It's not rice policy that's rotting our social fabric
October 16, 2012 00:00
On the subject of the rice mortgage scheme, some viewpoints that might be relevant:
1. The poor of Thailand are rapidly improving their lot. Their exit from poverty is part of an East Asian regional trend that one author described as “unprecedented in world history”. From the 1960s to 2007 the percentage of rural households living below the poverty line went from 96 to 10 per cent. It is a fallacy to think that the poor remain poor and that the government is responsible for this. In fact the opposite is true. Various Thai governments in the past have faced up to the unenviable task of “bootstrapping” the poor up from abject poverty.
2. Back when Thailand was hardly industrialised, it was rice exports that was a significant foreign-exchange earner. We needed the precious foreign currency to buy equipment and know-how to jump-start the country’s development. Not only did we tax rice exports to generate government revenues, we also imposed duties on the import of fertilisers. This so-called “urban bias” continued into the mid-1980s. It was estimated that at its peak in the early 1970s the price of rice was about 60 per cent lower than it would have been in a free market.
3. The farmers’ protests of the old days were influenced by communism. The protesters fought for the overthrow of the system. Today’s farmers are asking for more support – they want to work within the system. Academic and author Andrew Walker relates how the most sought-after skill in villages across Thailand is writing project proposals. A politician is judged by his ability to attract project funds from outside sources.
4. I think this is the most important point. Income distribution in Thailand has been more unequal than that of many of our neighbours and this inequality is getting worse. You need only to glance around the roads of Bangkok and observe all the luxury cars to understand this. The sky is not falling because of the mortgage scheme but because of this shameful inequality.
The market mechanism is not irreparably damaged by the mortgage scheme, it will bounce back, that is the genius of market forces. What is in danger of being irreparably harmed is the social contract, the shared understanding, the common cause that we took for granted.
All these do not mean that the rice mortgage scheme as implemented by Pheu Thai is an unqualified good, but the other viewpoints deserve to be mentioned.