A recent research on shadow economies raises some issues that need to be addressed by the two reform committees.  In June, Friedrich Schneider, Andreas Buehn, and Claudio Montenegro published a paper entitled “Shadow Economies all over the World:  New Estimates for 162 Countries from 1999 to 2007”

The researchers define a shadow economy as all market-based production of goods and services that are deliberately concealed from public authorities to avoid any of the following:  (1) paying income, value-added or other taxes, and social security contributions; (2) meeting labor market standards, such as minimum wages, maximum working hours, safety requirements; and (3) complying with administrative procedures, such as completing statistical questionnaires.

These are some of their pertinent findings:  The average size of the shadow economy relative to the officially recorded economy as measured by Gross Domestic Product (GDP) of the 162 countries has increased from 33.7% in 1999 to 35.5% in 2007.  Switzerland has the lowest ratio, falling between 7.7% and 9.1%, while Georgia has the highest, between 64.8% and 72.5%.

With the ratio standing between 51.8% and 57.2%, Thailand is among the countries having the largest shadow economies.

These results stand regardless of how the model is specified over seven different ways.  For example, when 151 advanced and developing countries are grouped together, Thailand ranks No. 8, while Vietnam ranks number 136, Singapore 143 and China 144.  Thailand also ranks No. 8 when only 98 developing countries are included, while others are way down the list.  These numbers clearly show that we Thais are way ahead of our neighbors and trading partners when it comes to hiding economic activities.  This, of course, is not a badge of honor.  Rather, it is a shame.

However, not all blame should be placed on individual Thais.  Apparently, the system plays a significant role.  This is because the researchers found that in general, four factors had contributed significantly to increases in shadow economic activities, including (1) high tax and social security burden; (2) intensity of regulations, such as minimum wages, dismissal protections, maximum work hours, and work-place safety; (3) high level of corruption; and (4) recession in the official economy.

Many will question the accuracy of these estimates.  But in case of Thailand, the relative size of the shadow economy is so large that even if it is substantially over-estimated, it still raises troubling issues.  For example, GDP numbers may not reflect the true picture of the economic conditions.  As it is unknown who generate most of the shadow economy, the distribution of income resulting from using official numbers may be meaningless.  So are the numbers on poverty.  Policies based on such highly inaccurate readings of the economic conditions are likely to be wrong.  There is also a high degree of injustice regarding the tax burden.  As so much escapes taxation, those who play by the rules have to shoulder an additional burden.  The sense of injustice, of course, tends to push more of them into hiding economic activities as well.

The reform committees have often mentioned the need to address the issue of injustice.  In the economic sphere, this research suggests that they need to focus particularly on the tax burden and corruption.  The government already has recognized the injustice in the tax system and has been working on revamping taxes on land and improvements thereon.  The committees should endorse this and urge the government to move quickly towards enacting the enabling legislation.  In addition, they should recommend that the government revise other taxes with a view to putting a much greater emphasis on taxing consumption, especially on goods and services falling outside of basic needs, because such an emphasis is an integral part of the Sufficiency Economy philosophy that the country will use as the foundation for its future development.

In this column of July 9, 2009, I wrote that Thailand had been virtually a nation of thieves, for the majority of people would accept corruption so long as they could also share in the gains.  No doubt, corruption rears its ugly head again in creating the high level of shadow economy.  But, as I wrote in this column two weeks ago, the committees are strangely mum on corruption, prompting me to think that some of the committee members themselves may not be beyond reproach.  Whatever the reasons for their silence, I shall say this again:  unless corruption is tackled effectively, it will cripple all other reform measures and the reform itself will fail miserably.

Dr.Sawai Boonma : Bangkok Post , August 18,2010

In Italy, a large number of local governments have been in dire financial straights as revenue collections have declined. They have cut essential programs such as assistance to the elderly and maintenance of buildings and streets. Some are forced to sell off assets. Recanati, birthplace of poet Giacomo Leopardi, is so short of money even after deep cuts in its expenditures that it has to sell off parkland. Some municipalities cannot close the budget gaps, not only as a result of low tax collections, but also as a result of losing investments or having to pay higher interest rates on their borrowings, because they failed to understand the full implications of the highly complex financial derivatives arranged with the assistance of international financial institutions. Milan is blaming big banks for hiding details of the arrangements and is suing them.

In Spain, where the central government itself is in serious trouble and may have to seek assistance from the International Monetary Fund (IMF) as Greece has done, regional and local governments, with a combined budget almost double that of the central government and already owing some $200 billion, are trying to borrow an additional $57 billions this year – more than other European local governments, except in Germany. Many will have to pay higher interest rates as their credit ratings have been downgraded, despite having cut down expenditures sharply by various means, including reducing salaries, limiting replacements of retired employees, and halting construction of ongoing projects.

In the United States, the same dire situation prevails. As many states have laws allowing local governments to seek bankruptcy protection from creditors, many towns are in the process of finding ways to declare themselves bankrupt. The town of Vallejo in California has recently done just that. California – the golden state – can offer no help to municipalities facing financial troubles because its finances are no longer golden. In fact, it is so short of money and is heavily indebted; it began the new fiscal year on July 1 without a budget, as politicians could not agree on how to close the $19 billion budget gap. Last week, the governor declared a fiscal emergency and announced more furloughs of state employees after reducing the pay of some 200,000 to the minimum wage earlier.

The above examples show what troubles financial autonomy could lead to at the local level. They, however, do not show what has happened at the national level – the finances of local governments have seriously negated the macroeconomic policies of the central governments. This is because during the recession, when the economy needs stimulus, local governments reduce spending as their tax collections decline. But during the period of rapid expansion, with inflation looming, when the policy calls for cutting expenditures, they often happily add more programs and gleefully spend money as they are able to collect more taxes.

Local governments in Thailand do not have full financial autonomy yet, but their expenditure patterns seem to have emerged during the past decades: great emphasis is placed on projects that have a major construction component, including large office buildings, study tours to foreign countries, seminars in plush resorts, and beautification of public areas. A large part of such expenditures is destined to benefit the officials themselves, not the public, and is open for easy grabbing. Seeing the possibility of enjoying those benefits and a chance to pocket part of the budgets, politicians invest heavily in local elections, resulting in fierce contests, with rampant vote-buying and violence. With corruption in all its forms – financial or otherwise – so pervasive, a greater autonomy will certainly lead to worse predicaments than shown by the examples.

Corruption, of course, is not limited to the local level. In fact, among the causes of Thailand’s ills which give rise to the need for reform in the first place, corruption is the most heinous. But strangely, the reform committees have yet to mention this in any of their pronouncements. If they avoid the subject and do not find ways to tackle it affectively, both at local and national level, the reform will fail miserably.

When the real estate bubble burst and the severe recession took hold two years ago, many had expressed the hope that a fundamental change in the world economic model that depended on ever-increasing consumption, especially along the lines practiced by Americans, would take place. What has happened since has clearly indicated that nothing of that sort is happening. Thailand not only has followed such a model faithfully but also has pushed for higher consumption via populist measures of free or highly subsidized goods and services. This is especially perplexing for a number of reasons. First, the existing model, calling for regular use of hair of the dog method, has already proven that it is likely to create a cycle of rapid booms and severe busts. Second, a widespread use of populist measures has shown that it can bankrupt the user. Third, Thailand already has an alternative economic model in the Sufficiency Economy framework that every government since 1997 says it has accepted as the guiding principle of its economic policies.

In recent years, Thailand has faced serious problems in many fronts, so much so that in the past couple of weeks, the government appointed two committees to draw up measures for a wholesale reform or re-engineering of the country. Many ideas will be debated before final proposals are drawn up by these committees. Into such debates, I suggest that the committees throw the relevancy of the Sufficiency Economy framework and how it can be used as the guiding principle for further development of Thailand. Among the measures that will be drawn up, I propose that a major focus be placed on how to restrain over-consumption, which has entailed many problems besides being the leading factor in creating severe imbalances and boom-bust cycles.

Imagine for a moment, what will happen if half of the 1.3 billion Chinese were to consume at the level of the average American. Add half of the 1.1 billion Indians to that equation as their incomes also have been rising very fast. Will the world have sufficient resources for them? If not, what will happen? Imagine also that if the Thais were to eat as much and to become as overweight as the Americans, what will happen to food production, land use, the environment and medical expenses in this country. The world may not be ready to think about these issues, but I hope the Thais are, through the work of the two reform committees.

Dr Sawai Boonma

The cat is out of the bag. It was revealed on June 16 that over the past year, Warren Buffett and Bill Gates had been holding a series of secret meetings with billionaires, beginning in New York City last May with David Rockefeller, the last grandson of John D. Rockefeller, hosting. They were not plotting to overthrow a government or to rule the world. Rather, they were trying to persuade their fellow billionaires to give at least half of their fortunes to charity. After many meetings, they agreed to set up a website called “givingpledge.org” on which any person can post a pledge of giving.

To set an example, Mr. Buffett posted a statement promising to give to charity at least 99% of his wealth, estimated by Forbes last year to be worth $37 billion (about 1,200 billion baht). This means he is upping the ante. In 2006, he’d already pledged to give some 83% to various charitable organizations, in particular the Bill & Melinda Gates Foundation, with a stipulation that all of what he gives must be spent 10 years after his death. He has already started making annual transfers to that foundation. By stipulating that his wealth should be spent for worthy causes within a fixed period, Mr. Buffett followed the footsteps taken years ago by Andrew Carnegie – reputed to be the second richest man in history behind John D. Rockefeller, who also gave a large portion of his fortune to charity, including through the well-known Rockefeller Foundation.

Bill Gates has not posted such a pledge, although a number of years back he had indicated that he would likely give 95% of his wealth to help fellow human beings. So far he and his wife have already given some $30 billion to their foundation. Besides, both have retired early from Microsoft so that they can devote most of their time to charity. According to some press reports, a few billionaires who attended the meetings are agreeable to the idea of giving at least 50% of their fortunes to charity although they may not post a pledge on the said website.

Whether or not Messrs. Buffett and Gates will succeed in their mission remains the subject of speculation. Even if they fall short of their goal of 50%, the amount that they will raise may still be huge. The wealth of the 400 richest American is estimated by Forbes to total $1.2 trillion. These millionaires have been giving to charity already, with various estimates indicating that the average is around 10% of their wealth. If they were to increase their giving, say, to 20% of that total, the additional $120 billion can certainly do a lot of good for humanity.

In his pledge, Mr. Buffett makes a number of interesting points. He says that measured in dollars, his giving is large. But compared to millions of people who regularly contribute to various charities, it is not large at all. This is because he and his family give up nothing in terms of need or want while the others may have to go without meals in order to do so. Besides, he only gives money, not time which is more precious than money. Many people, including his three children and sister, give extensively their own time to help others; the value of time spent befriending and mentoring a struggling child far exceeds what can be bestowed by a check. He believes that if he and his family were to retain and spend more than 1% of his wealth, their happiness and well-being will not increase. In contrast, the 99% can have a huge effect on the health and welfare of many. And lastly, he says that he does not like to collect material possessions such as expensive homes, because such a collection often ends up possessing its owner.

According to some press reports, Bill Gates held some meetings with non-American billionaires to try to include them in the endeavor. It is unclear whether he had included any Thais. Some Thai millionaires are known to have regularly given to charitable causes already. Hopefully, what Messrs. Buffett and Gates are doing will inspire them to give more.

For those who do not possess vast wealth, there is a large scope to give as much, if not more, than Mr. Buffett, especially in terms of time. In this regards, I see those who retire with comfortable pensions at age 60, in particular former government officials. In this day and age, people in their 60’s are still young. With relatively better education and pensions to live on already, I see that the retirees can give a great deal of their time to worthy causes and by doing so, they can out do Mr. Buffett, as time is indeed more valuable than money.

Dr.Sawai Boonma

The end of June is almost upon us. Normally, the monsoon would have brought heavy rains to nourish new crops and replenish the depleted reservoirs. But pictures from press reports continue to show the bottoms of some reservoirs, and severe water shortages persist. With rains bringing so much water each year, Thailand should never have to face severe water shortages if we knew how to manage water resources. Unfortunately, we have been so spoiled by nature and as a result, proper water management continues to elude us, at both government and individual levels.

Talks of constructing major dams have resumed, including a proposal to revive the much-studied Kaeng Sua Ten dam in Phrae Province. But little attention, if any, has been paid to rain-harvesting via clusters of small farm ponds and to planting crops that need less water than rice during the dry season. This state of affairs partly reflects the standard approach at the government level: no problems can be solved without major construction projects since without them, politicians, their cronies and high-ranking government officials will not have a chance to line their pockets.

There have been no reports about discussions of the role played by consumption patterns and water uses at the individual level. As the scope of this issue is vast, let me provide only a few examples, using some data from the book When the Rivers Run Dry, by Fred Pearce and the April 2010 issue of National Geographic, which devotes the entire issue to water.

It takes between 250 and 650 gallons of water to grow a pound of rice but only 130 gallons and 65 gallons, respectively, to grow the same amounts of wheat and potatoes. Although I do not have exact numbers, my own experiences tell me that growing other starchy food crops also take much less water than rice, including yam, sweet potato, corn, cassava, banana, plantain and taro (the species grown in Thailand, not in the South Pacific islands). These food items can be substituted for rice, which I have done for many years. In this connection, I would like to note also that varying daily consumption of these food items also saves energy and increases our chances of meeting daily requirements for vitamins and minerals.

I have not been to South Korea recently, but when I was there last, the Korean government urged citizens to cook rice with other grains and to abstain from eating rice one day a week. China has promoted production and consumption of potatoes and is now the largest potato producer in the world. These practices save a lot of water although China still needs to spend close to $100 billion to build the Three-Gorges dam and a canal system to transport water from there to the parched Beijing region.

Regarding meat, it takes 1,857 gallons of water to produce a pound of beef, while the same amounts of pork and chicken take 757 gallons and 469 gallons, respectively. To produce a cup of coffee requires 37 gallons of water while a cup of tea takes 9 gallons. Wine and beer takes 32 gallons and 20 gallons, respectively, per glass. The list goes on. Many of these products can be substituted or left out of our diet altogether without materially affecting our standards of living. What we choose to consume or refrain from consuming, therefore, can significantly change our demands for water.

Regarding water uses, we also have many options. We may take a full bath as practiced in the Western world or clean ourselves with a couple of gallons of water as some people do. These represent the two extreme ends of self cleaning. Amounts of water used vary greatly in other daily activities depending on the habit of each individual, be it in brushing teeth or in washing dishes. The size of the toilet tank also makes a lot of difference.

As the Thai government’s approach to water management leaves much to be desired, and most Thais are so spoiled by nature as to be unaware of the impact of their daily activities on water resources, I see a much bigger role for NGOs, which up to now have been much less active in this sector than in many others, in promoting awareness in various segments of society that we should no longer take water for granted.

Dr.Sawai Boonma

For those who have suggested that the said article be translated into Thai and distributed widely, I would like to report that it has been and emailed to all who have asked for it. In this connection, I would like to mention that the Ysaan Institute has put both the English and Thai versions on YouTube and I have also written articles based on the same materials for my columns in Thai newspapers. Distribution to schools and temples as suggested by two readers who would help defray the costs, however, have not been made, as I have not found volunteers to do so, partly because I am outside the country at the moment.

I do agree with those who say that Thailand is not unique when it comes to corruption, selfishness, indifference which I consider a sin, etc. But I believe that it is a matter of degree and there is a tipping point, to use Malcolm Gladwell’s terminology, beyond which those factors become critical detriments to progress. I once calculated the relationship between corruption and under-development, using Transparency International’s corruption perception index and per capita income as proxies, and found the correlation coefficient to be 0.86. This high correlation is quite suggestive although which causes which cannot be definitely determined.

In this connection, what has made Thailand cross the tipping point, I believe, are the populist policies brought on by the first Taksin administration in 2001. Those policies, more than anything else in Thai history, have raised false expectations and resentment among the rural population. I have witnessed this first hand because I grew up in the rice fields and am still closely connected to rural Thailand, as some of my siblings remain rice farmers. Besides, those policies have killed the take-off process of development, to use an old term employed by W. W. Rostow, which Thailand was on the verge of completing successfully. I have been warning about the consequences of populism for some time, including in a book published in 2003 about populism in Argentina, and will again say that if such policies continue to intensify, Thailand will soon find itself in economic and social quagmires.

I believe Thai society has failed miserably to raise the level of critical-thinking skills despite this being a goal of the education system since I was a teacher trainee decades ago, because the majority of us Thais mistakenly think that educating children is the responsibility of the schools, while it should be the responsibility of the whole society, starting in the homes and communities, for it takes a village to raise a child, to employ an African proverb made famous by Hillary Clinton in her best selling book. And if we adults continue to believe that good children should meekly obey their parents and teachers without question, Thai children will never grow up to be critical thinkers.

Taken together, these and factors mentioned in the earlier article may make the future of Thailand look rather bleak and thus lead to the feeling of hopelessness for those who wish to do something concrete as I suggested in that article. We should not feel that way. On the contrary, we should feel that, compared to other countries, Thailand has many good things going for it and try to do whatever we can even if it seems very minor. All of us should believe in the butterfly effect aspect of the chaos theory: under the right conditions, air movements from the flapping of a butterfly’s wings will create a storm. The future of Thailand needs all the efforts of us, little butterflies.

Sawai Boonma

A number of years back, a few individuals who were born and grew up in Banna, a district of Nakhon Nayok Provice, and in their own ways had found a measure of success, got together and agreed that we should do something to give back to our beloved motherland. We also agreed that the best thing we could do was to find ways to help young people increase their knowledge and broaden their vision. A best way to achieve that, we all believed, was to promote reading, beginning at the place of our birth.

A foundation and its work

We began with a pilot work in the 2006 school year by distributing copies of a book to a number of elementary schools in Banna and invited each of them to select a student, who could read and understand that book better than other fellow students, and send him or her to compete for scholarships. Fourteen schools participated. We repeated the process during the next school year with more schools participating. After a careful review undertaken with broad participation of the schools and selected elders of Banna, we agreed that our work was on the right track and the best way to support the schools’ reading promotion programs was to set up a foundation to carry that out. The Banna Reading Promotion Foundation was registered as a nonprofit organization in June 2008. Funding would come mainly from earnings generated by writing of Dr. Sawai Boonma, with friends making additional contributions.
What the Foundation has done since its formation is to procure books suitable for supplementary reading for the 35 government elementary schools in Banna. For each school year, a book is selected as a subject for reading competition: Each school searches for its best reader through internal reading competition and sends him or her to compete for scholarships in a district-wide contest, which is staged over a two-day period. Each participating student is guaranteed of a scholarship, with the winner getting the highest amount. The schools take turn to host the two-day competition.

The competition for the 2010 school year will be the 5th and is tentatively scheduled for November 12-13, 2010, with Wat Banprik School serving as the host. The book to be read for competition has been selected and distributed. It is an award-winning fiction for young adults entitled “Clouds in the Mirror” by the well-known writer, Prapassorn Sevikul.

The Foundation is headed by Ajarn Boonyang Rodprasert, a well-known elder of Banna, and is located at Wat Pikulkaew School, Pikul-Ok Sub-district, Banna, Nakhon Nayok, 26110. He can be reached by telephone at 089-903-5493.

Additional contributions are welcome and may be transferred directly to the Foundation’s accounts at Krung Thai Bank, Banna Brach, Account Number 212-0-07043-1 under the name “Reading Promotion Fund” or Account Number 212-2-15601-5 under the name “Banna Reading Promotion Foundation”.

Aspirations

Should the current support of the reading promotion programs succeed and with funds available, the Foundation hopes to promote fluency in English and computer skills, for it believes that fluency in Thai, English and computer skills are highly necessary for adults of the future. In addition, it hopes that people from other parts of the country will emulate what it has been doing. In this regard, there is a welcome development: during the 2010 school year, a group of schools in Patalung Province in Southern Thailand will stage a reading competition similar to the one in Banna, using the book about the Amish written and provided by Dr. Sawai Boonma.

(May 2010)

Ask Thais about the causes of last week’s shameful events — or of any problems in Thailand for that matter — and they will readily point finger somewhere else, never at themselves. I am a Thai so I am part of this well-practiced response. But I now believe that if we continue with this long-running charade of self-deception, Thailand is on its way to becoming a failed state shortly.

We present Thailand as the land of smiles full of gentle Buddhists. We regularly give alms to monks and often make donations to temples, believing that those are selfless acts for the welfare of others. Deep down, however, we do that only because we wish to get something in return – to go to heaven or have a richer next life. It is a trade, pure and simple, nothing kind or selfless about it. Few of us give for the sake of giving. We are basically very selfish.

Every time we go to the temple or attend a Buddhist ceremony, we duly accept and recite the Five Precepts as a guide to our daily lives; but we leave them there, as we always make promises without ever intending to keep them. Actually, we understand little about Buddhism. Even among the ranks of the monks, most do not know the teachings in-depth and lead their lives accordingly — all they know is how to conduct ceremonies from which they earn easy income. This reflects something deeper — we are generally lazy and like to take short-cuts to the “sabai” (do-nothing) state. Lottery tickets, therefore, always sell out at premium prices; prostitution is rampant and young women readily marry foreign pensioners.

We love to talk but rarely listen. Even when we do, we often fail to hear, as we never learn to think critically. We cannot put up with different points of view nor can we work cooperatively. Many of the over 30,000 Buddhist temples were built next to one another because when we disagreed with one, we just built another. That cooperative movement has never been successful here is another indication of our inability to tolerate different points of view.

We readily forgive, so we believe, as our most common utterance is “mai pen rai” (it doesn’t matter) when someone makes a mistake. But that is only a reflection of the culture of indifference and ready rationalization. We can always cite a well-known proverb, a famous poem or a sage’s sharp utterance to justify everything we do.

We complain so much about corruption. But we do little about it. Worse, we keep electing the same corrupt politicians because they have money and influence from which he hope to benefit. Survey after survey shows that the majority of us do not mind corruption as long as we get something out of it. One of the surveys last year showed that almost 85% of us believed that cheating was a normal business practice, making us practically a nation of thieves. When I raised the matter in this column, I received the angriest responses from fellow Thais, using expressions so colorful that they should not be printed nor uttered within earshot of other humans.

This long-running self-deception has created so much moral deficit, to employ Joseph Stiglitz’s terminology, that has put Thailand into a state of moral crisis for some time now. Some of the symptoms of this state are the economic crisis of 1997 and the protests culminating in last week’s events. Of course, we will never admit this, for we are perfect and will continue to be very angry when a foreigner utters something non-complementary about us. But I do hope that the events of last week shock most of us into reexamining ourselves, our values, and start reducing the moral deficit as well as trying to generate some moral surplus: doing more genuinely voluntary work for the common good similar to the street cleaning carried out by Bangkokians last weekend, but on a regular basis.

For sometime now, Thais have used certain colors to identify their political movements. The groups wearing yellow and red shirts are the best known, for they are associated with the most widespread movements that stand at the opposite ends from each other: The yellow shirts are against former prime minister Taksin Shinawatra and anything associated with him, while the red shirts are for him as well as for his policies and political tactics. Violence has periodically erupted, resulting in hundreds of injures and tens of fatalities during the mass rallies organized by these two groups; some injuries and fatalities were targeted specifically for wearing certain colored shirts.

The yellow shirts have formed a political party that has yet to contest an election. Presumably, should they gain power or become part of the next government, their associates and supporters would have access to more desirable jobs and rapid progress in their careers. The current government apparently has had a cozy relationship with this group as the foreign minister is a former yellow shirt. The red shirts, on the other hand, are openly associated with the current opposition party supported by Taksin, and should the party gain power after the next elections, they and their supporters will have a more promising future.

Such political influence may be disturbing. More worrisome, however, is what the groups associated with various colors will do next. As of Monday morning, the protesting red shirts have not definitely indicated whether they will accept the government’s proposal to call the next elections on November 14 and peacefully end their occupation of an important business district in central Bangkok. If they do not accept, they could very well use more barbaric tactics to increase pressure on the government. The government, on the other hand, might either capitulate to the red-shirts’ demands or use force to end the occupation.

The schools are scheduled to open on May 17. The fact that the red shirts have shown no qualms about unethically entering a hospital to conduct searches for soldiers and in the process threatened its staff, is indicative of what they are capable of doing — taking school children hostage. What will happen then? A carnage, perhaps?

What will the yellow-shirts do next as they are opposed to the government’s proposal? For they believe that the government has capitulated to the red shirts’ terrorist tactics. Will they organize a big rally to confront the red shirts and instigate skirmishes or, worse, a civil war? Will another coup then follow?

Even the current protests were to end peacefully, what will the red, yellow and other shirts do during the next elections? Will they allow politicians who do not agree with their views to campaign without harassment in their strongholds? And after the elections, what will the next government use the color-associated supporters for? A good friend of Thailand, Steve Young, has recently reminded the Thais of the roles played by Mussolini’s Blackshirts and Hitler’s Brownshirts, both before and after the two notorious dictators gained power in Italy and Germany, respectively. Is Thailand moving towards using the kind of political methods advocated by Mussolini and Hitler?

Besides, what will these movements do if the election outcomes are not to their liking? Will they take to the streets and start another round of protests or would they in effect try to partition the country as the red shirts have tried to do? One should not forget that ministers in the current government cannot visit certain areas in the North and Northeast without risking their life and limb. Recently, a minister was assaulted by a red-shirt in the Northeast. Is this a harbinger of something more sinister?

With developments such as these, it is not outside the realm of possibility that Thailand will soon witness a civil war and then become either a police or a failed state. So, fellow Thais, be careful of what colors you choose to wear before venturing out, for that might cost you your life or limb; and be careful which political movements you support, for they might cost you the future of your country.

Sawai Boonma

The 34 books cover a wide range of topics and focus on various areas of the crisis. The one written by Professor Joseph Stiglitz, a Nobel Prize-winning economist, entitled Freefall: America, Free Markets, and the Sinking of the World Economy, is perhaps the most noteworthy and should be read by those interested in broad economic, political and social issues that have had significant bearing on the crisis and need to be considered in order to avoid future crises, as well as to achieve economic sustainability. Those who have read his two prior books on globalization, namely, Globalization and Its Discontents, and Making Globalization Work, may think the present book is another sequel. It is not and Professor Stiglitz continues to write in a lucid and easy-to-understand way, even for non-economists.

The book covers many issues but I will focus on a few discussed in the last chapter, “Toward a New Society.” Professor Stiglitz argues that an underlying cause of the preset economic problems is a moral crisis in America, which he labels a moral deficit. This deficit may be even harder to correct than the other deficits, which result from Americans living beyond their means, and the flaws in the financial sector regulations. Americans have crossed the fine line between creative accounting and deceptive accounting; between exaggeration and fraudulent behavior. Taking moral responsibility has become alien to them. While Japanese CEOs might commit harakiri and British CEOs resign, Americans fight over the size of their bonuses when their firms fail.

The American social and economic model has created extreme individualism and rampant materialism which have led to erosion of trust and the sense of community. Without these two pillars of society, the financial system has broken down, with the pursuit of collective action becoming impossible. It also has led to a misallocation of the scarcest resources – human talent. Too many of the brightest students are going into finance, hoping to get rich quickly, instead of going into sciences, medicine and teaching that their parents might have done. This is because the markets are allowed to blindly reward those in the financial sector an extremely high proportion of any gains in the economy.

Professor Stiglitz wrote this book while the crisis was still raging and anticipated that by the time it was published, the sense of crisis could very well be over. As a result, only minor adjustments of the financial system will be undertaken. He believes such adjustments, which he labels as “plumbing”, would not be sufficient and thus has called for more fundamental and urgent reforms of economic, political and social systems – the reforms that are necessary to restore balance between the market and the state; between individualism and the community; between man and nature; and between means and ends.

Professor Stiglitz raises extremely important issues, which apply not only to the US but also other parts of the world, in particular Thailand. I believe that it is the moral deficit that causes political paralysis in Thailand at present. As for the fundamental reforms to be undertaken urgently, I would humbly suggest that those who have power to do so, both here in Thailand and abroad, should take a serious look at Sufficiency Economy (SE). The UNPD has put out documents on this subject sometime ago, detailing how SE might be applied in order to solve the world’s problems. Mainstream economists with a strong belief in the wonders of the market will probably dismiss this new thinking outright. Others with more open minds, especially those who are persuaded by Professor Stiglitz’s arguments that mainstream economics as well as the American social model have already run into dead end, will likely find that SE already provides a concrete framework for such reforms.

Sawai Boonma