Archive for the ‘Economics’ Category
Cross-border mobility of capital and labor between economic equals poses few problems and offers many benefits but that kind of economic integration is not possible between grossly unequal economies. Although a controlled flow of labor from the poor country may have economic benefits for the rich country, it must strictly control labor flow from the poor country to prevent its high value labor market and social institutions from being overwhelmed by a large number of workers seeking higher wages. Similarly, even though the poor country needs capital investment from the rich country, it must control its flow and extent to keep its relatively tiny asset market from being overwhelmed by the relatively huge money supply of the rich country. Both of these concerns are motivated by economic stability issues and neither may be described as xenophobia. It is not reasonable to expect these countries to have either reciprocal labor flow agreements or reciprocal capital flow agreements.
It is heartening to learn that Asia’s middle class is growing by leaps and bounds and that their numbers have now reached 274 million in India and a whopping 817 million in China (Study unveils Asia’s booming middle class, Bangkok Post, August 21, 2010). It is sobering to learn, however, that to get these rosy numbers it was necessary to count people consuming at least $2 per day as middle class. This consumption rate is just a dollar per day above the usual definition of extreme poverty. The falling dollar may also have contributed to the rise of the middle class in Asia by allowing many millions to be re-classified by virtue of nothing more than a change in the exchange rate. Thank God for statistics.
The performance of green stocks is assessed as the weighted average value of green ETFs in excess of a corresponding normalized value of the S&P500 index with the difference set at zero at the beginning of the comparison period. The chart below shows that over the period from April 2008 to June 2010, green stocks have lost almost have their value relative to the S&P500 stocks.
Reference: The world turns right Thailand turns left, Bangkok Post, July 9, 2010
It is argued that since budget deficits and looming sovereign debt crises in Britain, Greece, and elsewhere in the EU have driven these nations into austerity programs to cut spending as a way of balancing the budget, Thailand should follow follow suit with an austerity program of its own instead of increasing government spending with new populist programs for free train tickets and such (The world turns right Thailand turns left, Bangkok Post, July 9, 2010).
Austerity programs are not like a fashion trend to be followed as the new “in” thing to do. They are made necessary by harsh economic realities such as unsustainable budget deficits, an excessive amount of sovereign debt, and falling bond ratings. If an austerity program is prescribed for Thailand the argument must be supported with the relevant economic data for Thailand, and not simply with the observation that austerity programs have become fashionable in the West.
Reference: The human cost of austerity budget cuts, Bangkok Post, July 6, 2010
All British citizens, regardless of income, receive cash payments from their government equal to 50,000 Baht per year if they have one child, 86,000 per year if they have two, and 120,000 Baht/year if they have three children. Such is the largess of a nation that has become used to the idea of being fabulously wealthy.
Even if you ignore the market value of free housing, citizens on welfare receive the equivalent of 300,000 Baht per year – about twice the salary of a mid-level government officer with a college degree in Thailand.
Sadly for these welfare recipients, reality has caught up with the West. The extreme concentration of wealth and the huge divide between rich and poor nations have been eroding of late helped along by the financial crisis of 2008 and the Euro crisis of 2010.
It now appears that the rich nations are not as relatively rich as they once were and so they now find themselves having to take so called “austerity measures” to balance their budget as a way of keeping the value of their sovereign debt and that of their currency from collapse.
One of the proposed measures is to cut welfare payments by 20% – from 300,000 to 240,000 Baht per year and we are asked by analysts to feel sorry for those affected because the welfare cut will raise alcohol related deaths by 2.8% (Human cost of austerity budget cuts, Bangkok Post, July 6, 2010).
I am sure good natured Thais will commiserate with the misery of the West but it would be difficult for Thais working very hard to eke out a living on 9,000 Baht per month or less to shed a tear for welfare recipients limited to monthly handouts of a mere 20,000 Baht.
What they might be tempted to do instead is to advise Westerners to get used a new reality of globalization that includes a gradual easing of the extreme disparity in wealth between the rich nations and the developing world.
New York Times columnist Thomas Friedman writes that the root of the economic problems of the world today lies with us, the Baby Boomer generation, because instead of creating new wealth we simply ate like hungry locusts through the old wealth accumulated and left to us by the Greatest Generation (Root canal politics, Bangkok Post, May 12, 2010).
The numbers don’t bear out this harsh comparison. If you look at American GDP data in constant dollars from 1946 to 2009 you find that the Baby Boomer generation added twice as much wealth per year on average during their productive years than the Greatest Generation did. Of course we are grateful to the Greatest Generation for winning the war and for conceiving us and putting us through college but there is no question that we matched and exceeded them in artistic, technological, and economic achievement. It is unkind to both generations to say that the Greatest Generation raised a bunch of hungry locusts.
Cha-am Jamal, Thailand