdapisek land purchase was mentioned from day one of the coup and Thaksin and his spouse have been charged. Other investigations are ongoing. Again this is catch 22 for both sides: Thaksin says the AEC is a kangaroo court and he has not been found guilty. In fact, the AEC have bought charges on two cases , they are working on others still because they are searching for evidence that a kangaroo court would not need to find.

In so doing, they have had to invent new interpretations of Thai law with respect to investment and taxation.

These new legal interpretations cannot be applied only to me, however, which has jeopardised Thailand's hard-earned reputation for predictability and respect for the rule of law.

As a result, foreign investment - long a principal engine of Thailand's economic growth - has begun to dry up.

Another untruth. The reason for dipping foreign investment is because the value of the bhat has shot up. There is no new interpretation of tax law that has affected foreign investment (other than a reserve law, which is not what Thaksin is referring to).

To try to stop me or anyone sharing my enthusiasm for free markets and democracy from ever regaining power in a free election, the junta has banned my former political party, forbidden over 100 of the most prominent political figures in Thailand from running for political office, and frozen my financial assets in Thailand.

Actually they were found guilty of violating election law (in several ways) in an efficient and transparent trial in the Constitutional Court.

For most of the past year, Thailand has been under martial law, with freedom of the press restricted and activity by political parties severely limited.

As per Thaksin's regime.

The junta appointed a committee to draft a new constitution for Thailand, stacking it with hand-picked bureaucrats. The committee's top priority was to reduce the role of the Thai people and their elected representatives in national decision-making.

The constitution they produced needlessly reduces the size of the lower house of Parliament to 480 from 500 members, the size of the Senate to 160 from 200 members, and redraws parliamentary districts in a manner designed to diminish the voting strength of the 35 provinces in northern and northeastern Thailand that have been most strongly opposed to the coup.

Yes, because the previous regimes had demonstrated that the number of MPs and senators was unduly high and simply encouraging the use of power cliques and coalition governments.

In addition, the new constitution strips the Thai people of the power to elect the Senate. Instead, senators will henceforth be appointed by unelected selection committees. The anti-democratic role of the Senate and the judiciary is amplified by features empowering the Senate to appoint heads of independent agencies and to remove the publicly elected prime minister.

Even honest senators had admitted the senate had become useless and less than thirty percent were impartial. Under election laws, senators could not campaign for election, they could only submit their name. So, we got friends and relatives of politicians forming the senate. One TRT MP even referred to the senate as " the slave house". The need for reform was clear although it is true that this new system is not ideal. Thaksin is being a total hypocrite by mentioning this though.

In a referendum last month, an unexpectedly large number of Thais voted against adoption of the constitution, despite severe restrictions on organised opposition to the referendum imposed by the junta during the campaign.

And despite a massive funding campaign for "no" votes by Thaksin's former TRT allies in the north.

There will now be a national election on Dec 23, which the junta wants the world to accept as free and fair. As campaigning begins, however, the junta continues to apply martial law in the 35 northern and northeastern provinces. In those provinces, it remains illegal for more than 10 persons to gather for political purposes - though this rule and others are rarely enforced against political parties favoured by the junta.

Lie. When have other parties been allowed to violate martial law?

To ensure itself a free hand, the junta is resisting efforts by the European Union and others to deploy election monitors.

The world appears inclined to accept all these departures from democratic norms. The explanation is as simple as it is troubling. The international community is so disgusted by the junta's mismanagement that it wants it to pass from the scene as soon as possible. Rather than quarrel over the details of democracy, the world appears ready to look the other way so as to provide no reason for the junta to delay the Dec 23 election.

In a bizarre twist, the junta's greatest weaknesses - its incompetence and unpopularity - have been transformed into its greatest short-term strengths.

The world is miscalculating, however, if it thinks there can be stability in Thailand without true democracy. The voters of northern and northeastern Thailand who the junta wants to disenfranchise may be poor, but they will not be denied their voice - nor will the millions of other Thais whose rights are being restricted.

We will not have stability, democracy and development in Thailand until we have genuine national reconciliation.

Needless to say, national reconciliation will not be achieved at gunpoint or through rigged elections ( as you proved, Thaksin) but rather when our generals and politicians finally put the national interest above their own narrow interests.

How very true.

Let me leave you with this response from
National Legislative Assembly (NLA) member Prasong Soonsiri:

"In order for political groups to move in the way that they have in the past means that they must have lots of money. The question is, where is the money coming from?" .

"I have never trusted this man, and I believe that a large number of people don’t believe everything he says. It would be better if he stopped making public his intentions to withdraw from politics and then doing the complete opposite soon after. He should focus on really ending his political ambitions and stop talking about it."

(Source for all material: Bangkok Post)

Monday, September 17, 2007

Foreigners in Thailand : what both sides think.

I doubt anyone is unaware of the plane crash in Phuket. There isn't much more to say about this. It was tragic. My heartfelt condolences to those who lost loved ones. The Thailand blogging community has proved its worth again with good pieces here , here and here. I cannot do any better so I won't try.

"'Foreign passengers usually have their own life and accident insurance, but Thai passengers, who are now being treated at local hospitals, will be able to get compensation from OneTwoGo, which will have to pay hospital bills immediately'."

Those were the highly infelicitous comments by the Insurance Commission Office head after the Phuket plane crash.

At the same time, one of my favourite webboards has kicked off a real old chestnut argument between the ex-pat and Thai communities. The same old lines are showing up: "Why are foreign teachers so bad?" "Do we need them?" "Do foreigner teachers get paid too much / not enough?" (Delete according to your stance).

All these quotes don't sit easily with Thailand's "Welcome foreigner!" image do they?

So what do Thais think of us? Do they like us as much as those welcoming smiles they give the new tourists would suggest? Or are the cynical old ex-pats right when they say the Thai smile is a crocodile smile? Is Thailand a jingoistic country? Or is it an ex-pat paradise?

I sometimes think back to the day I first arrived in Thailand and the first time I received a real 'Thai smile' from the receptionist in my hotel. I had just spent three months in Hong Kong, and as much as I loved HK (and still do) I was relieved to get aware from people who gave me "dagger" looks as I smiled and held the door open for them.

In Thailand, there were friendly smiles everywhere. Everywhere I went, people seemed truly happy to see me, chat with me to practise their English and ask me about my country (and football, once they realised I was English). It seemed like the most 'foreigner friendly' place I had ever stayed.

Now let me fast forward four years. Things changed. I've gone through what I now call "The six month honeymoon period". This is the period when the typical farang first moves to Thailand and believes he (for the typical farang is surely a 'he') is in paradise. The girls are all friendly, the food is fantastic, the accommodation is good and cheap. Everything is just great.

But this illusion gets chipped away. One of the sharpest drops down to Earth can come with a visit to immigration. Anyone who believes all Thais are friendly has never had to deal with "immo". Immigration in Thailand is not only slow and inefficient, it is also populated by some of the rudest and most obnoxious people on earth. I could go into stories here but I won't. Suffice to say I was relieved this year when my visa renewal was handled by one of the more human Immigration staff.

But it's not just Immigration. There are con men amongst the builders, telephone companies, taxi drivers and so on. Thai politicians often blame foreigners and foreign influences for their own problems. And of course, there are simply good people who dislike farangs. If they dislike you they might call you "farang kii nok".

The first time I heard the term "farang kii nok" I didn't know what it meant. (If you don't know either, read my blog here, but know that with this knowledge you can never be 'just' a tourist in Thailand again!). The second time, it was shouted by an obnoxious eleven year old kid whom I had asked three times to stop throwing garbage in my garden. (I exchanged words with him and he thanked me by pouring chili sauce all over my car).

But without doubt, the biggest raise in 'anti farang' awareness can come from dealing with Thai government schools. As wonderful as the children in these places are, some staff can be very hard to deal with. In government schools, staff gain in rank, salary and influence simply by staying put and getting older. Many Thai English teachers cannot hold a conversation in English. They can become very hostile because they resent younger foreigners coming in and using a different style of teaching. Of course, there are friendly and welcoming teachers too.

So the verdict is Thailand is not a paradise that lays down the red carpet for foreigners (unless you are rich enough) but then, why should they? The reality is that some like us, some don't. In my experience there are more of the former. Just like in the west, a friendly attitude and a "hello" with smile in the morning will elicit a warm response in most people, if not all. There are plenty of locals who enjoy making friends with the foreigner, showing Thai hospitality and being your friend.

It's true that the Thai smile takes many forms (including the kii maa smile, you know about that right?) but a real "yim Thai" is never far away.


Part two - the farangs

As I said in my other blog, Thailand does not usually lay down the red carpet for farangs, but why should they? A few weeks ago I wrote an article about moaning foreigners who seem to believe that they should be treated like a heroes simply because they moved to Thailand.

A friend of mine (a Spurs fan) read the piece and debated with me about it.

"But look at all the red tape, look at all the things we have to do just to get a one year visa!" he said to me.

"So you don't have a visa? Of course you do! If they didn't want us, they wouldn't give us visas. And the slowness and complications are just pure inefficiency, the Thais have to deal with inefficient government staff just like we do" I replied.

"But what about our salaries? Why don't they pay us properly for what we do?" was his next line.

"Well first of all, what we do is not rocket science. Secondly we get paid a damn sight more than the Thais do for the same job. And thirdly, we actually do get paid very well" I said.

What my friend had said was simply a repeat of the gripes of many other farangs in Thailand. I know I am in the minority when I say we are well looked after but I now have one more point to make: many foreigners in Thailand should not be here.

The standard of English teachers in Thailand is very, very poor. The main reason for this is simply that demand for foreign teachers in Thailand exceeds supply. Many Thais believe that white skin = native speaker = best teacher of English. This is simply not true.

Such is the availability of English teaching jobs at the lower end of the pay scale that any Caucasian can walk into certain language schools and come out with a job. This person can (and sometimes is) a sex tourist, an alcoholic or a Nazi.

Furthermore, as I've said so many times, Thailand can encourage foreigners to become delusional. Many simply kid themselves that they've become a "Brad Pitt look alike super stud" by crossing time zones but others - older men especially - like to embellish about their past. They often do this so often they believe their own delusions. I've met hot shot lawyers, Black Panther activists, spies and UN activists all working in Thai schools. Strangely enough, three of the four people I've just referred to were so bad at teaching they got sacked by one of the lowest paying schools.

The problem with all this blase attitude and delusional thinking is that it isn't conducive to good work or good behaviour. Sex tourists and alcoholics turn up late and unprepared. They often convince themselves they are good teachers because they made kids laugh or got a smile from a female student. They fail to realise that these things are only good if some learning came with or after it. Over a period of time when the reality of their non sex god status kicks in, they often become resentful of Thailand and its people and become increasingly unreliable and derogatory to their chosen location.

Yet strangely enough, many teachers from this type of group also become professedly arrogant and resentful of their work. So many teachers are desperate to convince people "I'm not a teacher, I'm really a lawyer/Black Panther activist/ spy etc." as if they are too good for the job they are incapable of doing. Personally, I'm confident enough being what I really am.

Whilst many teachers fit the above descriptions, others are simply lazy, some lack pedagogical skills and others are just not very good at English.

So what's the solution? Well, for one thing Thai students and parents need to grow up and realise there is more to learning than throwing little Somchai in a room with a white man. Thai schools - both government and private - need to raise the stakes by being more diligent and considerate in their recruiting and interview process. Right now for the private schools it's simply a case of: "We need a teacher for this class, get in that room and we will pay you. You don't teach, the customer doesn't pay us".

I sense more parents are becoming aware of this. While some simply want to dump their precious offspring while they go shopping, others are becoming more curious about foreign teachers. I recall a particular grilling in a 'parents day' session that my school had given me all of five minutes notice for. I enjoyed the unexpectedly tough questions and I felt a genuine sense of approval and pleasant surprise from the large group of parents.

And finally, the "good" guys need to play their part by doing their best. There are plenty of good teachers in Thailand. Some have degrees in Education, some are simply effective communicators and others simply have warmth for young learners. I've recently become head teacher of an upmarket language centre (it has a black and white logo and has branches across Europe) , I'm lucky that my school actually give me some leeway in recruitment but even then, I have to employ at least two people I would rather not hire simply due to lack of good teachers.

If Thai people and government want to see why countries like Korea and even Vietnam are improving their English skills a whole lot faster, they should look at the learning system. Teachers with genuine qualifications who pass an interview, a test and practical assessment are invited to teach there. They are given accommodation, benefits and a good salary. Everyone is happy.

That's what I'd like to see happen here. I don't have a degree in Education, so it might mean that I had to leave. If that happened, so be it, I'd be glad to see Thailand had taken such a step forward. Then again, I hope someone might look at my record or watch me in the classroom and think: "Hey he's one of the good guys. Keep him".

Thursday, September 13, 2007

Sonthi and the worst quote EVER

"Former Communist insurgents could be behind the attacks [in the deep south]" General Sonthi, August 2006

Bangkok Pundit beat me to the keyboard, but I can't go without mentioning this.

General Sonthi Boonyaratglin today made quite possibly the worst comparison I have ever heard from any military leader in history.

Sonthi was talking about the possibility of entering politics. He mentioned that it would be crucial to choose the right party with the right levels of popularity and military support.

Then suddenly this quote jumped off the page and smacked me between the eyes:

"I will bring into use the successful strategy of the late leader of the Chinese Communist Party Mao Zedong who established strong support from both sympathisers and the militant."

I had to check the date and make sure it wasn't April 1st. Can Nation reporters confirm he really said this?

Did he really, really make a comparison to one of the 'greatest' Communist leaders of all time? A man who epitomised a political ideology that denies all forms of royalty and land ownership? A man who has been called by some as the "biggest killer who ever lived"? And a man who was directly responsible for the loss of millions of lives under the "great leap forwards".

Take a hint Mr Sonthi, if you come out with quotes this ill considered, politics is not for you.

Wednesday, September 12, 2007

A few books I have read lately

Natural Cures "They" Don't Want You To Know About
Kevin Trudeau

I approached the best selling "Natural Cures 'they' don't want you to know about" with a healthy dose of scepticism. After all, should we really take advice on healthy eating from a convicted fraudster? But I've concluded that Kevin Trudeau is the ideal person to write about the total scam that is the pharmaceutical industry and its packaged food counterpart.

"Natural Cures......" is basically a tirade against the culture of drugs and packaged foods that have taken over the modern world. Trudeau explains how this culture of drugs and snack foods (and some other products) is undoubtedly responsible for making us sick in many ways. He goes on to offer ways to reduce toxins in the body and cure or prevent many diseases.

A lot of what Trudeau teaches us is nothing new for most of us (snack foods have numerous chemicals, GM food loses much of its nutrition, etc.) but he goes to great lengths to make us realise just how serious the problem has become, just how extensive the lobbying and coercion of politicians can be and just how misleading drug or food advertising has become. So many lies and scams are exposed in this publication that there will be at least one revelation for everybody.

After making all this clear, Trudeau goes on to offer tips and ideas - many of them beautifully simple - on leading healthier lifestyle to clear the body of toxins and "never get sick again".

A lot of the advice is superbly simple yet often something we would never think of (Buy organic fruits and make a fruit shake every day, don't buy any product with ingredients you can't pronounce, etc.) and very passionate. Trudeau clearly practises what he preaches and has very extensive knowledge of the industries he discusses.

It's true that some of the author's ideas make him his own worse enemy. Statements such as "Animals never get sick" and "Wearing a magnetic ring will help you eliminate chaos" simply invite his many critics to knock him. But there are so many articulate, practical and genuinely heartfelt arguments and suggestions in this book, I get the impression many critics have based their reviews on their dislike for the writer.

This book did what "Super Size Me" and "Fast Food Nation" failed to do. It made me realise the dangers of my diet (as the aforementioned works also did) but it also gave me the inspiration and impetus to actually make a positive change. I've done two juice fasts and a water fast since I got this book two months ago. I've taken up many of Trudeau's ideas and I feel far better for it.

Highly recommended, if only to see what the fuss over this NY Times bestseller is all about.

Corruption and Democracy in Thailand
Pasuk Phongpaichit,Sungsidh Piriyarangsan

Now considered an essential publication for students, my second reading of this work reminded me it is a vital read , if for no other reason than making us realise how little some things have changed. Pasuk Phongpaichit (probably my favourite Thai author) gives detailed reports of various corruption sagas in Thailand but - far more importantly for students - helps us to understand the historical roots of corruption in Thai society and how Thais from different demographical groups have different ideas about what is classed as corruption. The book contains a very interesting survey that questioned Thais from all parts of society and gauges their opinions and responses to various examples of corruption. The section on police corruption is also very interesting and especially relevant today.

God Is Not Great How Religion Poisons Everything
Christopher Hitchens

This book was published just after the best selling "The God Delusion" by Richard Dawkins. Hitchens takes a far more poetic line to his polemics, delivering a fluent yet sometimes complex line of argument from many of the same angles as Dawkins. Hitchens delves into the historical atrocities committed by men of theist religions before moving on to a critique of the faults on attitude and logic of many modern religious groups. The author moves on to discuss the dangers of facist style doctrine from modern religious practitioners and delivers a final argument in favour of rational atheistic and scientific thought.

The book is very much a parallel line of argument as that of Richard Dawkins but written more in the style of a long open letter from one scholar to another. For this reason, I recommend the book to anyone with a strong interest in religious debate but for those who are looking for a down to earth and highly readable summary of an Atheist's argument against the existence of God, I recommend Dawkins' book first.

This is just a sample of what I am reading or have read lately. I devour books. For a fuller list of what I get into these days. See my 'iread' profile (about one hundred books long!) on Myspace.

As a general rule, I don't read books written by farangs in Thailand. There are some notable exceptions, but most of them are just plain bad. They range from gleeful recounts of debauchery written by guys who probably never had a girlfriend before coming to Thailand to self indulgent dramas or mystery novels written by those with delusions of grandeur induced by too much sun.

In between these we have guidebooks and biographies. I picked up "Lady of Pattaya" in the bookshop this week. A quick random read gave me these profound insights: "the typical women will first marry a Thai and divorce before moving on to a foreign between school students is now just as prevalent here as in the west............many prostitutes in Pattaya go on to become property owners and role models for the other workers".

Each one of these statements strikes me as pure nonsense. (Yes the rate of youngsters having sex is increasing, but I have spent years here teaching in all kinds of schools and I can assure you the rate is nowhere near equal to the west yet).

The book was written by a Canadian expat who made the classic foolish error - he went in search of something (prostitutes in this case) , found it because he knew where to look and judged all Thai people based on those who came into contact with him.

Friday, September 07, 2007

The debate on Thaksin and income equality (round 2)

Jotman has sparked me to blog again. The man who put forward the "theory" that thousand of Bangkokians and PAD members took to the streets in rage because of a "decline in income gaps" and motivated me to type a long response (Jotman had looked at a gini coefficient chart that amounted to a maximum gain of 910 bhat for Isaan people on Bangkokians) has now put forward another argument.

This time Jotman champions Thaksin's anti poor initiatives because of his "analysis" of the data. It appears "analysis" means he looked at two separate charts posted by Bangkok Pundit.

Jotman blogs:

Money was put to good use. Loans did not wreck the Thai economy. Whatever you call them, Thaksin's anti-poverty measures transferred lots of cash into the pockets of poor Thais. In the West, when the state makes it easier for poor folks to obtain credit, we call it social assistance. But for some reason, when this happened in Thailand -- and millions of poor people actually got their hands on some money -- they call it "bad policy."

Largely disparaging accounts of Thaksin's anti-poverty initiatives do not jive with my own analysis of the data. The fact is that Thaksin's tenure was marked by sweeping poverty reduction, despite a relatively modest increase in GDP. And if you couple this observation with the strong evidence that broader access to debt financing gave more people access to durable goods such as housing, amounting to welfare by another name.

With great respect to Jotman , I simply couldn't disagree more and I wonder how much research he has really done on his politics. He does not allow comments on his blog, so I'll have to make my response here.

I also note Jotman referred to my last post and claimed I suggested that economic data on household debt could be "bogus". Actually what I said was that the data could have been handled liberally, I certainly did not suggest it was a blatant fake. (I don't think Jotman was being malicious though, I'm sure it was a miscommunication. Thai political bloggers in English tend to be a very good bunch who like a good debate without dropping to the flame war nonsense we get so much of on line.)

Jotman also responded to my post by repeating polemics from Bangkokpundit "If Thaksin manipulated the figures, why doesn't the current government tell us the real figures, they have now had 11 months?"

This may be a good point of polemicism, but it is not an answer. How did Thailand accumulate its data on salaries if a huge proportion of Isaan farmers have no official salaries?

I don't want to make this post as long as my previous one, but let us begin by taking a look at the policy platform that formed the catalyst for Thaksin, the most dynamic and controversial politician in recent Thai history:

1) War on drugs. (A full length blog in itself. In a nutshell, the crooked police went on a killing spree with Thaksin's blessing).

2) War on corruption (A bit like David Beckham declaring war on football).

3) War on poverty or to be exact, a target of zero poverty in six years. (This is the same man who promised to eliminate Bangkok's traffic congestion in six months. I'm still waiting for him to promise Manchester City to win the Champions League "within three years").

That final goal included a 30 baht health care scheme, a debt registration programme and a Village Fund Scheme.

In short, TRT set up a huge credit system and a debt moratorium for the poor.

One of Thaksin's first acts was to transfer the sum of .....wait for hundred and eighty one billion baht of bad debts to a state asset management company. When Jotman talks about "the rate of non-performing loans is on the decline" I wonder if he realises the reason why. The spate of NPLs borne from the Asian Financial Crises of the nineties has been transfered to the state.

It doesn't stop there. Thaksin set up a Village Development fund, an SME loan system and an Agrarian Bank all for the purpose of directing credit at the poor and clearing old debts. After repeated failed negotiations with commercial banks, Thaksin gave up and simply cleared the debts via state groups for the government banks and basically forced them to lend.

And lend they did. Under the Village Development scheme, village leaders were given one million baht and authorised to allocate the funds (a maximum of 20k per time) to villagers. The Agrarian Bank set up a small loans system. Credit card restrictions were loosened and allocated to smaller earners. The name of the game was credit, credit credit.

In essence, it was a huge gamble on stimulating consumption and to an extent, it worked, albeit at the huge expense of the state via quasi fiscal spending (another point Jotman omits to note as it does not suit his argument). Private consumption went up above pre crisis levels even as productivity decreased.

But how was the money spent? If it was directed into investments, produce and education it could have been highly beneficial. However, despite the rhetoric from Jotman that "money is being put to good use", genuine research tells another story.

The poverty figures quoted by Jotman come from the NESDB ( National Economic and Social Development Board) . I am unable to find any other data covering the same period so we have to take NESDB's word for it, but there is a problem....

The NESDB stated that of all their funds distributed in the Village Development programme, only two percent were used for consolidation purposes. Meanwhile the Chamber of Commerce estimated that forty percent of recipients used the cash to consolidate other debts and a survey by a farmer's group put the figures as high as seventy percent! (Source: "Thaksin: The Business of Politics in Thailand" by Pasuk and Baker)

Given these monster discrepancies, can we put absolute faith in NESDB figures?

So let's re-cap. Thaksin allocated a lot of credit by forgiving bad debts (at state expense) and pushing unwilling banks to allocate further credit to create a consumption stimulus. Now let's look at the aftermath of all that spending.

Household credit did increase substantially, despite Jotman's claims that it was "relatively low measured against other countries" (Jotman was referring I cited in my previous blog concerning his 'income equality' argument which I felt was totally untrue) . Thailand's own levels of debt rose substantially but not alarmingly. However, what is alarming - as stated in the same paper and explained by myself in my previous blog - is the artificially low interest rate, the fact that Isaan people see debts as the greatest burden and their vulnerability to economic shock. A hike in interest rates could spell serious trouble for this sector.

So what Jotman's analysis amounts to is two graphs, one of which is highly suspect. The reality of the situation is that we have is a scheme that may have stimulated short term consumption (credit to Thaksin for that) but coincided with a drop in GDP (which ironically Jotman cites as evidence for Thaksin's greatness) and a highly vulnerable group that have used debt through official channels for consolidation, have not received genuine opportunities for further investment or education and could be set for massive default loans if the economy does not pick up as expected.

It may sound cynical, but it's a fact that throwing money or credit at people who lack the education or understanding to use it does not help in the long term. Left wingers and Thaksin apologists often respond to this argument with knee jerk, fashionable accusations of "contempt for the poor" or something similar. In fact, such observations about the reality of the situation for poor people in Thailand are in my opinion the kindest and most respectful. The rural workers of Thailand are wonderful people who play an important part in tradition, culture and productivity. They deserve more than 'short fix' schemes designed to buy votes and allow corrupt politicians to run rampant. They deserve huge investments in education that allow them to change the future for their families.

Thaksin undoubtedly had some good policy platforms for the poor. Some worked, some did not. His populist rhetoric and encouragement to indulge in great credit may yet prove to be a great liability.

Oh by the way, there is a another part of Thailand suffering from poverty in the deep south. Little has improved for them.

Let me leave you with these two quotes:
"The fact is that Thaksin's tenure was marked by sweeping poverty reduction, despite a relatively modest increase in GDP. And if you couple this observation with the strong evidence that broader access to debt financing gave more people access to durable goods such as housing, amounting to welfare by another name"

The Principle of Productivity of Debt asserts that the ratio of net gain in GNP to the gain in debt must never be allowed to become negative. If this principle is observed, then debt is properly harnessed and constrained, and is socially beneficial, It makes a positive contribution to economic growth and public welfare.

Antal E. Fekete
Professor Emeritus
Memorial University of Newfoundland

Tuesday, September 04, 2007

The debate on Thaksin, income gaps and PAD motivation

One of the latest and more interesting debates on the Thailand blog scene has been concerning the reduction in income gaps during Thailand's Thaksin years and the possible resentment of this by the PAD and Bangkok's anti Thaksin middle class groups.

The latest bout of debate was sparked by myself on bangkokpundit's article titled "Thaksin in a nutshell". Blogger Jotman posted a comment suggesting:

Thailand had made great progress in reversing income inequality. That this is one legacy of the policies of deposed Thai Prime Minister Thaksin, there can be little doubt. I wonder whether the trend also might help to explain why certain segments of Thai society strongly supported the coup d'etat. I have long suspected this. Perhaps noticing that the poor were quickly "catching up," there was some level of resentment on the part of better educated, middle class Thais.

To which I somewhat hastily replied:

I think the idea that "income gaps" were closing is grade A BS. It's another fabrication by apologists for the crook. The average wage did not increase for the rural folk under Thaksin. They were given debt relief, discounts on consumer good and bribes to vote. They did not get an increase in their farming salary.

I think you will find most middle class Thais disliked Thaksin because:

a)He was corrupt

b)He was arrogant almost beyond sane levels.

c)He put his family friends and own business ahead anyone or anything else.

Now, unlike some other bloggers I know, Bangkokpundit is devilishly detailed and will not accept polemics or a wikipedia scan. He ran a blog "Thaksin and income equality" which appeared to show I was wrong. There is some evidence to suggest that the middle class and rural poor income gap did close during the regime of Thaksin , but it is tenuous and in no way points to PAD motivation for protests.

I suggest reading the blog here. Now let's look in this with some more scrutiny.

First, pundit gives us four pieces of evidence to suggest Isaan workers gained on Bangkokians under the Thaksin regime. (Actually he gives five charts but he does not analyse the final one).
The first two charts are based on the Gini coefficient system. Pundit has already offered a quick definition:

The Gini coefficient is a measure of inequality of income distribution or inequality of wealth distribution.

Gini coefficients in Latin America are based on income; those in Asia are mainly based on expenditure, because reliable income data are often not available

Keep an eye on that bold text. We will return to it.

The next piece of information was a chart showing poverty rates by region in Thailand, and the final chart was a World Bank
report showing average income by region as a fraction of Bangkok income. I printed the chart and (without markers) I took a "best case scenario" of a seven percent gain by the north east on Bangkok.

So, it appears that on paper at least, there has indeed been some closure in the income gap, which is good news for anyone who believes in fairness. But we need to ask: just how accurate is this data and how much of this was the TRT government responsible for? And did the issue really cause resentment in Bangkok?

Actual salaries and their change

First, let's drop ratios and look at what this actually means in baht terms. Nearly every economical report from the TRT years tells us that a typical Thaksin voter in demographical terms (i.e. a rural Isaan worker) would have a monthly salary of four thousand baht.

Meanwhile, a typical PAD activist probably fits the description of my wife: a middle class office worker from Bangkok. The average salary for this demographical sector varies more by individual reports but thirteen thousand baht per month is a balanced figure.

So, if we use these two salary figures and trace the gap closure as given in the world bank report, the salary gain by Isaan farmers on Bangkokians is 910 baht.

Remember, this is a best case scenario. It also does not account for inflation. If we take the inflation rate of 3.5 % from the start to the finish of Thaksin's reign, that amount in real terms becomes even smaller.

Trends before and after Thaksin takes the helm

Now let us move on to some other data. Remember that many (not just Pundit, Jotman and Fonzi or the other Thaksin apologists in the blogosphere) have pointed to the reduction in numbers below the poverty line as a result of Thaksin's "war on poverty". Any reduction in poverty is great news, but it's worth noting that this has been a massive trend that was in place well before the reign of TRT. Let's take a look at this graph and commentary from a World Bank siteresources report.


Sorry the chart won't come out clearly but it the blue section represents Isaan and the years go from 1988 to 2002 in two years steps. So it tells us....

The poverty headcount fell from 48 percent in 1988 to 17 percent in 2002,
and in spite of population growth, the number of poor dropped from 9 million to 4 million people.

So it seems this was a trend well in force before the millennium. However there is another interesting factoid in this report. While the poverty count was dropping, productivity was also decreasing:

Economic growth, while decent by international standards, lacks behind Thailandu-s other regions. Since 1970, annual economic growth fell short by one percentage point compared to the national average, and the Northeastu-s contribution to Thailandu-s GDP fell from 16 percent to only 9 percent even though the population share remained constant at around one third.

The main factor behind lower economic growth is weak productivity gains. Much of the Northeastu-s human, physical and natural resources are absorbed in low-yielding activities. In 2004, the Northeast worker generated only one sixth of the value added of the average worker in Bangkok, Central, East and Vicinity, and just over two-thirds of the output of a worker in the North. And the gap to other regions is rising. Since 1990, labor productivity growth in the Northeast fell short by 0.4 percent compared to the North, by 0.5 compared to Thailand, and by a remarkable 7.7 percent compared to the East

As I have said before and will repeat later, I think the idea that Bangkokians staged anti-government protests out of resentment is audacious and insulting. However, let me return an equally ludicrous and based on circumstantial evidence idea: Bangkok and the middle classes took to the streets in protest because Isaan workers were seeing an increase in wages even when their productivity was dropping! Bangkokians felt this was unfair and wanted to see people rewarded for their work rate! How's that for an equally preposterous and silly theory?

Now it's time to examine another important topic and a concern that has weighed on me for this whole debate:

Validity of the data.

There are three concerns here. Firstly, how are the salaries being measured? Many farm workers don't have an official salary. They either get cash in hand or simply shelter and food. This report (the same as the one previously quoted) tells us:

Less than two fifths of Northeast workers earned a wage at the age of 35, and just over one fifth earned a monthly wage. This compares to two thirds and one half in Bangkok, respectively. These differences in wage employment rates link back to occupation and education, as wage employment is more common outside of agriculture and among skilled workers.

There are several ways to interpret these comments and they are not accompanied by graphical data. However, it raises a crucial question: how did Thailand or the World Bank collate this data? Is it taken from a census? If so, how did the census measure undeclared income? It seems very likely that a lot of salaries paid in Isaan are informal and undeclared (to a greater proportion than Bangkok).

If the data was not census data, was it collected by government figures or the BOT? If so can we put personal views aside and simply accept that a government that sold itself strongly on aiding the poor may have vested interests in use of wealth data collected from the area?

It seems possible that the data collated is taken purely from declared salaries. Declared salaries are likely to be higher than those undeclared and the proportion of undeclared salaries in Isaan is likely to be higher than Bangkok. Thus, we could be missing a substantial set of data in this equation.

And yet, we still have not touched on another crucial factor:

Household debt.

Household debts have been raising steadily in Thailand , however the jump from 2002 (Thaksin's first full year) at 84,603 baht to 130,881 baht in 2003 was well above a yearly average. (Pasuk and Baker 2004, The Nation 2004).

Such figures could be cause for alarm. Yunyong Thaicharoen, Kiatipong Ariyapruchya, Thitima Chucherd produced an excellent paper called ."Rising Thai Household Debt: Assessing Risks and Policy Implications" which , initially, puts our mind at rest. Data from part three tells us that farm workers are the only group not to have seen an increase in household debt from 2002-2004.

But things get worse from there on in many respects. Further data confirms that north east residents have the highest percentage who feel their debts are a "heavy burden". Worse still, the agricultural group appear to be at highest (Authors named above)

OK So the charts don't appear to be happy about my cut and paste technique. But what this chart tells us is:

Two groups of households that perhaps are potentially more susceptible to over
optimism in income prospects is the farmer and labourer in the agricultural sector. A deeper look at the agricultural sector indicates a dissonance between cyclical trends and farmers' expectations. Over the past few years, farm income has risen markedly as a result of favourable price trends in major crops.[Did Thaksin have an effect on crop prices?] In 2002, farm income has grown considerably. Given recent favourable income growth and assurances from the government, these farmers may have increased their borrowing. The figure 4.15 on farm expectations reveals that a substantial portion of farmers in the rice, rubber, and sugarcane sectors expect prices to rise. These farmers may be particularly at risk of over-borrowing and debt stress if they have overly optimistic projections of their income path

Of course this risk cannot be directly attributed to Thaksin, but it would surely be fair to say that excess should not be encouraged in a group that are at risk. However, Pasuk Phongpaichit in her paper "Financing Thaksinomics" confirms that Thaksin diverted a huge amount of credit to the agricultural workers. In addition to agrarian debt moratoriums, we also have the Million Baht Village fund, low end consumers goods such as subsidised computers and the People's Bank loan scheme.

The most concerning statistic of all however is:
Quasi-Fiscal Activities 2002--3
(million baht)

Source: (Dr Pasuk)

Looking at this quasi fiscal expenditure (i.e. money spent from state coffers ) we can see SME loans (for small businesses) People's Bank (credit for those in low income gaps) , Community enterprise loans and homes for the poor.

At this point, please recall the Gini coefficient for Asia is based on expenditure. Millions upon millions of baht was spent from state coffers in quasi-fiscal financing for expenditure in Isaan and other rural areas! What this means is that while expenditure
by Isaan citizens may have increased , it did so due to huge state lending and quasi - fiscal financing. This increases the risk of financial shock on the borrowers in the event of interest rates being increased. And as noted by both Baker and the Thaicharoen, Ariyapruchya and Chucherd team, Thai interest rates are at their lowest for years and cannot be sustained at such a low level.

In conclusion
It appears that Thaksin Shiniwatra and TRT did indeed take steps to close the income gap between the rural poor of north east Thailand and the middle class wage earners primarily based in Bangkok. However, Thaksin was not a miracle worker and the actual tangible increase in wealth by the rural workers was less than one thousand baht in real terms and was depreciated by inflation.

Household debts in Isaan have increased in line with the rest of Thailand, however the burden appears to be greater for this group and their risk has been increased tremendously by lax spending with quasi fiscal funding by the previous government.

It is unlikely that Bangkok's middle classes took to the streets in protest at a decrease in salary gaps.