The Economist reports (via New Mandala):

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. No, insisted the prime minister, General Surayud Chulanont, the sufficiency economy “does not by any means imply a rejection of globalisation”. So what does it mean? The general was launching a report on Thailand by the United Nations Development Programme (UNDP which promised to answer that very question. It explains that the sufficiency theory is for sustainability, moderation and broad-based development; and against excessive risk-taking, inequality and other evils.

The king developed his theory during the 1997 Asian economic crisis, when the consequences of years of reckless growth caught up with Thailand. But Thailand’s finances are now much more solid and great progress has been made in bringing health care and education to the rural poor—as the royal theory proposes. Like so many generals, the leaders of last September’s coup seem to be fighting the last war.

Judged by the sufficiency theory’s own tenets, the five-year government of Thaksin Shinawatra, the deposed prime minister, was wondrous. His “30-baht health plan”, offering treatments for less than a dollar, helped cut poverty sharply. Yet his government ran a surplus most years (the new one plans a deficit), cut public debt and built big currency reserves. There were extensive programmes to help rural villagers find new sources of income.

However, the UNDP report goes out of its way not to mention the Thaksin government or its policies. There is no discussion of how the new “sufficiency” policies will differ from Mr Thaksin’s—just an uncritical lauding of the new government’s five-year plan as “the biggest shift in Thailand’s economic orientation in over two decades” and much praise for royal projects.

The sufficiency theory talks of “immunising” the national economy against shocks. So far, the military government only seems to be creating shocks. As a result, growth is set to slow, and with it Thailand’s progress in cutting poverty. Neither the UNDP‘s report, nor the many speeches launching it, discussed such awkward truths.

Perhaps it makes sense for the new government to obscure its predecessor’s achievements while stealing its best clothes. The question is why the UNDP thinks it should provide cover for this whitewash by puffing the sufficiency economy as a miracle-cure for the developing world’s woes. The answer is that the UNDP is a sucker for this sort of new-age waffle, especially if it has royal patronage. It has also lauded the not entirely dissimilar “Gross National Happiness” theory of Bhutan’s King Jigme Singye Wangchuk.

In publishing such an unbalanced report on a theory that is untried on a national level, the UNDP has abandoned all sense of objectivity. It is also lending legitimacy to a regime that took power by force. Hakan Bjorkman, the UNDP‘s deputy chief in Thailand, says it wanted to provoke a debate. But no such debate is possible in Thailand, because sufficiency theory is the king’s philosophy and anything remotely critical of it could be seen as lèse-majesté, punishable with jail.

COMMENT: New-age waffle? New Mandala have a number of posts on the sufficiency economy theory including on the UNDP report – see here, here, here and here.

In a recent article for Asia Times, Shawn Crispin provided a summary on specific policy objectives advocated by HM the King for the sufficiency economy theory:

At the height of that crisis, King Bhumibol delivered in late 1997 his landmark “sufficiency economy” speech, in which he called on the Thai population to reduce its reliance on exports and shift toward a more localized economic system, where at least 25% of the local production was geared for individual needs.

Re poverty falling sharply under Thaksin,* see this post of mine in March 2006:

But Mr Thaksin has delivered to the poor like no one before him. Between 2000 and 2004 poverty in Thailand fell from 21.3 per cent to 11.3 per cent, the World Bank says. Farming incomes in the poorest part of the country, the north-east, have rose 40 per cent in that period. Whether the policies are sustainable in the long term is another question, but the rural poor love him for it.

The Northeast, which is the most populous region and houses more than half of Thailand’s poor, has seen a reduction in headcount from 35 percent of population in 2000 to 17.2 percent in 2004

As the Economist notes, the popularity of the sufficiency economy theory in Thailand stems from the fact that HM the King advocates the theory. HM the King himself in a speech he gave in 1998:

The word sufficiency has another meaning, a wider meaning. It does not only mean self-sufficiency but also means to have enough for the individual to live on.

To have enough to live on, of course, means sufficiency economy. If everyone has enough to live on, everything will be all right. Furthermore, if the whole country can subsist, the better it would be, and Thailand at that time was on the verge of insufficiency. Some individuals had plenty, but some had practically nothing. In the past, there was enough to live on, but today, impoverishment is creeping in. We must, therefore, implement a policy of sufficiency economy so that everyone will have enough to live on. This sufficiency means to have enough to live on. Sufficiency means to lead a reasonably comfortable life, without excess, or overindulgence in luxury, but enough. Some things may seem to be extravagant, but if it brings happiness, it is permissible as long as it is within the means of the individual.

COMMENT: I guess that means Surayud and his wife’s couple of a million baht in foreign watches is ok as long its brings them happiness.

The idea of people living within their means is certainly not a bad idea (i.e people learning to budget), but when the government announces (HTML or PDF) that the sufficiency economy theory is the “overarching principle” for the Surayud government, I think some concerns need to be raised on exactly what this means for the government’s economic policy.

Crispin sees the recent capital controls and amendments to the Foreign Business Act as part of a new protectionist streak which the government is following. The government can seek to justify the measures as being in accordance with the sufficiency economy. Then again, there are of course some beneficiaries to the amendments to the Foreign Business Act as this article in the Bangkok Post points out:

“Who stands to gain from all this? I would say certain large local businesses …I guess after six years, we have not yet learned how much damage powerful local monopolies can do to our country!”

COMMENT: No wonder the elite are happy with things now, they are the beneficiaries and the under guise of the sufficiency economy theory.

Finally, I share the Economist’s concern about debate about sufficiency economy being curtailed because of lese majeste. Who knows whether the debate will be enhanced by the offering of a new degree in sufficiency economics which is about to be offered? We will just have to wait and see.

*UPDATE: On the issue of poverty and Thai PMs, Siam Sentinel has a post with a quote from Handley’s book:

Prem had done little over eight years besides protecting his job and the monarchy. His government proved no less corrupt, abusive, and bureaucratic than a civilian one. Arguably, too, social problems had worsened. Bangkok was thriving, thanks mainly to increased foreign investment. But in the countryside poverty remained widespread. In 1988 more than 25 percent of Thai families lived below the official poverty line, little changed from a decade before. The rich had gotten richer, and the poor poorer; in 1988 the richest 20 percent of Thais captured 56 percent of income, while the poorest fifth got only 5 percent. In 1976, the split had been 49 percent versus 6 percent.” (326)

COMMENT: Sorry, couldn’t resist the reference to Prem.