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24-05-2014, 01:02 PM
(This post was last modified: 24-05-2014, 01:05 PM by dzwm87.)
Thailand's political crisis is complex because Thaksin, to be fair, did contribute to the national economy by promoting populist policies which favored the northeast Thailand community. It is not so clear cut like the Arab Spring and we can't fault him because he has the incentive to do so since this is a one-man-one-vote democracy system.
And the rice pledging scheme was one of his populist strategies which Yingluck spearheaded. This was one of her bargaining chips during the 2011 elections where she would guarantee an above market clearing price for the rice farmers or about 40% of Thailand's population. Her strategy was to hoard the rice, allow the market price to surge (due to undersupply situations) and then sell it off at a much higher price. Of course, short term result was positive, rice farmers have higher purchasing powers and that drove the economy...but only for a while. The policy backfired when market price didn't reach their expectation while rice hoard is starting to rot. Constraints were also beginning to show in their fiscal budget.
And we all know what happened later... The policy was not sustainable in the first place.
What is troubling is how the populist approach has distorted the market in Thailand. And when the reversal happens, it can have a big chain effect. A classic example was the 2012 first car buyer scheme where the government simply brought forward future purchasing power. I don't know what is the proportion of spending by rural households. But when the rice pledging scheme ceased, they will no longer enjoy such a high income during 2011-2013 and they will have to cut their consumption.
"Criticism is the fertilizer of learning." - Sir John Templeton
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