Thailand's Fiscal Economic Stimulus Policy

Thailand's Fiscal Economic Stimulus Policy

Posted by Tawan , Reader : 304 , 12:14:11
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Recent blogs have raised some very interesting questions. I have been trying to answer this myself but I cannot get past Government 101 maybe you can help.
As far as a fiscal stimulus package for the Thai economy, it follows the same path as the U.S. that just passed a fiscal stimulus package to avoid a recession. The decision for the U.S. is plain to see because the consumer makes up 80% of GDP.
This raises the question will a fiscal stimulus package bring back politics and business as usual? I may be wrong but is this not a basic principle of Democracy? The people elect representatives to represent their own special interests. A Democracy requires that the majority rules. A majority is 51% so the majority gets the spoils while the 49% minority waits for the crumbs that are left over or until the trickledown effect kicks in and wealth is more evenly distributed. How long does this take?

Increasing exports has been Asia’s main economic engine for a long time while consumer demand has been discouraged and savings encouraged. Today’s main benefactors of this policy are Japan and China. Japan has always exported its way out of trouble. Although, according to Bloomberg Japan is already in a recession. With Japan being in a recession there is not much hope for foreign investment to boast Thailand’s economy. Japan was the main investor after 1997 in growing Thailand’s export industry and also allowing Thailand to build up her foreign reserves.

Decoupling from the U.S. economy requires that Asia develops its domestic demand as India and China are doing. So the old tool of exporting Thailand out of trouble is not going to work for Thailand or Japan. Japan is solving this problem by making sure its labor resources are being trained in advanced knowledge based economy not just knowledge based. An appreciating baht and a weaker dollar has led to Thailand diversifying her exports away from the U.S. that only requires the cheapest price but this diversification to Europe and Japan that requires quality instead of the cheapest price means it is a much smaller niche market for Thai exports. The main question for Thai exports is what comparative advantage do Thai exports have? There are only so many widgets that a country can export and comparative advantages are won and lost quickly in a Globalized economy. So what widgets that Thailand can export that others are not doing?

Globalized labor markets are also following incremental steps from vocational skills, knowledge based to advanced knowledge based that all require a passport and a willingness to work anywhere in the world not just within one’s own borders. Thailand has been exporting labor for a long time now and importing labor to keep domestic prices down.

External problems abound from 100 dollar barrel of oil to the world wide credit crunch. Any 5 to 10 year economic development plan has so many variables to plan for.
Democracy itself is changing at a faster rate than our Grandparents day. We have only enjoyed a brief time of Democracy. The Great Depression was not so long ago with our Grandparents standing in soup lines and begging for pennies.
An alarming change in Democracy is the increasing use of Executive powers. The theory that Congress the people’s representatives are not qualified to make decisions erases the checks and balances between the Executive branch, Judicial and Congress. That one man only is right and actions are not allowed to be debated in Congress because of Executive powers. The master of words the Office of Legal Council make all covert actions and decision by the Executive branch legal in the written laws. No accountability or responsibility is taken into account because all actions are legal until overturned later by the Supreme Court. This is unchartered territory which will produce legalized Dictators by the OLC Master of the written word.

For Thailand to be afraid of pork barrel practices called earmarks in the advanced Democracies and are legal because they are law, does not make sense after all Democracy is electing representatives to promote your special interest.