The Big Lie and austerity mania are indeed global. Today we’ll see it in a Thai media pundit who calls himself a “senior economics reporter”…
Despite public debt accounting for 44% of GDP, it appears the Thai government remains safe from the immediate risk of fiscal crises, and is still able to acquire low-interest loans from domestic sources.
Right away the nonsense begins. The Thai government creates its domestic spending money out of thin air, and therefore does not need loans from domestic sources.
As for “public debt accounting for 44% of GDP,” this is irrelevant. Japan’s public debt is over 200% of GDP, meaning the amount of money deposited at Japan’s central bank is twice the amount of a given year’s GDP. What does that have to do with the state of Japan’s economy? Nothing.
A nation’s debt-to-GDP ratio is only meaningful when we are speaking of (a) foreign debt in foreign currency, or (b) entities that cannot create their domestic spending money out of thin air, such as euro-zone countries.
But that is no reason for the government to be complacent. In fact, permanent secretary for finance Somchai Sajjapongse said the need for fiscal reform is imminent, without which the country may experience a fiscal crisis in the next 10 to 15 years.
There it is. “If we don’t have more austerity, we will be doomed!” For governments that create their domestic currency out of thin air, the sole purpose of austerity is to widen the gap between the rich and the rest. The only exception to this rule would be if a nation was experiencing severe inflation, and the government wanted to use austerity to remove the amount of money in circulation. But the author says nothing about inflation. The author says Thailand may have a fiscal crisis in its domestic currency, which is nonsense.
Incidentally the term “permanent secretary of finance” warrants explanation. Thailand’s form of government is modeled after the British (i.e. Westminster) system that is used by thirty different nations. In the Westminster system, the Prime Minister chooses his Finance Minister (which at present in Thailand is Mr. Apisak Tantivorawong). The minister has a deputy minister, assistant minister, a vice minister, and several other assistants.
Meanwhile the “Permanent Secretary” of Finance (or Permanent secretary of Foreign Affairs, or of Defense, or of Agriculture, or Justice, or Labor, etc etc ) is a high-level bureaucrat. “Permanent” usually means about ten years, such that “permanent secretaries” do not come and go with each Prime Minister.
At present, Thailand’s parliamentary system is ruled by a military junta that took power in a May 2014 coup d’état. Thailand’s ruler is General Prayut Chan-o-cha. Since he does not always agree with the Western Empire’s demand for neoliberal “reforms,” the Empire calls him a “dictator.”
Anyway the same garbage we see in the Empire also occurs among media pundits in Thailand…
The need for fiscal reform is imminent, because Thailand will have to deal with increasing pressure from a fast-approaching ageing society.
What is the “pressure”? If you need to create more benefits for retirees (which in Thailand is called “Social Security”) then just create the money out of thin air, like always.
According to a study by the Fiscal Policy Office, the number of people reaching retirement age will reach 25.2% in 2030. This means in the next 16 years, this group of people will comprise one quarter of the entire population. As a result, the government has had to allocate an immense budget for the retirement safety net, which accounted for 270 billion baht in 2014 or 2.1% of GDP. Half of the sum went to pensions for retired state officials. The rest went on living allowances for the elderly, and contributions to the Government Pension Fund, the Social Security Fund (SSF) and the SSF) and the newly-established National Savings Fund.
So what? Money for beneficiaries (which is only 2.1% of GDP) goes into the Thai economy, and therefore helps everyone, not just beneficiaries.
In 2024, the amount is estimated at 680 billion baht, or 3% of GDP. Of the total, some 470 billion will be used for the retirement safety net.
The government will simply create it out of thin air. Notice how these pundits cite large numbers to make you think there is a crisis. Or as this writer calls it, “an enormous burden.” It’s like saying, “The USA has a 19-trillion dollar national debt? Where will we ever get that money?” Answer: we don’t need to get it. The money already exists. Nineteen trillion dollars is simply what’s been deposited at the Fed.
Despite the enormous burden, the government has yet to suffer a financial crunch, and has managed under a deficit budget for two decades. But the pressure will intensify each year.
As you can see, the garbage is the same in almost every nation. “The deficit will cause us to explode! We need a balanced budget! We need AUSTERITY NOW!”
With the need to relieve the financial burden, the government and the Office of the Civil Service Commission have considered raising the retirement age of civil servants to 65 years old from 60 which will which will ease the burden on pension payments for the retired and curb recruitment in the bureaucracy.
Where is the “burden”? Just create the money!
As the burden grows bigger, there has been little, if any progress in tax reform measures including a proposed hike in value-added tax while the introduction of housing and land taxes, due to public opposition have been put on hold indefinitely. Though the new taxes can ensure social justice, no government dares introduce them for fear of the political impact.
The author wants the government to impose austerity in the form of spending cuts and / or tax increases. However the military junta refuses. Therefore the Western Empire hates the junta.
But a new fiscal reform approach means more than tax increases. On the contrary, reform measures can include tax cuts — both in personal or corporate income tax — which are aimed primarily at boosting competitiveness and public acceptance. The measures for small- and medium-sized enterprises are a case in point. The Finance Ministry has offered an amnesty for SME operators to persuade them to duly pay tax in accordance with the single financial account project. Those eligible to join the project are operators with maximum registered capital of 5 million baht, and a sales performance not exceeding 30 million baht a year. Cooperative operators will be exempt from corporate tax this year.
Translation: When media pundits talk of “fiscal crises” and the need for “reforms,” they are calling for tax cuts for the rich and for the corporations — and tax increases for the masses. It’s all about widening the gap between the rich and the rest. This boosting of inequality is called “boosting competitiveness.”
Moreover, the Finance Ministry recognizes the need to improve the efficacy of the tax system which is vital, given that tax money accounts for 80% of the government’s total income. It is hoped that when the economy improves and people have more income, they will be more willing to pay tax, while the use of e-payments should significantly help heighten efficiency and improve revenue collection.
Yes, even in Thailand we see the lie that the government relies on tax revenue.
Reform of the tax system is not enough. In fact, the government needs to look at spending reform to prevent flawed projects such as the rice-pledging scheme that became an enormous budget burden.
The author falsely uses the term “burden” eight times in his article, and “reform” eight times. When anyone uses the term fiscal “reform” it means, “widen the gap between the rich and the rest.”
Damages from the rice scheme, plus past mistakes made before the 1997 crisis, became a massive burden amounting to 2 trillion baht or 35% of public debt for the current administration. An improvement in spending that prevents unnecessary losses or graft would ensure a stronger economy while taxpayers will be more willing to make contributions as they could be certain their money will be wisely used, with national development the ultimate goal.
The author is referring to a rice subsidy plan that was overseen by Thailand’s former Prime Minister Yingluck Shinawatra, who stole so much of the money that the military junta dismissed her on 7 May 2014 and took over. In fact, her corruption was one reason why the military took over.
In 2011 Thailand was the world’s largest exporter of rice, and had enough clout to influence world rice prices. The Thai government sought to buy rice from local farmers at a price 50% higher than the global market price. The government would then stockpile the rice in warehouses, causing a shortage that would drive up world prices. Thailand would then sell the rice abroad for increased foreign revenue.
Thai farmers signed up for the plan, and they boosted their production, expecting to get increased money for their rice. Thailand stored between 10 and 15 million metric tons of rice—equivalent to almost two years of the country’s rice exports. However, government bureaucrats stole more than $4 billion of the money (2 trillion baht ), and some 800,000 Thai farmers did not get paid.
Naturally Ms. Yingluck Shinawatra’s corruption made her a darling of the Western Empire. Her brother, Thaksin Shinawatra, was also corrupt, and was also ousted as prime minister (in 2006). He fled Thailand with his stolen billions before he could be imprisoned.
Since Ms. Yingluck Shinawatra is popular with the Western Empire, the Empire claims that the rice subsidy plan was killed by India’s return to the rice export market after a long absence, causing global process to drop for rice. The Empire claims that the Thai government “ran out of money” to support the rice subsidy, even though the Thai government can create infinite money.
Meanwhile all the extra rice that was produced was piled up in warehouses. Since there is now a surfeit of rice, the Thai farmers are getting 30% less than they were before the subsidy was introduced. However Gen. Prayuth (the military leader) ordered state-owned farmers’ banks to disburse some $2.7 billion owed to approximately 800,000 farmers who were unpaid for months for their rice.
Anyway the author of this article is lamenting that the rice scandal makes ordinary Thais less willing to pay taxes, and therefore less willing to submit to austerity.