GIVE SOME CREDIT FOR TRYING
That does not mean that Srettha’s specific stimulus, as written, is well designed. The pandemic-era US stimulus measures triggered high inflation with payments to households that comprised about 4 per cent of Americans’ personal income, and that could be deposited rather than spent immediately, coupled with policies (from lockdowns to generous unemployment aid) that reduced supply.
Srettha has proposed payments that could exceed Thais’ monthly per capita income that must be spent quickly and in limited locations, on top of a hefty proposed minimum wage hike.
Giving a large amount of money, with a quick expiration date, to poor rural areas – over 140 per cent of pre-COVID monthly per capita income in the Isaan region – with few places to spend it, is a recipe for peculiar kinds of inflation.
Nonetheless, these flaws could be addressed by halving payments to 5,000 baht, staggered over a year with no “expiration” and no geographic restrictions. Moreover, if tourism finally recovers to pre-COVID levels, the government would have more reason to reduce or further stagger payments.
Corruption is a risk – as it is for infrastructure programmes – and it is unclear if authorities can develop a payment mechanism easily accessible to older and rural citizens. Tackling these issues will rely on the strength of Thailand’s legislative, judicial and media oversight.
Western economists have often – and often rightly – criticised Asian governments for not doing enough to support their consumer and household sectors, and instead promoting investments and exports. Now that Thailand’s government is trying to take households’ economic conditions seriously, it deserves some credit for doing so.
Richard Yarrow is a Fellow at the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School. He will be a Visiting Fellow at Thammasat University in the summer of 2024. This commentary first appeared on the ISEAS-Yusof Ishak Institute’s blog, Fulcrum.
