turmoil challenging macroeconomic management

Macroeconomic management faces a challenge with the growth of participatory democracy against a backdrop of political chaos.

In the current climate of political uncertainty, it is almost impossible to manage an economy efficiently and productively. The economy has become a hostage as political tension remains high. It has been under threat from both the stubborn stance of an elected government and the anti-government People's Alliance for Democracy (PAD) protesters.

Participatory democracy is a broad base of people actively participating in decision making, not merely casting their ballots under a representative democracy, and the PAD insists that it has a political right to occupy Government House in the name of participatory democracy.

Prime Minister Samak Sundaravej cited the need to protect democracy as his reason for declaring a state of emergency in Bangkok. Judging from Samak's stance, he largely upholds the principle of representative democracy, a formal system, which critics argue is not truly democracy.

The soft tone of Army chief General Anupong Paochinda towards anti-government protesters suggests that he recognises participatory democracy, along with the large numbers of the population who judge political events on a case-by-case basis, not fully supporting either side. Meanwhile others view active participation that involves violence as a poor model for a civic movement. Sceptics consider it to be simply mob rule.

Under these circumstances, most people become quite concerned over any adverse impact on the economy.

Before we can find answers we have to look at how the situation has developed. The government said the coup in 2006 was a setback for the economy and promised to boost confidence. Many people share that view. The government has implemented two economic packages worth close to Bt100 billion.

However the PAD claims that the government is a proxy for ex-premier Thaksin Shinawatra. They accuse the government of attempting to amend the Constitution so as to whitewash Thaksin and his colleges who face corruption charges. In other words, they accuse the government of failure in the area of good governance.

Key policy-makers, such as Finance Minister Surapong Suebwonglee, have made the situation worse by manipulating recruiting processes, allowing controversial figures to be appointed to boards of regulators supervising financial markets. The public also has doubts over the Revenue Department's move to ask Siam Commercial Bank to release frozen Shinawatra family funds.

The continuation of populist policies - under which the middle class claim policy-makers waste their tax money - rubs salt into the wounds. In the eyes of the public, Samak also failed to find competent ministers to work with him.

Trying to compromise with the public's demand for professionals to run economic policies, Samak recently appointed Virabongsa Ramangkura - whose expertise has been recognised - as his chief economic adviser. However Virabongsa has been attacked over conflict of interest as he still hold several executive posts in private and financial firms. Thus, the question of good governance arises again.

Having little faith in the terms of participatory democracy in Thailand, Virabongsa often said that corruption cannot be avoided, "but if we cannot implement economic policies in a timely way, such as mega-project investment, it would mean much serious trouble for the economy", he warned.

Many others have expressed their support for independent anti-graft institutions and the courts to clean up the many corruption charges rather than resorting to street protests, yet the anti-government protesters have pointed to the government's attempts to intervene in independent organisations. Some of these independent institutions are the products of previous participants being actively involved in shaping the political and economic landscape.

Different priorities or interests among civic groups make it hard to find a consensus on pressing issues. However, good policies have to take into account everyone's concerns and welfare.

Though the current crisis may come to a natural conclusion in the near future the force of participatory democracy is likely to expand further. This will pose a challenge for managing economic policy when many people are actively involved in decision-making processes.

Learning from past mistakes and understanding everyone's needs, policy-makers may find appropriate solutions on how to run the economy in an environment of growing participatory democracy, while the sphere of policy-makers will not only cover those in political power but expand to include other parties.