Inequality in Thailand: the consequences and the necessary improvement
Inequality and Poverty (1000 Words / Shutterstock.com)
Thailand is in many ways an extremely unequal society, one of the most unequal in the world. This applies to income, property and power. What are the consequences and what can be done about it?
Alexis de Tocqueville wrote his famous work Democracy in 1835 in America and declared that the "general equality of circumstances" served as the basis of American democracy. For Thailand it is different, because it is precisely the general one inequality of circumstances it defines. By adapting Tocqueville's words, we can say that inequality in Thailand has a huge impact on society as a whole, shaping state ideology and laws that favor administrators and other powers. The influence of inequality extends beyond politics and law: it creates opinions, arouses feelings, suggests the common way of life and modifies what it does not itself produce. The inequality of conditions in Thailand is the fundamental fact from which all others are derived. (Kevin Hewison, 2015)
In the link below there is an excellent story by Chris de Boer about the inequality in income and wealth in Thailand. It is one of the highest in the world. The wealth figures are relatively new and come from the book mentioned below as a source. Inequality in income and property has increased sharply since the XNUMXs, while it has decreased in the other Southeast Asian countries.
In terms of land ownership, the highest 10% of landowners own three-quarters of all land, while the lowest 10% own only 0.07%. The bottom half of landowners own only 2% of the land. Inequality is also particularly high when it comes to bank balances, houses and other assets. In addition, there is a great inequality in the distribution of respect. All these matters are increasingly coming to the attention of the public and also lead to increasing disapproval. www.thailandblog.nl/economie/inkomens- Vermogensongelijke-thailand/
Equality and inequality in a society
Perfect equality in a society is an illusion, it is not possible. Striving for a utopian future in which everyone is equal only leads to coercion and violence. On the other hand, a very large inequality will cause a lot of problems. It is detrimental to the economy because a lot of money that is earned disappears abroad, only when interest-bearing capital is used or spent on luxury goods.
Luxury at Siam Paragon (SubstanceTproductions / Shutterstock.com)
More importantly, however, is the fact that high inequality also causes a large difference in the chances of progress of many population groups. It affects public services that are necessary for equal treatment and equal opportunities for all residents in a country.
Large inequality in income and wealth also leads to large differences in power and influence
Although Thailand has had periods that showed the beginning of a growth towards more control by the population, the general impression is that Thailand is an oligarchy, a rule of the few. Money is power. That power is mainly vested in the people at the top of the economic pyramid. They have greater and better access to services and goods in society in terms of education, healthcare and the legal system. As Hewison points out in the article below, this great inequality defines and characterizes all aspects of Thai society. Since the economic growth of the XNUMXs and XNUMXs, inequality in Thailand has increased sharply, while it has decreased in other Southeast Asian countries.
This inequality is also strongly regionally bound. The average income in Greater Bangkok is three times that in Isaan (in the Netherlands, the largest difference between regions and municipalities is 10-20%). Those are unsustainable differences.
Bangkok, Khlong Toei (Angelo Cordeschi / Shutterstock.com)
The education
We can divide the income distribution into four quarters. The highest earning quarter, the lowest earning quarter, and the two intermediate quarters.
What the last three years of it secondary education we see that all income groups experienced a strong development from 1992-96 and also more so for the lower income groups, which partly compensated for the previous large differences between the four quarters.
In 2006 almost 60 percent of the lowest earning quarter followed this secondary education, for the next quarter this is almost 70, for the third quarter slightly more than 70 and for the richest quarter 85 percent. This is mainly attributed to the fact that secondary education is virtually free.
We have a completely different picture when it comes to the participation of different income groups in what is usually expensive higher education. The poorest quarter hardly improved between 1996 and 2006 and remains stuck at 10 percent, the second quarter went from 5 to 25 percent, the third from 20 to 40 percent, and the richest quarter from 30 to 60 percent. So here there are very big differences between the more poorer and richer groups. In addition, the wages of workers with higher education have risen much more than those with lower education.
Education (cheewin hnokeaw / Shutterstock.com)
The health care
Everyone in Thailand now has access to health care. The quality of that care is very difficult to measure, and with it the differences between income groups. I therefore only show how much is spent per participant for the three different health insurance policies.
This is more than 9.000 baht per year for civil servant insurance, 6.000 baht per year for company insurance and only 3.000 baht per year for the universal system on which the majority of the population depends.
In Bangkok there is one doctor for every 850 people, in the province of Loei that is one doctor for every 14.000 people (this applies to all doctors, including those in private hospitals). If you only look at doctors in state hospitals, the distribution is almost equal.)
It is inevitable that these major differences affect the quality of care, but there are no figures on this.
The legal system
Everyone has the right to be assisted by a lawyer, paid for by the state. However, the amounts available for this cannot meet the demand by a long shot. That means that some can afford a good lawyer and many cannot. Money also means that a suspect can be released on bail pending trial. He can continue to work and take care of his family, and better organize his defense. Many minor (and sometimes major) crimes can be bought off with money.
Politics
The dividing lines here often coincide with differences in income and property, not entirely unusual, but more and clearer than in many other countries. The contradictions here are fueled by differences in income, property and power, and parties are often based on those differences. Incidentally, all members of parliament are on average very rich, and that does not differ much per party. On land alone, MPs own an average of 30 million baht (figures 2013).
Road fatalities
An article in the New York Times recently argued that the extreme number of road deaths in Thailand can also be traced back to the differences in income, property and status. There is virtually no attention for the poorer people who rely on motorcycles (where 85% of the deaths occur), while car owners are often unpunished in accidents. www.nytimes.com/2019/08/19/world/asia/thailand-inequality-road-fatalities.html?module=inline
Equality and equal opportunities
Striving for more equality in incomes, property and power is good. As I noted above, a vision of perfect equality is unrealistic. What a society needs to do, and that applies to a large extent to Thailand, is to create more equal opportunities for all residents. This is a task for the government that can only be achieved if more groups in society are given a say, coupled with more freedoms and if more money is spent on those opportunities.
More equal opportunities cost money
The government in Thailand allocates only 20 percent of the gross domestic product (GDP) for public services. Thailand is an upper middle income country and generally such a country will use between 25 and 30 percent of GDP to establish public services. To improve public services and provide residents with more equal opportunities, Thailand needs to raise taxes, especially on higher incomes, and on property and inheritance.
First of all, the informal economic sector, which comprises 60 percent of all workers, will have to be integrated into the formal sector in order to file taxes and become part of health insurance.
Income tax makes up only 16 percent of the state's revenue, with the rest being VAT, business taxes, and excise taxes. This is mainly due to the many deductions that have a very high ceiling. This particularly benefits the very high incomes and leads to the poorer population groups paying relatively more taxes. That has to be better.
A number of years ago a law was announced that prescribes a new tiered taxation of land, houses, other property and inheritances. However, the rates were always reduced to such an extent before the law was passed that it does not help. That has to be better.
Together with a slight increase in VAT, it should be possible to raise taxes to the level of 30-35 percent of GDP. With this higher tax revenue, a start can be made with a social system: more benefits for the elderly and disabled, more scholarships and better facilities in the state hospitals, to name a few things.
Such a road will reduce political conflict and contribute to the well-being of the population.
The current government recognizes that something needs to be done about the unequal distribution of incomes and wealth. A number of measures are being prepared, but they are insufficient to achieve the intended goal.
Main sources:
Unequal Thailand, Aspects of Income, Wealth and Power, edited by Pasuk Phongpaichit and Chris Baker, Singapore, 2016 ISBN: 978-981-4722-00-1
About taxes in Thailand see: www.thailandblog.nl/background/armen-thailand-pay-relative-lot-tax/
About road fatalities: www.nytimes.com/2019/08/19/world/asia/thailand-inequality-road-fatalities.html?module=inline
An excellent article discussing the causes and consequences of inequality especially in the context of politics (Kevin Hewison, 2015): kyotoreview.org/issue-17/inequality-and-politics-in-thailand-2/
About this blogger
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Born in 1944 in Delfzijl as the son of a simple shopkeeper. Studied in Groningen and Curacao. Worked as a doctor in Tanzania for three years, then as a general practitioner in Vlaardingen. A few years before my retirement I married a Thai lady, we had a son who speaks three languages well.
Lived in Thailand for almost 20 years, first in Chiang Kham (Phayao province) then in Chiang Mai where I liked to bother all kinds of Thai with all kinds of questions. Followed Thai extracurricular education after which a diploma of primary school and three years of secondary school. Did a lot of volunteer work. Interested in the Thai language, history and culture. Have been living in the Netherlands for 5 years now together with my son and often with his Thai girlfriend.
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The reaction of Tino Kuijs deserves to be realized through democratic means.
If there is universal suffrage and voters are aware of the facts in the article,
I do not consider such a turnaround in political thinking and policy impossible.
Dear Tino, once again you have delivered a good piece for which I not only thank you, but also my compliments, because it gives a very good insight into the socio-economic situation of ordinary Thai people and their living conditions. Circumstances that you rightly say are unequal for more than ¾ of the population. Being able to freely and happily dispose of and enjoy land, income, education, health care, goods and services, legal aid, plus being able to participate freely in society: these are things that only the upper class affords.
You put forward a number of solutions that can eliminate that inequality.
And then you're talking about opportunities and money. Without money no opportunities is your reasoning.
But that is a reasoning that applies in the west. In the East, a completely different condition must first be met. Namely realizing that inequality is not good for people, that it is harmful to country and people, and that it does not bring growth and progress. In Thailand, this realization has not yet sunk in. Plus, as your argument points out, there's no sign of, and no question of, any mentality change on this one for now. Nor with that one, and certainly not with the other, of whom you know whom I am quoting.
Which solutions do you propose? (More) taxes on higher incomes? You said it yourself: adjustments in tax measures have only led to substantial deductions and reductions in rates. The top layer benefits!
Then involve the informal sector: 60% of all working people belong to this category, but without health insurance. However, if they have to pay from their earnings and taxes and higher hospital costs, they will come home from a rude awakening. You will only perpetuate the gray circuit even more with this.
Raising VAT? How much misery has the recent increase in NL already caused? Why make the life of the ordinary Thai even more expensive? If the upper class is already so wealthy, target them with direct taxes: push down deductions and raise rates. However?
It will not work in Thailand with money alone, because those who have money will not share it, let alone give it away! That Thailand is a middle-income country is irrelevant. The idea of such reasoning is that the country in question has the resources and uses them to solve its own problems. Such a country therefore bears the responsibility for achieving sustainable growth for the benefit of its population. However: no goals have been set in that sense for the coming government period (?), and as you start your article: money, goods and power belong to only a few, who take good care of each other. Things will only change in Thailand, in other words: in Thailand inequality will actually be tackled on all fronts if a change of mentality first takes place: namely, that Thailand belongs to its people and not just to a historical fixed idea.
I think most people know very well that inequality is great. But don't they know how to handle this without - put simply - 1) jeopardizing their daily obligations to put rice on the shelf 2) getting a home visit from the government (in uniform or civilian) 3) getting shot to become.
Moderator: No Thai texts please.
maybe the below is as good? is this a new house rule? I see a lot of Thai txt comments on TB
Dear Rob. That it is indeed not entirely harmless to fight against inequality (and that means government) may be known, but how is it possible that the man you mentioned a short time ago has not yet been arrested at the Democracy Monument…. (Thai txt is not allowed by moderato)
No idea KhunKarel. Maybe he will get an interview at home or he will be on a list. The reins seem to have been loosened slightly to keep up the appearance of democracy. Similarly, gatherings of more than 4 people are no longer prohibited.
Very informative article Tino, for which thanks.
Health care expenditure item mentions an amount of 3000 bht. per person spent for the majority of the population. Recently an article in which Thailand ranks far above the Netherlands in terms of quality of care (6th compared to 11th), while the premium alone is more than
40.000 bht. pp is published in the Netherlands.
Furthermore, inequality in income and wealth will continue to exist in Thailand because everything is aimed at maintaining the status quo or even moving it further towards the top. A so-called democracy in which the parliament is filled with people from the top and the clear striving of the tip of the top (consciously do not call an institution) for the return of absolute power, are dead in the pot for reducing the differences.
A few things that stand out without "scientific" substantiation, etc
Secondary education would be virtually free. I hear different sounds, possibly due to the additional costs such as transport, books, clothing. Many children from the age of 12 - 14 already have to cooperate due to the low income of the family.
Health care for the low incomes is very limited. Family has to scrape together money for medicines otherwise it won't be there. The mortality rate is proportionally higher is my subjective impression.
Road deaths high in Thailand because there are so many motorbike riders. Why wouldn't that be equal to the number of deaths (so less) in Vietnam. The lack of traffic insight and mentality is the number one cause!
This week, a boy spun off at high speed at Bali Hai pier and slid his head under the rear wheels of the bus, which was unable to stop in time. More examples can be seen daily.
To begin with, one must first start teaching everyone from childhood what the word respect means, that this word does not only apply to the elderly, but to everyone, only then lay a foundation for tolerance, which is hard to find here.
Idd Jan, you phrased that beautifully. Commanding and gaining respect is the start of change, not only in Thailand but all over the world.
You are of course right Tina. But what I miss in your story is that the poor part of the population is mainly farmers. And that the labor productivity of farmers in Thailand is still very low. But that problem will probably solve itself, albeit slowly. The generation born after about 1990 generally no longer wants to work on the land in the way their parents did. So fewer people will have to produce the same and preferably more. The government could play a role in this, as land consolidation was promoted in the Netherlands. They could also introduce new crops and provide information. Fortunately, something is already happening in that area.
And the retired farang residing in Thailand can of course also do something: finally start paying income tax (provided his taxable income in Thailand is high enough, of course). Because those who do not pay have no right to speak.
Income tax? If you live here on your pension money that you receive from Belgium, why should you have to pay tax on it?
I would like to pay income tax in Thailand if I am then freed from it in my own country. Then I will have more left over per month… please yes, I am in favour.
Pay income tax in Thailand? How come Hans?
You pay income tax to the country of origin, where you have your income from. The only tax that foreigners who are renting here have to pay is that on the interest from 'savings money' in a Thai bank. Like that famous 800.000 Baht as proof of income for the Extension of stay. Or more money of course. And that is automatically calculated and paid directly by the bank every year.
Or am I seeing it wrong?
Dear Maryse, experts have already written a lot about it on Thailandblog, but in short it means that our Dutch pension is taxed here, if it is not a state pension and if you live in Thailand (at least 6 months per calendar year) . But due to the relatively high threshold and the necessary deductions, many farangs will not have to pay tax here. Your AOW (and eg ABP pension in many cases) is taxed in the Netherlands and to avoid double taxation, no tax is levied in Thailand. If that does happen, you can reclaim the amount paid in the Netherlands. For more details you should look further on Thailandblog.
Incidentally, the Thai tax authorities are not (yet) actively pursuing farangs, but that can of course change, especially if the immigration computer systems are linked to those of the Thai tax authorities or if they receive the necessary information from the banks. Possibly even with retroactive effect and with a fine. Because you are obliged to file a declaration yourself. You can't get out of it by saying that they knew your income at immigration. If you want to make a declaration about 2019, do so well before the deadline of the end of March 2020 because they don't have much experience with it because apparently few farangs take the trouble.. But don't worry for now.
See that's what I mean: Tino Kuis starts a posting about inequality in Thailand, and people respond to paying cheaper taxes in TH, and deductions on your AOW benefit/pension. People completely ignore Hans Pronk's original idea: do something about Thai inequality and pay your taxes here.
A clear summary with, in part, a start to possible solutions. Insofar as this is possible within the set frameworks. What I miss is that the Thais themselves should think carefully about a change of mentality. Now their society looks more and more like a hologram. Much is appearance. I doubt whether that turnaround will happen. Because lack of money (or unfair distribution) is a factor. Mindset another. Moreover, the choice is theirs. I'm not going to point. It will be a difficult process, especially because the current rulers (and also many governments in the past) lack a real goal (except to continue with the money). Something that Singapore and South Korea (once the same standard of living) picked up much better. Thailand is partly sinking into a xenophobic quagmire from which this society can no longer easily escape even with a fair distribution of money income. Maybe I'm going to think very black and white for a while, but the junta remains stuck in its current compartmentalized mind, they may subconsciously descend into a kind of soft North Korean model. Look at how things are partly stagnating. Less tourism (numbers alone are not enough), poor education and English that no one understands. How many Thais hoping for a winning ticket, dealing in yaba or trying to get out of the country on a visa.
Another good article in today's Bangkok Post covering a similar topic. .
https://www.bangkokpost.com/opinion/opinion/1753419/thailands-wicked-development-trap
Quote:
However, the biggest obstacle is Thailand's socio-political stability. Political uncertainty is perceived as one of the main factors in slowing economic growth. Since the regime changed from an absolute monarchy to a constitutional monarchy in 1932, the nation has experienced 13 coups d'état and additional political crises, with the last two being the most socio-economically destructive.
Political instability has been the default for the last 87 years. With the exception of the 1997 “People's Constitution”, the other 19 charters were largely crafted as weapons to quash political foes and protect the regimes that assumed power through the coups. The net result is that Thailand has had the longest on-off military government in the world.
This shows how much Thaialnd stands in the way of itself: in favor of those who strive for the status quo. If it is established, for example in this Bangkok Post story, that 1932 coups have taken place since 13, of which the last 2 are the most destructive for country and people, then you also have to conclude that “political instability” is an end in itself? And for what? “The net result is that Thailand has had the longest on-off military government in the world.” For the personal glory of a few.
It is not difficult to say about Thailand how this country can develop in a more democratic and economically beneficial direction. There are so many studies and reports from just as many institutes and universities that apply seamlessly to the Thai situation.
But the sense of necessity is missing. There is no realization whatsoever that this country needs more than a few fables scattered here and there. Take the Prime Minister's recent gesture: he will make 10 baht available for the first XNUMX million subscribers. What is this about? instead of working on structural solutions, he sends many into the woods.
In my earlier response I already said that only a change in mentality can bring about change. That only happens when the top layer really recognizes that they can no longer have a say. But given the social conditions, that will take decades.