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21 April 2016
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Puey Ungphakorn’s honourable but unfulfilled dream

Somchai Jitsuchon

2016 marks the 100th year since the birth of Puey Ungphakorn, top economist and former Bank of Thailand governor. A number of commemorative events were already held, and many more are planned to celebrate this important anniversary in the eyes of many Thais who admire him. But if you ask, you might get different answers as to why he is so hugely admired. He is remembered by some as the founding father of the modern Thai economy; by others as a member of Seri Thai which fought to maintain Thailand’s independence during World War II; and yet also as Thammasat University’s rector during the troubled time of October 1976, when he had to flee Thailand to live and die in foreign country.

But if we want to picture Ajarn Puey from his most famous writing The Quality of Life from Womb to Tomb , I doubt if any of the above images would emerge in the readers’ mind. Instead, the writing reflects a grand dream of a visionary man; a dream free from any discipline. This beautifully written piece depicts what a typical Thai can equally expect from Thai society since before his/her birth until death. The idea behind the piece is what many modern social scholars describe as “equal opportunity”. They include good nutrition (including nutrition to the pregnant mothers), access to good education, suitable working conditions, healthcare, pensions and so on.

There are three important questions to ask; are we presently living Puey’s dream? If not, should we make his dream come true? And can we afford it?
The answer to the first question is simple enough. Casual observation indicates that Thais do not have equal opportunities. Students go to schools that are quite different in quality, and some have to drop out before graduation. Our workforce consists mainly of informal workers who enjoy much less social protection than the minority formal workers. Many elderly Thais have no savings while suffering from chronic illnesses. Although we have made some progress in offering more equal opportunities to Thais, Puey’s dream remains largely what it is, a dream.

Answering the second and third questions is trickier. Whether we should make Puey’s dream come true depends largely on one’s political stance. There are those who view the poorer Thais as much too dependent, and that they should put their own efforts into securing ‘equal opportunities’. I believe (and hope) that this is a minority view. So the third and deciding question of whether Thailand will live Puey’s dream has to do with affordability. In fact, some people who do not think Thai society should grant equal opportunities think this because they are afraid that we cannot afford it.

Research by my team at TDRI indicates that Thailand can afford a system of universal social protection and welfare for all and from birth to death provided that three conditions are met: (a) benefits from such programmes are kept at optimal levels so that no one will want to be unemployed just to get welfare (b) long-term economic growth is at least around 4-4.5% per year and (c) minimal tax reform to generate extra income for the government of around 2% of GDP. I thought that it was not difficult to meet all three conditions. I was proved na๏ve. There are much greater challenges than what I had imagined.

Why? Let me begin with the second condition of “moderate economic growth”. The 4.5% per year is now considered “high growth” as the country has entered the middle income trap. This means we will have less tax resources to finance Puey’s dream, unless we step up the third condition by making more stringent tax reforms or, alternatively, we can find resources outside the public sector.

A recent study by the World Bank says that, technically, Thailand can collect more tax revenues, at least up to 4% of GDP, which should be more than sufficient to finance Puey’s dream even with 3% economic growth. But such extra tax revenues can only be achieved either by collecting more tax from the rich and powerful, which is politically difficult, or by raising the VAT tax rate, which is deemed politically incorrect.

So back to the first condition. Some critics of Puey’s dream are afraid that keeping the level of welfare benefits optimal is unlikely, when political parties are likely to top each other by offering policies that better please the “grassroots”, and hence jeopardise the country’s fiscal position. I bet they would argue that the country might be trapped in a “populist trap” and is yet another reason why they are reluctant to endorse Puey’s dream, certainly not an easy task.

But I for one will not give up. I believe that with the right mindset and proper preparation and management, Thailand can still achieve what Puey longed to see some 40 years ago. On the mindset, two things need to be done. First, the rich and powerful should understand that following Puey’s dream is the best bet to reduce the country’s inequality which has wreaked havoc on Thai society for more than a decade. If they agree to accept some small sacrifice, such as paying more tax, their long-term benefits will be worth much more. Second, we need to differentiate between irresponsible populist policies from Puey’s grand idea of ensuring equal opportunity for all. The two ideas are easily mixed up among both the rich and the poor.

Proper preparation and management is another challenge. But we have the benefit of being a latecomer in that we can avoid the mistakes made by some “welfare state” countries and create a productive social protection and welfare system where all parties (government, private sector, communities, etc) are all involved.

I hope that readers of this newspaper will join in my belief and passion. After all, what is a better way to celebrate Puey’s centennial birthday than sharing his dream and making it come true?

Somchai Jitsuchon, PhD, is research director for inclusive development at Thailand Development Research Institute (TDRI)

First published: Bangkok Post on Wednesday, April 20, 2016



Somchai Jitsuchon, Ph.D.
Research Director, Inclusive Development