Anyone who has glanced at the best-seller lists recently might be forgiven for thinking that we’ve suffered a 150-year time warp. Topping the charts is a hefty tome entitled ‘Capital’ by a European political economist.
No, old Charlie Marx is not making a comeback (he never was a money-spinner in the book trade – try finding a copy of the Penguin Classics edition in any Bangkok bookstore and see what I mean). The full title of this new doorstopper (ideal for braining recalcitrant neoliberal economists) is ‘Capital in the 21st Century’ and it is written by Thomas Picketty, who is French (even if many Americans pronounce his name to rhyme with ‘rickety’).
The commentaries and reviews on this book are now many times more voluminous than the original 700-page text, but here’s a hint. If a review uses the words ‘rock star’ in the intro, it’s likely to be negative.
Or at least as negative as possible. The big surprise in the critiques from such unsympathetic quarters as the Economist is that by and large they accept the findings. It seems that Picketty has genuinely unearthed a new seam in economic scholarship – that rising inequality in capitalist economies has been the historical norm and that periods when things got more equal are the aberrations.
At this point, ideological differences start to emerge. Picketty, like Marx before him, argues that there are inherent design flaws in capitalism, and if not corrected, these will inevitably lead to disastrous levels of inequality.
Here you start to get counterarguments that say well, it’s not getting as unequal as all that, or the Maggie Thatcher theory that inequality is no problem, and in fact is a necessary stimulus to entrepreneurship and innovation and a generally increasing and down-trickling prosperity that will, somehow, some day, float all our boats.
And when he sets out his recipes for dealing with the situation, the right wing among economists (which is the most of them) suffer collective apoplexy. A wealth tax? splutters Forbes mag. But that’s … that’s unconstitutional. (Maybe you have to live in Thailand to get that joke.)
But the way economic disparities of wealth and income are becoming the topic du jour and usurping the economics discourse is causing anxieties even in unlikely places.
The Bangkok Post, for example, decided to bulk up a rather thin Songkran issue a couple of weeks ago with a full-page reprint of an interview with another iconoclastic economist, Ha-Joon Chang. And bravo for that. Until you see what they decided to leave out. (And I do not allege censorship by such an august publication, no matter how many of my letters they refuse to print.)
Chang’s leitmotiv is that what is defended ideologically and politically as free market capitalism is no such thing, that the more successful stories of capitalism are in fact engineered by interventionist governments (think Chang’s own South Korea or Singapore), and that the state takes a pivotal and necessary economic role even in such things as innovation. He cites, for example, studies that show that every bit of important technology in an iPhone was funded by the US government.
The interview then drifts into Piketty’s topic of inequality and Chang starts talking about what governments can do and have done about this. Here is a part of what the Bangkok Post thought was too inflammatory for the delicate intellects of their Thai readers:
‘If you look at the figures, you actually realize that before tax and transfers, quite a few European countries are more unequal than the United States. However, after tax and transfers, these countries end up being a lot more equal. Because they tax and transfer so much, they basically change inequality in a fundamental way. Germany is one country which is more unequal than the United States before tax and transfers, and Belgium is another. Sweden has a similar level of inequality with the U.S. before tax and transfer. All these countries have a very high level of inequality before public intervention.’
Now Thais know what taxes are, even if the whinging from the middle classes betrays an ignorance of where most come from in Thailand. But transfers are not so well understood and refer to what a government pays out in some form of income redistribution. It can include state benefits for unemployment, disability and old age (virtually non-existent in Thailand), and social welfare services like free access to health services (which in its Thai incarnation is of course considered Thaksin-instigated populism and therefore evil).
On the other side of the equation, Thailand has no significant taxes on wealth in the form of land, no inheritance tax, and even, as a special sop to the casino capitalists who play the stock market, a capital gains tax exemption on profits from share-trading.
And it’s not as if the pre-tax-and-transfer inequalities here were relatively small, as they are in Japan. In other words, successive Thai governments have done virtually nothing by way of taxes and transfers to dent the persistently high disparities in income (among the highest in the world by some measures) and the even more obscene disparities in wealth.
Now is this because they really, really wanted to, but didn’t know how (because the Bangkok Post doesn’t print this kind of propaganda)? Or is it because our ruling elite, with their jaw-dropping assets declarations, are quite comfortable with a 1%-us-versus-99%-them scenario just as long as the Thai economic system is so structured as to keep them safely ensconced in the 1%?
That’s a difficult question.
About author: Bangkokians with long memories may remember his irreverent column in The Nation in the 1980's. During his period of enforced silence since then, he was variously reported as participating in a 999-day meditation retreat in a hill-top monastery in Mae Hong Son (he gave up after 998 days), as the Special Rapporteur for Satire of the UN High Commission for Human Rights, and as understudy for the male lead in the long-running ‘Pussies -not the Musical' at the Neasden International Palladium (formerly Park Lane Empire).