Inequality and politics

In a recent PPT post, we commented on an academic’s account of the politics of inequality. In this post, we look at a Reuters report on how politics is impacting inequality in potentially a different way.

The report notes that:

Growth in Thailand, Southeast Asia’s second-biggest economy, has begun to slow, but the economy of the northeast is in the grip of a boom. The economic renaissance of “Isaan,” Thailand’s poorest and most populous region, has coincided with expansionary policies—from wage increases to farm subsidies—that are enriching an area at the heart of a “red shirt” protest movement that backed Prime Minister Yingluck Shinawatra in a 2011 election. As a new middle class emerges, investors and companies are taking note.

While much of the economic potential “may never be realized if a crucial 2.2 trillion baht ($71 billion) infrastructure program becomes a casualty of the feuding between Yingluck’s ruling Puea Thai Party and its opponents,” the poor and long-neglected northeast has seen change under this government and other pro-Thaksin Shinawatra administrations.

Incomes are said to have risen dramatically and investment is shooting up, although much of it is said to be “concentrated in property—from high-rise condominiums to town houses and shopping plazas.”

The report states: “Politics explains part of what is going on.” It observes that the 300 baht minimum wage rise was a huge boost; it refers to earlier Thaksin-era policies as contributing, and it mentions “subsidizing agricultural products such as rice, tapioca and rubber.” Business executives are cited saying that the “political calm [that] has returned since Yingluck’s election win” also makes a difference.

So did the floods of 2011, which sent businesses scurrying to higher ground:

… Thai manufacturers such as CP All Pcl, Thai Beverage Pcl and Siam Cement , plus foreign firms with Thai plants such as Panasonic Corp, Kraft Foods Group Inc and Fraser and Neave Ltd are gravitating toward the northeast.

Politics matters for the people of the northeast and it potentially impacts inequality.