Thanks Chris, I am not particularly happy with the 60,000 baht threshold. But I am constrained by the categories used by the NSO. The relevant category they have is 5,000-10,000 baht per month (60,000 to 120,000 per year). If there is such a thing as a threshold between “poor peasants” and “middle income peasants” I think it lies somewhere within this range. (The Basic Needs Survey comes up with a “basic needs” figure of about 80,000). Do you know if finer breakdowns are available? AW
In half a dozen or so comments here, you haven’t addressed my first complaint about your comment.
“For one thing it trickily conflates the “mumbo jumbo” ritual that the Redshirts did conduct of collecting blood and symbolically pouring it onto selected sites with the “bloodshedding” of the 91 deaths of this period. ”
As you say, we all have our own artistic preferences which are neither here nor there, but could you address this point?
Sam, I can’t get that from Google. I hope you got a screen shot.
I really like the thong (Strine) thing, “flip-flops,” as you call them, or ‘slippers’, as the Thais call them, because it’s so distinctively Thai. I suppose it has its equivalent in printed images of hated politicians on toilet paper in the west. I’ve seen this with Thatcher, George W, and, I seem to remember, Malcolm Frazer, after The Dismissal. Unfortunately I didn’t buy any at Pan Fah or Ratchaprasong, but I’m keeping my eyes open from now on (somebody’s got to be selling them). I think they’d look great mounted & hanging on the wall. Its ridiculous that one seller has been nabbed for it.
They also had small poster-portraits of the gremlins in question pasted to the floor of the sky-walk at Ratchaprasong. I think I got some shots of them. Doormats could be a good seller, if the Ministry for Certain Things would just stay home and do their sheltered workshop activities.
‘Strine’? I’m glad you asked. It is correct Australian language, or Australian English, as the Poms, who just can’t let go, would have it. The word comes from Prof. Afferbeck Lauder’s seminal work, ‘Let Stalk Strine’, publ. Ure Smith, Sydney 1965. He published a series of books, every one of them seminal, and even wrote a wonderful popular song, ‘With Air Chew.’
Problem is that you can draw the income lines defining your middle-income peasant anywhere you like. So any sensible sceptic will accuse you of drawing the lines where it suits your argument.
I can’t think of any science that will help you justify where you draw the lines. But your response #2 suggests you have set the bottom line too low. Does a farmer who is straining his chin above the poverty line think of himself as “middle income”? I doubt it.
Last year the Thai Health Foundation (SoSoSo) did a nationwide survey with a sample of 5,300, reasonably well selected. One of the questions asked respondents to evaluate their own economic status. Among farmers, the result was: “poor,” 31%; “not rich, not poor,” 43%; “have status,” 24%; “rich, comfortable,” 2%.
I suspect that “not rich, not poor” is the answer which a “middle-income peasant” would select on this question. This distribution is very similar to your chart, but squeezed upwards a bit.
I’m not suggesting you should take this or any other survey as gospel. But I think you need some way to justify where you draw the lines, and that self-evaluation might be one way. I seem to remember a couple of other recent surveys found around 30% classifying themselves as poor.
[…] The 13th general election is approaching. However, many Malaysian are apathetic towards the election due to its dirty practices. A free and clean electoral reform practice is demanded. […]
Hi,
Nothing new in what I’ll say. Basically, the idea is: don’t go too far in trying to picture the situation in rural areas in a positive light.
1st) a key question is obviously how much of their income (for each group and income level) comes from agricultural and non -agricultural sources.
I believe there’s overwhelming evidence to the fact that the relatively good economic picture in Thai agricultural hh is largely due to non-agricultural income sources (in which I would include providing agriculture-related services such as renting out machinery) and not to a good economic situation within agriculture itself (except perhaps for rubber).
What difference does it make? Thailand and its professional and part-time farmers need a real and coherent agricultural policy. If you (and many others of course) describe the economic situation in rural areas in a rosy light, this could be used by others to undermine efforts to finally have a farm policy adapted to the current level of capitalization of agriculture.
About the level of indebtment:
There are three things that need to be understood
1) The capitalization of agriculture has meant that capital requirements for each farming season also increased. This I believe explain why the severity of indebtment (as shown by OAE data we discussed earlier) increased since the 1970s (in relations to total yearly income). This transformation of agriculture is fundamental and must be adequately recognized and managed.
2) About debt: a major problem is distinguishing yearly debt repaid this year (or along a predictable horizon) and the unexpected debt which won’t be repaid this year or in a predictable horizon. The first kind is not worrying, only the second is.
3) in line with this, the 70% of annual income figure is not really relevant here as we don’t know (for sure) how we should interpret this. Obviously, it’s not the same thing if this debt is at 7% or 100%/yr interest rate, or if the debt was incurred willingly and can, reasonably, be repaid over a predictable horizon vs an unexpected debt due to market fluctuations, health issue, etc. Again, comparing a mortgage debt for somebody with a fix and secured income with a farm debt used simply to pay for this year’s seeds, fuel, fertilizer, education (and not for say buying a huge tractor which you could sell if a problem occurred) is not really fair.
A last thing I’d like to point out is the possibility that more than ever agricultural debts cannot be repaid through agricultural income in the ensuing years but rather through non agricultural incomes (this at least outside the most dynamic agricultural areas in Thailand). When positive margins in a good year represent a tenth or a twentieth of the negative margins (debt) incurred during a bad year, this means a heavy problem for agriculture, no?
Of course, some ‘modernist’ at the World Bank or elsewhere will be happy to see these problems in Thailand as it will finally lead to the ‘normal’ shedding of backward farmers, the transfer of surplus population to other economic sectors, and the growth of ‘professionnal’ farmers. But this phase of the agrarian transition is accompanied by major social problems and suffering. Perhaps, they really are almost inevitable, but they need not be lauded and left unmanaged.
“If my household debt was ONLY 70% of my annual household income I would be a happy man!” – Andrew Walker
That is a ridiculous statement. What could somebody buried in debts (70% of annual household income) be so gleeful about? Remember this is household income. I could not imagine the wife or the children cheering their father on this singular accomplishment: 70% of household income.
Having witnessed 6 or 7 years ago the advent of cheap loans courtesy of Thasin perhaps I might be allowed comment. The local ‘Credit Union” or Agricultural Bank had a queue of several hundreds of people every day waiving their lands deeds in order to get a loan. 100K baht seemed to be the norm. On one side of the bank was a motor cycle shop and on the other was a furniture shop specializing in white goods. They had a steady stream of customers for months.
Now of course the day of reckoning has come and the bank has called in the loans, threatening that no payment will result in eventual foreclosure. How many have made any effort to repay? Very few indeed.
Being a farang with some money, every day I get someone wanting to borrow money (usually 100K baht). Sometimes I oblige, it involves going to the bank and paying the money into their account. After a couple of days the roll over of the loan is approved and the money is then returned to my account. I charge a small amount of interest for this service, No cash changes hands. The borrowers are of course only postponing the inevitable the money will have to be repaid sometime in the future.
Many of the local rice farmers are heavily in debt . They borrow against what they hope will be a bumper crop. More often than not it isn’t. Two nights ago we had an enormous rain storm that has caused widespread flooding. Many of the paddy fields with rice due to be harvested are under water. Tis will certainly affect the quantity
of quality of the crop.
Over the past twenty years plus that I have been coming to Issan I have definitely seen things improve for the locals, however many still live hand to mouth existence struggling to survive for one day to the next.
When I first raised this issue about personal (or household) debt, I had already read the 2007 Household Socioeconomic Survey executive summary and seen the relevant 2007 data on household income, expenditure and debt published in the Thailand Human Development Report 2009. Assuming the information supplied by households to the interviewers was accurate, I was left with various important questions unanswered:
тАв The data were collected over three years ago, before the global economic crisis took hold. What has happened since?
тАв What was the breakdown of bank loans, hire purchase and informal debts, and what interest rates were borrowers paying to each of these sources of credit?
тАв The 2007 Household Socioeconomic Survey executive summary did make the point that households in the Northeast, where incomes were much lower, had much less money left over after regular expenditures to repay loans, but provided no information about household hardship in loan repayment. What level of hardship was there? To what extent, for example, were people taking out loans to pay for basic household running expenses or financing existing loans?
тАв To what extent may Thailand be moving into subprime lending? What controls are in place or available to regulate the level of debt to which households expose themselves?
This is not Australia or any other Western country where incomes are much higher, and debt is a relatively safe way of accessing property, vehicles and costly consumer goods, and where lenders usually apply rigorous ways of testing the credit–worthiness of would-be borrowers.
Andrew said: “If my household debt was only 70% of my annual household income I would be a happy man!”
I assume the bulk of that is a mortgage at single digit interest rates that offset other expenses (rent). Would you feel the same way if the debt was on credit cards? Or to a money lender, with the assets backing it being your daughter or your kneecaps.
An awful lot of adjustment needs to be done before comparing debts loads between Thai farmers and Australian academics.
I agree that the composition of rural Thailand is more diverse than many think. But you haven’t made a case that debt isn’t a very important rural problem.
Thanks David. Not middle-class, but “middle-income peasant”. I’m not suggesting that “middle-income peasants” are particularly well off. But I don’t think their politics is the same as the survival-oriented politics of the “very poor”. 60,000 baht per annum per household is roughly the same as the UNDP poverty line for 2007 (about 1500 baht per person per month). AW
If the magic-potion you are talking about is really true then Abhisit+Korn due should be really famous and love by all Thais by now, did you see the short special episode of “Wanida”???
From a purely academic interest, following Les Abbey’s poster (#17), the question is (and not necessarily applying to Thailand): AT WHAT POINT IS TERROR (INDISCRIMINATE BOMBINGS, ASSASSINATION, ET AL) A JUSTIFIABLE POLITICAL MEANS?
Villagers heavily in-debt are easily susceptible to magic-potion promises from politicians. If I don a Red superman suit, and promise these villagers debt-relief and debt-forgiveness, of course they will worship me as their Savior . . . .
It’s a nice winning Thaksin formula. Give villagers easy access to credit (to buy cellphones, TV and lots of other must acquire consumables), and, promise debt-relief to those who could no longer afford to service their debts.
Farmers are most susceptible. Their source of income depend on the vagaries of weather, risks of infestations and the most unpredictable of all, the ruthless impact of supply & demand on farm prices (usually depressed). Any farmer who will borrow up to 60% or more of their (unpredictable) household income is financially suicidal . . . despite Andrew Walker’s suggestions to the contrary.
With the recent news in the Bangkok newspapers maybe it’s time to look at the use of bombs and other violent acts as political weapons and the financing of the bombers.
With mud beginning to stick on Wisut Chai-narun the Pheu Thai MP for Phayao over the alleged financing of the Bangkok bombs and Methee spilling the beans on threats from Jataporn and the missing red shirt funds, it does get harder to proclaim it’s all a conspiracy by the government.
Of course in the background is that question all the red shirt supporters try to avoid. Why did Veera withdraw from the protest early and what were his disagreements with the other first and second generation leaders?
60,000 baht per annum is a pretty low threshold for elevation to the middle classes. I would read the graph as showing that 60% of people in Thailand are very poor.
We all live in credit. In thailand the salaries are small but the prices are not far from ours, that is why we, with our salaries can pay out our loans and they cant. Thank you
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The dominance of the middle-income peasants
Thanks Chris, I am not particularly happy with the 60,000 baht threshold. But I am constrained by the categories used by the NSO. The relevant category they have is 5,000-10,000 baht per month (60,000 to 120,000 per year). If there is such a thing as a threshold between “poor peasants” and “middle income peasants” I think it lies somewhere within this range. (The Basic Needs Survey comes up with a “basic needs” figure of about 80,000). Do you know if finer breakdowns are available? AW
Red art: Democracy Monument April 12 2010
MattB,
In half a dozen or so comments here, you haven’t addressed my first complaint about your comment.
“For one thing it trickily conflates the “mumbo jumbo” ritual that the Redshirts did conduct of collecting blood and symbolically pouring it onto selected sites with the “bloodshedding” of the 91 deaths of this period. ”
As you say, we all have our own artistic preferences which are neither here nor there, but could you address this point?
Red art: Democracy Monument April 12 2010
Sam, I can’t get that from Google. I hope you got a screen shot.
I really like the thong (Strine) thing, “flip-flops,” as you call them, or ‘slippers’, as the Thais call them, because it’s so distinctively Thai. I suppose it has its equivalent in printed images of hated politicians on toilet paper in the west. I’ve seen this with Thatcher, George W, and, I seem to remember, Malcolm Frazer, after The Dismissal. Unfortunately I didn’t buy any at Pan Fah or Ratchaprasong, but I’m keeping my eyes open from now on (somebody’s got to be selling them). I think they’d look great mounted & hanging on the wall. Its ridiculous that one seller has been nabbed for it.
They also had small poster-portraits of the gremlins in question pasted to the floor of the sky-walk at Ratchaprasong. I think I got some shots of them. Doormats could be a good seller, if the Ministry for Certain Things would just stay home and do their sheltered workshop activities.
‘Strine’? I’m glad you asked. It is correct Australian language, or Australian English, as the Poms, who just can’t let go, would have it. The word comes from Prof. Afferbeck Lauder’s seminal work, ‘Let Stalk Strine’, publ. Ure Smith, Sydney 1965. He published a series of books, every one of them seminal, and even wrote a wonderful popular song, ‘With Air Chew.’
The dominance of the middle-income peasants
Problem is that you can draw the income lines defining your middle-income peasant anywhere you like. So any sensible sceptic will accuse you of drawing the lines where it suits your argument.
I can’t think of any science that will help you justify where you draw the lines. But your response #2 suggests you have set the bottom line too low. Does a farmer who is straining his chin above the poverty line think of himself as “middle income”? I doubt it.
Last year the Thai Health Foundation (SoSoSo) did a nationwide survey with a sample of 5,300, reasonably well selected. One of the questions asked respondents to evaluate their own economic status. Among farmers, the result was: “poor,” 31%; “not rich, not poor,” 43%; “have status,” 24%; “rich, comfortable,” 2%.
I suspect that “not rich, not poor” is the answer which a “middle-income peasant” would select on this question. This distribution is very similar to your chart, but squeezed upwards a bit.
I’m not suggesting you should take this or any other survey as gospel. But I think you need some way to justify where you draw the lines, and that self-evaluation might be one way. I seem to remember a couple of other recent surveys found around 30% classifying themselves as poor.
The 13th General Election in Malaysia
[…] The 13th general election is approaching. However, many Malaysian are apathetic towards the election due to its dirty practices. A free and clean electoral reform practice is demanded. […]
The dominance of the middle-income peasants
[…] http://www.newmandala.org/2010/10/13/the-dominance-of-the-middle-income-peasants/ I’m not completely happy with the categories, but they are the best I could do with the data provided. […]
The dominance of the middle-income peasants
Hi,
Nothing new in what I’ll say. Basically, the idea is: don’t go too far in trying to picture the situation in rural areas in a positive light.
1st) a key question is obviously how much of their income (for each group and income level) comes from agricultural and non -agricultural sources.
I believe there’s overwhelming evidence to the fact that the relatively good economic picture in Thai agricultural hh is largely due to non-agricultural income sources (in which I would include providing agriculture-related services such as renting out machinery) and not to a good economic situation within agriculture itself (except perhaps for rubber).
What difference does it make? Thailand and its professional and part-time farmers need a real and coherent agricultural policy. If you (and many others of course) describe the economic situation in rural areas in a rosy light, this could be used by others to undermine efforts to finally have a farm policy adapted to the current level of capitalization of agriculture.
About the level of indebtment:
There are three things that need to be understood
1) The capitalization of agriculture has meant that capital requirements for each farming season also increased. This I believe explain why the severity of indebtment (as shown by OAE data we discussed earlier) increased since the 1970s (in relations to total yearly income). This transformation of agriculture is fundamental and must be adequately recognized and managed.
2) About debt: a major problem is distinguishing yearly debt repaid this year (or along a predictable horizon) and the unexpected debt which won’t be repaid this year or in a predictable horizon. The first kind is not worrying, only the second is.
3) in line with this, the 70% of annual income figure is not really relevant here as we don’t know (for sure) how we should interpret this. Obviously, it’s not the same thing if this debt is at 7% or 100%/yr interest rate, or if the debt was incurred willingly and can, reasonably, be repaid over a predictable horizon vs an unexpected debt due to market fluctuations, health issue, etc. Again, comparing a mortgage debt for somebody with a fix and secured income with a farm debt used simply to pay for this year’s seeds, fuel, fertilizer, education (and not for say buying a huge tractor which you could sell if a problem occurred) is not really fair.
A last thing I’d like to point out is the possibility that more than ever agricultural debts cannot be repaid through agricultural income in the ensuing years but rather through non agricultural incomes (this at least outside the most dynamic agricultural areas in Thailand). When positive margins in a good year represent a tenth or a twentieth of the negative margins (debt) incurred during a bad year, this means a heavy problem for agriculture, no?
Of course, some ‘modernist’ at the World Bank or elsewhere will be happy to see these problems in Thailand as it will finally lead to the ‘normal’ shedding of backward farmers, the transfer of surplus population to other economic sectors, and the growth of ‘professionnal’ farmers. But this phase of the agrarian transition is accompanied by major social problems and suffering. Perhaps, they really are almost inevitable, but they need not be lauded and left unmanaged.
The dominance of the middle-income peasants
“If my household debt was ONLY 70% of my annual household income I would be a happy man!” – Andrew Walker
That is a ridiculous statement. What could somebody buried in debts (70% of annual household income) be so gleeful about? Remember this is household income. I could not imagine the wife or the children cheering their father on this singular accomplishment: 70% of household income.
Ridiculous.
How much of a burden is rural debt in Thailand?
Having witnessed 6 or 7 years ago the advent of cheap loans courtesy of Thasin perhaps I might be allowed comment. The local ‘Credit Union” or Agricultural Bank had a queue of several hundreds of people every day waiving their lands deeds in order to get a loan. 100K baht seemed to be the norm. On one side of the bank was a motor cycle shop and on the other was a furniture shop specializing in white goods. They had a steady stream of customers for months.
Now of course the day of reckoning has come and the bank has called in the loans, threatening that no payment will result in eventual foreclosure. How many have made any effort to repay? Very few indeed.
Being a farang with some money, every day I get someone wanting to borrow money (usually 100K baht). Sometimes I oblige, it involves going to the bank and paying the money into their account. After a couple of days the roll over of the loan is approved and the money is then returned to my account. I charge a small amount of interest for this service, No cash changes hands. The borrowers are of course only postponing the inevitable the money will have to be repaid sometime in the future.
Many of the local rice farmers are heavily in debt . They borrow against what they hope will be a bumper crop. More often than not it isn’t. Two nights ago we had an enormous rain storm that has caused widespread flooding. Many of the paddy fields with rice due to be harvested are under water. Tis will certainly affect the quantity
of quality of the crop.
Over the past twenty years plus that I have been coming to Issan I have definitely seen things improve for the locals, however many still live hand to mouth existence struggling to survive for one day to the next.
How much of a burden is rural debt in Thailand?
When I first raised this issue about personal (or household) debt, I had already read the 2007 Household Socioeconomic Survey executive summary and seen the relevant 2007 data on household income, expenditure and debt published in the Thailand Human Development Report 2009. Assuming the information supplied by households to the interviewers was accurate, I was left with various important questions unanswered:
тАв The data were collected over three years ago, before the global economic crisis took hold. What has happened since?
тАв What was the breakdown of bank loans, hire purchase and informal debts, and what interest rates were borrowers paying to each of these sources of credit?
тАв The 2007 Household Socioeconomic Survey executive summary did make the point that households in the Northeast, where incomes were much lower, had much less money left over after regular expenditures to repay loans, but provided no information about household hardship in loan repayment. What level of hardship was there? To what extent, for example, were people taking out loans to pay for basic household running expenses or financing existing loans?
тАв To what extent may Thailand be moving into subprime lending? What controls are in place or available to regulate the level of debt to which households expose themselves?
Since my initial post on the issue I have found two further sources of information which go some way to answering some of these questions:
http://www.nationmultimedia.com/2009/02/27/business/business_30096787.php
http://www.allbusiness.com/reports-reviews-sections/polls-surveys/13659942-1.html
Neither of these updates provides any justification for complacency. Household debt appears to be increasing, and the indications are that increasing numbers of people are finding difficulties in meeting their repayment obligations.
This is not Australia or any other Western country where incomes are much higher, and debt is a relatively safe way of accessing property, vehicles and costly consumer goods, and where lenders usually apply rigorous ways of testing the credit–worthiness of would-be borrowers.
The dominance of the middle-income peasants
Andrew said: “If my household debt was only 70% of my annual household income I would be a happy man!”
I assume the bulk of that is a mortgage at single digit interest rates that offset other expenses (rent). Would you feel the same way if the debt was on credit cards? Or to a money lender, with the assets backing it being your daughter or your kneecaps.
An awful lot of adjustment needs to be done before comparing debts loads between Thai farmers and Australian academics.
I agree that the composition of rural Thailand is more diverse than many think. But you haven’t made a case that debt isn’t a very important rural problem.
The dominance of the middle-income peasants
Thanks David. Not middle-class, but “middle-income peasant”. I’m not suggesting that “middle-income peasants” are particularly well off. But I don’t think their politics is the same as the survival-oriented politics of the “very poor”. 60,000 baht per annum per household is roughly the same as the UNDP poverty line for 2007 (about 1500 baht per person per month). AW
How much of a burden is rural debt in Thailand?
MattB – 10
If the magic-potion you are talking about is really true then Abhisit+Korn due should be really famous and love by all Thais by now, did you see the short special episode of “Wanida”???
Topics for future discussion on New Mandala
From a purely academic interest, following Les Abbey’s poster (#17), the question is (and not necessarily applying to Thailand): AT WHAT POINT IS TERROR (INDISCRIMINATE BOMBINGS, ASSASSINATION, ET AL) A JUSTIFIABLE POLITICAL MEANS?
How much of a burden is rural debt in Thailand?
Villagers heavily in-debt are easily susceptible to magic-potion promises from politicians. If I don a Red superman suit, and promise these villagers debt-relief and debt-forgiveness, of course they will worship me as their Savior . . . .
It’s a nice winning Thaksin formula. Give villagers easy access to credit (to buy cellphones, TV and lots of other must acquire consumables), and, promise debt-relief to those who could no longer afford to service their debts.
Farmers are most susceptible. Their source of income depend on the vagaries of weather, risks of infestations and the most unpredictable of all, the ruthless impact of supply & demand on farm prices (usually depressed). Any farmer who will borrow up to 60% or more of their (unpredictable) household income is financially suicidal . . . despite Andrew Walker’s suggestions to the contrary.
Topics for future discussion on New Mandala
With the recent news in the Bangkok newspapers maybe it’s time to look at the use of bombs and other violent acts as political weapons and the financing of the bombers.
With mud beginning to stick on Wisut Chai-narun the Pheu Thai MP for Phayao over the alleged financing of the Bangkok bombs and Methee spilling the beans on threats from Jataporn and the missing red shirt funds, it does get harder to proclaim it’s all a conspiracy by the government.
Of course in the background is that question all the red shirt supporters try to avoid. Why did Veera withdraw from the protest early and what were his disagreements with the other first and second generation leaders?
The dominance of the middle-income peasants
60,000 baht per annum is a pretty low threshold for elevation to the middle classes. I would read the graph as showing that 60% of people in Thailand are very poor.
Topics for future discussion on New Mandala
Taking a cue from Andrew Walker’s recent posts, how about extended discussions of Burma’s rural economy and agriculture?
Topics for future discussion on New Mandala
The political significance of the princess and catfish story in Uncle Boonmee Who Can Recall His Past Lives.
How much of a burden is rural debt in Thailand?
We all live in credit. In thailand the salaries are small but the prices are not far from ours, that is why we, with our salaries can pay out our loans and they cant. Thank you