Forrest E. Cookson is an economist and Tom F. Joehnk writes for The Economist and they have an op-ed at the New York Times that assesses the military dictatorship. It begins:
Fifteen billion dollars. That’s roughly the price tag of the coup d’état to date. And it’s the difference between the Thai economy, Southeast Asia’s second-biggest, stagnating, as it is now, or its chugging along at 4 percent, its average growth rate since 2001.
It takes this further:
Now the economic consequences of the military takeover have become plain. The protests that precipitated the coup had already slowed growth, partly because of blocks on government borrowing, stalled exports and a restrictive monetary policy. And the situation has hardly improved since.
The authors observe that “the return to old-fashioned autocracy threatens to bring economic near-stagnation and will likely increase income inequality.”
Why is this? They say: “… in a bid to scour the system of Mr. Thaksin’s influence, the generals have been turning their backs on many policies favored by his government, including those that worked.” They elaborate:
Mr. Thaksin’s signature economic achievement was to encourage consumption among lower-class people: His government provided access to affordable health care, gave out credits to rural communities, and created a transfer system benefiting poor students and old people. Today, the generals are reducing transfers to lower-income groups, concentrating on unfocused infrastructure expansion and taking no action to increase exports or tourism.
What could the junta do if it cared and wasn’t in the business of transferring even more wealth to the already fabulously wealthy?
Some simple, well-known measures could do much immediate good. The central bank could spur stagnating exports and tourism by buying U.S. dollars to drive down the baht. The government could boost private consumption with a massive transfer program to farmers, students and the elderly. The Bank of Thailand could make credit more readily available by increasing the money supply, and it could stop using interests rate to manage monetary policy, which has not been effective.
What are the chances? They say “low.” Apart from our view on the nature of the economic exploitation, Cookson and Joehnk say this:
The Bank of Thailand seems crippled by conservatism and uncertainty. Fiscal policy is in the hands of bureaucrats who are fearful of spending public money. The generals’ own support base is too narrow for them to suggest, much less achieve, anything contentious. And some of their economic proposals so far have been essentially nationalistic and risk discouraging foreign investment.
Every rational path out of stagnation seems blocked by autocratic rule. Thailand is not, as many economists argue, in a middle-income trap; it is in a coup trap. And this is a self-inflicted condition.
That says enough.