Monday, April 03, 2006

Termites in the woodwork

Interesting that the heads of government in both the Philippines and Thailand are both grappling with credibility crises. Under a Parliamentary system as in Thailand, elections can be called to test the mandate of a sitting government. Under the Presidential system of the Philippines, a President serves a fixed term and can only be removed by impeachment. Both solutions have been tried in each country. In the Philippines the impeachment bid failed in a Congress whose Lower House (where impeachment must be initiated) is dominated by the President's allies.

In Thailand meanwhile the crisis has probably gotten deeper, mainly because of the opposition boycott. This boycott has often puzzled me, given the relatively credible electoral system in Thailand. Why would the opposition intentionally attempt to undermine institutions that have served Thailand well, so far?

Well, as explained in the CNN report, a large bulk of the population remains rural (70%). Apparently agriculture-led development has worked in Thailand, preventing the massive rural-urban migration observed in other Asian countries, such as the Philippines. I hypothesize that the rural population tends to be more conservative in their voting strategy, as long as the sitting government is delivering basic services. Abstract values of governance tend to be dismissed as petty bickerings of a distant urban center. Knowing of their impending defeat at the polls, the opposition organized a boycott among urbanites - deepening the crisis of institutions in that country.

The case of the Philippines is different. In Thailand, there appears to be a strong urban-based constituency towards actively replacing the administration. In the Philippines, a loose oppositionist alliance with vague middle and lower class support has repeatedly called for the President to resign. However these calls have not provoked mass demonstrations. Ironically, an unpopular President continues to rule because extra-constitutional measures are themselves highly unpopular.

As an economist my biggest worry is that political paralysis and pessimissm would extend to economic decision-making, particularly in the area of fixed and financial investment. In the Philippines the "firewall" appears to be holding, but things seem more tenuous in the case of Thailand. Would an economic crisis the magnitude of the 1997 exchange rate debacle hit Thailand, again? Maybe not soon. But in both cases these credibility problems are simply burrowing deep in the woodwork - like termites.


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Edquiban said...

The "everyone loses" effect of the power struggle among political factions in the Philippines can be best illustrated by the "lose-lose" payoff matrix in The Prisoner's Dilemma Game Theory Scenario.

Cooperation, of course, provides the greatest collective payoff. But when that will happen in our country is a question that nobody can answer.