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The International Journal of the Royal Society of Thailand
Volume XII, 2020

Inequality and Policy 1

Pasuk Phongpaichit

Abstract
Economists formerly argued that inequality promoted economic
growth, but have now changed their minds. From the 1960s to 1980s, inequality
in Thailand rose from an average level for similar countries to one of the

highest levels in the world. The major factors driving this rise were
government policies aiming at economic growth. Since the 1980s, inequality
has declined, but rather slowly and unevenly, and is still higher than in the
ASEAN region. Wealth inequality remains very high. More people now
understand that this high inequality has underlain the political turmoil of
recent decades. As a result, combatting inequality is included in the national
agenda, but rather little has been done. The military government installed
in 2014 pursued many policies that were disequalizing. The policies required
to combat inequality are known from the experience of other countries.
The critical factor is political will.

Keywords: inequality, ASEAN, flexible oligarchy, wealth inequality, public
policies

Introduction

Economists once argued that inequality contributed to growth by
motivating entrepreneurs to invest (Lazear and Rosen, 1981), by putting funds in
the control of the rich who provided the finance for investment (Kaldor, 1957),

and by helping households to accumulate assets for entrepreneurship and for
education (Barro, 2000). But in the 21 century, when knowledge and technological
st
progress have become important for economic growth, when social cohesion
has become more important than ever to increasing competitiveness, and when

This article is a summary version of a lecture by the same name delivered at the meeting of the
1
Royal Scholars and Associate Members on May 3, 2017, the Royal Society of Thailand, Bangkok,

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Pasuk Phongpaichit

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