ECO Cafe'
TIENTIP SUBHANIJ
No one could have missed the spectacle of Bangkok's main airports under siege two weeks ago by the People's Alliance for Democracy (PAD). The incident left tens of thousands of foreigners stranded. For several days, the tiny U-Tapao airport was the only way to fly in or out of the country for those in Bangkok while Thailand was bombarded by questions as to why we let a national problem go international.
Although I am used to the "Thai-style" compromise, I was quite surprised at the time by our officials' tolerance in allowing the blockade to continue. A state of emergency was basically ignored and no action was taken to end the siege - the rule of law is once again just a piece of paper in Thailand's current state of affairs. Had the Constitution Court not found the People Power, Matchima Thipatai and Chart Thai parties guilty of fraud in the December 2007 election, our airports would still be closed today.
The only positive thing I can take out of this situation is that there was no bloodshed. If the same thing happened in another country, it would likely have ended with the use of force and violence.
Many say that our political crisis is a long struggle because we are deeply divided between the pro- and anti-Thaksin groups. But I think this is only one reason. Another underlying cause lies in our inappropriate rule of law.
In economics, the rule of law is part of the institutions that shape our performance. Institutions are important because they define our incentives. They are made up of formal institutions such as rules, laws and constitutions, and informal institutions such as norms of behaviour, conventions, and self-imposed codes of conduct.
Throughout our political history, it seems that "informal institutions" win most of the time. The formal rules, laws and even constitutions appear largely ineffective and incompatible with our norms and beliefs.
After 76 years of democracy, we are still deeply dissatisfied with our political system. Thailand's democracy is sadly shaped by 12 coups, 18 constitutions and several short-lived prime ministers (and shorter-lived ministers). In other words, political instability has taken a permanent place in our social and economic development.
Political crises always cost us a great deal. And this time, it undermined Thailand's reputation as a credible and peaceful country. Last week Moody's, Standard & Poor's and Fitch Ratings all revised Thai sovereign ratings outlook to negative from stable. The Daily Telegraph in London ranked Thailand as the seventh most dangerous place in the world to visit, behind Iraq, Afghanistan, Chechnya, South Africa, Jamaica and Sudan. Meanwhile, the Economist Intelligence Unit's expectations for Thailand are not reported to have worsened considerably simply because they had fallen a lot already in the past two years.
The main message from outside is clear: there is currently serious doubt about our ability to survive the combined effects of global recession and political paralysis that show no sign of resolution.
For many countries, politics are not a problem and leaders can do their best for their countries. President-elect Barack Obama, for example, has received strong support for his cabinet choices. His key economic team members include Timothy Geithner as Secretary of the Treasury, Lawrence Summers as the director of the National Economic Council, and Christina Romer as a director of the Council of Economic Advisors. Former Federal Reserve chairman Paul Volcker was also named a chairman of the President's Economic Recovery Advisory Board, a new panel aimed at helping the president navigate the country in an ailing economy.
The profiles of the new team are quite reassuring. Mr Geithner, currently a president of the Federal Reserve Bank of New York, is highly respected on Wall Street and Capitol Hill and has played a key role in the US government bailout packages. Mr Summers was a former Treasury secretary in the Clinton administration and former president of Harvard University. Despite a controversial and aggressive style, Mr Summers is no doubt one of the most prominent economists in the US. Ms Romer, a career academic, is an expert on tax cuts and recessions.
The US has suffered a lot from the financial crisis, but its strong political institution should help boost public confidence and hopes, two very important factors in reviving the overall economy.
While the US and several other countries are now rethinking their economic strategy and financial architecture to prevent future financial crisis, Thailand's urgency is more about rethinking our political institutions. In the same way that current financial rules are not compatible with modern financial realities, Thailand's political rules are seriously not compatible with Thai culture.
The start of a journey to find the right kind of Thai-style democracy is therefore important, and this kind of democracy should be more incentive-compatible with the way things are here in Thailand.Dr Tientip Subhanij holds a Ph.D. in economics from the University of Cambridge, and currently has a career in banking as well as academia. She can be reached at tien201@yahoo.com
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