Friday, February 9, 2007

Another Explaination of Sufficiency Theory

Sufficiency versus Thaksinomics


Lack of confidence and understanding by foreign commentators about Thailand's present government's sufficiency economy-based economic policy have still prevailed although the government has tried hard to explain it since it took office in October 2006.

Lack of confidence? What the heck does not agreeing with or criticizing sufficiency theory have to do with confidence?

I love how Thai people always pull out the old "you never understand me" excuse or insults every time somebody doesn't see the world exactly the way they do.

An example can be found in The Economist (Jan 13-19 issue) in an article entitled "Rebranding Thaksinomics". The writer wrote: "The government's espousal of a 'sufficiency economy' theory, developed by King Bhumibol, further fuelled suspicions that it plans a partial retreat from Thailand's hitherto liberal economic stance."

One example in a badly written article in The Economist is not evidence of a world wide media conspiracy or misunderstanding concerning sufficiency theory. Where are the other foreign condemnations of sufficiency theory? Where are the citations?

Some currently implemented policy measures are cited as supporting evidence that economic growth will be slower. They include tighter restrictions on foreign ownership of local companies, the Bank of Thailand's curbs on currency inflows, and a planned budget deficit.

The problem was the Thai government implemented these policies while simultaneously spouting sufficiency theory. Ironically, the Thai government's policies actually caused instability and shock to the Thai economic system, which is what King Bumibol warned against. Therefore, it was the idiocy of the Thai government and not sufficiency theory or foreign actions that caused the recent problems and misunderstandings.

In parallel, the UN Development Programme was blamed for supporting such a move toward the non-objective "sufficiency economy" theory as a means to overcome national poverty without acknowledging the success of the "Thaksinomics" policy of ousted prime minister Thaksin Shinawatra, which, in the author's opinion, better helped accelerate growth and cut rural poverty.

Where is the citation? Is that what the article said? The Economist criticized the UNDP for embracing "sufficiency theory" without any kind of critical analysis. And the reason there was no critical analysis is because of Thailand's restrictive lese majeste laws. Again, Thais expect the rest of the world to kow tow to whatever King Bumibol proposes, but many other people in the world are democrats and they actually believe in debating and discussing public policy.

Thailand's cabinet ministers have lately come out on the defensive, affirming that the sufficiency economy-based policy does not contradict, but rather complements the globalised market economic system. In essence, the argument was that Thaksinomics was only a policy whereas the sufficiency economy is a principle governing a broad-based management approach, including economic policy formulation, based on moderation, integrity, transparency, accountability and good governance. In other words, the sufficiency economy focuses on long-term economic growth and stability (sustainability).

Thailand cabinet ministers are the last people on the planet to speak about sufficiency theory considering the total mismanagement and corruption of the Thai state. How does sufficiency theory compliment globalization? Like I wrote before in another blog entry, capital goes abroad to look for profit; it cares about maximum profit; it doesn't want sufficiency because that contradicts the point of capital going abroad in the first place.

In response to the comments made in foreign publications and from cabinet ministers, Mr Thaksin himself has recently accepted, through adviser Noppadol Pattama, that he had espoused the sufficiency-economy concept when he was prime minister. In fact, one may recall that his government has adopted and emphasised the sufficiency-economy philosophy as a guideline used in the formulation of the present 10th National Economic and Social Development Plan (2007-11). Why did no foreign commentators raise questions at the time?

Many foreign commentators criticized the national socialist aspects Thaksinomics.

If one were to study His Majesty the King's speech on the sufficiency economy, one would understand that it provides direction on appropriate conduct that will lead to a sustainable way of living, better able to meet the challenges arising from globalisation and other changes. His Majesty's speech, as taken from the material distributed during the 1999 TDRI Year-end Conference is as follows:

"Sufficiency economy is a philosophy that stresses the middle path as the overriding principle for appropriate conduct by the populace at all levels. This applies to conduct at the level of individual, families, and communities, as well as to the choice of a balanced development strategy for the nation so as to modernise in line with forces of globalisation while shielding against inevitable shocks and excesses that arise.

"'Sufficiency' means moderation and due consideration in all modes of conduct, as well as the need for sufficient protection from internal and external shocks. To achieve this, the application of knowledge with prudence is essential. In particular, great care is needed in the utilisation of untested theories and methodologies for planning and implementation. At the same time, it is essential to strengthen the moral fibre of the nation, so that everyone, particularly public officials, theorists and businessmen, adheres first and foremost to the principles of honesty and integrity.

"In addition, a balanced approach combining patience, perseverance, diligence, wisdom and prudence is indispensable to cope appropriately with critical challenges arising from extensive and rapid socioeconomic, environmental, and cultural changes occurring as a result of globalisation."

There is nothing wrong with what King Bumibol has said. It is common sense. It is the same thing that our parents, teachers, religious texts, and many other books of wisdom have taught us for hundreds of years.

It should be noted that the sufficiency-economy concept is much broader than self-sufficiency. Sufficiency means being satisfied enough, minimising greed, being reasonable, and applying moderation. It enables people to better cope with external and internal shocks and live in a more sustainable manner.

I love how people who embrace sufficiency economy don't live the lifestyle themselves. I think anybody who speaks as an expert on sufficiency should submit a financial disclosure form. The fact is this: Sufficiency doesn't create material advancements in society. How will Thailand economically advance if it doesn't sell its surplus agricultural goods and surplus labor power? The problem is Thailand doesn't produce anything of value that advances society, because its education system is abysmal and those in political power don't want Thais to develop their mental faculties and analytical abilities, because that sort of intellectual power threatens the entrenched interests of the ruling class. Therefore, Thailand has to buy advanced technology-- computer, telephones, medicine--from the West, and to buy from the West, it must purchase it with something.

The concept of good governance embodied in the philosophy could verify that a market economy can certainly function more effectively without fraud, corruption and distortion and, hence, results in a betterment of economic efficiency and performance.

Funny, there are dozens of governments in the world that aren't totally corrupt like Thailand's government. There are many highly successful, regulated capitalist economies in the world. Thailand seems to be the country that is hopelessly corrupt in every way, so the King is right to tell his own people to stop ripping off each other. But let's face it: King Bumibol has been telling the Thai people to stop being corrupt and stop cheating each other and to be good and honest and it seems the people have refused to listen to him, because nothing has changed. The King is right. If Thais listened to him, the Thai government would function better and the economy would be better off.

To most economists, the role of good governance in a free market or a laissez-faire economy is not new but dates back to the time of Adam Smith's "invisible hand". Economic theory since then has held that the most efficient resource allocation system is achieved when individuals and firms pursue their own self-interests without any central direction. But this is valid only if one assumes good governance as a precondition. Good governance here encompasses both good government regulations and conduct, and good morality of the populace at all levels so as to be able to guide their appropriate conduct with honesty, transparency, accountability and integrity.

Actually, this is a very good summation of what Adam Smith said in "The Wealth of Nations." But unfortunately, the Thais neither listen to the King nor to Adam Smith.

Is not it a time, then, for the Thai people and the whole world to embrace the sufficiency-economy philosophy as a way of living for the betterment of life in a globalised world?

Most of the civilized world already lives by the words of King Bumibol and Adam Smith, or at least subscribe to their belief systems, which is why they are civilized, successful countries. It is the Thai people and the Thai government who have chosen to cheat, lie, steal and protect their own selfish interests rather than work for the public good or for sustainability of the state and world, and that is exactly the reason why Thailand is in the mess that it is in. Foreigners don't have a problem with the sufficiency theory per se, but rather with Thailand's apparent hypocrisy and double standards concerning how Thailand is implementing it.

Ake-Aroon Auansakul is director of the research division at the International Institute for Trade and Development. The opinions expressed here are his own. He can be reached at

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