Free Handouts will always be open to abuse

EDITORIAL
Free handouts will always be open to abuse

Published on August 18, 2010

Tax money should be better spent on raising the minimum wage and on education to teach self-reliance
The Abhisit government has kicked off its debt-relief scheme to help debtors who have suffered from exorbitant interest rates. The scheme is part of the administration's populist programme, with which it hopes to woo voters, especially in the rural areas. The intention behind the scheme may be fine, but an increased number of populist policies may adversely affect the country's fiscal position and the morality of the people.

Prime Minister Abhisit Vejjajiva apparently is trying to connect with poor debtors amidst criticism that he is out of touch with the grassroots. Some 1.18 million people with combined debts of Bt122.67 billion are registered with the government.

But the implementation of the debt-relief programme, along with other policies, may instead wreck people's motivation to work hard. It may leave them wrongly thinking that the government will always rescue them. If not handled properly, this scheme could also create a moral hazard among lenders.

Debt relief is the latest in a series of government "bail-out" policies for the poor, including free transportation and utilities. The government has basically resorted to the same kind of initiatives that proved to be powerful tools to attract votes for fugitive former premier Thaksin Shinawatra. Unfortunately, these policies cannot be sustained. They also create many opportunities for corruption. And they do not help bridge the gap between the rich and poor, as statistics have shown that the wealth gap has widened over the past decade - despite the fact the populist policies came into full force over the same period.

People in rural northeastern provinces are still living in poverty and many have had to sell their land. But many of the poor remain ignorant of the concept of self-reliance or self-sufficiency because the government's easy-money programmes have instilled the wrong perception among them. They believe, it seems, that they can always ask for more.

Politicians like populist policies to reach poor voters because they generate short-term political benefits. They don't care that tax money is most often wasted in these schemes. But bad habits are difficult to break. People, once given free handouts, crave more. The sad news is that eventually they will lack the motivation to work hard and stand on their own two feet.

This debt relief scheme must be handled with caution and monitored with diligence. The government must ensure that those who are willing to work hard will benefit from the programme, while those who squander the money that is given to them will not easily get away with their wasteful habits. There is no other way to ensure that people recognise the value of hard work. They cannot be permitted to wait for easy money every time election season comes around.

In this context, a minimum wage rise would make more sense than more handouts, as it would reflect the actual situation in the labour market. The supply of labour is lower than the demand, but the current minimum wage of around Bt150 discourages many Thais from taking on low-paying jobs. Instead, employers are forced to hire foreign migrants, which results in the creation of a new set of problems, including human rights abuses.

The disbursement of the budget on populist policies will result in future budget crises, as many of these programs are not simply one-off schemes. Human folly means they will always require continuation, and will thus force future governments to commit to the same. The government has pledged to balance the budget within five years. But if it continues its spending spree to appease voters like this, it is unlikely that a balanced budget will happen in that timeframe, if ever.

The government should learn a lesson from the populist policies that previous governments doled out. No country will move forward if the majority of the people refuse to work hard but simply wait for government assistance. The tax money of those who do work hard - and, in some cases, of those who are honest enough to pay taxes in the first place - should be better spent instead of being exploited for politicians' benefit.
--------------------------------------------------------------------------------
Privacy Policy © 2009 Nation Multimedia Group

August 29, 2010 09:35 am (Thai local time)
www.nationmultimedia.com