In case you missed it with all the chaos and violence in Bangkok — global financial markets are in melt-down. Iceland, among others, is apparently bearing the brunt of this change of economic temperature. Having a quick scout around today’s news I was struck by a portion of this article from The Times. With the title “Iceland: the land of cool turns bitter” it notes:
Professor Thorvaldur Gylfason of Reykjavik University has been predicting disaster for years - on his desk sit wooden blind and deaf monkeys, representing central bank policymakers - and has been shunned for his efforts. “We have Thai-style croneyism that has failed the system,” he says. “The Government is not on top of the situation. It is in denial and has not been truthful about the system.”
I don’t know anything much about Icelandic-style croneyism but perhaps some New Mandala readers do. I am just wondering if this is a fair comparison? It is a cute line, for sure, but is Thailand really the global exemplar of “croneyism”? The Professor seems to think so. Is there something about economic action in the land of the Thai and the land of Ice that, in fact, ties them together?
2 responses so far ↓
1 Colum Graham // Oct 9, 2008 at 4:46 pm
I guess that comparison could be made in the sense that two elites from Iceland and Thailand have owned football clubs recently and have, or are about to, sell them. Thaksin’s assets were indeed ‘frozen’.
However, Iceland has a population smaller than Canberra and an average income of over $60,000 US. I think this sort of situation lends itself easily to more overt cronyism as everyone would - sort of- know each other and would be of the same ilk. Whereas Thailand has a population of over 60 million and an average personal income of nearly $4000 US, with a great deal of class and cultural divides. Therefore, I assume elitist croney behaviour in Thailand is much more centralized and secretive, whereas for Iceland and it’s smaller population, cronyism would have had more of a direct impact on average peoples lives.
Also, the Icelandic collapse was in part, fostered by it’s citizens borrowing foreign money for loans. I remember reading that Icelandic bank interest rates for loans had been something like 15% (not sure for how long that was). This forced the regular middle-upper class demographic into putting their money off shore, making repayments internationally. Surely most Thai subjects don’t have the financial capability to borrow money from overseas for their home loans…. Doesnt this lead the majority of people in Thailand to play into the cronyism of the elites indirectly because the gap between status is much wider.
Perhaps the gap in status was much finer in Iceland and the middle-upper class Icelandics could refuse to ingratiate themselves at 15%. How often do Thai subjects refuse Thai elites? I dont think Icelandic elites were nearly as powerful towards their citizens as Thai elites as their situation has now fallen apart. Therefore, perhaps Professor Gylfason comments were simply to make an analogy to talk of cronyism.
I’m pretty tired, sorry if this is muddled.
2 Leif Jonsson // Oct 10, 2008 at 3:11 pm
I am from Iceland but don’t consider myself an expert on the place, least of all on the spectacular wave of speculative investment in other countries over the last ten-plus years. But to say that there is a “Thai-style cronyism” is nonsense on both counts. I don’t think Thailand is a global exemplar of cronyism (a lot of stuff in the US is quite similar, and to allege corruption and such as unique to places like Thailand simply smacks of old orientalism), nor do I think the crash in Iceland is much like that in Thailand 11 years ago (except that ordinary people suffer and their money evaporates, but that is the story with capitalism’s crises anywhere). Judging from what I have read in the newspapers, the cronyism in Iceland (with financial institutions, dubious loans, and the authorities complicit or looking the other way) is more like what’s going on in the US. The main difference is one of scale, the economy is not big, the population is 300,000 (including a few hundred Thai people); the fiction of an endless increase in value was apparent sooner than elsewhere.
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