Sufficiency and the rich

Sufficiency economy is now a notion that pervades numerous aspects of Thai government operation. Sometimes this may signal a real shift in policy but more often, I suspect, it represents a superficial symbol of loyalty to the prevailing wisdom. This proliferation of “sufficiency economy” is obviously of some concern to Kobsak Pootrakool, an analyst from the Bank of Thailand. During his presentation at The Australian National University last week he indicated several times that there is a real risk of “sufficiency economy” being misunderstood and misrepresented in the post-coup rush to adopt its label. His approach was rather more purist and even scriptural. He spent a lot of his time examining the king’s statements about sufficiency economy, extracting from them the essential meanings of moderation, reasonableness and self immunity. This was an eloquent, if rather general, presentation and was largely consistent with the outline of sufficiency economy theory contained in the UNDP’s Thailand Human Development Report (discussed previously on New Mandala). A key argument put forward by Kobsak was that sufficiency economy does not just relate to rural people or the agricultural sector (though this is the sector that furnished his most detailed examples). He was at pains to emphasis that sufficiency economy also applied to the rich – moderation for example may mean buying a half-million dollar house instead of a ten-million dollar house (a rather brave example, I thought, when discussing royal theory). But at the same time he indicated that the progress of sufficiency economy in the Thai business sector was rather limited.

A second presentation was made by ANU economist, and expert on the Thai economy, Peter Warr (based on a paper he had written with Chintana Sandilands). He examined the sufficiency economy approach from a number of different perspectives, linking some of the kings statement’s both with Buddhist belief and developments in the Thai economy over the past few decades. Most interesting was Warr’s discussion of the relationship between sufficiency economy theory and recent economic research on happiness. A number of researchers who have surveyed happiness internationally have found that happiness tends to increase with rising per-capita-GDP but that the increase starts to plateau once national affluence reaches a certain level. Here is one such graph which I have grabbed from the web (I have roughly inserted the trend line):

 happiness.JPG
Warr pointed to a seeming commonality between this research and the sufficiency economy approach (which he prefers to call the “economics of enough”). What the happiness research indicates is that there is a level of “sufficiency” or “enough” beyond which happiness will increase only very modestly. As such it would be moderate, reasonable and risk-averse to not seek to push income or expenditure beyond this sufficiency threshold.  In other words, some economic research points to the good sense behind the sufficiency economy approach.

Warr’s presentation raises interesting questions. As one audience member pointed out the graph would appear to indicate that the sufficiency economy approach applies most logically to those on high incomes – it is high income earners who are getting a minimal happiness dividend for their increased income. By contrast, increasing the income of low income earners is likely to significantly increase happiness. So, a progressive tax system that reduced the income of the rich (and only marginally reduced their happiness) and allocated it to the poor (making them much happier) would have a significantly positive effect on gross domestic happiness. A redistribution of government expenditure from urban to rural areas would have a similar impact. I wonder if these approaches to sufficiency economy will be taken up by the Surayud regime?

Following Warr’s presentation, I spoke about the UNDP’s Human Development Report and its enthusiastic endorsement of the sufficiency economy approach. My presentation was based on my previous posts to New Mandala, so I won’t repeat my comments here.

Overall, the seminar was a useful discussion of the sufficiency economy concept from various perspectives. Kobsak’s presentation indicated that there are likely to be many approaches to sufficiency economy within the Thai government – ranging from the rather purist (his approach) to the more overtly pragmatic, political and cynical. It is easy for commentators (like me) to overlook this diversity within the state.