Populism

Populism and Cash Handouts: The Free Ride That Isn't Free

Populism has always thrived on a simple formula: promise the people what they want, give them something they can feel, and watch the votes roll in. One of the most effective tools in the populist playbook is the cash handout, a quick and tangible way to win over the masses. It's simple, it’s direct, and who doesn’t like free money? But, as with most things in politics and economics, there's no such thing as a free lunch—or free money for that matter.

Let's take Thailand as a case study. When Prayuth Chan-o-cha was in power, one of the most popular moves he made was launching the "คนละครึ่ง" (Half and Half) campaign, where the government matched 50% of people's spending, up to a certain limit. The goal was to stimulate the economy, boost consumer spending, and give the country’s middle and lower classes a little breathing room. On the surface, it seemed like a win-win: people got to stretch their baht, businesses saw an uptick in sales, and Prayuth reaped the political benefits of keeping the economy moving in a crisis. Easy support, right?

But here’s the catch—where’s the money coming from? That’s right, from tax revenues, which are collected from the very people who benefit from these cash handouts. It’s a delicate balancing act, because while people love getting something for "free," they aren’t exactly thrilled when the taxman comes knocking. Cash handouts are like a drug: once you give people that high, they’ll come back for more. And sooner or later, that money has to be replenished. The government can only dip into its coffers for so long before the people themselves are footing the bill through increased taxes, inflation, or public debt.

The "Half and Half" Effect: Stimulus or Dependency?

Now, while economic stimulus through programs like Half and Half can have positive short-term effects, there’s always the risk of creating dependence. You give people a taste of free money, and they begin to expect it. It’s like an addictive substance—when people get used to their spending being subsidized, they crave more. And when the handouts stop, the withdrawal symptoms kick in. Populists know this and use it to their advantage, but the problem is, the high doesn’t last forever. Eventually, someone has to pay the bill.

In Thailand, Prayuth’s Half and Half program gave people a quick fix during the tough times of the pandemic, but it set the stage for political competition over who could give out more free stuff. Enter the Pheu Thai Party, Prayuth’s main adversary, with a campaign promise that’s bigger, shinier, and—of course—more expensive: a 10,000 Baht Digital Money handout. The idea sounds futuristic, with talk of blockchain and digital wallets, but after dragging on for almost a year, what’s finally being delivered is a direct cash deposit. No blockchain. No digital revolution. Just more cash handouts.

Free Stuff vs. The Taxman

Here’s the problem: people love free money, but they hate paying taxes. This is the core paradox of populism in action. When you offer the public something for nothing, they rarely ask where the money is coming from or who’s going to pay for it later. But when it’s time to refill the treasury—whether through higher taxes or other forms of revenue generation—people suddenly forget about that “free” gift they received. Nobody wants to be the one paying the piper.

Take Prayuth’s Half and Half program, for example. It cost billions of baht, which came from public funds. And where do public funds come from? Taxes. The very same people who benefited from the program are also the ones who end up footing the bill. It’s a cycle that works for a while, but as public expectations rise, the costs balloon. At some point, the government has to find ways to raise more money. They can’t just print it without causing inflation (although many try), and borrowing from the future only delays the pain.

With Pheu Thai now in power, they’re handing out their own brand of populism with the 10,000 Baht handout, but the underlying problem remains the same. Someone has to pay for it. Thailand, like any country, runs on a system where tax revenues sustain government spending. And while giving people a short-term boost feels good and might even be necessary in tough times, it creates an unsustainable cycle of dependency that future leaders will have to deal with.

The Populist Trap: Why It Won't Last

Populism thrives on immediacy—on giving people what they want now. But the reality is, economic problems can’t be solved with a one-off handout. The fundamental issue with programs like Half and Half, or the 10,000 Baht handout, is that they only address symptoms, not the underlying structural problems of an economy. When people become dependent on government subsidies, the economy itself becomes dependent on government intervention. This limits the ability of the private sector to grow and innovate, and it reduces people's motivation to be self-sufficient.

What happens when the money runs out? Or when the government can no longer sustain these programs without severe economic repercussions? Populist policies, especially cash handouts, can only go so far before the system starts to strain. And once people get used to the idea of "free money", any politician who doesn’t offer more of it becomes the enemy. It’s a dangerous cycle, one that leads to fiscal irresponsibility and debt crises.

Conclusion: Beware the Free Lunch

In the end, cash handouts may win elections and keep the populace temporarily satisfied, but they are not a long-term solution to economic problems. Politicians like Prayuth and Pheu Thai can offer the people free stuff, but at some point, the taxman cometh, and the bill comes due. Someone has to pay for these handouts, and that someone is the public. Populism thrives on the illusion of generosity, but it’s the working class that ends up bearing the burden. As the handouts keep flowing, the addiction grows, and with it, the eventual crash when the government can no longer keep up the act.

Free money is never truly free—it just comes with a delayed price tag. And when it arrives, it’s not just the populists who will feel the sting, but everyone who got hooked on the dream of easy cash.