Beware of Populism

      April 15, 2010 12:38

      Protesters clashed with soldiers in Bangkok on Saturday in a standoff that killed 21 people and injured around 870 after the Thai government had announced a state of emergency. In April last year, anti-government protesters stormed into the conference venue of the ASEAN+3 Summit causing the high-profile meeting to be canceled, and 16 heads of state, including Korean President Lee Myung-bak, had to be airlifted to safety from the rooftop. In December, 2008, an ASEAN foreign ministers' meeting in Thailand had to be canceled due to protests.

      At the center of anti-government protests is former Thai Prime Minister Thaksin Shinawatra. He became prime minister in 2001 and was re-elected in 2005. But in January of 2006, his family was sold US$1.9 billion worth of shares in a telecom company to Singapore's state investment company without paying any taxes. More revelations followed showing that he funneled lucrative business contracts to his own businesses, avoided taxes, took bribes and rigged bids. In February, the Thai Supreme Court ordered the confiscation of Thaksin's illegal fortune worth 46 billion baht (W1.61 trillion).

      Thaksin has been roaming the world since being stripped of power at the end of 2006, and the anti-government protesters who have swept through the Thai capital want to see him return. At present, Thailand is in a virtual state of civil war as the red shirted anti-government protesters face off against citizens clad in yellow shirts supporting the incumbent government. Thaksin is leading his supporters, mostly poor farmers from northern and northeastern Thailand, via appearances on satellite broadcasts and through phone messages.

      The reason why Thaksin's supporters long for his return despite his massive corruption scandals is that they have become hooked on his populist policies. After taking office, Thaksin rolled over farmers' debts for three years, provided state medical insurance to all Thais for a basic fee of just 30 baht (W1,050) and handed out 1 million baht (W35 million) to each village under the pretext of narrowing the income gap between city dwellers and farmers. The generous policies ended up emptying Thailand's state coffers. Thaksin was finally driven out of office as he faced mounting discontent among the middle class, who grew tired of the deteriorating quality of medical services despite rising taxes.

      But low-income Thais had already become addicted to free handouts. There is no cure for a public that has become addicted to populist policies. Thailand is not the only country to experience such a problem. Argentina, which had almost reached advanced-country status in the late 1990s as well as other Latin American countries ended up falling back to Third World status after trying to meet the demands of citizens who had grown accustomed to populism.

      In Korea, ruling and opposition parties are racing to come out with policies to win the hearts and minds of voters ahead of the June 2 regional elections. The Democratic Party has proposed using W1.5 trillion in taxpayer's money to provide free lunches to 5.48 million students, while the Grand National Party has produced nine policy goals aimed at helping the poor at a cost of W1.22 trillion in state spending. To those watching the red- and yellow-shirted protesters in Thailand, those pledges have an ominous ring.

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