Govt should stay out of the free market

The prime minister wants “a long-term solution to address product prices from “upstream to downstream”, including lowering the cost of fertiliser and energy, building warehouses and distribution centres, and providing space for distribution of “price-controlled” products.

Hasn’t the government learned anything from its disastrous rice price-pledging scheme, which was another form of intervention in prices, which destroyed the only area in which Thailand was No 1 – rice exports – and caused the public up to Bt1 trillion in losses?

Economics 101: “An externality leads to inefficiency.” PM Yingluck needs to learn the basic economic principle that the government should stay out of the free market. Name one thing that the Thai government produces that has any value. The answer is nothing.

When I ponder what this government has accomplished in three years in office, I can only think of failed policies. There was the handling of the floods, the big budgets passed for flood ways and high-speed trains, the rice scheme and the pay-outs of millions of baht in “compensation” to red-shirt victims of their own street protests.

Previously Yingluck went to markets herself and denied that there was any inflation. Now supposedly it is occurring “upstream and downstream”.

Either way, someone will have to pay for these planned interventions and there is a real cost to the implied subsidies and use of government property as warehouses and distribution centres for “controlled goods”.

Frederick von Hayek

Bangkok