The People Power Party (PPP), successor to Thaksin Shinawatra’s banned Thai Rak Thai party won 232 seats out of 480 in Thailand’s election on 23 December. With another 41 seats won by other Thai Rak Thai successor parties, Thaksin’s supporters led by Samak Sundarajev should be able to form a government provided democratic norms are maintained. That should bring back Thaksin’s economic policies of free market growth combined with an extension of prosperity to Thailand’s underdeveloped rural sector. When democracy produces a result this sensible, it must be rewarded.
The coup of September 2006 that overthrew Thaksin, who had been re-elected the previous April, had no obvious economic justification. Thai growth had averaged 6% per annum under Thaksin, with restrained inflation, a balanced budget and increasing private sector investment. Much of the coup’s force came from Bangkok residents’ protests against Thaksin’s policies, which had redirected economic development towards Thailand’s impoverished rural areas. Nevertheless, with Thailand’s revered King Bhumibol behind it, the coup seemed likely to succeed.
Economically, it didn’t. The “Three Stooges” quality of policymaking in its early months, with an attempt to impose currency controls reversed within hours, improved over time, but not before causing Thai growth to slow and private sector investment to dip for the first time since 2002. A surge in public spending, up 11% in 2007, doubtlessly targeted to assuage the anger of rural areas at losing the government they had voted for, has provided Keynesian stimulus. Nevertheless, the coup-makers’ economic record is undistinguished.
Thailand’s position is thus the reverse of that in Pakistan, where an economically competent dictatorship is faced in January’s election by an opposition that provided corrupt, inept socialism in the 1990s. In Thailand’s case, economics combines with politics to urge the rapid formation of a new PPP-led government, surely fairly easy provided undemocratic forces do not intervene. That will allow the resumption of Thaksin’s economic approach, which could usefully be copied by other countries such as China where development is excessively concentrated in the big cities. King Bhumibol should bask in the reverence of his subjects, but stay out of politics.