Do whatever you want, but give me food!

According to an article run by the Bangkok Post, Thais are more worried about food than they are about any political conflict about charter amendments. Higher inflation and less money in people’s pockets give them a major headache and the future is not looking any better. People expect the economy to improve by the end of the year, which could increase prices again. They expected the implementation of the minimum wage this year, but this has not become reality so far.

So, a little interpretation of this situation: Firstly, economics is a lot about expectations and the self-fulfilling nature of prophecies on an economy’s development. The economy is not a system that works according to a plan (historical examples of a planned economy show that human nature and expectations are an important factor in economic development, and cannot be planned in advance – therefore the economic experiment in e.g. the former USSR has failed). If people now expect an increase of prices again by the end of this year, the likeliness of this to happen is very high – although there are other sides to this story. Secondly, what is going to happen during this raining season!? No one knows of course, but if Thailand is hit again by a major natural disaster, it will influence the supply of staple foods and hence drive prices up again. Thirdly, the government is still paying a minimum price to Thai rice farmers well above the market rate. An intervention of such kind is according to the free market principles more likely ending in a loss for the economy than in any good (remember “Dead Weight Loss”?!). According to an article by the Malaysian Insider, the exports of Thai rice are down by half already. The Thai rice economy is an important player in the global supply chain of staple foods; therefore its irresponsible to implement such outdated measures. And last, the interference in the production of rice for the sake of a safer Bangkok municipality is not the right measure to prevent further floods. It seems one intention here is to cut production so the implemented rice scheme becomes less expensive (Am I too simplistic here with this thought!?). Preventing another flood has to be better planned than just leaving vast areas inundated. Improving the capacities and structures of existing water dams, extend and improve artificial watercourses and canals and strengthen the natural protection by stopping deforestation for economic purposes and start re-planting trees where possible and reasonable – that’s some things that could be done, but I am no expert on preventative measures, so consultations with experts might be my best advice here.

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