Populism: bad for economy, good for votes

The definition of populism changes in accordance with a given time and context. In the Thai experience, populist policies reflect real politicking rather than good or bad governance.

If the Democrats are planning to grill the prime minister for championing populist policies, then their censure debate will possibly backfire and end up boosting public confidence in Yingluck Shinawatra.

Members of the opposition bench should bear in mind the populist paradox – voters tend to rally behind populist policies despite knowing that these policies will eventually be harmful.

The 2004 referendum victory of Venezuelan President Hugo Chavez is a classic example of such a paradox, because voters see populism as a means of getting what they believe they are entitled to.

In Thailand, late prime minister MR Kukrit Pramoj was the first to come up with the populist idea of distributing state funds directly among local residents in 1975.

Although Kukrit tried to justify his idea as being based on Fabian socialism, many saw him executing this policy as a strategy to garner votes.

In 2001, Thaksin Shinawatra came into power and implemented a full range of populist policies, including re-branding Kukrit’s idea as the "Village Fund".

By 2005, Thaksin had won his second term by an unprecedented landslide and critical views on populist policies only proved him to be an invincible electioneer instead of making a dent on his popularity.

From the days of Kukrit to the times of Thaksin, populist policies have been formulated to sway votes, and economic consideration became a secondary issue.

By the 2011 general election, all major parties jumped on the populism bandwagon. Two rival parties, Pheu Thai and Democrat, competed to outwit one another in churning out populist policies.

The Democrats claimed that their policies were practical and would have no adverse impact on the economy, while Pheu Thai countered this with policies designed to bring the people’s entitlements to new heights.

Nipon Poapongsakorn, president of Thailand Development Research Institute, spoke to the press last week outlining how Thaksin had pulled out all stops just to defeat the Democrats.

With Thaksin’s blessing, Pheu Thai mapped out populist policies to serve 10 groups of voters, including farmers. In the current crop year, the government has already spent almost Bt300 billion to shore up paddy price and is likely to need an additional Bt260 billion for its rice-pledging scheme later this year and the next fiscal year.

Nipon voiced concerns about the far-reaching consequences on the rice industry and also pointed out that small-scale farmers were not direct beneficiaries. Rice millers and well-to-do farmers, who account for more than half of the paddy production, seem to be benefiting the most from this scheme.

He said in his view, the Bt300-billion scheme was far too extravagant for garnering just 5 million votes.

From the economic perspective, leading economists from the World Bank and local academia are absolutely correct in pointing out flaws in the rice-price intervention.

Based on several studies done by international institutes, the Democrats are correct in saying their paddy income guarantee is far more sensible than this government’s rice-pledging scheme.

The main opposition party experienced a painful defeat because tenant farmers opted to vote for Pheu Thai even though they admitted that the previous Democrat government had helped boost their income.

In rural Thailand, the patronage system still has a dominant influence on voting outcome and though populist policies may not make much economic sense, they work magic for election victories.