New thinking on poverty

Chang Noi The Nation Asia News Network Bangkok

The scenes from Argentina in crisis are a big contrast to Thailand in 1997. There, the mobs smash and loot, presidents last only days, governments struggle for a solution which |will minimize the social impact, |and the International Monetary Fund (IMF) looks on in horror. Here the demos were small and polite, the government did the IMF's bidding, and society suffered the consequences.

Why the difference? Some argue that Thais are inherently peaceful. But look at the statistics of murder, violent crime, abuse of women and children -- and this fantasy dissolves. Perhaps Thailand just hasn't reached that stage -- yet.

In Argentina, this is not the first crisis. People have learnt the pattern. The rich make money in the booms, then hang onto it in the busts. Each time, more of the economy gets sold, and the vulnerability to international instability gets worse. The IMF programs always place the burden on the poor. So don't accept it, resist.

Maybe Thais are not naturally peaceable. Maybe they are still learning.

In November, the World Bank published an important report on poverty and inequality in Thailand. The Thailand Development Research Institute (TDRI) held its annual conference on the issue. Many top Thai economists contributed to the report and the event. Poverty in Thailand, they all agreed, had got significantly worse in the crisis -- an extra three million people. What's more, economic growth alone will not make poverty go away. Inequality is getting worse too, and this is a major issue.

What was being said is not new. Others have said it before. Who was saying it was revolutionary. Even while the World Bank recently made poverty a central issue, it insisted growth was the best solution, and it skirted round the issue of inequality. Thailand's mainstream economists followed the same line: poverty was disappearing; inequality was bad but |would disappear with time; growth was the answer.

The reasons for this apostasy are buried in the World Bank's excellent report.

First, during the good years of the boom, some sections of Thai society actually got poorer.

Second, during the bust, most of the pain got dumped on the poor. With those two pieces of information, faith in growth is no longer enough. You have to think of Argentina.

The report conveys all of this in statistics. But with imagination, you can convert their findings into the human story.

Over the last two generations of high population growth, many families migrated to become smallholder farmers on poor land, especially in the harsh Northeast. It was tough, but it was survival. When the urban boom started in the 1980s, the benefits did not trickle down this far. Agricultural prices sank. Things brought from the city became more expensive. Government spending on infrastructure and welfare went to the richer areas. Over half of all the income gains of the boom went to Bangkok (with just 11 percent of the population), and only one |ninth to the Northeast (with one third).

Some young people got on the ladder of education and escaped. But in the Northeast, this was still difficult. Rather more helped their family survive by migrating to the city for work. Some just did not have enough to invest in either education or migration. Some families were crippled because the main breadwinner got sick, died (poverty is dangerous) or disappeared. Some lost their land to a rich neighbor or urban speculator. Even during the boom, more and more of the land-poor and landless were falling below the poverty line.

When the bust came, the kids in the city lost their jobs. Remittances still kept some rural families out of poverty. But for many more, the loss of this income was critical. After a short upward blip, crop prices took another plunge.

Many poor people found some work on the employment-creation schemes financed by Miyazawa money, but only for a short time. Some got help from Social Investment Fund and other community schemes organized out-side the government. But these were late and sporadic. The government's only extra spending to combat the crisis was on student loan programs, and most went to the rich who could afford it already.

The top 60 percent of the population survived the crisis without any income loss. All the pain went to the bottom 40 percent. Worst hit were the landless and land-poor; the uneducated young rural migrants flung out of work; the northeastern rural households headed by a widow or abandoned wife.

Looking at the future, the |World Bank and TDRI are fear-ful for two reasons. Growth may |not be strong enough to return to the old trend of poverty decline. Even with growth, some places and some people are simply being left out.

The report is less sure what to do. It praises community schemes. It pooh-poohs Thaksin's programs. It hopes for better targeting. But the evidence in the report makes two priorities stand out: Education and land.

Education is still the best cure for poverty in the long term. Make it available and people will grab the benefit. The policies to cheapen access and improve quality are written into the education reform plans. The Thaksin government's abysmal failure on education reform must be reversed.

The land question is the dead elephant which lies in the center of the World Bank report and which everyone is trying to ignore. What happened with land in the boom-and-bust is a mystery. Was a lot sold? Is it now owned by speculators and banks? Recent attempts |to unravel this mystery failed because the Land Department refused to cooperate. But this report shows that lack of land is a major factor creating poverty and inequality.

The land issue is difficult. Old elites rose by land-grabbing in the past. New elites have done the same thing recently. But if Thaksin likes the Taiwanese economic model, he must know its success began from land reform. That would really be new thinking -- new action on poverty and inequality.