Thailand's Barnum & Bailey Economy Getting Tired: William Pesek

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In the "Amazing Thailand" advertising blitz that helps fill beaches, hotels and public coffers in the sun-kissed Southeast Asian nation, the sales pitch to tourists and executives everywhere is this: Thailand's magic "begins with the people." If the country isn't careful, it will end with them, too.

The world has gotten accustomed to Thailand's remarkable resilience. Since 2006, Southeast Asia's second-biggest economy has bumbled from one political crisis to another without killing the economy. Eight years ago, for example, giant protests ousted then-prime minister Thaksin Shinawatra in the nation's 18th coup in eight decades. Since then, Bangkok's revolving door has spat out six prime ministers, the current one being Thaksin's baby sister, Yingluck Shinawatra. And now, anti-government forces are shutting down Bangkok in an attempt to dispatch her, too.

My worry is that Thailand's amazing luck is running out. Could this latest standoff be the one that prompts the world to turn its back on the Land of Smiles? Here are three reasons why Thailand is risking just that sort of fed-up backlash from the foreign investors and tourists on which it relies for growth.

The circus never leaves. Thailand is Asia's Barnum & Bailey economy. Until now, it's largely gotten a pass on the three rings of chaos and uncertainty that never seem to leave town. That tolerance stems from many things: the country's enviable geographical location; a growing population; low wages; the relative ease of doing business; a fiscal balance sheet that, since the 1997 Asian crisis, has avoided the excesses of many peers; the knowledge that a stable and predictable bureaucracy is in place to keep the economy from unraveling. There's also a less quantifiable, but no less potent, consideration: the belief that should Bangkok go the way of Cairo, the widely revered King Bhumibol Adulyadej will swoop down and save the nation.

But Thailand has been virtually paralyzed by one people-power skirmish after another. Meanwhile, the simultaneous emergence of China, India, Indonesia and the Philippines isn't just making Asia more dynamic, but also offering executives from Apple to Lenovo to Toyota to Unilever choices. At some point, executives who prize reliability and abhor drama are going to move their factories and corporate offices elsewhere.

The perpetual political circus has left Thai policymakers little time to engage in long-term strategy. A desperately needed $61 billion infrastructure-spending plan looks dead, as does an ambitious high-speed-train project. Better roads, ports, bridges and railways are required to plug into the region's boom and to ensure Thailand plays a pivotal role in the 10-member Association of Southeast Asian Nations as it slashes tariffs in

2015. The damage being done now may not be immediately visible, but could last for years to come.

No clear center can emerge. The pro-Thaksin red shirts and anti-Thaksin yellow shirts have become two polarized extremes determined to fight things out until one side wins. And in reality, neither side offers an obvious way forward.The Thaksinites, mostly powered by rural voters, think the billionaire-turned-politician now living in exile should return and save the day. The urban-heavy anti-Thaksin crowd views his tenure as one of corruption and abuses of power and favors turning leadership over to an unelected “people’s council” that would supplant Parliament. Neither solution is grounded in democratic principles of negotiation and compromise, which alone can ensure future stability.

The alternative, ultimately, is violence. “Thailand finds itself bereft of a credible center that can forge reconciliation and a settlement that recognizes elements of justice in both sides of the political divide,” Michael Connors of the University of Nottingham, Malaysia Campus, told Bloomberg News. “If that center does not emerge, we can only imagine further violence and chaos as one side seeks to crush the other.”

The choice is between Egypt and South Korea. It's time for Thailand's 67 million people to decide whether they want to live in a constant state of chaos and socioeconomic stasis (like Egypt), or to move up the economic ladder, Korea-style. The only way democracy works is if a critical mass of the people trust it. In Thailand's case, that means building credible and independent institutions that provide checks and balances for elected officials. Only strong judiciaries, anti-corruption arms and networks of government watchdog agencies can ensure accountability.

While Korea faces many challenges, it's at the vanguard of developing Asian nations that are growing more stable and prosperous. Indonesia and the Philippines, too, deserve a shout-out for moving beyond the coup-happy rhetoric of a just a decade ago. Like Korea, they are learning the importance of good and predictable governance -- and that the success of democracy depends on how leaders act long after the ballot boxes close.

It does all begin with people, as Thailand's slogan goes. This circus will only end when Thais decide that Barnum & Bailey's tent is a fun place to visit, but not to live. There's little time to lose.

Thailand's Troubled Democracy

(William Pesek is a Bloomberg View columnist. Follow him on Twitter.)