World Trade Organization Podcast - About the Organization

Income Inequality - Thailand vs. BoliviaLorenz Curves

Virtual Chancellor Simulation

1. How well did you manage the economy?

While I was quite satisfied with my macroeconomic goals, boosting the GDP by a huge amount, tearing apart inflation, and lowering government debt (at a cost to things like exchange rate which I feel don't matter as much), my families struggled massively. I used very socialist policies, putting large taxes on the rich, lowering regressive, consumption-based taxes, and increasing pocket money, which helped my employed singles, but hurt poor families and pensioners, which I feel isn't worth at all, not to mention that devastating chunk of income I took out of the rich.

2. What were some of the consequences of your actions?

Like I mentioned above, the primary damage of my actions was to families, most importantly poor families with children and old pensioners. My economy as a whole did fairly well, but I did go into an account deficit and hurt my exchange rate index quite a bit.

3. How much influence do you feel policy makers have on how the economy performs?

I feel policy makers have a massive impact on an economy's performance; they can't "control it", but their actions can definitely have huge consequences on an economy, as demonstrated by the massive shifts in macroeconomic goals and family wealth that occurred as a result of a few of my changes.

Thailand's Tax Rate

1. Progressive Tax (Thailand, 2014) -
   100000 - 0 - 0%
   500000 - 27500 - 5.5%
   1000000 - 115000 - 11.5%
   5000000 - 1315000 - 26.3%
2. Proportional Tax (30%) -
   500000 - 150000
   1000000 - 300000
3. Regressive Tax (30%) -
   100000 - 7.20%
   1000000 - 0.72%

1. Tax Rates in Thailand (2014) - http://www.rd.go.th/publish/6045.0.html - Section 3
2. Tax Rates in Thailand (Old) - 0% for 0-150k, 10% for 150k-500k, 20% for 500k-1m, 30% for 1m-4m, and 37% for 4m and beyond.

Most importantly, the new tax rates split up the larger brackets from 0-1 million into much smaller ones, which makes for lower average rates on lower incomes. Additionally, they also break up the multimillion brackets and have adding increments of 5%. These changes essentially result in tax cuts across the board for all income levels for 2014. The lowered taxes could have been established to increase aggregate demand by encouraging consumption and working.

Unemployment Videos

Song 1: Mockingbird - Eminem
https://www.youtube.com/watch?v=OthLwh5Gtvw

Song 2: Brother, Can You Spare a Dime? - Bing Crosby, Yip Harburg, and Jay Gorney
https://www.youtube.com/watch?v=eih67rlGNhU

Song 3: If We Make It Through December - Merle Haggard
https://www.youtube.com/watch?v=Z-IJxTd8dCo

My primary song choice for this blog is Eminem's "Mockingbird". Mockingbird has been one of my favorite songs since my childhood, but after recently rereading the lyrics, I only recently recognized the references it has to unemployment. Low unemployment is perhaps the most important macroeconomic goal, since a long period of high unemployment leads to several dire consequences, other than those that are just purely based on economic theory. There are few things more soul-crushing than an utter sense of worthlessness, which stems frequently from feeling like one has no contribution to make to society or anything that they've achieved in life. Rampant unemployment can easily cause previously well-off families to lose all their savings, or their standard of life, and unemployment that lasts for too long often forces families to sell off houses, cars, and other absolutely essential requirements for functioning in society. At that point, even a recovery period makes it impossible to get a job or comeback from the devastation, and this leads to higher suicide and crime rates.

Some of the lyrics in Mockingbird that I felt had a connection to unemployment were "I'm trying to give you the life that I never had", "Daddy's always on the move", but this entire passage was very heartbreaking and significantly referenced the struggles of unemployment:

"I remember back one year when daddy had no money
Mommy wrapped the Christmas presents up
And stuck 'em under the tree and said some of 'em were from me
Cause daddy couldn't buy 'em
I'll never forget that Christmas I sat up the whole night crying
Cause daddy felt like a bum, see daddy had a job
But his job was to keep the food on the table for you and mom."

Unemployment Rate in Thailand

How does the government define and calculate the unemployment rate?

The unemployment rate is typically defined as the percentage of the active working force currently out of a job and seeking one. The Thai government essentially follows this definition, and their unemployment statistics are calculated by the Labor Force Survey (LFS).

Give some statistics on the unemployment rates for different regions, age groups, ethnic groups and gender in Thailand.

While Thailand has a total population of 67 million, it's labor force is roughly 40 million. Thailand actually has the FOURTH lowest unemployment rates in the world at 1%. Here is a breakdown by different categories, as well as a chart depicting Thailand's unemployment rates from 1986:

agriculture: 38.2%

industry: 13.6%

services: 48.2%

Female Unemployment rate: 0.60%

Male Unemployment rate: 0.60%

North: 0.48%

South: 0.53%

Central: 0.85% 

Bangkok: 0.26%

Northeast: 0.93%

How extensive are the labour market regulations in Thailand (e.g. minimum wage, job security, safety standards, length of workday/week/month and paid holidays)

Thailand is a developing nation, and there is still a lot of child labor that goes on in low income regions, especially industrial, factory-abundant areas. Despite it's relative lack of prosperity, however, Thailand has fairly generous labor standards. There is compensation for sick, pregnant, and young workers, and children under the age of 15 are not allowed to work. A minimum wage exists, around 300 baht (~10 USD) per day, and work hours cannot officially exceed 8 per day.

What does the government do to reduce the level of unemployment? Can you identify which policies are interventionist or market oriented?

The government has enacted various policies since the late 1900's to combat unemployment in Thailand. Most significantly, the Thai government has started several market-based programs to increase the quality and quantity of their workforce, providing cheap, accessible education in low income regions and ensuring quality public education for all. They've attempted to subsidize struggling farmers with interventionist policies like the infamous "rice scheme". Another example is using the military to improve the quality of infrastructure throughout Thailand (market based).

Business Cycle

This image shows us an excellent example of a typical business cycle. As time goes on, the level of output in an economy fluctuates between two constantly evolving extremes: the boom and the bust. While the oscillation is constant, the economy (in most cases) is still ever growing. Even if there's a temporary recession (the downward decrease in growth from a boom),  the economy eventually recovers (period of increased economic growth from a bust), and reaches an even higher boom. As this cycle goes on, with ever increasing peaks, the long term trendline is one of constant growth, usually slightly below potential output (unless the economy is undergoing a phenomenon like an inflationary gap).