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UNCLAS SECTION 01 OF 03 BANGKOK 005706 
 
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TREASURY FOR OASIA 
 
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E.O. 12958: N/A 
TAGS: ECON ETRD EINV PGOV SOCI SENV TH
SUBJECT: WHAT IS THE "SUFFICIENCY ECONOMY"? 
 
¶1. (SBU) Summary:  Much has been written about a "Sufficiency 
Economy" this year due to the King's championing the idea in his 
birthday speech last December and the perceived "capitalist 
excesses" of the Thaksin administration.  The Sufficiency Economy's 
Buddhist-like principles, promoting hard work, moderation and 
self-reliance, are considered by many as antidotes to crony 
capitalism, corruption, consumerism and indebtedness.  The general 
idea is not recent.  It was first floated by the King in 1974 to 
justify royal development projects and was revived after the 1997 
Asian financial crisis.  Economists note that the principles have 
been expressed in vague terms that limit their practicality, and 
while RTG institutions pay lip service to them (as with any ideas 
supported by the King), they have so far been applied only to 
small-scale farming projects.  End Summary. 
 
¶2. (SBU) The term "Sufficiency Economy" has been a fixture of 
newspapers, conferences and political debate through much of this 
year, since the urging of King Bhumipol in his December 4, 2005 
birthday address to consider self-sufficiency and moderation as 
cures for the perceived excesses plaguing Thailand's economy.  The 
King's speech summarized the idea as follows:  "If one is moderate 
in one's desires, one will have less craving.  If one has less 
craving, one will take less advantage of others.  If all nations 
hold this concept, without being extreme or insatiable in one's 
desires, the world will be a happier place." 
 
¶3. (SBU) The King has in fact been advocating "Sufficiency Economy" 
ideas for over 30 years, initially borrowing from the "Small is 
Beautiful" movement inspired by economist E.F. Schumacher.  They 
gained renewed prominence after the 1997 Asian financial crisis and 
the realization that the speculative boom/bust of the mid-1990s 
could have been avoided with curbs on excessive investment.  Yet, 
beyond exhortations to "live within one's means" and to "act 
prudently", no specific policy recommendations were made to rein in 
the factors that led to the 1997 crisis.  Likewise, guidance for 
economic policy today is sorely lacking from pro-sufficiency 
pronouncements, despite growing popular belief that cronyism, 
corruption, consumerism, and household debt are on the rise in 
contravention of sufficiency economy principles 
 
Background 
---------- 
 
¶4. (SBU) Some general observations about the Sufficiency Economy 
"model": 
 
-- It was first advocated by the King in 1974 to support royal 
development study centers for farmers. 
 
-- It borrows from a chapter titled "Buddhist Economics" in E.M. 
Schumacher's 1973 book "Small is Beautiful", which the King 
translated into Thai. 
 
-- Royal advisers insist it is not anti-trade, nor does it place 
environmental considerations above the need for economic 
development. 
 
-- Its tenets are vague and malleable (calling for prudence, 
reasonableness, moral behavior, and resistance to excess) and 
subject to interpretation. 
 
-- Viewed as the King's personal economic model, it benefits from 
public reluctance to criticize anything associated with the revered 
King. 
 
-- It has been seized by Thaksin's critics as an indictment of 
economic growth fueled by consumption, over-investment and 
indebtedness. 
 
-- A government advisory board includes its recommendations in 
five-year plans that carry little weight in policy formulation. 
 
-- Practical programs inspired by it are limited to agriculture, 
with royal research projects focused on sustainable development for 
small-scale farmers. 
 
¶5. (SBU) The Sufficiency Economy framework is not easily described 
in traditional economic terms.  The economist who inspired it, 
Schumacher, said himself that economists suffered from "metaphysical 
blindness" by measuring standards of living only by material wealth. 
 Schumacher's aim, in his words, was to "obtain the maximum of 
well-being with the minimum of consumption," with "well being" 
defined in spiritual as well as material terms.  This, he said, 
dovetailed neatly with Buddhist or Gandhian principles, which he 
observed while during his research in the early 1970's in Burma and 
India.  His "Small is Beautiful" ideas were particularly 
well-received by environmentalists, inspiring the formation of 
Greenpeace among other groups.  (Western economists were not so 
inspired, however, with one Oxford economist publishing a rebuttal 
book titled "Small is Stupid".)  Thai observers have also noted 
similarities with ideas put forth in 1972 by the King of Bhutan, who 
called for the measurement of a GDH, Gross Domestic Happiness, to 
replace the more materialistic GDP. 
 
¶6. (SBU) Thailand's King, as his advisers have admitted in the past, 
adapted Schumacher's thinking as a reasonable "middle path" of 
development between the extremes of socialist autarky and laissez 
faire capitalism.  The aim, his advisers said, was to eschew the 
pursuit of fast economic growth in favor of balanced growth, 
self-sufficiency, and immunity from shocks in the domestic or 
international economy.  Development, in the King's view, should 
proceed in stages, with farmers first providing basic sustenance for 
their families and their communities before seeking greater income 
through long distance trade.  (An example of a non-sufficient farmer 
might be one who converted his entire production to a single export 
crop, borrowed on credit to invest in the technology to produce that 
crop, only to find himself in debt and unable to feed his family in 
the event of a market collapse.) 
 
¶7. (SBU) The King's advisers sought to put his agricultural ideas 
into practice by creating a series of rural Royal Development Study 
Centers from 1979 to 1983.  Their aim was to "improve the living 
standards of farmers by means of land development, water resource 
development, forest rehabilitation and application of plant and 
animal production techniques."  The centers were to demonstrate the 
King's 1992 "New Theory of Agriculture", which, among other things, 
directed small farmers (those with less than 2.4 hectares of land) 
to devote 30 percent of their land to water storage, 30 percent to 
rice cultivation, 30 percent to multiple other crops, and 10 percent 
to a residence and farm buildings. 
 
Easier Said Than Done? 
---------------------- 
 
¶8. (SBU) Although couched in terminology that makes it difficult to 
criticize (as one economist said, "Who can oppose a model that 
promotes 'reasonableness', 'good behavior', 'and 'protection from 
shocks'?") schisms have arisen where activists interpret 
"Sufficiency Economy" to oppose policies or projects supported by 
the King.  NGO activists, for example, incurred the King's anger in 
the 1980s and 1990s when they cited the model's environmental 
language in opposing the construction of large-scale reservoir dams. 
 The King, who has long advocated dam construction as a necessary 
water management tool, sharply criticized those groups, explaining 
that limited deforestation was in some cases necessary to provide 
consistent energy and water sources for farmers. 
 
¶9. (SBU) Likewise, anti-trade activists have used Sufficiency 
Economy language to oppose trade expansion, arguing that trade 
exposed farmers to market risks that threatened their ability to be 
self-reliant.  Members of the King's Privy Council, however, explain 
that the model is not anti-trade or anti-globalization, but seeks to 
accommodate global trends through "reasonable trade" to generate 
farmer income and promote the rational allocation of resources. 
 
Thaksin's "Dual Track" Vs. "Sufficiency Economy" 
--------------------------------------------- --- 
 
¶10. (SBU) The King and his advisers have maintained their customary 
restraint from directly attacking specific policies of the ruling 
political party.  Yet their public pronouncements are carefully 
studied for nuance.  The King's renewed emphasis on the Sufficiency 
Economy in his recent public statements are interpreted by many as 
an oblique criticism of Thaksin's economic priorities.  Thaksin's 
critics have increasingly cited "Thaksinomics", with its emphasis on 
GDP growth fueled by exports, domestic consumption and 
infrastructure investment, as antithetical to the "moderation is 
good" ethos of the Sufficiency Economy. 
 
¶11. (SBU) Thaksin's has described his economic policies as having a 
"Dual Track approach": 
 
-- 1) Promote domestic demand by emphasizing grassroots and 
small-to-medium size enterprise development. 
 
-- 2) Improve international competitiveness and linkages, including 
the negotiation of Free Trade Agreements (FTAs). 
 
¶12. (SBU) A member of the National Economic and Social Advisory 
Council (NESAC) told us that the first track of Thaksin's approach 
diverges from Sufficiency Economy principles by "fostering 
consumerism and encouraging easy credit for farmers, which have led 
to high rates of indebtedness among rural households."    "As for 
the second track," he said, "your FTA has gone nowhere since 
Thaksin's political troubles began."  He added that the national 
organ charged with implementing Sufficiency Economy principles in 
economic planning, the National Economic and Social Development 
Board (NESDB), "has an advisory capacity only and no authority to 
implement change." 
 
¶13. (SBU) Similarly, Kosit Panpiempras, executive chairman of 
Bangkok Bank and former head of the NESDB, has publicly criticized 
the Dual Track approach for promoting an "unsustainable level of 
domestic consumption" that can only diminish in the face of rising 
household debt and inflation.  Easy credit for farmers, he said, was 
being used to purchase cellphones, refrigerators and TV sets rather 
than farming equipment 
 
¶14. (SBU) The NESAC economist cautioned, however, that Thaksin's was 
not the only administration at fault.  "There is no political party 
that stands out as promoting 'sufficiency economy' ideas." 
"Everyone pays lip service to it," he said, "but their plans offer 
vague language and no practical proposals."  "In any case," he 
added, "crony capitalism and corruption have been around forever - 
the only difference being who's in power and who benefits from the 
excesses." 
 
¶15. (SBU) COMMENT: Pretty much every political party has included 
fealty to "sufficiency economy principles" as part of their platform 
in the run-up to election scheduled for later this year.  The 
question we have asked ourselves is whether there is any intention 
by any serious political group of actually implementing sufficiency 
economy elements.  The answer seems to be "no" because 1) no one 
really has a clue what such elements would look like for anyone but 
a small-scale farmer and 2) politicians realize that sufficiency may 
sound good, but in practice people are going to want to continue 
consuming beyond the level of mere sufficiency.  No one here (at 
least overtly) has noted the irony of adherence to the "sufficiency 
principle" with the reality of Thailand's status as one of the most 
export-dependent economies on earth. 
 
Arvizu