Thaksin-businessman & capitalist?

[admin]

The Prime Minister is well known for being influenced by what he sees in foreign countries and returning from foreign trips with new ideas he gained there. Any guesses on what initiatives he will bring back from Brazil?

(BTW: We were going to mention this today, but coincidently The Nation had the same idea and printed a story with some speculation.)

********

PM to pick Brazil's brain
The Nation, Published on Jun 13, 2004

Prime Minister Thaksin Shinawatra has a busy schedule ahead of him this week during a visit to Brazil, as he plans to learn about gasohol, football and Brazil's science, technology and fashion industry.

During the United Nations Conference on Trade and Development (Unctad) in Sao Paolo from June 12 to 17, Thaksin said, he will take time off his official visit to meet Brazilian businessmen who produce gasohol and gasohol engines.

"We have an over abundance of sugar [in Thailand]. With oil prices rising, it would be useful if we learned to produce gasohol,'' he said. Gasohol is made from petrol and ethanol, often distilled from fermentation of crops or crop waste.

Thaksin is also interested in Brazilian football and said he wanted to see how Brazilian training produced world-class clubs. But the Prime Minister stopped short of expressing any interest in buying a Brazilian football club.

"We are developing our sports sector because I want young Thai teenagers to play sports. I love learning. Whatever others are good at, if it would benefit our country, I want to learn to utilise it,'' he said.

The PM will also study Brazil's continuing development of atomic energy, bio-agriculture and Aids vaccines and it's fashion industry, in another attempt to learn from industry experts. Brazil is world-renowned for its designer brands and labels, and the Thai government is ferociously promoting the Kingdom's fashion industry under the slogan "Bangkok Fashion City''.

During the 11th Unctad meeting, Thaksin said, he will give a speech on "trade and poverty'' and take part in a round-table meeting with 10 heads of state, joined by the ministers of more than 100 countries. Many countries will ask how Thailand achieved sustainable recovery in the face of numerous economic crises, he said.

"I will touch on our economic policy of self-reliability, which creates inner strength for the country,'' Thaksin said.

The PM added that the country had earlier overly focused on export and trade without paying enough attention to local development.

"We need to have a strong base so our labourers and farmers can stand on their own feet,'' he said.

Thaksin said he would promote trade, as Thailand's deficit with Brazil had climbed to Bt10 billion per year.

http://www.nationmultimedia.com/page.news.php3?clid=5&theme=A&usrsess=1&id=115374

[Scuba22]

Regardless of whether people are pro or anti-Thaksin, one thing everyone appears to agree on is that he is a successful businessman and a capitalist.

I would like to challenge that idea - I think it's a myth.

In my view, a "successful businessman" is one who builds or runs a successful business in a free market with open competition without unfair advantage. Otherwise "business" becomes a euphemism, as when the mafia speaks of themselves as "only businessmen".

Looked at in this way, has Thaksin ever had a "successful business" - that is, has he built or run a successful company in a free market with open competition and without unfair advantage? My only evidence comes from the book "Thaksin - the Business of Politics in Thailand" by Pasuk, a professor at Chulalongkorn University.

She details Thaksin's early years when he tried to start several businesses in areas with open competition - running movie theaters, developing property, etc. All of these failed.

Pasuk goes on to state that he started his "success" by selling computer equipment to the police - winning a procurement contract that he had written himself, and that this was somehow all overseen by his wife's father, who was influencial in the police force. If this is true, it can hardly be called a "business success".

Using the money from this computer sales, Pasuk claims that Thaksin systematically curried favor with military leaders who controlloed the telecoms agencies. She quotes Thaksin talking about buying expensive cars for the generals who approved his mobile phone monopoly license and his satellite license. Thaksin also said that the going rate for kickbacks were in the order of 10-15% of project value. Once again, if true, this is not a "business success".

After that, the situation becomes more complicated. First, the military starts losing power over politics after the 1992 uprising. Second, new mobile phone licenses are granted. As a result, uncompetitive advantage cannot be gained from military relations anymore - one needs political power over regulators over subtle areas such as interconnect charges.

Pasuk explains how at this point, Thaksin enters politics, and then climbs to his current position. How his position affects his business starts getting very complex, getting into details on telecoms regulations such as interconnect charges and so on. I must admit that this is where I start to get confused.

I would love to open a clear discussion here about how current government regulations and activities have impacted Thaksin's business interests. We hear about this usually in sinister conspiracy-theory type of allegations, but I wonder if we can't lay out a clear fact-based analysis of this. What regulations have been passed? Who passed them? How have they benefited (or hurt) Thaksin's businesses: AIS, iTV, Shin Satellite, family businesses like mobile phone distribution (sister?), media production & event planning (son), or others?

This gets to the question of "capitalism". The essence of capitalism is free competition in a level playing field where fairness is guaranteed by the government. Because of that, Adam Smith stated that any government policies recommended by any single business must always be looked at with suspicion because competition is always bad for business though it is good for society in general.

If Thaksin uses government to favor any specific companies, his own, his families, or any other, then he is not a capitalist. We may find other words for him - corporatist, perhaps, or corporate socialist - but certainly not "capitalist".

This I propose two discussions here: first, is Thaksin really a "successful businessman"? What businesses has he succeeded in without massive government assistance? Perhaps it would be more accurate to call him a "wealthy government contractor", or "successful welfare recipient".

Second, can we start going over specific regulations and actions this government has taken and examine the impact of those actions on businesses related to Thaksin? I don't want to claim that the reason for those actions was in order to benefit these businesses - that would speculate on intent, and I don't think we can do that. But we can look at the facts and let them speak for themselves.

How about it?

Best regards,

Scuba22

[GWR]

How about 'Thai-Style Entrepreneur'?

My guess is that if you really put him on the spot about this issue, he would tell you flat out that this is how business is done here, always has been, and will continue to be done for some time yet.

It reminds me of a Malaysian Blog I read recently that described assassination as a 'Thai' Business Tool.

[Scuba22]

Dear GWR -

Thanks for your reply. Personally, I find the moniker of "Thai-style" when applied to these kind of practices an insult to Thailand and self-respecting Thais. I feel the same way when people use "but this is Thai culture" as an excuse for being lazy, slow and inefficient. I don't believe "Thai culture" has anything to do with being a shiftless idiot, and it's an insult to claim that it does. Did Buddha tell people to provide terrible customer service? Is it Theravada teaching to bribe officials? Of course not. Thai culture has many wonderful and fascinating facets, it's a sin to use it as an excuse for general stupidity.

I would also add that there are a number of quite successful Thai businesses that do NOT do this - Thai Carbon Black & Thai Union Frozen both pop to mind, but there are others. The key difference is that these companies tend to be export-focused, therefore subject to international competition, meaning that they need to have superior goods and services at a competitive price to sustain their business. This is the essence of capitalist competition.

By contrast, Thaksin's businesses (as well as his cronies) tend to be primarily domestic, where competitive advantage can come from preferential access to markets through licensing, permits, and other sundry mechanisms which do not ensure superior goods & services for customers. Notice how international expansion tends to go to other repressive regimes with even worse corruption issues - Cambodia, Laos, Burma. You won't see BEC Tero expanding into Europe or Japan any time soon - they'd have no idea what to do when not protected by government connections.

But you make an excellent point about the historical roots of what we call "corruption". Pasuk, in her book "Democracy & Corruption" in Thailand, talks about how in the past during the absolute monarchy period, regional bureaucratic positions were granted by the monarch. These positions carried no salary, but the right to provide certain services in a given area for a fee. The "tax farming" system in 18th centure Europe was quite similar - if you gave a certain amount of money to the King of France, you had the right to tax a certain area to recoup your investmnt.

Today, the idea of buying a civil servant position in order to charge fees for your services to the people is clearly "corruption" - but it wasn't always seen that way, and Pasuk argues that these ancient notions still have not gone away, regardless of new laws and constitutions.

Lawrence Lessig, the constitutional law scholar at Stanford, commented once that democratic laws only make sense if they reflect values already inherent in the people, that is, you can't impose democracy and freedom top-down - it has to be desired and won. Given Thaksin's demonstrated attitude about the law, he clearly has no concept of legal supremacy, and lots of Thais voted for him. Indeed, even the UK educated, international investment banker was completely clueless about why it's important that privatization follow law.

This brings me back to my original question - I think one way to get people to understand the issues would be to be clear about them. Can we pinpoint specific TRT policies and actions that have clearly benefited specific companies at the expense of others? What are the facts here?

Thanks,

Scuba22

[Tettyan]

Scuba22 -

You're right that we shouldn't be making value judgements about "Thai business practices." Thaksin, and many others like him, are products of the system. If not Thaksin, then it would likely be someone else. Many idealist, foreign-educated Thais return to find a system that does not reward honesty and hard work, but connections. If you don't respond to the incentives provided by the system, then you won't make it anywhere.

Having read Pasuk's book on corruption, you'll understand that few Thais understand the corruption problem from a systemic perspective. Rather, many emphasize the solution lies in emphaszing "ethics" or "traditional values." Or that if only "good people" can be found to serve in government. The problem is that a system full of perverse incentives can turn "good people" into the kind of clowns who run the country today.

In an earlier post, you touch on the importance of rule of law and institutions. Many Thais still believe that democracy means simply choosing someone to rule the country. But you and I know that real democracies are not ruled by men, they're ruled by laws and institutions. Can't really blame the people for this though. This isn't America, where students are taught to read the constitution as early as 5th grade. Thai constitutions change so frequently that they can hardly be held up as a sancrosant work in a civics class. Teachers often discourage their pupils from forming opinions on politics, and are often used as canvassers in local areas. I guess we all know that it takes a very long time for a democratic culture to take root.

One more problem may be Thailand's adoption of a civil law system as opposed to a common law system. I don't want to be picking a fight here, but I think this gives less incentive to the government to respect legal precedent and the law in general.

Oh yes, what TRT policies have benefited specific companies? Well, you need look no farther than the ITV case. The original ITV concession required the station to pay a high licensing fee and devote most of its airtime to news and documentary programs. These conditions, plus the 1997 crisis, are probably why the station never made any money. With ITV deep in the red, it was a ready target to be gobbled up by Shin Corp. Of course, now Shin was saddled with a money-losing enterprise. So after Thaksin became PM, an arbiration panel set up to resolve the dispute over ITV's contract gives into ITV's every demand! The concession fee was reduced and the station was allowed to replace much of their news programs with entertainment programs. What a neat and very convenient coincidence!

If anyone wants to argue that this was NOT a case of policy corruption, I would be happy to hear your comments.

[Wisarut]

Totally agree with you that it is a policy coruption at the purest form :p
They just want to grab the nataional asset for themselves so they can use the mas the ransom ... to threat thsoe villagers to live in starvation without electricity or even water if they have go AGAINST theri regime ....

[GWR]

Hi Scuba.

You might well be overloading the expression 'T-SE' with your own interpretations there. How about 'Entrepreneurial Policeman' instead?

I certainly had the idea of 'tax-farming' in mind. The Na Ranong family of Southern Thailand spring to mind, with their special ability to court favors from the establishment in both Malaya & Thailand. And it would seem that such mechanisms were essential for a monarchy that was intent on widening or stabilising its sphere of influence.

In fairness to many Civil Servants, I think many of them genuinely believe that they are still living in the 'tax-farming' era. After all, it usually isn't enough to read about systems of improvement; you actually have to experience them fully. And that's none to easy for a Civil Servant earning less than 10,000 a month. Of course, after you've added on a few backhanders, it might well be possible for a CS to travel to a country that has a degree of transparency. But he or she won't really experience such transparency whilst on a short vacation. Indeed, he or she might easily come back from such a tour having experienced a great deal of racism; & feeling alienated by a system that allows little respect for the financially-challenged. [France to name only one!] Having already experienced the very tangible benefits of Thailand's long-established system of sweeteners, he or she will probably return with the distinct feeling that there are no benefits to be derived from doing things the Euro/USA way. Which is especially interesting when you think of Taksin working his way up through a Police Force which still believes that Policeman can live on thin air; and still buy a motorcycle, radio and gun on the proceeds. [Someone was telling me only this week about a Policeman who shelled out 30,000-40,000 for a very insignificant promotion, only to find himself on the beat in Yala.] And God knows how much Taksin had to shell out to catch the eye of Pojama's well-connected folks. They would have wanted a good slice; along with plenty of evidence that they would all be well-looked after over the years. Hardly surprising he turned out like this, when one considers his uniformed nurture.

I wouldn't for one minute claim that all this is a uniquely Thai problem. I see very similar things happening in Europe, too; indeed getting worse by the day. It might well be argued that the European colonial powers (& American neo-colonialists) share a very high responsibility for foisting certain practices on Siam/Thailand against which it hadn't yet acquired any natural immunity. And I have little good to say about Euro elites; knowing only too well the treacherous depths to which they have all too frequently descended for the sake of a few miserly Eurodollars more.

I'm also not convinced that Buddhist belief has any direct effect on business practice either; although I sometimes suspect that Buddhists are way too tolerant of those who pay only lip-service to their belief system. Then again, Christianity is a dab-hand at such oversights. The Asian Miracle is remarkably similar to the Western Industrial Revolution, in as much as it is/was almost entirely acheived through the (at times masterful) exploitation of cheap labour.

I rather like your 'Welfare Recipient' definition. I have the feeling that Taksin would find that especially insulting. Listen, I work with Republicans every day of the week. Most of them spend all their time making disparaging remarks about 'Welfare Recipients'. They use it as a barb to annoy anyone who is not entirely on their side, regardless of work record. They would never allow themselves to admit for one minute that they have gotten rich by being subsidised by the sweat of the poor. Their success is all down to their innate ability to work hard and outthink others. They obviously live in a 'perfect vacuum'.

We don't necessarily begrudge other people's (inevitable) wealth, but we do begrudge it when they begin to impose their warped system of justice on us.

Dear GWR -

Thanks for your reply. Personally, I find the moniker of "Thai-style" when applied to these kind of practices an insult to Thailand and self-respecting Thais. I feel the same way when people use "but this is Thai culture" as an excuse for being lazy, slow and inefficient. I don't believe "Thai culture" has anything to do with being a shiftless idiot, and it's an insult to claim that it does. Did Buddha tell people to provide terrible customer service? Is it Theravada teaching to bribe officials? Of course not. Thai culture has many wonderful and fascinating facets, it's a sin to use it as an excuse for general stupidity.

But you make an excellent point about the historical roots of what we call "corruption". Pasuk, in her book "Democracy & Corruption" in Thailand, talks about how in the past during the absolute monarchy period, regional bureaucratic positions were granted by the monarch. These positions carried no salary, but the right to provide certain services in a given area for a fee. The "tax farming" system in 18th centure Europe was quite similar - if you gave a certain amount of money to the King of France, you had the right to tax a certain area to recoup your investmnt.

Today, the idea of buying a civil servant position in order to charge fees for your services to the people is clearly "corruption" - but it wasn't always seen that way, and Pasuk argues that these ancient notions still have not gone away, regardless of new laws and constitutions.

Lawrence Lessig, the constitutional law scholar at Stanford, commented once that democratic laws only make sense if they reflect values already inherent in the people, that is, you can't impose democracy and freedom top-down - it has to be desired and won. Given Thaksin's demonstrated attitude about the law, he clearly has no concept of legal supremacy, and lots of Thais voted for him. Indeed, even the UK educated, international investment banker was completely clueless about why it's important that privatization follow law.

This brings me back to my original question - I think one way to get people to understand the issues would be to be clear about them. Can we pinpoint specific TRT policies and actions that have clearly benefited specific companies at the expense of others? What are the facts here?

Thanks,

Scuba22

[Scuba22]

Hi GWR,

Yes you’re right, I am overloading the expression. As a minority ethnic group member growing up in the US, I am probably a bit over-sensitive about using national/ethnic labels. As you point out, building a business based on government handouts is not limited to Thailand, indeed the US appears to be going more and more in this direction. At the same time, I work with a wonderful group of young Thai entrepreneurs who are dedicated to building honest businesses. So if the activity is not limited to Thailand, and there are Thais who behave very differently, I just don’t see calling it “Thai-style” – that’s all.

I do like “welfare recipient” especially for its insulting characteristics. Imagine if people started referring to Thaksin not as “Thailand’s most successful businessman” but “Thailand’s most successful government welfare recipient”. It’s certainly more accurate. Frankly, I prefer “Thailand’s most successful beggar”, but that may be a bit over the top!

You’ve got some great points about civil service reform. In Thailand, this “reform” has been mostly superficial window dressing – provide a measly salary, create a bunch of laws that no one follows; where the reality is still a feudal system. For real civil service reform, you need competitive salaries (e.g. as in Singapore), thorough training for civil servants, and a hard core approach to law enforcement. If you’re missing any of these, it just won’t work. Thailand is missing all three.

Though I don’t mean to stereotype, I do think this is indicative of an overall emphasis on the superficial rather than the fundamental in Thailand. For example, there is a stock exchange, but the free float of companies is so small, they are effectively family-owned. The current government are masters in the style-without-substance approach, but you hardly see anyone really criticizing them effectively for it.

An interesting example was the Marketing Man Somkid running around in August telling exporters to “ship products out quickly” so that the trade balance would revert to positive after the deficits over the summer. Of course, shipping out orders quicker would look like growth, but it would only falter if nothing were done about future orders. Sure enough, today came an announcement of another deficit. Well, duh.

As belittling as it sounds to say it, I do believe that Thailand is simply not ready for some of the complex political and economic structures that have been pushed on it both by outsiders and domestic elites. Without a concurrent building of an educational system capable of creating citizens with the skills for questioning and self-government, installing these systems only allows the local elites to solidify their dominance while appearing benign to the outside world – I’d say this is a WORSE situation than obviously screwed up systems like Zimbabwe or Burma, because it LOOKS OK!

best regards,

Scuba 22

[Tettyan]

You’ve got some great points about civil service reform. In Thailand, this “reform” has been mostly superficial window dressing – provide a measly salary, create a bunch of laws that no one follows; where the reality is still a feudal system. For real civil service reform, you need competitive salaries (e.g. as in Singapore), thorough training for civil servants, and a hard core approach to law enforcement. If you’re missing any of these, it just won’t work. Thailand is missing all three.

Not to mention nepotism. Although recruitment into the civil service appears to be meritocratic and transparent, through competitve examinations, placement and promotions are definitely not. Look at the prevalance of fancy last names among the senior bureaucrats. Politicians formally are not supposed to intervene in personnel matters, but they can order Permanent Secretaries to transfer bureaucrats at will. A truly independent and meritocratic bureaucracy insulated from political pressures would go a long way toward solving the country's problems.


Though I don’t mean to stereotype, I do think this is indicative of an overall emphasis on the superficial rather than the fundamental in Thailand.

I don't find this to be an unfair stereotype at all. In fact, I think this is true throughout much of East/Southeast Asia.

As belittling as it sounds to say it, I do believe that Thailand is simply not ready for some of the complex political and economic structures that have been pushed on it both by outsiders and domestic elites. Without a concurrent building of an educational system capable of creating citizens with the skills for questioning and self-government, installing these systems only allows the local elites to solidify their dominance while appearing benign to the outside world – I’d say this is a WORSE situation than obviously screwed up systems like Zimbabwe or Burma, because it LOOKS OK!

I can't disagree with this, but I'd just like to remind everyone of Churchill's quote about democracy, that it's "the worst system in the world, except for all the others."

Regards,

Tettyan

[Scuba22]

We're getting off the topic of Thaksin's "business success", but into a very fascinating area of political science...

It's been interesting to see the calls for a new Constitution given the way that the 1997 Charter has been abused and de-fanged.

I am skeptical that the cause of the issues in the current government are really rooted in the content of the Constitution, or whether the failure of the Charter is a result of it not really reflecting the reality of the Thai power structure of value system.

There is an idea in political science that the laws of a nation are only effective insofar as the reflec the values of the people. There is also an opposite notion that the laws serve to guide the people, rather than being guided by them; but in the Thai context, I see the first situation. I don't think that a Consitution, not matter how well structured or inentioned, will in itself change the behavior of people, much less the powerful and wealthy.

If people don't believe in checks & balances and self-government, no charter is going to make that happen. Changing the constitution may be a fine idea and I'm not opposed to it, but I think it's naive to think that's going to have a major impact.

Rather, there needs to be a concerted effort to communicate ideas and stimulate discussion about the rule of law and the role of civil society; this discussion needs to happen in the countryside, in much the same manner that TRT spreads its policy message - village to village, with great fanfare.

The problem is of course that this takes money. It is pretty clear to see where the TRT message spreading money comes from, it's not at all evident to me who has an interest in creating a civil dialogue in the provinces.

Would Sondhi fund something like this? The Nation? The Democrats? I can tell you that if someone did it well and had the media savvy to publicize it well, they could be real heroes, both here and internationally.

What do you think?

Scuba22

[Tettyan]

Dear Scuba22,

I've been meaning to start a thread on this topic for a while, but havn't managed to get around to it. If you havn't done so by later tonight, I'll try starting one with my own suggestions for Constitutional reform. Of course, you're right, many gov't critics scapegoat the constitution for producing Thaksin. But I think that several aspects of the charter were flawed from the start, and should be changed. More on this later.

On the topics of getting out a message to the grassroots, you're absolutely right. But it not only is going to take money, it also will need a lot of time, years even. Furthermore, without the rule of law, trying to organize politically in the countryside can be a pretty dangerous undertaking. TRT, because it controls the levers of the state, can use local gov't officials and village heads to serve as its organization and get its message out. You'd have to build a parallel grassroots organization - an uphill task partly because the powers that be would use every dirty trick in the book (intimidation, harassment, bribery, organized crime) to stop you. One model that maybe you could turn to is the Japan Communist Party. Their representation in parliament is small, but their local-level organization is nothing less than impressive and their presence is felt in city councils throughout the country. And this is in spite of (or because of?) the occasional harassment from right-wing groups and their friends in the yakuza.

On another note, this coming month I will be doing a lot of traveling, so I won't be posting on this forum very much. That doesn't mean I've forgotten you all, I'd love to see how these threads continue to develop over the month. I hope to still follow the discussions here even during my travels.

Best,

Tettyan

[Wisarut]

Now, the leader is RUNING out of CASH ... Look at 80 billion Baht Loan to refinance the treasury,
the long waiting lines for contractors at Provincial Treasury Hall as a few good examples..

Therefore, The leader is BEGGING for foreign investors to invest on mass transit projects of
200-550 billion Baht ... after the failture to privatize EGAT ... What a Pathetic leader we have !

IMHO, I would like the Leader to SACRIFICE his wealth as well as his crony's wealth to finance
such megaprojects if they want to FINISH the project at all. Otherwise, better staff the
gold bars and greenbacks in your 20 new suicases .... and fly that SHAMEFUL
Thai Khoo Fah AWAY ..... and we'll SHOOT you down ....

Well, I think you DO have secret Bank accounts at Cayman, Zurich, London or even Singapore
which you can make trasfer from SCB & TMB bank accounts to the secret account abroad, don't you?

[ncr]

...you can say what you want - just gotta love Wisarut's polemics! :p ;)

[Scuba22]

Yes, it's great to see people expressing themselves.

I wonder why nobody defends the government with such passion?

[Wisarut]

Those TRT men/women are trying to defence TRT .... by applying SMEAR Campaignsand Politickings ... but Many people feel OUTRAGE on the followign issue so NObody come to defence TRT and the leader

1) The Revealation of the Plan to Overthrow Thai Monoarchy by Applying Smear Campaign AGAINST alogn with the sychophantic praises of theLeader

2) The Photo of Royal Plane 44-444 at Finland durign the EuropeanTrip by PM alognwith the involvement of the lad who ride that Royal Plane. .... alogn with the Photograph of the leader in Wat Phra kaeo.

3) the Deficits after approvign FTA .... Forcing many hilltribes, farmers including dairy farmers to either commit Suicide or REvoltign Against the regime.

4) Blatant Prospereities of the leader's Family along with the gains of their relative's wealth and crony's wealth ... while people outside the sphere of pwer from rags to to riches become MUCH poorer.

5) The Furyfrom both bureaucrat offices and state enterprise officers from the meddling schemes without plannign in advance.

6)The top brasses or even the officers who are NOTwithin the sphere of pwer would get NO promotion ....

the list goes on and on ... Wating for Ignite --- at ANY seconds!

[Tettyan]

I agree with Scuba22. Where are all you intelligent pro-government posters? We know that there are many more people who read this board than who actually post. But there's no point in having a discussion really if no one is presenting contrary views.

I hope we're not scaring you all away. I admit that I am a bit harsh toward what I view as illogical arguments or utter stupidity. However, I think the record of this board shows that all posters here treat each other with the utmost respect, and we seldom resort to personal attacks against the messanger. Nor do we disrespect those who have a little trouble with the English language (your English is probably much better than my Thai anyway). So, to all of you who hold opinions different from those expressed on these threads so far - Welcome! We don't bite. Really.

[Wisarut]

We don't cook YOU on frying woks & blasting palm oil either ...

[Scuba22]

The hit rates for this site clearly indicate a lot of readership that does not post. It's amazing to me that in all these people there is not ONE person who can articulately defend the current government using facts and logic in an open discussion. That should be a major media story in itself.

I very much enjoyed Tom V's comments, but they were mostly taking Thaksin's opposition to task. This is totally appropriate and welcome, but it doesn't defend the government.

Mr. Wisarut - I am intrigued by your comments about suicides and protests among hill people. Has this been documented anywhere?

Cheers,
Scuba22

[Wisarut]

Well, The Massive Importation of Fruit and vegetables from China via Chaing Saen Port have effetively KILLED many farmers who run fruit orchards and vegetable fields in the North but the hardest hit are those Hilltribes ...

Many feel OTRAGED when TRT members ask thsoe farmers to grow soemthign else to give the way for the products from China

Now,they have few choices

1) Suicide the whole family
2) Sellign speed pills or even Ecstacy to kill thechildren of those High So and political Elites
3) Revolt

[Scuba22]

Mr Wisarut:

I appreciate the sentiments, but I must ask - has there actually been documented suicides of hilltribe fruit growers related to trade with China? That would be very interesting to several journalists I know.

I was at the "Microcredit Forum" last week where the governmnent touted all sorts of "success stories" - I'll post a longer piece on that in the "grassroots policies - successful?" thread.

It would just be good to get some verified reports rather than vague accusations.

Thanks,

Scuba22

[Wisarut]

Well, I have seen the news abotu the detrimental effects of FTA with China from Post Today .... a few days ago .... which mentioned that hilltribes got the hardest hit while thoe farmers in the north also got very hard hits .... even though theri relatively better wealth has kept them from the worst effect ....

[Bangkok Cicero]

I am skeptical that the cause of the issues in the current government are really rooted in the content of the Constitution, or whether the failure of the Charter is a result of it not really reflecting the reality of the Thai power structure of value system.

There is an idea in political science that the laws of a nation are only effective insofar as the reflec the values of the people. There is also an opposite notion that the laws serve to guide the people, rather than being guided by them; but in the Thai context, I see the first situation. I don't think that a Consitution, not matter how well structured or inentioned, will in itself change the behavior of people, much less the powerful and wealthy.

....

What do you think?Scuba22

There is another possibility: one of the best ways to combat corruption is to open up the economy, particularly the financial sector, to international competition. This view is supported by empirical evidence and economic logic. The best summary I have seen of this is in the 3 May 2003 edition of The Economist in an article entitled “Shipbuilding”. I will summarize and add some local comments below:

1. Corruption discourages foreign direct investment (FDI), the safest and most productive form of capital inflow. It therefore relatively favors bank lending as a source of funding.

2. Connected lending supports corruption. Connected lending is where loans are made on the basis of connections rather than commercial merit; that is loans, are made to cronies irrespective of their ability to meet their obligations. We saw here in Thailand precisely how much damage connected lending can do to an economy. I personally saw how much connected lending there was in Thailand by participating in the due diligence of the four banks that were sold to foreign banks. all of them made the same bank model: take deposits from ordinary Thais, and lend the money to you cronies. I worked in the US for 16 years in this area, and I can tell you that the level of connected lending here surpasses the US at least ten-fold. I was surprised that the whole house of cards here was able to last long.

3. Multinational banks are less likely to be corrupt because of international market incentives and regulatory requirements in their home jurisdictions. They have their reputations at home and abroad to consider. Is a large multinational bank going to risk its reputation in more developed markets by making connected loans in Thailand? No. Multinational banks also have an incentive to expose corrupt practices since it provides an unfair business advantage to corrupt competitors. Banking sector FDI also increases diversification; if a shock does occurs in one country, it doesn’t cause the whole bank to collapse. Financial activity continues, even while the country is in economic shock.

4. There is empirical evidence here in Thailand to back-up point no. 3. While close to 70% of the loans of domestically owned banks were non-performing (“NPLs”), only about 11% of the loans of foreign banks in Thailand were NPLs. Why? I think we all know the answer.

5. The opposition to liberalizing the financial sector here is fierce. It is so closely wrapped in nationalistic nonsense that it is almost impossible to have a rational discussions on the subject.


The counter-argument is generally: "True, but Thailand is not ready." If Thailand insists on delaying liberalization of its financial sector until its domestic banks are “ready” to compete, reform will never happen because the gap will continue to widen. Meanwhile, other economies in the region will surge ahead as they take the sensible step of opening up their entire service sector, including the financial sector, to foreign competition.

Paradoxically, or perhaps predictably, many of the opponents of the current government are the fiercest critics of those measures that will open up the Thai economy.

[Scuba22]

Dear BK Cicero:

Thanks for the post and welcome to the discussion!

You bring up some very interesting points about financial sector liberalization that have puzzled me for a while. As an insider in the bank world, it's great to have your perspective.

The odd thing I see is that Thaksin makes a great show of openness to international investment and free trade while laying the foundations to control specific industries domestically through stacked regulatory bodies.

For example, the NTC and proposed NBC are full of crony-connected sycophants who can be expected to regulate in favor of their patrons. No one I know in either the media or telecommunications industries (which are fast converging) would say that the industry is "open" - unless they worked for one of the favored companies. If you read the "media" thread, you'll see how convoluted and complex the regulatory regime is, and it's that way purposefully to provide advantage to specific groups.

In financial services and tourism, however, he makes lots of noises about opening widely to foreign competition, and gets backlash from protectionist voices in the opposition. Personally, I support liberalization of both sectors, both from a philosophical point of view and from a personal point of view - my bank is pretty shoddy even though owned by a Singaporean. It was noticably better under ABN Amro, and I'm positive that if foreign banks are allowed to open multiple retail branches under their own brands (which is not allowed now, the reason why ABN Amro pulled out of Bank of Asia, as I understand it - please correct me if I'm wrong), then services would improve.

The "big three" non-state banks here - Kasikorn, Bangkok Bank, and Siam Commercial Bank - like to pretend to be "world-class" and competitive, but from personal retail experience, they're a far cry from that. Retail branch staff have next to no training, are horrible at customer service, and can't handle any inquiries beyond routine transactions. Would Citibank, HSBC or Standard Chartered do any better? I don't know, but I can't imagine it would be any worse. I don't think we even need to mention KTB or the smaller banks.

But these banks have never been big Thaksin cheerleaders anyway. Banthoon of Kasikorn by all accounts is a very straightforward and honest fellow, and it's caused friction with Thaksin in the past (largely related to scandals involving charities that Banthoon exposed). BBL and SCB seem to stay on the sidelines in any political issues. SCB for obvious reasons as a Crown Property Bureau holding, and BBL is probably the most international of Thai banks anyway.

By opposing financial sector opening, Thaksin's opposition paints themselves as backwards-looking nationalistic protectionists and lends credibility to Thaksin's claims of being a forward looking free market capitalist. In areas of his own business, of course, he is nothing of the kind - so perhaps his support for financial services opening is a ploy to limit local power in industries which could potentially challenge him while currying favor with international community?

Then again, Shin Corp has made moves in the financial services arena. I personally believe that this is a setup for when the massive personal loans made by government banks start going sour, Shin will come in and buy them on the cheap, creating a situation where thousands of Thai people are in debt to Thaksin.

I'd love to hear your thoughts on that possibility.

Cheers,

Scuba22

[Wisarut]

The following are the letter from Ajarn Sumet Jumsai - the descendant fo Kign Rama III to Premier Thaksin abotu the wayt to run the contry by folling the example of King rama III.


Letters to the Editor
Published on December 17, 2005

An open letter to Thaksin Shinawatra, prime minister of the Kingdom of Thailand.

A lot of people are put off by the fact that you, sir, have become prime minister through your business dealings and amassing of huge wealth.

I should like to draw your attention to the example of another great businessman who amassed unparalleled wealth in this country, This was His Majesty King Rama III. You might, sir, learn the following lessons from him:

1. His late Majesty, who was called chao sua, or “chief merchant”, by his father, HM King Rama II, made huge profits from trading with China. But every penny earned was regarded as belonging to the state and not passed on to his children or family members.

2. Being pious, a great deal was spent in building or expanding monasteries, which establishments also served as schools and community centres, Wat Pho being in this respect the first open university in the Kingdom. (These expenses could be afforded on top of other mega-programmes: building new towns, city walls and fortifications, new canals, a new Navy and wars on the Burmese and Vietnamese fronts.)

3. On his deathbed, HM the King asked that his successor (King Rama IV) continue with a long list of unfinished monastery-building projects, while leaving a huge gold reserve for future use, should the country find itself in crisis. (This gold reserve was used to bail out Siam in face of the French territorial occupation and blockade of Bangkok in 1893.)

4. His late Majesty did not tolerate corruption, and those found guilty were punished harshly without exception.

So you can see, sir, that your being a great businessman with incomparable wealth, and now head of government, is not necessarily a bad thing, as long as you have an underlying moral agenda.

Sumet Jumsai

Bangkok

[Khun004]

I find the moniker of "Thai-style" when applied to these kind of practices an insult to Thailand and self-respecting Thais. I feel the same way when people use "but this is Thai culture" as an excuse for being lazy, slow and inefficient. I don't believe "Thai culture" has anything to do with being a shiftless idiot, and it's an insult to claim that it does. Did Buddha tell people to provide terrible customer service? Is it Theravada teaching to bribe officials? Of course not. Thai culture has many wonderful and fascinating facets, it's a sin to use it as an excuse for general stupidity.
Thank you, Scuba22, for looking carefully.
Excellent analysis.
And compliments to you on starting a valuable thread here.

[Khun004]

I propose two discussions here: first, is Thaksin really a "successful businessman"? What businesses has he succeeded in without massive government assistance? Perhaps it would be more accurate to call him a "wealthy government contractor", or "successful welfare recipient".

Along with Scuba22, I wonder, also.

I conclude that many so-called "successful businessmen" in many countries are not so much successful at business, as they are able to successfully play "the government game".
And what is the government game?
One theory is - in our current era - the government game is democracy.

The theory goes by the name of a recent book on this topic, Democracy: The God That Failed.
Perhaps, better, "that is failing", in many countries of the world.

The original post by Scuba 22 refers to "capitalism": The essence of capitalism is free competition in a level playing field where fairness is guaranteed by the government.

No.
That definition will cause serious problems in thinking.
It assumes government is essential to free competition.
But government is the antithesis of free competition.
Government is a monopoly of the application of force in a geographical area.
Government "guarantees" - backed by threats of force - can not contribute to capitalism in any way.

And capitalism makes no assumptions whatsoever about playing fields.
Real capitalists take reality as they find it.
Reality is rarely level.

Capitalism can not be impossed by government.
Capitalism is the absence of government controls.
Capitalism is what happens when people are left alone.
Nowhere in the world today are people left alone.
The last time that happened was in the American states during the 19th century.
There simply wasn't much government there, then.
The result of that unfettered capitalism awed the whold world.
The Americans are still living off of the stored value from that century.

Capitalism can not be impossed by government, but democracy can be imposed, and has, in many countries, including in Thailand.

Anyone spending much time in Thailand quickly notices that Thai people imitate many Western practices, without quite understanding what it is they are doing.
The result is sometimes more beautiful than the original, because the Thais add their own, highly-developed, sense of aesthetics.
But, too often, the result of the imitation is not quite right: a recipe where one ingredient is missing.
One such practice is democracy.
I submit that democracy may be the cause of the "successful businessman" problems which seem so prevalent in many places.

Thailand has committed itself to the trappings of democracy.
What if democracy itself leads to degeneration of the culture?
One theory makes a good case that democracy is bad ... but monarchy is less bad.
This theory concludes that monarchy, with all its failings, is a lesser evil than mass democracy.
It explains such phenomena as rising levels of crime, degeneration of standards of conduct and morality, the decline in security and freedom, and the growth of the mega-state, as adaptations to the imposition of democracy.

Does this sound like Thailand?
It does to me.


Democracy: The God that Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order
by Hans-Hermann Hoppe
Transaction Publishers (October, 2001)
ISBN: 0765808684

From an overview, written by the author, I have selected a few excerpts.
As you read, do you see any parallels with the rise of "successful businessmen" in Thailand?


Myth 1: The emergence of states out of a prior, non-statist order has caused subsequent economic and civilizational progress. In fact...progress must have occurred in spite – not because – of the institution of a state.

Myth 2: The historic transition from absolute monarchies to democratic states. Neoconservatives interpret this development as progress; there is near-universal agreement that democracy represents an advance over monarchy and is the cause of economic and moral progress.

This interpretation is curious in light of the fact that democracy has been the fountainhead of every form of socialism: of (European) democratic socialism and (American) liberalism and neo-conservatism as well as of international (Soviet) socialism, (Italian) fascism, and national (Nazi) socialism. More importantly, however, theory contradicts this interpretation; whereas both monarchies and democracies are deficient as states, democracy is worse than monarchy (emphasis added).

Transition from monarchy to democracy involves ... a hereditary monopoly "owner" – the prince or king – being replaced by temporary and interchangeable – monopoly "caretakers" – presidents, prime ministers, and members of parliament. Both kings and presidents will produce bads, yet a king, because he "owns" the monopoly and may sell or bequeath it, will care about the repercussions of his actions on capital values.

Myth 3: The third myth shattered is the belief that there is no alternative to Western welfare-democracies a la US. This belief is false because the modern welfare-state is not a "stable" economic system. It is bound to collapse under its own parasitic weight, much like Russian-style socialism imploded a decade ago. ... An economically stable alternative to democracy exists. The term ... for this is "natural order."

For the author's complete overview see: http://www.lewrockwell.com/hoppe/hoppe4.html

So, to Scuba's original question:
I hold that what we are seeing is not successful business, it is not successful capitalism in action.
What we are seeing is successful adaptation to a government-impossed system, a system which goes by the name, "democracy".


As for me, on December 5th, I happily wore a yellow shirt and held a lighted candle during a ceremony to celebrate the birthday of the King.
Given a choice only between the effects of democracy - such as Scuba 22 observed in his original post - and government by monarchy, I say, "Long live the King!"

I just wish there was another option, "Long Live Capitalism".
But that seems nowhere to be found.

.

[Scuba22]

Dear Khun004,

Thank you for your contributions and compliments, and welcome to the discussion. I understand what you're saying in regards to the state and capitalism, and from a purely theoretical framework, I think it's very sensible. I think you're advocating an "anarcho-syndicalist" line of thinking where there is no coercive state power (the "anarcho" part), but that people choose to associate with each other voluntarily for various purposes (the "syndicalist" part). It is a wonderful utopian vision, but I am concerned about its practicality.

For one thing, there are bound to be disputes between individuals and groups, and these disputes need to be resolved. It is difficult to imagine that all disputes can be worked out by the parties involved, often an impartial mutually trusted referee is needed - this is the role of the judiciary.

Secondly, it is useful to have a certain set of standards in place for society to function. For example, if everyone drove wherever they liked (as it seems sometimes in thailand!), the result can be a total mess, so traffic laws can be very useful. Similary, a common currency is a pretty basic convenience that is difficult to maintain without a government.

There are also cases of "market failure" - activities which are clearly beneficial to society, but does not provide enough specific returns to warrant private investment. Education for the poor is an example, as is electricity provision to rural areas.

In the introduction to Book V, Ch I, Part III, of Wealth of Nations, Adam Smith states, "After the public institutions and public works necessary for the defence of society, and for the administration of justice…are chiefly those for facilitating the commerce of the society and those for promoting the instruction of the people." So government is an integral part of classic capitalist theory; it's only pretty extreme libertarians that see no role for government.

19th century US was indeed a fairly laissez-faire economy and led to tremendous gains, but also tremendous problems including substandard working conditions and monopoly control over various industries (steel, oil). If this is "unfettered capitalism" (or close to it), then we have good evidence that such unfettering is not a purely positive thing. Remember, the point of capitalism is the improvement of society. "Wealth of Nations" is not about getting rich, it is about improving the well-being of the people. Smith wrote in Book I Cha VIII that "No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable."

I completely agree with you that much of business today has nothing to do with capitalism (in which competitive advantage comes from providing superior value), but with collusion with the state. I can't see how democracy is particularly at fault here. If anything, I'd argue that non-democratic states such as Burma or Zimbabwe are far more economic basket cases than any functioning democracy.

To be sure, the workings of democracy are just as messy and chaotic as capitalism, and there is lots of room for abuse so it's a constant process of review and improvement. There is a great argument to be made for a benevolent dictatorship, the philosopher-king, or "son of heaven" as referred to in Chinese political theory. In practice however, the dictator often turns out to be less than benevolent, or as Lord Acton put it "power tends to corrupt, and absolute power corrupts absolutely." Some kings are great and do wonderful things - others, less so. The history of bad things done by kings and dictators I daresay is far worse than the history of bad things done by democracies.

These are all very appropriate issues in the discussion of Thaksin. I am saddened that more people don't take the time to learn exactly how he made his money; the more you know about him, the less surprising it is that his ideas are all marketing with no substance and that he really doesn't know how to manage or run anything.

I look forward to your response.

Cheers,

Scuba

[Khun004]

I think you're advocating an "anarcho-syndicalist" line of thinking
No, I'm not advocating that here, (although I do wish for it everywhere).

My post was thinking out loud about the question in the original post on this thread.
Finding an answer to that question could help me better understand the politics, the economy, and the society of Thailand.

So I wondered:
Why are so-called "successful businessmen" successful under "government-imposed" democracy, such as exists in Thailand and many other countries.
My conclusion was that such success is due to skill at playing the government game, rather than success at business/capitalism.
In wondering why, I advanced the idea that democracy fosters an environment where - in the long run - the government game thrives.

(Other forums get deep into theories of anacho-capitalism. I don't see 2Bangkok Forum as the place for that discussion.)

Remember, the point of capitalism is the improvement of society.
No, it's not.
Capitalism is an effect, not a cause.
Capitalism is what happens when people are left alone to pursue their own interests as they wish.
Under capitalism any improvements accrue to individuals, not to some collective "society".

Thaksin ...[snip]... the more you know about him, the less surprising it is that his ideas are all marketing with no substance and that he really doesn't know how to manage or run anything.
It takes considerable intelligence and a high level of skill to achieve success at the government game.
To reach the pinnacle that Thaksin has would take immense intelligence and skill.
However, the skills for playing the government game are quite different than those needed for success in business/capitalism.

I concur with Scuba22 that a title of "successful businessman" is a misnomer, but for quite different reasons than set out in the original post.
.

[Scuba22]

Dear Khun 004,

Once again, thanks for your post. We are, I think, operating under different definitions of "capitalism". My definition draws heavily on Adam Smith and subsequent mainstream free-market thinkers like Ricardo and Shumpeter. Smith's book concerns the "Wealth of Nations", not the "wealth of individuals", and as such is indeed concerned with societal benefit. His major insight was that social benefit arises from the "invisible hand" of individuals pursuing their own private benefit, rather than from grand utopian schemes. Even today, the advocates of globalization, like the Economist magazine, routinely promote the proven value of free-trade in reducing poverty. This is the difference between "business" - an enterprise seeking to maximize its own value, and "capitalism", an economic system seeking to maximize social value through individual freedom.

Your definition of "capitalism" as a Hobbesian "state of nature" with no state is an unusual usage that most people would easier recognize as an "anarcho-libertarian" model. I don't know of any well-known political economy theorists who advocate this model. Hobbes began with this as a starting point to explain why a state structure (the Leviathan) is needed. Smith limited state functions security, dispute resolution, and market failure. Of course, historically the state has used its power (especially its security power) to vastly overstep bounds, but I'm not sure this is a clear indication that not having any state is a preferred situation.

But you're right, this is not the place for a political theory discussion!

You ask why people playing the "government game" are so successful in modern democracies. That's a great question. However, I don't think that the idea of democracy itself is the problem. Thieves will always try to break locks - the solution is to try and keep one step ahead and build better locks, not get rid of locks entirely. People will always try to manipulate the power structure for their own ends, the issue is how to prevent this and make sure that the power structure does not unfairly benefit any particular individuals and groups. This is an eternal problem, just as the quest for the "perfect lock"

It may seem as though an all-knowning perfect leader (the son of heaven) could guarantee this fairness, but I think history shows that this is a dangerous course. Democracy is messy, and it needs constant refinement, but I again would contend that absolute power has led to far more disasters.

Getting back to Thaksin, I agree that it takes considerable intelligence and skills to manipulate a power structure to your own benefit. I never claimed that Thaksin was unintelligent or lacked skills. What I said was that he doesn't know how to manage or run anything.

Government manipulation is a completely different skill set than business vision or corporate management. The problem is that Thaksin has created a myth about himself that his vast wealth comes from his vision and management expertise, and Thai people have believed it. They expected Thaksin to apply that vision and expertise to solving national problems.

The flaw in that reasoning is that Thaksin's wealth did NOT come from vision and management - it came from government manipulation. The facts are very clear on that. And government manipulation will not help at all in solving national problems, as we have seen.

My question is why it is so difficult for Thai people to see this - and what can we do to spread this understanding? This is what I was hoping would come out of this thread - some practical ideas for spreading facts that we as individuals can implement.

All the best,

Scuba

[Khun004]

I agree that it takes considerable intelligence and skills to manipulate a power structure to your own benefit. ...[snip]... Government manipulation is a completely different skill set than business vision or corporate management. ...[snip]... Thaksin's wealth did NOT come from vision and management - it came from government manipulation. ...[snip]... My question is why it is so difficult for Thai people to see this?
You've given a highly useful summary of the question.

I suggest pulling back to look around: this is not just a question about Thai people.
Look anywhere in the world and you will see similar trends in all democratic systems.

Yesterday, Evo Morales was elected in Bolivia.
Morales is an ardent communist and a wealthy cocoa grower with drug cartel connections.
He is an admirer of Castro in Cuba.
Morales' main campaign pledge is to nationalize (steal) the companies producing natural gas in Bolivia.

Meanwhile, in Chile, Michelle Bachelet looks like she will win the run-off election.
Bachelet is an ardent socialist/leftist.
Both are highly skilled players of "the government game".
The list of such examples could go on for a very long time.

We must ask, "Why is it so difficult for so many people to see this?"
If we can answer that question, we will understand much about many different people, not just Thai people.

The questions we are discussing are hardly unique to Thai culture.
Similar problems arise in almost all democracies.
I think examining democracy is the place to begin looking for answers.

Yes, there are a few exceptions to social decay under democracy, but they are few.
Switzerland comes to mind as most obvious.
Studying those exceptions would be fascinating, but, again, more appropriate to a forum other than 2Bangkok.

The history of Thailand shows that it thrived under the strong monarchy (of the Chakri dynasty).
Under monarchy, Thailand/Siam advanced in many ways - and maintained its independence - during times when neighboring countries did not, could not.
I often wonder if return to a strong monarchy would benefit Thailand.

Under monarchy, skillful players of "the government game" still have opportunities to rise in power, but their power would be constrained by the prevailing power of the monarch.
A wise monarch sees to it that none of the players accumulates too much power.
We have seen the kings of Thailand handle this problem many times, even after the coup of June, 1932 (which marked the end of absolute monarchy in Siam).
Is the electorate in a democracy so wise?

Given a limited choice, I'd rather live under a wise king than a mass of democratic voters.
Of course, I am not Thai, so all this is just curious speculation on my part.

.

[Scuba22]

Hi Khun004:

As an American, I am well aware that electing idiots is not a purely Thai phenomenon. I've focused on Thailand since this is a Thailand-based forum and the topic of this thread is Thaksin. But of course, people the world over make bad choices - does that mean that people should not have choices?

Democracies can definitely be manipulated - these days mostly through money and controlling information, the two practical foundations of democracy. These are serious problems, but I don't think the answer is to dump democracy, I think the answer is to ensure transparency in money flows and open access to media.

I'd also love to live under a wise king. Having someone tell you what to do is definitely easier than thinking for yourself. But I have two concerns: first, how do you make sure that the king is wise? What if we wind up with Robert Mugabe instead of Lee Kwan Yew? Second, is it really wise to get people to stop thinking for themselves? Sometimes I wonder if HM isn't a bit saddened to see how much the people adore him; I suspect he would be happier if the people had as much faith in themselves.

Best regards,

Scuba22

[jpatokal]

I've always thought that The Solution is get rid of both monarchies and representative democracies, and institute direct democracy instead.

The one important catch: if you don't want to vote on every issue personally (and you probably don't), you can delegate your vote to another individual or party of your choice. This should both allow a fairly accurate reflection of what people think and prevent special interest groups from hijacking the process.

Doomsayers who think allowing the masses to run things will inevitably result in chaos are invited to consider the example of direct democracy forerunner and notorious pariah state Switzerland :D

[GWR]

Suspect that this site is a bit dated by the standards of the obviously knowledgeable postership in this string; but it might provide an interesting 'wrap' for passersby. I notice, for example, that the references include many from Daniel Lian, who has had some poor press on this site to date:-

http://www.thaksinomics.com/

http://pioneer.netserv.chula.ac.th/~ppasuk/stephffsviewthumb.jpg

[Scuba22]

Direct democracy doesn't automatically get rid of special interest groups - take a look at California's balloonting ballot referenda and the forces behind them for an excellent example.

I don't know much about Switzerland, but I'm not sure if those lessons are widely applicable. It's a small country with lots of locally-ruling units who have over time come to see the value in cooperation in various areas. For me, the main element that makes it work is that the system evolved from within rather than being imposed from either the outside or from some elite force. There's more on this topic in the thread on the Thai constitution - it's probably more appropriate to discuss those issues there.

Getting back to Thaksin and his business credentials, the Thaksinomics.com site is kind of dated, but still it's a nice synopsis of the TRT economic platform, so thanks for the link, GWR.

It's hard to argue with the idea of getting economic growth out to the countryside, but it's telling that pretty much all of the programs are based on government loans. You would think that a "successful businessman" might come up with something a little more creative than "here, borrow money from the government, in flavors A,B,C,D, and E". However, when you consider that Thaksin's "business success" pretty much came from government connections, it makes a lot more sense.

There's another thread about whether the grassroots programs have been successful. I attended a "microcredit conference" that the GSB put together to tout its "successes" and I'll post some of the details in that other thread, but for the most part, the measures I heard there were pretty farcical.

As for Dan Lian, I think it's become pretty clear what he is.

Cheers,

Scuba22

[tomv]

Scuba 22,

As someone who is generally fond of capitalism and business, I appreciate your attempt to distance them from someone you consider unsavory, i.e. Thaksin. Your logic, however, is wrong.

It suffers from the "no true scotsman (http://en.wikipedia.org/wiki/No_true_scotsman_fallacy)" fallacy: Thaksin is not a capitalist and businessman because no true capitalist and businessman would do that. Well, actually, they do. As rationally self-interested agents propounded and assumed by economics, capitalists and businessmen pursue businesses and business advantages, whether or not others consider them to be "fair", as long as the benefits justify the costs. Disney got the Congress to extend its copyright on Mickey Mouse. Industries and firms lobby for subsidies, "anti-dumping" tariffs, and otherwise favorable measures. (And who, by the way, should be surprise if a few lobbyists turn out to be Jack Abramoff types?) Chevron tried to stop CNOOC's bid (http://www.washingtonpost.com/wp-dyn/content/article/2005/07/15/AR2005071501889.html) in its track. Are these not works of capitalists and businessmen? They are, and par excellence.

Capitalists don’t mind unleveled playing field as long as it’s someone else in the troughs. Being good capitalists, they can even claim that tough competition is in and of itself an unfair advantage (see “dumping”). A level playing field is different things to different people. And even if one sort of levelness were ever agreed upon, it wouldn’t be because the players want no advantage over others, but rather because they want no others to have advantage over them.

Thailand is, without a question, a rather corrupt country (http://bangkokpundit.blogspot.com/2005/12/thailand-and-corruption.html), but that does not rule out competent capitalists and businessmen, of which Thaksin is one. He has connections; so, too, does others (and you’ll notice that your network tends to grow with your success). I believe he’s bribed before, as have others (including foreign companies like Airbus and Boeing that have won large contracts from the Thai government). Here, suppliers bribe managers of private firms to order their wares and entrepreneurs and fraudsters alike bribe bank officers to approve their loans. Now imagine what it takes to operate successful cell-phone and satellite networks. If it were just connection and corruption, I, too, would be doing it. But it also takes an entrepreneur to spot the opportunities, a dealmaker to beat out other well-connected would-be licensees, and a businessman to actually run the business.

I have answered your question. You may find a related sub-topic or two in this rather off-topic comment thread (http://sanpaworn.vissaventure.com/?id=236) on my blog (which, in fact, brought me here to this discussion).

And now, a question of my own about the source of your information: Is Pasuk Phongpaichit an economist or even an academic? (http://sanpaworn.vissaventure.com/?id=238)

My answer is no and no. And I’d prefer Daniel Lien any day.

[Tettyan]

Dear All,

I've been busy with other things for the past couple of weeks, so I havn't been posting in quite a while. As soon as things calm down a bit for me later this month, I'll resume posting as I did before.

Now, back to the topic.

As rationally self-interested agents propounded and assumed by economics, capitalists and businessmen pursue businesses and business advantages, whether or not others consider them to be "fair", as long as the benefits justify the costs. Disney got the Congress to extend its copyright on Mickey Mouse. Industries and firms lobby for subsidies, "anti-dumping" tariffs, and otherwise favorable measures. (And who, by the way, should be surprise if a few lobbyists turn out to be Jack Abramoff types?) Chevron tried to stop CNOOC's bid (http://www.washingtonpost.com/wp-dyn/content/article/2005/07/15/AR2005071501889.html) in its track. Are these not works of capitalists and businessmen? They are, and par excellence.

Tom,

You raise a good point. Lobbying and special interest groups are indispensable elements of the democratic process. They are necessary evils, if you want to call it that.

I don't think anyone here is questioning Chevron's (or any other company's) right to lobby. But Chevron (or its majority sharholder, if it had one) is not running for public office. And if it were, you would see red flags saying "conflict of interest" rising all over the place. Think back to when Paul O'Neil first became Treasury Secretary - public pressure forced him to divest his holdings in a widely-held, professionally managed corporation (Alcoa), of which he was once CEO.

Thaksin, on the other hand, isn't just running for office, he's the Prime Minister of Thailand! And his family closely controls (or formerly controlled, if this week's rumours are to be believed) one of the country's largest conglomerates, whose operations are based on government concessions. I think what dismays Scuba and myself the most is that most Thais don't see anything wrong with this conflict of interest.

Maybe I'm just really naive. But I still have yet to be convinced that there's nothing wrong with having Thaksin set government policy while his family's businesses at the same time are the ones most impacted by these policies. If you manage to convince me otherwise, though, I'll buy you lunch the next time I'm in BKK.

Regards,

Tettyan

[Scuba22]

Dear Tom V:

Thanks for your reply. From what you've written and referenced, it appears that you might benefit from a closer reading of your own sources. In the "no true Scotsman" article you cited, it clearly points out that the disagreement arises from differing definitions of "Scotsman". And so it is for our debate. I'm not saying Thaksin is not a Scotsman because he likes sugar, I'm saying he's not a Scotsman because he doesn't come from Scotland.

We obviously ascribe very different meanings for "capitalist" and "businessman". Regarding "capitalist", I suggest that this means "one who subscribes to the economic theories orginiated by Adam Smith in Wealth of Nations" - I feel this is a reasonable definition given general acknowledgement that Smith's book is the origin of capitalist thought. Smith is adamant in his conviction that any public policy suggested by businessmen should be treated with the most severe skepticism, since the public interest is served by increased competion, whereas business interest is inherently opposed to competition. And that is only one capitalist tenet that Thaksin routinely ignores, hence my assertion that he is not a capitalist. Note here also that Smith draws a very clear distinction between capitalism, which is an public economic model through which society benefits from competitive free markets, vs. business, which is a private interest in value-maximization. You appear to be using the terms interchangibly, just like popular usage in newspapers, which is exactly what I am contending is in error.

Regarding what constitutes a "business", again, I think we are in disagreement. I consider a "business" to be "an enterprise which seeks to maximize value for its owners through providing superior value for the customers of that enterprise". This, I admit, is an unorthodox definition. However, I believe the popular understanding, that "business" constitutes "any activity that seeks to make profit", is problematic in that it winds up covering various activities as "business" which I contend would be better characterised as "crime" or "policy manipulation". Mafia extortionists are stereotyped as referring to themselves euphamistically as "businessmen"; a customs agent taking bribes may be considered a "businessman" - yet surely there is a difference between these activities and the noodle seller making an honest living, just as there is a difference between Disney trying to squeeze additional money out of Mickey Mouse on the argument that not extending a patent years after an artists' death may deter other artistic creation vs. trying to make money by creating new characters and stories for public entertainment.

Under these definitions, Thaksin is clearly neither a businessman nor a capitalist - he is a policy manipulator. In fact, the entire reason I consider him "unsavory" is precisely because he brings a bad name to both business and capitalism, both of which I feel are benefits to society in their proper form. When corruption, deception and arrogance begin to be tied to capitalism and business, it does a disservice to the ideals of those terms and the people who strive to meet those ideals. This in turn feeds the more irrational and wooly critiques that are the norm, as you point out on your website. I am suggesting that if you really believe in capitalism and business, Thaksin is the real enemy because he has always draped himself in those banners while in fact practicing neither.

I must wonder what your concept of "businessman" and "capitalist" are. From your response, it appears to be "anyone trying to make money" - do you really believe that? Are pickpockets "businessmen"?

I have no doubt there are competent capitalists and businessmen in corrupt societies, indeed I know quite a few in Thailand. I just don't believe that Thaksin is one of them. A competent policy manipulator, definitely. A successful government welfare recipient, absolutely. A skillful mass manipulator, sure. Capitalist and businessman? No - not unless you strip those terms of any meaningful substance.

Finally, regarding Pasuk, she is employed by a university as a professor and routinely publishes in peer-reviewed academic journals. Hence, I would conclude that she is an "academic". Under what definition of "academic" do you dispute that? We seem to back in Scotsman territory again.

Regarding her economics expertise, I actually agree with you in that I've found her economic arguments to be far weaker and less convincing than her sociopolitical insights. I was surprised to learn that she was in an economics faculty; I had assumed she was a political scientist, and I do find her political comments quite interesting.

However, my references to her work involved neither her economic nor her political commentary, but her exposition of the facts of Thaksin's past. I invite you to review the material I referenced from her work in my first post: Thaksin's failure in every competitive free-market company he started, his first fortune based on connections in the police IT purchasing department, and his monopoly license based on military favor. These are matters of fact, not analysis or opinion. I read them in Pasuk's book and she appears to have documented her sources quite well. Are you contending that she is misrepresenting the facts, or that her sources are mistaken? If so, I'd be interested to hear why you feel this way - surely it is not because you are unimpressed with her economics analysis, as you point out in the article you referenced.

I look forward to your response.

Best regards,

Scuba22

PS - If you're looking for an insightful economist, might I suggest taking a look at Adam Smith; Wealth of Nations is actually a fascinating read and holds up quite well after more than 200 years. I'd wager that Daniel Lian and "Thaksinomics", despite colorful "super cycles" and "dual-tracks", are not likely to last that long - if indeed anyone reputable still buys any of it (or ever did).

[Wisarut]

Taksinomic? Now It's the 3ay to please theri own cronies while RUINGIn the economics as a whole if the economic activities have not been taken over by theri cronies. :( :mad:

[BangkokPundit]

Thaksin's failure in every competitive free-market company he started, his first fortune based on connections in the police IT purchasing department, and his monopoly license based on military favor. These are matters of fact, not analysis or opinion. I read them in Pasuk's book and she appears to have documented her sources quite well. Are you contending that she is misrepresenting the facts, or that her sources are mistaken?

Ok, I will take the bait. First, I will state I haven't read Pasuk's book and this is why I have hesitated to respond until now.

My main problem with your overall argument is your belief, based on Pasuk's book, that in a free-market economy Thaksin failed. I am not saying the businesses didn't fail, but you seem have very black and white images on the free market and which industries are in the free market.

Your first post cites businesses in which Thaksin has failed and they are "
running movie theaters, developing property". I know a bit about the purchasing of movies in Thailand from someone who is involved in actually purchasing movies for the Thai market. It is not that easy for some person to enter the market, set up a cinema and just be able to obtain the rights to show movies. There are, to use some an economic term, serious barriers to entry in the movie business and many other businesses in Thailand. Obtaining licenses for most businesses in Thailand often involves some form of under-the-table payment.

At the time Thaksin obtained a license for mobile phones/pagers, how did he manage to do this? He certainly didn't win every concession and in the words of Baker & Pasuk (http://66.102.7.104/search?q=cache:E49QjQqc7TAJ:pioneer.netserv.chula. ac.th/~ppasuk/thaksinpopulismcronyism.doc&hl=en) this was because his "rivals had better political connections at the right time." Why didn't his rivals get ahead of him on the mobile phone concessions? Maybe they didn't see the opportunity he did. Surely, he deserves credit for that.

Time Magazine states (http://www.time.com/time/asia/news/magazine/0,9754,170024-2,00.html):

"His early bids for the pager business and the mobile phone business, and his gumption in launching the first Thai satellite when most analysts and experts said that wasn't a viable business are all achievements Thaksin can take credit for"

I mean there was some risk involved with the concessions that Thaksin was granted. It was no license to print money. Critics of Thaksin say that Thaksin received favourable concession agreements (http://66.102.7.104/search?q=cache:tnAv7v97Y-sJ:www.nationmultimedia.com/page.arcview.php3%3Fclid%3D6%26id%3D55653%26usrses s%3D1&hl=en&lr=&strip=1), hence, the huge profit that Shin/AIS makes today. However, He wasn't given a license to print money. I also thought the idea was that a favourable concession would allow Thaksin to undercut his rivals on price and corner the market. But IMO this is not what has happened. If you look at 2 of Thaksin's busineses, AIS and Phonelink, they are (or were for Phonelink) more expensive than some of their rivals.

My memory on pagers is a little bit hazy as it was 7 years ago now, but I believe Postel's price back then was 288 baht a month vs Phonelink which was around 450-500 baht. Phonelink offered a range of different and extra options well Postel basically operated a plain no-frills service. I choose Postel as I didn't need those extra services and I know someone who used Postel and they found it reliable. In the 2 years I had a pager I personally never noticed any problems with Postel's network, but was surprised about the lack of a marketing plan. They were signficantly cheaper than Phonelink, but always seemed to be bleeding customers. At the time, Phonelink were hip and trendy and No 1 in marketshare (http://66.102.7.104/search?q=cache:KRX6zZ5briYJ:www.crf.dcita.gov.au/crf/papers98/lewis.doc+Phonelink+thaksin&hl=en) despite their higher price. Postel was what the Police and other government officials used (apparently so I have been told). Eventually, the pager industry collapsed when cheaper mobile phones came on the market, but IMO Phonelink had a much better marketing plan and a range of services which people wanted, hence their success at the time.

I would say the same is true for AIS vs DTAC/Orange. While I was in Thailand, AIS was always the most expensive mobile phone provider - there per minute charge was always higher or their "promotion" was never as competive pricewise as DTAC and later Orange. Sure, AIS' favourable concession terms means they have lower input costs, but this doesn't in itself explain their success.

AIS is more expensive. People in the marketplace perceived that AIS offered a better range of services and had better network quality and coverage. DTAC never seemed to strike the balance between investment in the network with lower prices. Over time, DTAC's biggest problem was network congestion and not investing enough in their network when taking on new customers. AIS offered a premium service and people at least perceived AIS had better network coverage and less network congestion

NOTE: I say perceived because in the beginning I found that this wasn't true and I never used to understand why anyone would choose AIS over DTAC as AIS was more expensive. I used to enjoy the shock on friend's faces when travelling somewhere and I as a DTAC customer still had network coverage, but the AIS customers had lost theirs. They were under the false impression that AIS had better network coverage everywhere which for a long time was not true. It also took a long time before I ever had signficant network congestion problems with DTAC, but eventually I found things went downhill.

I believed that DTAC got the balance wrong and AIS was always ahead of them. To me this was AIS had a better business and marketing plan. DTAC were unfortunate that it wasn't until TAC become DTAC (and Telenor came in) that they finally developed a decent marketing plan but by then it was going to take a while to change people's perception of TAC/DTAC compared with AIS. AIS were perceived as having a better service, even if that was not always true. DTAC's problem was their image and no favourable concession term caused that.

For me, DTAC was always fortunate that there was no mobile phone portability otherwise IMO more established customers would have left.

I don't put down Thaksin's business success down to solely the concessions. He wasn't given a license to print money. If the business success was down to the concessions, I would have expected that Thaksin's companies would have the lowest prices in the market and thus be able to corner the market, but I would say the opposite was true, they were always the most expensive. For me, they succeeded because of the way they were operated and the services they provided.

[Wisarut]

Insider Info:

1) Chiang Rai Chamber of Comemrce said they are VERY upset that the government have NOT starte Denchai - Chiang Rail railway project even though the y start cclearign the exappropirated way. Eve nthat, the governemtn still BOAST aroudn about the new Bridge across mekhong at Chiang Khong and the new railway from Chiang Rai to Chaing Saen whcih is totally a BIG LIE.

2) During the cabinate sicussion abtou Pak Bara Project, the cbinate has GLEEFULLY approve 4 Billion Baht for 4-lane highway while SUSPENDING the railway project for B\Pak Bara Port.


This is CLEAR sign of HYPOCRICY sicne ANY world class port Need Railway Links and the 4-Lane highway is DEFINITE for pleasign the cronies such as Ai Phoomtham Wetchayachai (the former member of CPT whis is now runnign truck business and the one who KILLED ETO for good.) , AI Suriya (wo run Summit Auto part), Ai Snoh (who run Sor Thiangthogn truck business), contractors (who love the road project so they can suck more and more moeny from both contruction and the maintianance), and above of all -> the LEADER who have sold Shin Corp to SIngTel at 68 billion Baht so he can invest on Energy business. To Prosper form Energy Business, he have to force MORE energy consumption by supporign more sell of automobiles and truicks and expanding higheway at the expense of Raiwlays .... A Sure sign of CORRUPTIOn in POLICY. They would NOT build the new lien unless they have the share on the construction budget or even the business within railway ...


Furthermore, Ministry of Commerce and Ministry of Finance have forced SRT to extract the revenue from leasing spacve in Lad Krabang ICD (from 1200 Baht/month/TEU to 1700 Baht/Month/TEU or 2400 Baht/Month/FEU to 3400 Baht/Month/FEU) and Chatuchak weekend market ot UNACCEPTABLE level is a sure sign that the government have chosen very INCOMPETENT merechant to run SRT Board who who know ONLY how to MAXIMIZE the Revenue, NOT the OPTIMIZE the revenue rasing in the way that everybody can accept.

If the settlement on the new leasign rate at ICD is NOT settled the companies like Evergreen from Taiwan wold mvoe theri ICD station to Laem Chabangor Klogn Toei - incrasign mroe traffi jam due to the space constrain in both ports.

[Scuba22]

Hi BK Pundit - thanks for your reply!

Ok, I will take the bait.

My comments weren't meant as "bait", rather an attempt at fact-based civic dialogue without partisan vitriol. I do appreciate your responses.

You seem have very black and white images on the free market and which industries are in the free market.

Actually, I'd rather phrase this as "black & grey images". You make a valid point about my comments that Thaksin has "failed in free markets", in that he may have never participated in an actual free market, given that such a thing is rare in Thailand. Your observations about the film distribution and exhibition business are also valid.

Perhaps it would be more accurate to say that Thaksin has only been successful in highly protected markets in which he enjoyed privileged access, in other words, completely unfree markets. After all, surely we can agree that there is a difference between a corruption-ridden industry where bribes must be paid to obtain licenses and a government granted monopoly where competition is simply not allowed - one is grey, the other is totally black.

So let's look at Thaksin's business successes- and again I refer to Pasuk simply because she's the only detailed source I could find; if there are better sources I'd love to see them. Pasuk recounts how Thaksin's first fortune came from selling IT equipment to the police under a procurement contract that he wrote himself. Is that true? If so, the conflict of interest and privileged access is obvious. I can't see how this can be called "business" - it's pretty clear cut corruption. Am I missing something here?

Then comes the monopoly concessions for mobile and satellite. Thaksin himself admits that he obtained these concessions through paying off military connections who were in charge of the relevant agencies (CAT & TOT I believe) at the time. Comparing AIS to TAC at this point makes little sense as there was no TAC. By the time the monopoly was broken, AIS already had a number of advantages, including lack of number portability as you mention, but also a spectrum assignment that allowed for longer distances between base-stations and therefore far lower costs of building network infrastructure and beneficial network interconnect regulations. Now, I'm not an expert in either of these areas, so I'm relying on what I have heard from friends in the business. If these are mistaken, I'd love to know - are they? If not, then I can't see how AIS's success can possibly be ascribed to any business savvy (ie, superior products, services, management, finance or operationals).

Of course there are risks and of course a monopoly concession is not a license to print money. You make an interesting point about Thaksin having the "vision" to see the future of satellite and mobile telephony while others didn't. Yet, at the same time you point out that others beat him out for more obvious concessions. So, did he go after mobile and satellite due to "vision", or because he couldn't get anything else? Was he brilliant or lucky? From what I've seen of "successful businessmen" and their strategic thinking, I'd conclude that most think they're brilliant, when in fact they're really lucky (not to put that down, I think it was either Lincoln or Grant who said "give me a lucky general over a smart one"). From what I've seen of Thaksin's policies, I'd conclude that he was lucky as well, but there's no factual basis for that. Is there any factual basis for believing that he was brilliant?

Using pricing policy as a basis for determining non-competitive practices is highly problematic, as you can see by looking at anti-trust actions. If someone's price is high, that can be evidence of monopoly pricing power; if the price is lower, it can be dumping; if the price is the same, it can be collusion. Pricing alone, therefore, is hardly indicative of anything.

For me, they succeeded because of the way they were operated and the services they provided.

Can you elaborate on this? What operational superiority do you see at AIS vs. DTAC or True/Orange? What services are they providing that DTAC or True/Orange don't or can't? For a truly superior business, these should be pretty obvious, as it is for say, Dell, Toyota, Wal Mart, or Google.

If you can point me to something that doesn't involve privileged positions or access, I'm ready to admit that Thaksin has business savvy. But I ain't seen it yet. Policy manipulation savvy, yes; public manipulation savvy sure; political savvy, definitely (for a while at least), but business savvy? I still don't see it.

And of course, with his close government relationships, rampant industrial policies and strong support of public subsidies for private enterprise, his "capitalist" credentials are pretty weak.

Best regards,

Scuba22

[BangkokPundit]

Perhaps it would be more accurate to say that Thaksin has only been successful in highly protected markets in which he enjoyed privileged access, in other words, completely unfree markets. After all, surely we can agree that there is a difference between a corruption-ridden industry where bribes must be paid to obtain licenses and a government granted monopoly where competition is simply not allowed - one is grey, the other is totally black.


Thaksin doesn't have a monopoly, at least a pure monopoly, on the mobile phone business. Even Pasuk and Baker concede (http://www.cityu.edu.hk/searc/WP36_02_PasukBaker.pdf) that (they say he doesn't have a total monopoly).


So let's look at Thaksin's business successes- and again I refer to Pasuk simply because she's the only detailed source I could find; if there are better sources I'd love to see them. Pasuk recounts how Thaksin's first fortune came from selling IT equipment to the police under a procurement contract that he wrote himself. Is that true? If so, the conflict of interest and privileged access is obvious. I can't see how this can be called "business" - it's pretty clear cut corruption. Am I missing something here?


I can't disagree with Pasuk here as well I haven't read her book and won't quibble over the IT equipment as I now nothing about the subject.


Then comes the monopoly concessions for mobile and satellite.


I won't take issue with the satelite concession as I simply know too little about this subject, but as I said above Thaksin doesn't have a monopoly in the mobile phone business. There are at least 5 mobile phone providers (http://66.102.7.104/search?q=cache:9NWTaNtMW_QJ:mkaccdb.cec.eu.int/study/studies/27.doc+thaksin+mobile+phones+tac&hl=en)in Thailand now. Yes, to run a mobile phone business in Thailand, you do need a license, but this is just a barrier to entry (not that I support such barriers). Barriers to entry can also exist when originally you had one supplier/provider in a market and the infrastucture costs to enter the market are high. I normally consider myself pro-market and all for free competition, but the mobile phone concessions don't get me riled up. I mean using a mobile phone in Thailand is dirt cheap and much cheaper than the other western countries I have used a mobile phone in. It used to be cheaper for me to use my mobile phone to make a short call than to use the landline.


By the time the monopoly was broken, AIS already had a number of advantages, including lack of number portability as you mention, but also a spectrum assignment that allowed for longer distances between base-stations and therefore far lower costs of building network infrastructure and beneficial network interconnect regulations.

Actually, Thailand doesn't have number portability (which I think is just stupid), but back on point.

In 1986, AIS gained a mobile phone concession. In 1987, TAC also gained a mobile phone concession. Both established digital services together in 1994. (Source (http://72.14.203.104/search?q=cache:KRX6zZ5briYJ:www.crf.dcita.gov.au/crf/papers98/lewis.doc+thaksin+mobile+phones+tac&hl=en))
Timewise I don't see that AIS had a comparative advantage.

If not, then I can't see how AIS's success can possibly be ascribed to any business savvy (ie, superior products, services, management, finance or operationals).

Let's imagine that Thaksin hadn't been granted a license and I had been granted the license instead. You seem to believe that if I was running AIS, it would be in the some place it is today. Can't you attribute some of AIS's success to the way that Thaksin has run AIS?

Companies and organisations are run in different ways. If you have ever lived in Thailand and have had to deal with TOT, you will know what an incompetently run business is like. Isn't that part of the reason for AIS' success? Whether it is true or not, I don't know, but certainly perceived that AIS was better run. For example, I remember once that TAC was in a dispute with TOT over paying some access fee. I understood that TAC suddenly decided that they weren't going to pay so TOT threatened to cut off their services. I remember it taking a couple of weeks to resolve before TAC caved. In the meantime, TAC bleed customers during this period. It was a complete disaster from a PR POV.


So, did he go after mobile and satellite due to "vision", or because he couldn't get anything else? Was he brilliant or lucky? From what I've seen of "successful businessmen" and their strategic thinking, I'd conclude that most think they're brilliant, when in fact they're really lucky (not to put that down, I think it was either Lincoln or Grant who said "give me a lucky general over a smart one"). From what I've seen of Thaksin's policies, I'd conclude that he was lucky as well, but there's no factual basis for that. Is there any factual basis for believing that he was brilliant?


Sure there is luck involved with business. I believe you make your own luck. You can't just attribute everything to luck otherwise I could always say that .


Can you elaborate on this? What operational superiority do you see at AIS vs. DTAC or True/Orange? What services are they providing that DTAC or True/Orange don't or can't? For a truly superior business, these should be pretty obvious, as it is for say, Dell, Toyota, Wal Mart, or Google.


I have given an example above on TAC/DTAC was badly run. I would actually say that AIS had a better marketing plan than saying that they offered better services. To use some examples, sending a SMS on the web. For AIS, the receiver had to pay 1 baht per message received (they had to activate the service which was just sending a blank message to some number from their phone). It was easy to send. For TAC, it was actually free, but you had to register and I believe enter in a username and password everytime for sending. The number of messages that could be sent each month was limited. For Orange, you couldn't send on the web (at least that was how it used to be).

It was the some with Phonelink vs Postel (not that it worried me that much as I wasn't sending messages to myself). Phonelink required no registration. Just enter the number and send. Postel you had register as well, use a username and password.

It is just a convenience factor.

Another thing I can think of was that I had a DTAC connection, but I found out it was offered through a subcontractor IEC and DTAC couldn't help me when I had a problem with my account. I had to go to the IEC service center which then was miles away from where I was and I could only go to that one (there might have been a second one, but that was even further away). Or wanting to change something with my acount and having to go home to get my passport.

I am sure that some AIS customers have their own customer service horror stories, but overall I heard worse stories about DTAC - and others I know at least felt or perceived this was the case. You can't put this down to Thaksin being granted a license.

AIS also had better ads on TV! I mean when it comes down to it are Dell computers better than Compaq computers. Or do people conceive that Dell offers better customer service? Is this even true? Or is just what people perceive to be true? Is VHS better than BETA? These are rhetorical questions but I think you get my point.

[Tettyan]

Companies and organisations are run in different ways. If you have ever lived in Thailand and have had to deal with TOT, you will know what an incompetently run business is like. Isn't that part of the reason for AIS' success? Whether it is true or not, I don't know, but certainly perceived that AIS was better run. For example, I remember once that TAC was in a dispute with TOT over paying some access fee. I understood that TAC suddenly decided that they weren't going to pay so TOT threatened to cut off their services. I remember it taking a couple of weeks to resolve before TAC caved. In the meantime, TAC bleed customers during this period. It was a complete disaster from a PR POV.

This relates directly to the point that I was trying to make on the forum at Tom's blog (and to which neither of you could answer). AIS may never had been a complete monopoly, but the playing field has always been highly distorted in its favor. As a direct concessionaire of TOT, AIS does not have to pay interconnection charges to TOT. TAC (and the other competitors), on the other hand, are concessionaires of CAT, meaning they do have to pay the TOT interconnection charge. As Scuba also mentioned, being the only mobile concessionaire of TOT brought AIS other advantages as well.

I don't dispute Thaksin's marketing prowess. I think his skills as a salesman are unmatched by few in Thailand. The question is whether there is any substance behind the marketing and spin. You yourself are uncertain whether the perceptions of AIS as a superior product are actually true.

The same can be asked of Thaksin's political and economic policies. Sure, he does an excellent job of marketing them (he didn't win two landslide elections sitting still). But is there any substance behind the salesman's pitch?

Best,

Tettyan

[Scuba22]

Hi BK Pundit – thanks for your response, it’s nice to have a substantive fact-based conversation rather than the vague accusations I usually see thrown around by all sides.

Thaksin doesn't have a monopoly, at least a pure monopoly, on the mobile phone business…. Timewise I don't see that AIS had a comparative advantage.

“Monopoly” vs. “pure monopoly”? We’re splitting hairs here. If I have an exclusive license to build paved roads all over the country and you have an exclusive license to build dirt roads all over the country, it’s completely disingenuous to say there is no monopoly since there are 2 road licenses. The claim becomes even more spurious if drivers accessing the national highway system from your dirt roads have to pay a surcharge while drivers from my paved roads can get on cheaper.

The regulatory advantages that Thaksin enjoyed are not as obvious as exclusive licensing, but subtle policy manipulation as with interconnect fees, spectrum allotment and number portability. While these can be hidden from popular understanding, they are nonetheless real and significant, providing advantages quite distinct from any management or business prowess. This is precisely the nature of modern policy corruption – keep things looking reasonable to the ill-informed public, and manipulate regulations at a level that only technicians and wonks can understand them.

Both of us are proving quite well that neither of us really know enough about the details to make an accurate assessment of the situation. I’m relying on Pasuk’s book and conversations with telecoms people; you keep coming back to pricing as an indicator of competition, but as I mentioned before, that’s a very imprecise measure. If I have lower costs than you, I may choose to lower prices to gain market share, but I may also choose to increase my profits to reinvest in building network. The point is that I have a wider range of choices than you arising from regulatory advantage – that’s not a free market.

There are very good arguments for creating temporary monopolies. Patents and copyrights, for example, are just that. However, the “temporary” condition is critical. In the case of telecoms, where you have significant “network effects” creating increasing returns to scale, the proper policy maneuver would be to subsidize network creation to create an adequate return on investment and then to open the network as a public utility. Competition then arises purely from marketing and services, with all marketing/service companies having equal access to the network at a price that secures network maintenance and the return to the original investors.

If you don’t do this – if you subsidize the network creation, but then leave it in the hands of the private operator – you create a substantial advantage for that operator; which they can use to create pricing power, or leverage to get into other businesses – and perhaps politics. This is what the NTC was supposed to look over; with an industry as critical as telecoms, an honest regulator is critical. Do you feel it's just coincidence that Thaksin, with the biggest parliamentary majorities in Thai history and his oft-claimed "popular mandate" can't get an NTC off the ground after 5 years?

Incidentally, the same network-marketing industry dynamics work in the energy industry, so I don’t think it’s a coincidence that Thaksin’s major next moves appear to be in energy.

Can't you attribute some of AIS's success to the way that Thaksin has run AIS?

Sure, if I can see any particular way that Thaksin has run AIS that is linked to its success. So far, you’ve given me the incompetence of competitors, web-based SMS services, better customer service, and better marketing. Incompetence of competitors in the face of regulatory disadvantage certainly makes things easier for AIS, but in itself is hardly any proof of business acumen - as if winning a race against cripples is proof of athleticism. Web-based SMS services in a country with less than 10% home PC penetration is a dubious competitive advantage. As for customer service, the best you could provide is that you’ve “heard worse” about DTAC – which goes back to the “competitor incompetence” argument.

Regarding the marketing, are you seriously suggesting that advertising is a more important customer acquisition driver than network coverage or interconnect charges? With the majority of subscribers being prepaid, I’d say pricing is a far more critical driver, and with AIS’s regulatory advantages, they should have a considerable leg up in a price war. Yet last year, when there was a brutal price war initiated by Orange, the winner turned out to be DTAC. How is this possible, unless AIS’s operating cost structure is not nearly as efficient as DTAC’s? That tells me that AIS is not fundamentally a very good company, and without its regulatory advantage, it would not be nearly at the position it’s in now.

You can't just attribute everything to luck otherwise I could always say that .

Agreed. Similarly, you can’t just attribute wealth to business skills either. That’s my original point in this thread – Thaksin is very rich, but that does NOT mean that he’s a “successful businessman”. Successful policy manipulator, yes. Businessman? No.

By way of comparison, let’s look at the competitive advantages of the other examples we both have mentioned. Dell’s advantage is in being able to build and deliver customized PC’s quicker and cheaper than anyone else. Their competitor in this regard was not Compaq, but Gateway (who? Exactly). Compaq, on the other hand, made its original advantage from reverse engineering IBM’s complier, creating the first PC clone. Since then, it hasn’t fared so well, eventually being taken over by HP. Compaq's business model relies on retailers, Dell's doesn't - that's where the source of differentiation comes from, not from customer service or quality of PCs. Toyota makes reliable, attractive cars cheaply - better than US automakers and on a par with their major competitor, Honda. Wal Mart offers higher variety at lower prices than main street retailers. Google has superior search algorithms to accurately match advertisers and customers. Panasonic made a strategic decision to open the VHS standard while Sony chose to keep Beta proprietary. Every single one of these examples shows a clear-cut business advantage that has nothing to do with regulatory favor.

From everything that you’ve said, the only clear takeaway I get is that AIS has better TV ads. Even if that’s clearly true, I can’t see that that is in any way the driving force of AIS’s success. So I repeat my question – where is the evidence for Thaksin’s “business success”? At best, it’s highly dubious; at worst, it’s nonexistent.

Best regards,

Scuba22

[Wisarut]

Yep the Great leader want ot dela with both Real Estate and Energy so he asked his family to sell theStocks of AIS to SingTel at 70 billion Baht and they got the cash ready to invest of PTT or egven EGAT if they can find the way tooverturn the Administration Court Decision by the Puppet Constitution Court.

[BangkokPundit]

I don't dispute Thaksin's marketing prowess. I think his skills as a salesman are unmatched by few in Thailand. The question is whether there is any substance behind the marketing and spin. You yourself are uncertain whether the perceptions of AIS as a superior product are actually true.

The same can be asked of Thaksin's political and economic policies. Sure, he does an excellent job of marketing them (he didn't win two landslide elections sitting still). But is there any substance behind the salesman's pitch?


Is there any substance behind any salesman's pitch?

There are a number of disagree with Thaksin about, but he least seems to have the power to do something. Education reform is moving slowly and the teachers aren't happy, but the Democrats always seemed scared to try to reform. I would say there is substance. I don't think it is all smoke and mirrors, but I consider myself a realist and don't think things will change overnight.

On AIS having a superior product, I'll answer that in my reply to Scuba22.

[Wisarut]

Even though Khun Oy (Jaturogn Chaisaeng) is very good man to handle Ministry of Education, he underestimated the undercurrent of thsoe teachers and fialed to get the suppports from both studetns and parents to go AGAINST thsoe anti-reform teachers .... :(

[Tettyan]

Education reform is moving slowly and the teachers aren't happy, but the Democrats always seemed scared to try to reform. I would say there is substance. I don't think it is all smoke and mirrors, but I consider myself a realist and don't think things will change overnight.

Don't mean to get off topic, but you brought up a subject that I'm very interested in, so let me indulge for just a second.

The entire master plan for education reform was drawn up under the Chuan adminstration, which was outlined in the 1999 National Education Act. This was the law on which the 2002 restructuring of the Ministry of Education was based. This act also called for decentralization of education management. Many teachers grumbled that they were was not sufficient consultation before the act was passed. Indeed, before the 2001 election, the teachers threatened to take to the streets. Strangely enough, it was up to none other than PM's Office Minister Abhisit Vejjajiva, who was responsible for decentralization policies at the time, to try to persuade the teachers otherwise.

After Thaksin took office, he agreed to suspend the decentralization plan, so the teachers called off their threats to protest. In 2004 not long before the elections, the plan was suspended yet again. But under pressure from TRT's supporters in local adminstrative organizations (who were ready to stage their own counter-protests last November, if you recall), the government finally decided to move ahead with the decentralization plan after the elections. I think we're all familiar with most of the rest of the story, so I won't take space recounting it here.

I've always agreed that decentralization is a good thing in principle. But some of the teachers make the point that it should not be conducted in haste lest the quality of education services declines, which sounds like a valid point. Then there's the hard-core rejectionist group of teachers, who want no decentralization under any circumstances, even if it's "voluntary." But then there are the principals of secondary schools, who seem to generally be in favor of decentralization.

So what the heck is going on? You could argue that the teachers are simply acting out of pure self-interest (and I'm sure many are), but I'm interested in getting to the bottom of the issue. What are the stakes, and why are different groups of teachers behaving the way they are? Are the teachers' fears of local adminstrative organizations overblown? And what's wrong with the existing education system that decentralization could fix?

If there are more of you folks out there who are interested in discussing this topic further, I'll start a new thread. Otherwise, I'll end my digression right here.

Best,

Tettyan

[BangkokPundit]

If I have an exclusive license to build paved roads all over the country and you have an exclusive license to build dirt roads all over the country,


I used to have a work phone which was connected to AIS which I used sometimes. I never once noticed any technical superiority in using a phone connected to an AIS network. However, to the end consumer, there is a noticeable difference between using the paved road and the dirt road.

To most end consumers using a paved road will be the better choice and this is regardless of what the person with the license to build dirt roads does. I don't see the situation between AIS and Thaksin's competitors as being like that.

I have never denied that Thaksin didn't get a better deal (see the end of this post for more on this). My point on commenting was that my reading of your comments the perception I got was that you are saying that the sole factor