Thai inequality: What should we do?

Passengers carry luggage at Hua Lamphong station in Bangkok after using the free train service. Thailand needs to get serious about tackling inequality, says economist Somchai Jitsuchon. APICHIT JINAKUL

In the first part of this two-part article, published in the Post on Jan 22, I mentioned six things we should know about inequality in Thailand -- most of them under-recognised and underappreciated. In this second part I will deal with what we should do but are not doing or not doing well. There are 10 items on this list.

First, we should make it mandatory that all major public policies take into account their wealth-distribution aspects. Take the Eastern Economic Corridor (EEC), for example. The EEC is aimed at boosting economic growth, but the government rarely talks about its social and distributional impacts. Even policy that is meant to reduce inequality must actually do the job. Take as another example the state welfare card scheme. Evidence shows that the scheme left out 64% of those who were truly poor. This means out of 100 poor people, only 36 have the cards. So it doesn't help reduce inequality much.

I said in the first article that countries which have cut inequality to low levels have done so via comprehensive welfare systems. Yes, this could also be our dream. And yes, it would need money. We could collect more tax, but experience shows that the rich do everything to resist taxation, and they often succeed. What we can do right now is to set aside more state budget for social and welfare spending and less for other areas. For one thing, the Thai state should reduce its role in economic production, especially in state enterprises. We should instead shift towards public-private partnerships to fund infrastructure. Getting rid of regulations that are unnecessary and bad for business is another must-do. This will leave more money to take care of Thai people and enable this government to finally honour election pledges such as the Manda Pracharath welfare scheme for all pre-school kids. This is the second item on my list.

The third is related to the second. The private sector has a pivotal role, but it should play that role fairly. The tendency towards monopolies in Thai business should be curbed and reversed. Now that we have a new competition law, we must make it work.

Fourth on my list is the need for genuine decentralisation. When I say decentralisation, I mean not only fiscal but political as well. Decentralisation that comes with accountability and governance, and with full civil participation, greatly aids policies of redistribution.

Fifth, we must narrow the quality gaps in education at all levels. It is not right that one year of educational fees for rich kids equals a lifetime's income for parents of poorer kids. Narrowing this gap must begin as early as possible. Pre-school kids must be given good care regardless of their parents' income, so that they can reach their full potential in education. Small schools in remote areas should be amalgamated to become larger and better schools, and the saved budget used to transport students. Schools at all levels must be accountable for their learning outcomes and performance, so they have an incentive to improve. At present, accountability in our education system is badly lacking.

Compared to education, the healthcare gap is narrower and marks the one bright spot when it comes to inequality in Thailand. We must, however, ensure that the current system is sustained financially and management-wise. While we can be proud of granting good health-care access to citizens nationwide, most notably through public hospitals, the burden on these providers has now reached a critical level. We must correct this situation quickly. This is number six on my list.

For the seventh, we must be pre-emptive in tackling the problems of our ageing society. Poorer people are usually less prepared for old age. Aside from lower labour productivity, lack of financial and health literacy often leaves them unprepared for retirement. People are now getting into unmanageable debt and suffering from age-related diseases at earlier stages in their lives. They can easily end up with insufficient retirement savings even after working in well-paying jobs.

Number eight, we need an inclusive technology policy. Since poor people and small firms are less equipped to use modern technology, we could aid them with subsidies or with handy technological capital somehow. At the same time, technology can be directly used to benefit low-income people. Social services and welfare for the poor can be implemented more efficiently with new technology. It can even be used to to encourage "direct democracy", as Switzerland does when it conducts frequent online referendums. In my view, making sure the poor can vote on issues important to their lives can help reduce inequality far better than conventional "free and fair" general elections held every four years.

The last two items on my list are related and also more structural. Thai society would benefit by changing its view of the poor and marginalised. Too many rich and middle-class Thais see them as "lowly" people who are lazy, ill-behaved, short-sighted and dependent. We should instead see them as equals and try to understand them, realising that we would act the same way if we were in their shoes. We must "understand and reach out" to them, as the late King Rama IX once said.

Last but perhaps most important, in order to thrive we need a genuine and quality democracy. A true democracy ensures a broader and more equal range of voices in policy-making, preventing the state being captured either by money politics or other external factors, which I believe is the root cause of our inequality.

I sincerely hope we can get serious about tackling inequality. I don't want to re-publish this article 10 years from now with the title amended to "Thai inequality (2030)".