Thailand's elections rethought

An interesting point of view on Thai politics that tempers my demands to let democracy run its course:

In 1973, student-led protests ended military rule in Thailand and gave birth to a civil society movement. Its members came mostly from an expanding middle class in Bangkok that had benefited from new opportunities for university educations and was increasingly politically assertive. Thai civil society groups wanted a permanent end to military rule and government corruption, and a halt to the growing influence of money in politics, which had become pervasive as businessmen came to dominate parliament.

By 1997, these groups had grown strong enough to force parliament to agree to a new constitution. Significantly, it was drafted not by serving politicians or bureaucrats but by a popularly elected committee. The new constitution made too many changes to the existing charter to list here, but the underlying purpose was simple: to enforce the rule of law. It established, among other independent institutions, a national anti-corruption commission, a constitutional court and an election commission, and it explicitly recognized many human rights. Some questioned how effective the changes would be, but in general the 1997 constitution was hailed as a major advance for democracy in Thailand.

In 2001, Thaksin Shinawatra, one of Thailand’s wealthiest business executives, was elected prime minister. One reason for his decisive victory was a populist program to help Thailand’s rural poor, but his main message was that Thailand needed to be run in a modern, businesslike way. Thaksin liked to call himself the “CEO prime minister,” and he played down the importance of the system established by the 1997 constitution, arguing that it wasn’t law that mattered but results.

Thaksin asserted that since he was a moral person and a successful executive, he had the best claim to govern Thailand, and that the opposition was illegitimate. Over time, more Thais saw in his actions evidence that he was using his office and his enormous personal wealth to gut the constitutional reforms of any real meaning and to perpetuate himself in power. This was the main reason for the conflict between Thaksin and his opponents, not the desire of a pampered elite in Bangkok to maintain its privileges. In 2006, after Thaksin tried to manipulate the army promotion list, installing loyalists in key command positions to further his reelection prospects, the army acted to remove him.

This was a useful reminder to me of some of the events that began back in 2006 (more information on Wikipedia - see section "Origins of the Crisis"):

1. The move by Thaksin to install loyalists in the army.
2. The sale of Shin Corp and a ruling that this sale (of about US$2 billion) was exempt from capital gains taxes

Both of these struck the Bangkok elite (and myself still) as hypocritical (my word) since Thaksin was not really looking after the rural poor but looking after himself.

The way forward does not look too optimistic. The NYT reports of a growing Shinawatra dynasty in Thai politics.

Once again the Shinawatra clan has pulled off an unlikely feat: One of the wealthiest families in Thailand has convinced the poor and politically disenfranchised that it understands their problems, feels their pain and will fight for their rights.
…
In grubby market stalls and ramshackle shops, residents flew red flags that advertised their support for Thaksin Shinawatra and his younger sister, Yingluck, who is now in line to become Thailand’s first female prime minister.

“We are so happy and relieved,” said Somboon Kamduang, a 55-year-old resident who scratches out a living selling peanuts and beans in the market and singing in restaurants at night.

Mr. Somboon said he was one of dozens of residents who gathered at the covered marketplace on Sunday night to watch election returns on television — and cheer the victory.

There were similar celebrations across north and northeast Thailand after the surprisingly strong victory of Pheu Thai, as the party led by Ms. Yingluck is known. Opponents of the party fear a surge of populist policies, increased debt for the country and a revival of what they say were efforts by Mr. Thaksin to dilute democratic checks and balances.
...
A caravan of pick-up trucks from the Pheu Thai Party drove triumphantly through town on Monday, with loudspeakers blaring a grateful message to voters: “We will bring happiness back to you, brothers and sisters! Thank you!”

The caravan was led by Mr. Thaksin’s niece, Chinnicha Wongsawad, who was re-elected as a member of Parliament with a commanding 78 percent of the vote. At 29 years old she is one of the youngest members of the Shinawatra family.

She joins the growing dynasty: In 1969 Mr. Thaksin’s father, Lerdt, was elected to Parliament and served a little more than two years. (Like his son nearly four decades later, his term was interrupted by a military coup.) Mr. Thaksin’s sister, Yaowalak, served as an official in the municipal government of Chiang Mai, the busy capital of northern Thailand a half-hour drive from here. Mr. Thaksin’s brother, Payap, was a member of Parliament for one year until the 2006 coup.

Moral hazard and adverse selection

In the playground:

Fear of litigation led New York City officials to remove seesaws, merry-go-rounds and the ropes that young Tarzans used to swing from one platform to another. Letting children swing on tires became taboo because of fears that the heavy swings could bang into a child.

Adverse selection:
“Paradoxically,” the psychologists write, “we posit that our fear of children being harmed by mostly harmless injuries may result in more fearful children and increased levels of psychopathology.”

Moral hazard:
“There is no clear evidence that playground safety measures have lowered the average risk on playgrounds,” said David Ball, a professor of risk management at Middlesex University in London. He noted that the risk of some injuries, like long fractures of the arm, actually increased after the introduction of softer surfaces on playgrounds in Britain and Australia.

“This sounds counterintuitive, but it shouldn’t, because it is a common phenomenon,” Dr. Ball said. “If children and parents believe they are in an environment which is safer than it actually is, they will take more risks. An argument against softer surfacing is that children think it is safe, but because they don’t understand its properties, they overrate its performance.”

Moral hazard and adverse selection:
Reducing the height of playground equipment may help toddlers, but it can produce unintended consequences among bigger children. “Older children are discouraged from taking healthy exercise on playgrounds because they have been designed with the safety of the very young in mind,” Dr. Ball said. “Therefore, they may play in more dangerous places, or not at all.”

See also previous post here.

Coffee transitions

I finally took a plunge and bought a coffee maker despite all the mixed reviews. The odd thing is that if I had not done any research I would probably have just gone ahead and bought one instead of agonizing over it. I like my old thermal carafe coffee. The drip coffee makers with a hot plate leaves a burnt taste sometimes. I can only conclude that the negative reviews from those who had trouble using it are from those switching from a maker with a hot plate to one one without (hence a thermal carafe).

Here are some things that I discovered during the transition about 10 years ago.

1. You cannot fill the water reservoir with the thermal carafe. This seems to be really bad for those who are used to measuring and filling with a glass carafe and hot plate combination. It seems that over the years technology must have improved in order to allow us to do this but apparently not. The thermos type container does not appear to have advanced at all. Spillage always results no matter how careful I am. So, yes, you will need a separate vessel to fill the reservoir.
2. You have to unscrew the top of the carafe all the way in order to pour out the coffee as opposed to just loosening it. I don’t know why this is so, but so it is. I have the same problem in coffee shops when trying to pour out cream from their thermal carafes. No matter how much I loosen the cream just won’t come out and if I loosen too much, the top falls out (all over the coffee!). I always end up taking the top off anyway.
3. The coffee brewed using a thermal carafe is much cooler than one that comes from a drip coffee machine with hot plate. I would have expected this to be the other way around and again I don’t know why this is so. I don’t mind it because I like to able to drink it right away (well, maybe let it sit for 5 minutes or so) but if you are a coffee nurser, the coffee will get cold very quickly.

There is definitely a stagnation in coffee making machines (at least the thermal carafe ones anyway). It’s been a2 weeks since I bought the machine and it’s still working. I can only hope that it will last as long as the previous one which was bought from Gevalia at $10 plus coffee subscription which I promptly canceled.

Outlets in NC vs DC or reflections on regulation

When we were at the Outer Banks, I noticed that the electrical outlets in the bathrooms and the kitchen were regular outlets rather than GFCI outlets which are required here in metro DC/Montgomery County, MD.

Thoughts vis a vis the building code in Montgomery County:

1. Is this an example of unnecessary/excessive regulation?
2. Do the costs of compliance (homeowner or repair costs, etc.) exceed its benefits (e.g. lives saved)?
3. Do we need to be protected from our own stupidity or accidental electrocution? Or should we have a say in whether to be protected or not?

US debt and credit rating agencies

For a while the debt ceiling standoff has only been at the peripheral of my attention but two recent articles caught my attention.

From WaPo:
The Obama administration has mounted an intense behind-the-scenes campaign to keep the nation’s major credit rating companies from issuing threats that they might downgrade the United States over the swelling size of the federal debt.

Senior administration officials have been trying for months to convince analysts at the credit rating companies — all part of publicly traded firms — that political leaders in Washington can come to an agreement to tame the debt.

The role of ratings agencies in the subprime crisis has escaped scrutiny which is unfortunate since they were more than just a minor player first, by classifying all the toxic securities as AAA and then exacerbating the crisis by turning these “pristine” securities into junk at the first signs of trouble. Lately, they have been major players in the European debt crisis and now the American debt crisis, not by taking a long hard look at their role in creating systemic risks but by trying to reclaim the vestiges of their reputations by trying to appear impartial and objective when downgrading the countries.

It almost appears as though the ratings agencies are trying to shrink the volume of AAA securities. Alphaville reports the following:

… a new report, issued by the BIS and Basel Committee’s joint forum, on the subject of securitisation incentives. ... what it shows has much wider, more current implications.
According to the report, between 1990 and 2006 — the year in which issuance of Asset-Backed Securities (ABS) peaked — assets with the highest credit rating rose from a little over 20 per cent of total rated fixed-income issues to almost 55 per cent. Think about it. More than half of the world’s debt securities were, for all intents and purposes, considered risk-free. In 2006, that was nearly $5,000bn of assets.

The financial crisis had a lot to do with triple-A ratings being slapped on to subprime securities which didn’t warrant them, we know that. The report says between 1990 and 2006 ABS accounted for 64 per cent of the total growth in the amount of AAA-rated fixed income, compared with 27 per cent attributable to the growth in public debt, 2 per cent to corporate and 8 per cent to other products.

But watch what starts happening from 2008 and 2009.

The AAA bubble re-inflates and suddenly sovereign debt becomes the major force driving the world’s triple-A supply. The turmoil of 2008 shunted some investors from ABS into safer sovereign debt, it’s true. But you also had a plethora of incoming bank regulation to purposefully herd investors towards holding more government bonds, plus a glut of central bank liquidity facilities accepting government IOUs as collateral. Where ABS dissipated, sovereign debt stood in to fill the gap. And more.

It’s one reason why the sovereign crisis is well and truly painful.

It’s a global repricing of risk, again, but one that has the potential for a much larger pop, so to speak.

But if U.S. debt is downgraded because they think it should be, where does that leave the other AAA securities? Relative to the downgraded U.S. debt are these securities really still AAA? Think of aggregate shocks and idiosyncratic shocks - is the downgrade of U.S. debt an aggregate shock that affects all securities equally? And then what? Do they all get downgraded too? And will there be any AAA securities left?

Why are paint brushes so expensive and painting so hard?

I’ve had a chance to do some painting around the house recently using rollers and paint brushes. The perfectionist that I am makes painting extremely frustrating - the trail marks left by the brush and the inconsistent pressure of the roller leaves “bumping” on the surface. It’s true that I can only see it if I look closely enough - but I know they’re there and since then I have had the chance to examine the paint job of the rest of the house when we bought it and I’m not the only imperfect painter.

Which is why I would never trust college kids to paint a house. Here’s a story from a former college warrior-painter:

EVERY summer, thousands of homeowners entrust their homes to college-age painters, possibly on the theory that if you’re smart enough to matriculate, you can smear paint on a flat surface. Seriously, how could you mess it up?

To the dozens of customers who asked precisely that question in the 1980s, soon after my college buddies and I left the job: you’re about to find out.

Instead, I learned everything that my old bosses never taught me, tips that can easily make the difference between a two-year paint job and a 12-year paint job.

And while we’re on the subject, why are paint brushes so expensive? For this price, they had better be sticking the bristles in one at a time. (And so hard to clean!)

Finally, choose brushes wisely. Good ones, which usually have tight, compact bristles, are expensive. But bad ones are excruciating. You need a four-inch brush for siding (Purdy’s costs $28), and a 2.5-inch, angled brush for trim (Wooster’s is $12).

Water aid

I have always been puzzled by stories like these:

Aylito Binayo's feet know the mountain. Even at four in the morning she can run down the rocks to the river by starlight alone and climb the steep mountain back up to her village with 50 pounds of water on her back. She has made this journey three times a day for nearly all her 25 years. So has every other woman in her village of Foro, in the Konso district of southwestern Ethiopia. Binayo dropped out of school when she was eight years old, in part because she had to help her mother fetch water from the Toiro River.
…
When you spend hours hauling water long distances, you measure every drop. …

Why not move closer to the water source? Is this an example of lack of adaptation? Perhaps this is the reason:

Many villages in the tropics were built high in the hills, where it is cooler and less malarious and easier to see when the enemy is coming.

Or hysteresis? And the story of water aid is not very encouraging:
The villages of Konso are littered with the ghosts of water projects past. In Konsos around the developing world, the biggest problem with water schemes is that about half of them fall into disrepair soon after the groups that built them move on. Sometimes technology is used that can't be repaired locally, or spare parts are available only in the capital. But other reasons are achingly trivial: The villagers can't raise money for a three-dollar part or don't trust anyone to make the purchase with their pooled funds.

A new approach seems to be the following:
But the real innovation is that WaterAid treats technology as only part of the solution. Just as important is involving the local community in designing, building, and maintaining new water projects. Before beginning any project, WaterAid asks the community to form a WASH (water, sanitation, hygiene) committee of seven people—four of whom must be women. The committee works with WaterAid to plan projects and involve the village in construction. Then it maintains and runs the project

But there is some skepticism:
WaterAid and other successful groups, such as Water.org, CARE, and A Glimmer of Hope, believe that charging user fees—usually a penny per jerry can or less—is key to sustaining a project. The village WASH committee holds the proceeds to pay for spare parts and repairs. But villagers think of water as a gift from God. Should we next pay to breathe air?