The Danger of Populism

Like drug addicts, many in the country are addicted to the government’s handouts. This addiction, built over an entire generation, is almost impossible to kick – and the long term repercussion to the country is one that I shudder to think.

The problem is not unique to our country. Almost every country around the world has at one time or another been guilty of promoting populist policies that fly in the face of good governance and economic prudence. While not all populist legislations are bad, it is a general rule of thumb that what’s good for politics and politicians are often bad for the economy. In Thailand, this divide is evident in the battle between the ‘red shirts’ who claim to champion the working class, and the ‘yellow shirts’ who represent the business community and ruling class.

In many countries, ours included, political parties compete and try to outdo one another on the freebies that each dishes out. Economic feasibility and prudence give way to ‘mega handouts’ that in the long run, do absolutely nothing but great harm to the livelihood and economic future of the citizens. And the ones most harmed are the very people that these populist policies claim to be helping.

On the extreme end, countries that have welfare states, find that their citizens are so disincentivized to work, that when an economic crisis looms, the country goes straight to bankcruptcy. Populism doesn’t just remove the incentive to work and excel, it gives citizens the false impression that their lives and livelihood are forever protected by the country. Hence people do not save or invest, and the country is trapped in a vicious circle of having to provide higher and higher social safety net to its citizens. We practice the very policies that we demonised as ‘communism’ in countries we don’t like.

Populism isn’t just limited to handouts to the poor. We have seen and continue to see the certain privileged groups being given preferential treatments and outright handouts. The poorly crafted excuse is that this helps narrow the economic divide. Never mind that in the process we are destroying free market in this country, and created a whole class of ‘entrepreneurs’ supported by crutches. And hence further enlarging the very divide that the policy claims to narrow.?

It is an open secret that some of our best and brightest economists have argued, albeit in private for fear of repercussions, against this official policy of handouts and more handouts. But their voices continue to fall on deaf ears of gutless politicians. Many of our leaders apparently have never heard of the famous saying, “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime”.

Handouts are like steroids. They do not cure any disease. They just mask the symptoms and give the patient a false sense of being miraculously cured. What happens to the patient after the effects of the steroid wear off is really of no consequence to the prescribing doctors. The more often the same patient comes back and visit, the more money doctors make.

And like steroids, handouts are very addictive. As time goes by, the body wants more of them. And like drugs and alcohol, one would need bigger and bigger doses to get the same high.?

Ultimately, these handouts end up in the same path the world over – in economic and social disaster. Reforms become impossible when discontent emerges to obstruct the short-term pain that can bring about long-term gain in an economy conditioned for generations to handouts and crutches.?

In the last election, I read the manifestos of both sides of the political equation and that gave me a nightmare. It looked like a contest between two (or three) santa clauses to see who will rule Christmas. Freebies and political handouts are, along with the racial card, the easiest tool to use and abuse by any half-brained politician.

We are not unique in our corruption, wasteful subsidies and poor service delivery. All over the world, populism has become a political goose that lays the golden egg of electoral wins. In the United States, that goose has a name and it’s called ‘Change’ and ‘MAGA’. In many other countries, it’s called the ‘government for the people’.

A genuinely responsible government should have the pursuit of sound economic policies as its top priority. The price of populism is systemic damage that is not confined to fiscal deficit, it distorts expectations and destroys efficiency while encouraging waste, pilferage, and corruption.

Remember, every corrupt politician began with a declared aim to end the people’s sufferings. It’s time we wake up to the dangers of populism. Politicians come and go. But the damage done will take decades to reverse.