A welfare bill will show Thailand cares
By Chang Noi
Should we be spending money on welfare? Thailand’s first welfare bill will come before parliament soon. It is likely to be controversial.
The bill proposes to set aside 3 billion baht from the annual budget to assist the really needy in society including the disabled, neglected children, and aged. The Ministry of Labour will oversee the use of this fund. Community organisations, NGOs and foundations will apply to the Ministry for money to supplement their own programmes.
Is this a good bill? Can we afford it? Is welfare a good idea?
In some advanced countries, welfare has become a dirty word. It is criticised as giving money to people to make them lazy. It is blamed for swelling government budgets, resulting in high taxes which discourage private enterprise. Many people in Thailand want to use these arguments against this bill.
But there are some members of our society who simply cannot help themselves. Some have been disabled but still deserve a decent livelihood. Some like the blind or abandoned kids have the potential to contribute to society if they first get a little help. The welfare scheme aims to provide basic help, as part of the society’s compassion.
Traditional society in Thailand provided this help in various ways. Families looked after their less fortunate members. Villages cared for those the family could not. Sons which the family could not afford to support were sent to be temple boys (dek wat). Families which faced hunger because of harvest failure could beg rice from other households without any social stigma.
As our society becomes more commercial and more urban, many of these traditional forms of social welfare wither away. Communities are torn apart by migration and social change. Even the family becomes less effective at looking after all its members. More and more of the less fortunate are left without a social safety net.
We can ignore such people. Or we can say: the quality of our society is measured by how we treat all its members, especially those who cannot help themselves. If economic progress and social change mean that old forms of community welfare no longer work, then the responsibility falls on government.
But will this new scheme have any impact on Thailand’s economic growth? Will it be wasteful to spend government funds on a scheme which brings no economic return?
Of course the fund needs to be managed well. Here we can study the experience of other countries. Schemes which are over-centralised tend to grow bloated, bureaucratic and uncontrollable. We should not centralise everything under the main bureaucracy. The Ministry of Labour should manage the scheme. But implementation should be dispersed to grassroots organisations in the villages and urban communities.
Overseas experience also tells us to be wary of the long-term impact on the economy. Welfare schemes can become monsters with lives of their own. We will need a research and monitoring unit which constantly calculates the costs of various welfare programmes, and their long-term impact on the economy.
But can we afford it? What impact will the bill have on the government budget?
Here the answer is very simple. The welfare fund will cost less than all the taxes the revenue department fails to collect each year because of loopholes; less than the amount the government fails to spend each year because of inefficiency; and probably no more than a tail fin on the military’s proposed communications satellite.
Since 1988, the government has been collecting more revenue than it spends. Some of this surplus is planned. Some has come about because government departments fail to spend their total allocation. The left-over is piling up as fiscal surplus. We have used some to pay off our external debts. But there is still a lot left each year. This is a waste. Would it not be better to devote some of this surplus to people who really need it?
Corporate profits taxes now yield around 150 billion baht a year. But every year, around 90 percent of all companies claim to make a loss and pay no tax at all. Given Thailand’s booming economy, do we think these losses are likely?
VAT yields almost another 150 billion. But the Revenue Department reckons it loses another 30 billion baht because of corruption over VAT rebates.
Other sales taxes including excise yield another 150 billion. But it is said that one company alone evades around a billion every year.
Just a little more efficiency by the Revenue Department could cover the costs of the welfare scheme several times over.
The budget allocation for defence is around 100 billion baht. In addition, the armed forces have proposed arms purchases totalling almost 75 billion. The largest item is the military satellite costing almost 30 billion. From experience, a significant chunk of such arms budgets (usually around 10 percent) will be paid in commission. The commission on the satellite alone could pay for one year of the welfare scheme.
Corruption costs us much more than compassion.
We can pay for the welfare bill easily just by cutting out some of the corruption, inefficiency and waste in the collection and expenditure of the government budget. At the same time we would be transferring funds from people who don’t deserve them to people who do.
Chang Noi says: support the welfare bill. It’s a measure of the quality of our society.
Source : The Nation , May 3, 1996
Showing posts with label Chang Noi - 1996. Show all posts
Showing posts with label Chang Noi - 1996. Show all posts
3/10/2008
Why the interest in an "Asia Model" is dangerous
The Asian model is more of a fantasy
By Chang Noi
The west is looking east. The east should look out.
Not so long ago, Asia looked to Europe and the US to learn about economic development. Now some Europeans and Americans argue that the "Asia Model" may be the cure for the western recession.
Should we be flattered by this reversal? Actually, no. We are in deep trouble.
The western economies slowed down in the 1970s after the oil crisis. Now they cannot seem to get going again. For many years, the business lobby argued that the problem was too much government. High taxes reduced business investment. Lavish social security schemes made workers lazy. Too many regulations hamstrung enterprise.
Political leaders like Reagan and Thatcher played to this mood. They reduced taxes on companies and on the rich to encourage investment. They cut back welfare schemes. They justified their policies with new theories of "supply-side" economics which said less government intervention would end the recession.
But it didn’t work. The recession went on. Thatcher was ditched. Reagan’s successor was defeated. Supply-side economics was discredited as shallow nonsense.
This is the background to the rise of the Asia Model. The arguments brought out to back the Asia Model are - surprise, surprise - the same that were once used to justify the supply-side theory. Asian economies are booming because they have less tax, less social security, less regulation.
After the Asem meeting, a US-owned magazine instructed the Europeans to learn from the Asian example: "Asian savings rates provide a pool of investment funds while European social security and other welfare programmes discourage work and risk-taking and even threaten to ruin national finances... Economic policy in Asia remains overwhelmingly aimed at promoting growth. In Europe, redistribution and industrial policy often seem top of the agenda."
Now of course it is true that most Asian boom economies have less tax, less social security, less regulation than the advanced countries of USA and western Europe. But it is not true that Asian economies are booming because they have less tax, social security, regulation. (And probably even less true that western countries would escape recession by reducing tax, social security and regulation).
The fact is: the conservative business lobby in the west would like to reduce tax, social security and regulation because that would increase profits. For a time, this lobby persuaded some governments to agree under the shabby cover of supply-side economics. Now it is trying again with the Asia Model.
Why is this so dangerous for us?
First, because we are in danger of believing this Asia Model. Such ideas find their way into economics textbooks, from there into the heads of students who go to study in the west, and from there into policies. They may also shape the actions of the international bodies which regulate the international economy.
Second, because these ideas are just as attractive to businessmen here as they are in the west. The Asia Model suggests that governments can help growth by doing as little as possible. It argues that it is a mistake for governments to pay attention to things like income distribution or social security. These arguments appeal to businessmen here. And to many economists, journalists and technocrats too. Some have criticised the NESDB’s Eighth Plan for trying to balance economic growth and greater social equity. The NESDB, they contend, should stick to growth. A local magazine added that NESDB should leave the job of having a social conscience to the Buddhist Sangha.
Third, because the Asia Model is two parts truth and three parts pure fantasy. And such fantasies make it more difficult for us to study what is really happening in the Asian boom economies. Thailand can learn a lot from countries like Singapore, Korea, Taiwan which got onto the escalator of rapid growth a few years ahead of us.
Fourth, because these countries did not concentrate solely on growth and let social matters look after themselves. Rather, they recognised that very rapid growth leads to very drastic and destabilising social changes. These social changes, if they are not managed well, can result in political explosions which wreck growth. The world is full of case studies of this pattern - including several Latin American countries, Nigeria, and the Philippines.
Being an economic shooting star for a few years is not so difficult. Sustaining growth depends on how well the resulting strains are managed.
The governments in the successful Asian boom economies do not concentrate only on promoting economic growth. Japan spends a fortune on subsidies which close the gap between rural and urban incomes. Singapore has possibly the most elaborate social security system in the world. Western countries are now studying it. After the first spurt of industrial growth, Korea’s planners made it a priority to reverse the widening gap between rich and poor. Through sensitive social policies, Korea went from being one of the most unequal to one of the most equal societies in a handful of years.
These countries invest expertise and resources in preventing growth leading to social division.
So we have a choice. We can learn from the experience of our Asian neighbours. Or we can be fooled by the conservative western fantasy of an Asia model in which business booms because government leaves the society alone.
Chang Noi says: don’t be fooled by the Asia Model. The strains in our society are too obvious. We need to manage them well.
Source : The Nation , April 27, 1996
By Chang Noi
The west is looking east. The east should look out.
Not so long ago, Asia looked to Europe and the US to learn about economic development. Now some Europeans and Americans argue that the "Asia Model" may be the cure for the western recession.
Should we be flattered by this reversal? Actually, no. We are in deep trouble.
The western economies slowed down in the 1970s after the oil crisis. Now they cannot seem to get going again. For many years, the business lobby argued that the problem was too much government. High taxes reduced business investment. Lavish social security schemes made workers lazy. Too many regulations hamstrung enterprise.
Political leaders like Reagan and Thatcher played to this mood. They reduced taxes on companies and on the rich to encourage investment. They cut back welfare schemes. They justified their policies with new theories of "supply-side" economics which said less government intervention would end the recession.
But it didn’t work. The recession went on. Thatcher was ditched. Reagan’s successor was defeated. Supply-side economics was discredited as shallow nonsense.
This is the background to the rise of the Asia Model. The arguments brought out to back the Asia Model are - surprise, surprise - the same that were once used to justify the supply-side theory. Asian economies are booming because they have less tax, less social security, less regulation.
After the Asem meeting, a US-owned magazine instructed the Europeans to learn from the Asian example: "Asian savings rates provide a pool of investment funds while European social security and other welfare programmes discourage work and risk-taking and even threaten to ruin national finances... Economic policy in Asia remains overwhelmingly aimed at promoting growth. In Europe, redistribution and industrial policy often seem top of the agenda."
Now of course it is true that most Asian boom economies have less tax, less social security, less regulation than the advanced countries of USA and western Europe. But it is not true that Asian economies are booming because they have less tax, social security, regulation. (And probably even less true that western countries would escape recession by reducing tax, social security and regulation).
The fact is: the conservative business lobby in the west would like to reduce tax, social security and regulation because that would increase profits. For a time, this lobby persuaded some governments to agree under the shabby cover of supply-side economics. Now it is trying again with the Asia Model.
Why is this so dangerous for us?
First, because we are in danger of believing this Asia Model. Such ideas find their way into economics textbooks, from there into the heads of students who go to study in the west, and from there into policies. They may also shape the actions of the international bodies which regulate the international economy.
Second, because these ideas are just as attractive to businessmen here as they are in the west. The Asia Model suggests that governments can help growth by doing as little as possible. It argues that it is a mistake for governments to pay attention to things like income distribution or social security. These arguments appeal to businessmen here. And to many economists, journalists and technocrats too. Some have criticised the NESDB’s Eighth Plan for trying to balance economic growth and greater social equity. The NESDB, they contend, should stick to growth. A local magazine added that NESDB should leave the job of having a social conscience to the Buddhist Sangha.
Third, because the Asia Model is two parts truth and three parts pure fantasy. And such fantasies make it more difficult for us to study what is really happening in the Asian boom economies. Thailand can learn a lot from countries like Singapore, Korea, Taiwan which got onto the escalator of rapid growth a few years ahead of us.
Fourth, because these countries did not concentrate solely on growth and let social matters look after themselves. Rather, they recognised that very rapid growth leads to very drastic and destabilising social changes. These social changes, if they are not managed well, can result in political explosions which wreck growth. The world is full of case studies of this pattern - including several Latin American countries, Nigeria, and the Philippines.
Being an economic shooting star for a few years is not so difficult. Sustaining growth depends on how well the resulting strains are managed.
The governments in the successful Asian boom economies do not concentrate only on promoting economic growth. Japan spends a fortune on subsidies which close the gap between rural and urban incomes. Singapore has possibly the most elaborate social security system in the world. Western countries are now studying it. After the first spurt of industrial growth, Korea’s planners made it a priority to reverse the widening gap between rich and poor. Through sensitive social policies, Korea went from being one of the most unequal to one of the most equal societies in a handful of years.
These countries invest expertise and resources in preventing growth leading to social division.
So we have a choice. We can learn from the experience of our Asian neighbours. Or we can be fooled by the conservative western fantasy of an Asia model in which business booms because government leaves the society alone.
Chang Noi says: don’t be fooled by the Asia Model. The strains in our society are too obvious. We need to manage them well.
Source : The Nation , April 27, 1996
Why is the freedom of the media important?
Why a free press is so important
By Chang Noi
Why is the freedom of the media important? Is it just a principle for the sake of principle? Or is there a practical value?
Consider this recent report: "The children and grandchildren of politicians are noted for their opulent and vulgar lifestyle; many are simply criminals. Most politicians have something to hide; hence the guilty are not fearful of being caught by other politicians. They also have become disdainful of public opinion, which they see mainly as a problem of media management."*
The passage is not about Thailand. It was written about India and the Surendra Kumar Jain corruption scandal.
Jain became one of India’s richest contractors and businessmen by systematically bribing politicians on a massive scale. He kept a record of all his bribes, and by chance these fell into the hands of the police. Still, nothing happened for almost four years. Only when a TV journalist publicised the story and petitioned the supreme court, did things begin to happen. Now 42 politicians and bureaucrats, including seven Cabinet members, are under charge for accepting large bribes from Jain. And more cases are expected.
Only when a TV journalist ....
The famous political scientist, Samuel Huntington, has a very simple definition of American democracy: "a way of preventing any individual or group from achieving too much power". Parliament was first invented in England to prevent the king spending tax revenues without any control. The US constitution was devised to check the power of both politicians and bureaucrats.
Democracy has arisen because, as the saying goes, "power corrupts", so we need a system to check and limit power.
Thailand has a tradition of authoritarian rule - first under absolute monarchy, later under military dictatorship. The new elected politicians are not very enthusiastic about limiting this authoritarianism. Instead they try to keep it intact, and grab it for themselves. Elections do not act as much of a check on the abuse of power. And parliament only does to a limited extent.
That is where the media have come in.
Thailand’s press has a long tradition of acting as a "public court" to expose the abuse of power. The press first became important in the 1920s when it expressed a growing popular feeling that the old absolute monarchy needed to be controlled. It was bottled up again through the long period of military rule. But it emerged again in the 1970s to articulate criticism against military dictatorship. Since then, the press has gradually grown into its role as a public watchdog.
From the early days of radio in the 1930s, government understood how much more powerful electronic media are than the printed word. They made sure radio and later TV were under close government control. But from the mid-80s, the drive for press independence filtered into the electronic media. Individual programmes tested the possibilities for airing independent views.
Now Thai politics sometimes seems to be just a procession of scandals - over share fixing, illegal land deals, vote-buying, stealing trees. That is because those in power consistently try to take advantage of authoritarian power, and the media offer one of the few ways available to oppose them. Because police, judiciary and other forms of check are so often ineffective against the politically powerful, the media have become a final court of popular appeal.
It is not necessarily a very just or effective court. Journalists can get things wrong. They too can be manipulated and bought. The press has no weapon of authority except public shame. And most politicians have developed thick skins and a very limited sensitivity to shame. I did not buy the votes, somebody else did. The gift cheques were repayments for loans. It’s a coincidence so much of the land is owned by my relatives. And so on.
The media may not be very effective, but right now they may be the best form of democratic limitation we have got.
The unmasking of the Jain scandal in India was the joint work of TV journalism and the judiciary. The media made the issue public. The supreme court took up the issue and charged the politicians. Now the public is praising the judges as defenders of morality and democracy.
The Jain case is following a pattern similar to the recent "Clean Hands" saga in Italy. There, a single case about political corruption was taken up by both press and judiciary, and snowballed into a massive political house-cleaning.
This same combination of media and judiciary may not work here. India’s powerful supreme court was inherited from the British tradition of separation of powers. The Italian magistracy also has a tradition of independence from politics. In Thailand, the judiciary has rarely shown much independence. Most see it as just another part of a single government machine.
But there is a small glimmer of hope in the Buriram election case. Initially the police decided that 11 million baht and stacks of candidate cards was not sufficient evidence of vote-buying. They dropped the case. But the press continued to focus on the issue. And eventually the Office of the Attorney General launched charges.
Of course the case may still fail. This is still a long way away from the Jain scandal or the Clean Hands saga. But it is a start.
So in the end, the issue of media freedom comes down to this. If we feel confident about those in power, if we think the current limits on power are sufficient, then maybe the freedom of the media is not so critical. But if we like Huntington’s definition of US democracy as a system for limiting abuse of power, and if we have doubts about the effectiveness of other limits, then maybe media freedom is very important to us at this moment. Very important.
[* Ashis Nandy in Newsweek, 4 March 1996.]
Source : The Nation , April 1, 1996
By Chang Noi
Why is the freedom of the media important? Is it just a principle for the sake of principle? Or is there a practical value?
Consider this recent report: "The children and grandchildren of politicians are noted for their opulent and vulgar lifestyle; many are simply criminals. Most politicians have something to hide; hence the guilty are not fearful of being caught by other politicians. They also have become disdainful of public opinion, which they see mainly as a problem of media management."*
The passage is not about Thailand. It was written about India and the Surendra Kumar Jain corruption scandal.
Jain became one of India’s richest contractors and businessmen by systematically bribing politicians on a massive scale. He kept a record of all his bribes, and by chance these fell into the hands of the police. Still, nothing happened for almost four years. Only when a TV journalist publicised the story and petitioned the supreme court, did things begin to happen. Now 42 politicians and bureaucrats, including seven Cabinet members, are under charge for accepting large bribes from Jain. And more cases are expected.
Only when a TV journalist ....
The famous political scientist, Samuel Huntington, has a very simple definition of American democracy: "a way of preventing any individual or group from achieving too much power". Parliament was first invented in England to prevent the king spending tax revenues without any control. The US constitution was devised to check the power of both politicians and bureaucrats.
Democracy has arisen because, as the saying goes, "power corrupts", so we need a system to check and limit power.
Thailand has a tradition of authoritarian rule - first under absolute monarchy, later under military dictatorship. The new elected politicians are not very enthusiastic about limiting this authoritarianism. Instead they try to keep it intact, and grab it for themselves. Elections do not act as much of a check on the abuse of power. And parliament only does to a limited extent.
That is where the media have come in.
Thailand’s press has a long tradition of acting as a "public court" to expose the abuse of power. The press first became important in the 1920s when it expressed a growing popular feeling that the old absolute monarchy needed to be controlled. It was bottled up again through the long period of military rule. But it emerged again in the 1970s to articulate criticism against military dictatorship. Since then, the press has gradually grown into its role as a public watchdog.
From the early days of radio in the 1930s, government understood how much more powerful electronic media are than the printed word. They made sure radio and later TV were under close government control. But from the mid-80s, the drive for press independence filtered into the electronic media. Individual programmes tested the possibilities for airing independent views.
Now Thai politics sometimes seems to be just a procession of scandals - over share fixing, illegal land deals, vote-buying, stealing trees. That is because those in power consistently try to take advantage of authoritarian power, and the media offer one of the few ways available to oppose them. Because police, judiciary and other forms of check are so often ineffective against the politically powerful, the media have become a final court of popular appeal.
It is not necessarily a very just or effective court. Journalists can get things wrong. They too can be manipulated and bought. The press has no weapon of authority except public shame. And most politicians have developed thick skins and a very limited sensitivity to shame. I did not buy the votes, somebody else did. The gift cheques were repayments for loans. It’s a coincidence so much of the land is owned by my relatives. And so on.
The media may not be very effective, but right now they may be the best form of democratic limitation we have got.
The unmasking of the Jain scandal in India was the joint work of TV journalism and the judiciary. The media made the issue public. The supreme court took up the issue and charged the politicians. Now the public is praising the judges as defenders of morality and democracy.
The Jain case is following a pattern similar to the recent "Clean Hands" saga in Italy. There, a single case about political corruption was taken up by both press and judiciary, and snowballed into a massive political house-cleaning.
This same combination of media and judiciary may not work here. India’s powerful supreme court was inherited from the British tradition of separation of powers. The Italian magistracy also has a tradition of independence from politics. In Thailand, the judiciary has rarely shown much independence. Most see it as just another part of a single government machine.
But there is a small glimmer of hope in the Buriram election case. Initially the police decided that 11 million baht and stacks of candidate cards was not sufficient evidence of vote-buying. They dropped the case. But the press continued to focus on the issue. And eventually the Office of the Attorney General launched charges.
Of course the case may still fail. This is still a long way away from the Jain scandal or the Clean Hands saga. But it is a start.
So in the end, the issue of media freedom comes down to this. If we feel confident about those in power, if we think the current limits on power are sufficient, then maybe the freedom of the media is not so critical. But if we like Huntington’s definition of US democracy as a system for limiting abuse of power, and if we have doubts about the effectiveness of other limits, then maybe media freedom is very important to us at this moment. Very important.
[* Ashis Nandy in Newsweek, 4 March 1996.]
Source : The Nation , April 1, 1996
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