or
No Vacancy at the Inn on the Countryside
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It is largely agreed that it was heavy asset-financing steeped in a thick moral hazard that turned a cyclical Southeast Asian deceleration into a crisis of global proportions. Since then Thailand has been listed as a country on the brink of social and political explosion. Do the sayers of such ill-soothes have any validity?
Yes - but not for the reasons you might think...
The
Thai Countryside ...
Rural Thailand has largely been the source of the country's stability
over the years; it has served as a very important labour buffer in periods
of economic changes both positive and negative and was the nation's key
to the world market. This sector of the population had little choice
but to ignore politics - they were too busy tending the land and producing
food for themselves (as well as for their urban counterparts). When,
in the early 1970's, urban games of politics and profit started interfering
with their ability to feed themselves, however, it ws this otherwise 'docile'
section of the citizenry that took proper measures to ensure their livelihood.
Given that era of US-led anti-communism mania, this was seen as the source
of social unrest in Thailand (any move for strength of the people was seen
as counterproductive to capitalism). Starting in the mid-80's, however,
policy focussed away from agriculture. With the boom years the conceit
of industrialization quickly took hold.
Kernel to national stability, the philosophy of never forsaking your agriculture was brushed off as so much Third World dander (this was Thailand, after all - an emerging Tiger!!). Accordingly, labour from the countryside started becoming less and less nomadic, ultimately pursuing a livelihood principally through the demand of manufactures-export. Concomitantly there ocurred real steps forward in tertiary education. But it was too little too late. When the boom finally went bust, hundreds of thousands of well educated and/or well skilled employees were left with apparently little future. TO THE TOP
...
Labour ...
Where will as this skill go? 'Back to the farms!' cry the bright
lights in the Ministries. But the government never bothered to ask
if the country-side can absorb the extras. Can the country-side afford
them? Will the urban refugees be able to earn their keep back on
the farms? These question are not going to be taken lightly by the
rural community. Grassroots debts have reached the order of Bt250
billion. Approximately 50 billion (some estimates reaching as high
as 100 billion) of this is debt outside the government Agricultural Bank
system and therefore outside of any government negotiated debt moratorium.
Also, the landholdings of many of these debt-holders is being lost to calls
on collateral. With the return of more hungry mouths to the farm,
tensions could flare.
Even IF the unemployed find a way back into the countryside, is this transitional generation ready to commit to this 'retro-step'? They have pursued an education as a means to escape the farm. If these recent graduates have to go back to square one (as they often see it), that is a lot of energy left to fester in the hot paddy fields. TO THE TOP
...
Trade Agreements ...
The Agreement on Agriculture (AoA) of the World Trade Organization
greatly exacerbates the commoditization of agricultural resources, thereby
making it even harder for farmers to maintain their way of life.
Such trade pursuits erode the political buffering capacity of the countryside
and with continued implementation of the agreements combined with Thailand's
now HUGE debt, the situation won't get any better. Farmers simply
won't be able to keep their land and the unemployed will not be able to
return to the countryside as is now hoped.
This above statement is directly supported by the governments recent free-food campaign for the urban hungry. Why are these hungry people not returning to the farm? Because there is no room for them. No vacancy at the Inn on the Countryside. And furthermore - who is paying for all this free food? One can be sure that some of the burden is at least indirectly transferred to the farmer.
The problem of hunger is a very real manifestation of what I term 'food production'-substitution led growth, i.e. growth based on producing non-edible goods and selling them so as to be able to buy food. It is a problem that has established itself firmly in ASEAN (Association of SouthEast Asian Nations). Malaysia is a PRIME example of this problem. Their Prime Minister Mahatir has chosen industrial growth over food production. Now, in the midst of the economic crisis, the nation has little money to buy food. Had he not followed the path he did of closing the country's economy off from the world, thereby avoiding a meltdown on the scale of Thailand and Indonesia, he would have had a massive revolution on his hands as hunger would have swept through the country like wildfire. As it is they are financially better off than many of their neighbours yet still the country is sitting precariously on the precipice of revolt.
Indonesia's production shortages lay demand on fully half of the world's tradable rice 'surpluses' of approximately 12 million tonnes. While this might be chalked up to El Nino, the truth of the matter is that Indonesia cannot afford to buy rice and now Thailand, by far the world's No. 1 exporter of rice, has ceased offering rice to Indonesia on credit. Finally, the rice shortage in Southern Philippines has left many dead yet the global demand for rice in this year of drought has pushed up the price of the basic foodstuff, essentially pushing up the price of keeping one's self alive.
What are Malaysia, Indonesia and the Philippines to do? To make
matters even worse, Vietnam, another extremely large exporter of rice has
joined in with Thailand to focus on rice production and marketing.
The carvers of this collusive masterpiece were quick to say there was no
intention of a rice cartel, but this none-too-little regional enterprise
in staple foosdtuffs combined with the influential lead exporter's recent
cessation of rice credit to Indonesia certainly makes a lot of people stop
and think.
TO THE TOP
...and
Globalization ...
The very foundation of globalization; WHAT YOU CAN PRODUCE EFFICIENTLY
YOU PRODUCE, THAT WHICH YOU CANNOT YOU LET OTHERS PRODUCE FOR YOU, has
been proven wrong in the absolute when it comes to agriculture. Globalization
is forcing a situation of survival of the fittest. That is arguably
well and good with respect to industrialization. Proponents even
argue that it would force industries to be more environmentally conscious.
Now while that is debatable, what is not debatable is the fact that streamlining
smallholder agriculture is tantamount to forcing millions and millions
of people into hunger and destitution in the name of more money for the
West. And it would necessarily be more money for the West as ALL
of South, East and Southeast Asia is smallholder farming - it is ALL 'inefficient'
when measured by the yardstick engineered by the creators of Free Trade
- that is to say the Corporate West. 'Let the West feed the world' for
we do it more efficiently.
Everyone knows - and it was starkly underscored by the anti-WTO demonstrations at the 2nd Ministerial meeting in Geneva - that the 'level playing field' as billed by the various crafters of Free Trade is not so much level as maybe flattened, but still very much slanted in favour of the West. Various exemptions and remaining protection measures such as the so-called Green and Blue box exemptions of the WTO are outside the reach of the poorer Asian and European governments. The WTO hails the existence of such exemptions as fair and non-trade distorting but the country-level truth that is being elucidated is that these allowed exemptions from the rules are a source of unfair subsidy. In 1996 alone, it is reported that through such exemptions the U.S. corn production was subsidized to the tune of US$5 billion (although their phrase-crafters eschewed the nasty word SUBSIDIZE for a more favourable creation)! The governments of Asia cannot compete with that. Combined with the schedule of Minimum Access Volumes (MAV's - ensuring sa minimum level of access to domestic markets by foreign producers) under the WTO, Asian domestic prices are forced lower and Asian farmers fall starkly below even domestically defined levels of poverty.
The thinking of the West is that through globalization there will be more jobs for its own citizens. The pursuit to the end of the welfare state in the West through trade, then, is being sought at the cost of forcing a welfare state in Southeast Asia. Hundreds of thousands of persons have been forced out of work over the past year of the regional economic crisis which has its roots in globalization. These economically displaced persons now look to the state for help. Unfortunately regional governments do not have the resources to help them.
Looking at it in this light, it is confusing, then, to hear that these trade aspirations included in such fora as APEC (Asia-Pacific Economic Cooperation), ASEM (Asia-Europe Meeting) and of course the WTO are to the ends of correcting sources of aberrations in international trade. I cannot imagine anything more trade distorting than national instability; a nation at civil unrest does not put much focus on imports or exports. Too many countries in the world lay asunder as testament to that. TO THE TOP
...
Mixed with Regional Democracy ...
So what are the implications for a Thailand which is emerging as the
older brother in the region (the mother of all regional dictatorial leaders
- Suharto - has stepped down, Malaysia's is faltering) and is also presently
in the sticky situation of being of THE HAVE'S while many of its ASEAN
neighbours are of THE HAVE NOT'S? With the crisis still very much
present and no end in sight - regardless of what favourable predictions
and self-promotions the IMF tries to broadcast - ASEAN is facing less a
trading bloc role than a mutual aid and problem solving role. Can
ASEAN withstand this test of purpose? Many of us fear not.
What will happen if the rice situation in the region continues on this same path? La Nina - a weather phenomenon as unstable as El Nino - has brought floods and prolonged rainy seasons. The regional rice harvest is again facing very serious impacts. Will Vietnam join the ranks of Thailand in ceasing rice credit? Will Thailand and Vietnam have to stop even cash sales of rice to ensure sufficient domestic supplies? THE HAVE'S are being pitted against THE HAVE NOT'S. This spells regional insecurity. TO THE TOP
... Leads
To ???...
The passing of the boom has bequeathed Thailand and the region both
pause for reflection and a better educated population; providing both energy
and circumstance for change. What is lacking is a vector for this
potential force. A weak, self-serving administration and/or globale
business powers acting in an air of 'international economic development'
will probably lead Thailand and many of its near and not-so-near neighbours
deep into an abyss of social and political chaos.
Trying to think like a crafter of free trade, this would certainly wipe out any political and market advances made over the last quarter century and also eliminate hope for continued economic growth back in the West. So not only does Thailand and other signatories of the WTO have a social responsibility to listen carefully - especially now - to what their populations are saying in response to the impacts of trade negotiations to date; hell, it also simply behooves the very purpose of these long and arduously sought trade agreements themselves. TO THE TOP
J.D. Comtois
November, 1998