Writing Feedback / Natural Monopoly and Its Provision [2]

Given the economic structure, laws and regulations in Thailand, what would be the most suitable type of natural monopoly for the society? Private ownership or State-Owned Enterprises (SOEs) and Why?

Is private enterprise more efficient than state-owned enterprise? The empirical evidences in Thailand says so. However, Thai economy is different from the advanced economies like United States. Therefore, adopting or reforming the natural monopoly companies' structure requires applicability of various factors such as political interests, expertizes in specific businesses, and commitment of government official in the SOEs. Thailand would always need to think twice before adopting a package of laws and regulations that affects many lives and may triggers resistances. The government and the law provision should carefully develop as natural monopoly and its public utilities such as electricity or telecommunication have substantial impacts on economic development.

First, let us assume that private enterprises in natural monopoly is more efficient and the SOEs are not. Private firms deliver a lower price and higher quality under good provision of independent experts and regulators. But does Thailand has the professional executives and experts to provide efficient private ownership of natural monopoly? Strong incentive and legal provision to bring in the best personnel and look after the enterprise are the two crucial factors of success. Otherwise, private enterprises can cause a problem as well.

Second, if the price and quality is better in private firms, why there is little progress on privatization? The first statement gives us some insights of how difficult it is to have private companies. Having said that, SOEs are also powerful in political agenda and vital to Thai economy. Even though the inefficacy exists but SOEs gives government the power to control and generate revenue if it is managed properly. We must say that there is a grey market in Thailand, consisting oft good SOEs and terrible ones with bureaucrats in businesses. Therefore, our focus may move towards new questions. Is it possible to eliminate bureaucracy apart from privatization? Or the privatization that will not provoke resistance by having reduction in state-ownership but still sufficient to get access to control and revenue? This leads us to a mixed strategies and middle-way approach to natural monopoly.

The implication is that the reformation is necessary but how to do it in a wise way. Whatever the solution is, forceful public interests on natural monopoly lay upon many sectors including public, private, producers, consumers and our people. Thus, the cooperation of private and public decision-makers to eliminate inefficiency and promote the favorable outcomes for the vast majority is predominantly needed.

Writing Feedback / To what extent is the inequality good or bad for the economic development? [2]

To what extent is the inequality good or bad for the economic development?
According to the research paper of François Bourguignon (2004), the poverty reduction and growth are the objectives that have triangle-interrelation together with inequality. With the regard to economic development, poverty alleviation must be advocated by both economic growth and distribution policy towards the poor. On one hand, absolute poverty can be alleviated by an increase in income per capita or economic growth, on the other hand, relative poverty that adjusted for rising average income can still persist when the gains are not distributed with equality. Thus, the poverty reduction is determined by growth of mean income of the population and changes in the distribution. However, the redistribution or more equitable society has its cost and therefore we must discuss the foregone development in order to achieve equity.

First, in general, the distribution effect in comparison to the growth effect on poverty reduction will depends on the initial condition of development and income disparity of a country. For example, a low-income and low-inequality country benefits more from economic growth than distribution policy. On the contrary, high-income and high-inequality country, the effect on poverty reduction will be less elastic to growth and more elastic distribution of income. Therefore, the optimal strategies for development depends on a country's characteristic.

Second, it is questionable that there could be a tradeoff for more equal society and growth. In this case, the statement we made so far would have to be reconsidered as we assumed that both instrument of development can be functioning simultaneously to optimize the level of development. The relations of growth and inequality may be interrelated or independent from each other, depending on our assumptions and hypotheses.

The effect of growth on inequality will normally be inconclusive due to the structural of economy that is determined by many factors such as political philosophy, institutional standard, social relations, and so on. But with regard to economic development in consistent with growth, there should be more social participation demanding for more equitable society. However, it is statistically insignificant to prove with the data.

Having said that, it still comes back to initial condition and policy choices that will determine the mixture of economic growth and distribution policy, resulting in the effect of growth on level of inequality.

The effect of inequality on growth is even far more complex but it can be generalized that extreme inequality or equality is not good for economic growth. The paper has discussed that on the negative impacts of high inequality would resulted in inefficiency due to credit market imperfections and political instability when the poor cannot have fair opportunities as the rich do.

Notwithstanding these effects, the thing that should be emphasized on the political context is the perspective on the redistribution policies i.e. progressive and regressive tax. According the paper, the high-inequality implies regressive tax in favor of the rich due to political influence which in turn promoting economic growth. Vice versa, the more equitable society implies progressive tax that would lead to lower growth if it reduces efficiency or incentives of productivities but it may not always be the case.

The progressive tax - as mentioned it depends on discretions - may increase efficiency on transferring wealth instead of income. Although the progressive income tax will reduce the incentive on productivity and economic efficiency, the wealth redistribution can be growth-enhancing such as land reform or social protections that advocate the poor to accumulate capital in various forms e.g. education equality, without reducing income of the rich which will reduce their incentives and productivities.

In conclusion and on personal comments, extreme inequality or equality is not good for economic development as we have discussed there are many possible routes of development that depends on various conditions. This paper has introduced the route of redistributing wealth from the rich to the poor. To put it differently, it is the changing how much poor people would get out of the pie size which is difficult due to many political constraints. Another route would be increasing the pie size from the grass-root level or for the poor people which will also reduce the income disparity thought many policies e.g. functional redistribution on traditional sector enlargement and enrichment that will not necessary harm the rich people or even generate benefits because the sectors are generally positively linked to the others. It is always important that policy approach do take into consideration of more sustainable development from the other perspective as poverty-growth-inequality may not be only triangle-relation but multidimensional determined by other important factors as well.

Reference: Bourguignon, F. (2004). The Poverty-Growth-Inequality Triangle. Indian Council for Research on International Economic Relations, New Delhi, India, Working Paper 125.

This writing is an assignment for my economic development class to summarize a research paper after reading it. Thank you for your time.

Writing Feedback / 'Preparation' - What events, activities have contributed to your own self-development [2]

Hello,

English is my 2nd language, I appreciated your help for even just taking a look a my essay. I need a lot of practice of grammar, style (SEXJ) = Statement, explaination, example and justification; and active verb( like instead of join, I should use participate). These kind of help would be really useful. Thank you very much.

What events, activities or achievements have contributed to your own self-development

Preparation is all of my events, activities and achievements for my development which has completely changed my attitude. "You learn something every day if you pay attention." is the best description of my modernized perspective towards life. This is the most significant self-development during the final year of my high school.

Four months before my first SAT exam, I started to prepare anyhow to advance this test. However, I had no insight at the time; consequently, I resolve that by going straight into the previous practice SAT papers without any comprehension. This resulted in my appalling score. Therefore, I lost all of my confidence and arrogance and finally determined to give more effort in studying by study two to three hours every day. Hoping that there is somehow to attain a favorable outcome.

Subsequent to the failure, I had aware of insufficient diligence and assiduousness. When I am open-minded, I recognize the relevant knowledge from school which supports and implements my SAT test from daily education. Accordingly, I adapted and applied various input by studying dedicatedly at school and with myself. On the one hand, better grade and results are what I acquired, but on the other hand, I proudly received admiration from my parents, teacher; moreover, respect from other students. This has made my accomplishments such a wonderful experience and development. I always appreciate the diligence of those hardworking because it never goes wasted.

Despite the magnificent achievements I have attained, I have been working breathlessly and energetically. Concentrating on and giving priority to academics beyond my leisure. "Practice makes perfect", I have learnt to organize my time to have an efficient study both of the school and SAT. Also evaluating the work I have done and paying attention to small subjects which will facilitate my "Preparation". I have struggled, worked not only to acknowledge but go far beyond to make the best of it. Therefore, my effort has been apperceive by teachers, parents and people around me. They encourage and support my education resulted in my pleasure of studying.

Eventually, I found my pleasure in academics, which I could not since I started my education. I am grateful to share my experience, inform or apprehend new things from everyday life as my supporter did. Ultimately, I endeavor to continue learning and living with the best awareness, in order to make every single minute as my precious opportunity.