It’s six in the morning on a typical day in Bangkok. Near where I’m standing a man lays out his worldly possessions for sale on a rug. Thumbing his book, he settles down for a long and uneventful day. Nearby a mother of three is also starting her day. She fires the charcoal grill and gets to work chopping up day-old meat and vegetables. Although she will do brisker trade than the gentleman with the rug, it’s not much of a living. This scene is typical of the developing world. But just a stone’s throw from this particular makeshift market is a bustling mega-mall where Bangkok’s growing middle class come to find an outlet for their new-found wealth.
Bangkok is one of several hotspots around the developing world where economic prosperity is on display in close proximity to poverty. But while this large gap between rich and poor seems undesirable, we should remember that an unequal society is better than a society where everyone is in poverty. Economic growth doesn’t create winners and losers, just winners and on-starters. Nevertheless, now that the job of growing the economic pie has begun in Thailand, the job of ensuring everyone has equal chance to participate in the economy should not be neglected.
If we wanted the Thai government to intervene and create a more equal society, what would such intervention look like? Firstly, we would need to have a clearly defined goal. Poorly thought-out goals regarding poverty reduction tend to focus on outcomes. Focusing on outcomes is an easy trap to fall into, because outcomes are what we see in front of us when we visit these places. Having people living on the street is an outcome. Having people able to shop in high-end department stores is also an outcome. But if we want to tackle poverty sustainably we need to focus on incentives and opportunities.
The primary social issue in places like Bangkok is not poverty in itself, but that life is a lottery. Although there is a growing pool of wealth from economic growth, an individual’s lifetime income is largely determined by which family they are born into.
No society can fully shake off privilege by birth right, and parents have every right to try and give their children a head-start in life. But in developing countries your family or social status can determine everything from whether you go to school to whether you even have a roof over your head. Therefore, our goal for poverty reduction should not be equality of outcomes, but equality of opportunity.
Equality of opportunity is perhaps best summed up by the American idea that "anyone can grow up to be president". The ideal is not one of a socialist utopia where people are all living equally, but of a society where it is solely the individuals own choices which determine their living standard. People should not be disadvantaged by things they cannot control.
A society with equal opportunities will always have a level of income inequality. Some people will choose to forgo income in order to study, thereby increasing their income in the future. Some people will take risks in business, while others will be content with a modest but regular pay-check. And there will always be an element of luck, which is why welfare safety-nets are needed. This is why focusing policy just on inequality in income or living standards is a flawed approach.
How does a country like Thailand foster equal opportunity? Education is perhaps the lowest hanging fruit. As incomes begin to rise in developing countries, it makes sense to train more unskilled people because the financial returns to education also rise. But many families in the developing world don’t want to send their kids to school because they need them to help out with the family chores or business. There are some weighty social issues that need to be worked through before take up of education improves.
Another key area to foster further economic growth is infrastructure planning. Provincial areas will miss out on economic growth if they don’t have good infrastructure including electricity supply, internet access, good roads, and other utilities.
For our friends in the Bangkok market, life is already beginning to improve. The growing bustle of shoppers attracted by nearby malls means business has picked up. They have grown strangely accustomed to their difficult lifestyle and always manage a friendly smile for the customers, but they worry about their children. Will the fruits of Thailand’s economic expansion will be kept by a few elite or will the next generation have equal opportunities to get ahead?