Friday, March 31, 2006

Corruption at the United Nations?

A recent paper by Harvard's Ilyana Kuziemko and Eric Werker uncovers the likely corruption at the United Nations. Furthermore, it's likely that the UNICEF should be hold responsible the most; and that means... the U.S. Abstract:
Ten of the fifteen seats on the U.N. Security Council are held by rotating members serving two-year terms. Using country-level panel data, we find that a country’s foreign aid receipts rise substantially when it is elected to the Security Council: on average, U.S. aid increases by 54 percent and U.N. development aid rises by 7 percent. We find that the positive effect of Security Council membership on aid is much greater during years in which key diplomatic events take place, when members’ votes are likely to be especially valuable. Further, the increase in aid is shown to begin the year a country is elected to the council and to disappear after its membership ends. We find evidence that the effect of council membership on U.S. aid is especially large for dictatorships and U.S. allies, suggesting that the United States seeks to form alliances with the council members who are cheapest to bribe. Finally, the connection between U.N. aid and council membership seems to be driven by UNICEF, an aid organization over which the United States has historically exerted much control.
It's really everywhere.

via MarginalRevolution.

Thursday, March 30, 2006

Unique, exclusive identity: (im)possible?

I agree with Amartya Sen:
"...A person's religion need not be his or her all-encompassing and exclusive identity. Islam, as a religion, does not obliterate responsible choice for Muslims in many spheres of life. Indeed, it is possible for one Muslim to take a confrontational view and another to be thoroughly tolerant of heterodoxy without either of them ceasing to be a Muslim for that reason alone..."
Here's the article from

Limiting a given individual's identity to a unique and exclusive association may disadvantage both the individual and the institution he or she is associated with.

When somebody commits terrorism and it turns out he or she is a Muslim, reductionists conclude: Islam is bad. This is an example of how an institution is disadvantaged by a unique, exclusive identity association.

As for how the effect harms the other way, think about the stigma from which Islam now has to suffer, thanks to reductionist way of thinking. Somehow every muslim is a terrorist.

Of course it is easy to find examples showing that the effect can be good. Sen uses Al-Ikhwarizmi as an example. He's a great mathematician and he's a muslim. I can't blame muslims who are proud of this. But saying that every muslim is a good mathematician is simply wrong, no matter how good it sounds.

Monday, March 27, 2006

U.S. support of Israel was and is a bad idea

The U.S. support for Israel should be eliminated. The U.S. shouldn't even have helped the creation of Israel in the first place.

The above paragraph isn't mine. I borrow it from a U.S. libertarian economist, Jeff Myron. Prof. Myron cites a controversial paper by Chicago's J. Mearsheimer and Harvard's S. Walt. The first sentence is drawn from the study, and the second is Myron's.

Here is the complete paper, and below is its abstract:
In this paper, John J. Mearsheimer of the University of Chicago's Department of Political Science and Stephen M.Walt of Harvard University's Kennedy School of Government contend that the centerpiece of U.S. Middle East policy is its intimate relationship with Israel. The authors argue that although often justified as reflecting shared strategic interests or compelling moral imperatives, the U.S. commitment to Israel is due primarily to the activities of the “Israel Lobby." This paper goes on to describe the various activities that pro-Israel groups have undertaken in order to shift U.S. foreign policy in a pro-Israel direction.

Saturday, March 25, 2006

The Politics of Rice 16

You think I gave up with this series? Not so fast.

Here's a shock: 18 percent of "raskin" ("beras untuk yang miskin", or subsidized rice for the poor) is stolen by corrupt officials.

A recent study by Ben Olken of Harvard and NBER reveals another evidence of corruption behind the largest redistributive program in Indonesia. Here is the paper. Abstract:
This paper examines the degree to which the corruption in developing countries may impair the ability of governments to redistribute wealth among their citizens. Specifically, I examine a large anti-poverty program in Indonesia that distributed subsidized rice to poor households. I estimate the extent of corruption in the program by comparing administrative data on the amount of rice distributed with survey data on the amount actually received by households. The central estimates suggest that, on average, at least 18 percent of the rice appears to have disappeared. Ethnically heterogeneous and sparsely populated areas are more likely to be missing rice. Using conservative assumptions for the marginal cost of public funds, I estimate that the welfare losses from this corruption may have been large enough to offset the potential welfare gains from the redistributive intent of the program. These findings suggest that corruption may impose substantial limitations on developing countries’ redistributive efforts,and may help explain the low level of transfer programs in developing countries.
I'm not surprised.

Friday, March 24, 2006

Skin change

Let's just say I was bored with the skin I had been using since 2003. No, it's not a bad thing. In fact I was in a dilemma: 1) I wanted a new skin, 2) I felt that I was betraying my old skin. Furthermore, the latter included a guilty feeling to the great creators I had borrowed ideas from, especially Jason Sutter (the original creator of the former skin, before I messed it up) and John Irons (an excellent economist who invented ArgMax, including it's useful newsBot).

I ended up with this new skin you're looking at now. It's much more simple. Notice, I don't put my long list of favourite blogs, news sources, etc anymore. I believe everybody who blogs use aggregator (I use Bloglines). Technology is amazing. We don't even need to put our feed address anymore. The aggregators can find it easily. Incredibly easy searching is also the reason why I don't keep the ArgMax's newsBot anymore. Don't tell me you can't find it.

Another reason I changed skin was that many friends complain that Exegesis "don't take comments", which isn't true. Well, it didn't until last year. But due to so many alterations on the template, I think I made it obscure. Now it's more obvious. I welcome your comments.

I remember the first time I set up this blog. It was October 2003, as you can see in the archive. I wasn't sure I could even maintain it. It was just a media to vent out my stress trying to meet dissertation deadlines. But it worked quite well. So far...

As you might have seen, I've been swinging on themes here and there. My first posts were all about the life of a graduate student struggling with his work. Then I came back home. Things were no less interesting. It was all the reality, and boy, "reality bites". Now, most of my current posts are comments to national headlines. My apologies to many of you who don't read Indonesian; I linked to Indonesian newspapers a lot. But I always try to make my points clear, even if you don't click the links.

Did I bore you already? You can always go to the café next door...

KPPU shouldn't punish Semen Gresik; the market would

So the nation's antitrust committee, KPPU has reached another verdict, this time against PT Semen Gresik. According to KPPU, Semen Gresik has violated the Commpetition Law (UU No. 5 Th 1999). Among all, SG allegedly 1) sets retail price , 2) decides who are allowed to do business with its distributors, and 3) forbids its distributors to sell cement produced by its competitors.

Semen Gresik denies. It says, this is common practice in business.

I agree with Semen Gresik. I don't think KPPU is the right entity to punish (or to decide the punishment for) SG for such conducts. The distributors have the options to leave Semen Gresik anytime and serve Semen Tonasa, Semen Cibinong, whatever. If Semen Gresik is doing something bad, it will lose its distributors and consumers. The market will punish it.

Thursday, March 23, 2006

Islamic parties good for fighting corruption?

Here's a recent evidence in a paper by LPEM researcher, Ari Kuncoro. Here's the abstract:
Indonesia has a tradition of corruption among local officials who harass and collect bribes from firms. Corruption flourished in the Suharto, pre-democracy era. This paper asks whether local democratization that occurred after Suharto reduced corruption and whether specific local politics, over and above the effects of local culture, affect corruption. We have a firm level data set for 2001 that benchmarks bribing activity and harassment at the time when Indonesia decentralized key responsibilities to local democratically elected governments. We have a second data set for 2004 on corruption at the end of the first democratic election cycle. We find that, overall, corruption declines between these time periods. But specific politics matter. Islamic parties in Indonesia are perceived as being anti-corruption. Our data show voting patterns reflect this belief and voters' perceptions have some degree of accuracy. In the first democratic election, localities that voted in legislatures dominated by secular parties, including Megawati's party, experienced significant relative increases in corruption, while the reverse was the case for those voting in Islamic parties. But in the second election in 2004, in those localities where corruption had increased under secular party rule, voters "threw the bums out of office" and voted in Islamic parties.

Wednesday, March 22, 2006

Refurbished, anyone?

Domestic market is flooded with "reconditioned" TVs, reports Kompas (Ind). The association of electronics makers urges the government to impose a "national industry standard" to "protect both consumers and producers". I say crap.

All that is needed is a simple label saying "Refurbished" (or, "Reconditioned", if you like) on those TVs' package. Sell them at a lower price than the newly made. That way, you "protect" the consumers who want to wantch TV but have fewer money. You also "protect" the producers who make use of used stuff and are willing to accept lower return. In the meantime, the producers of new TV sets should resort on quality enhancement.

If you're not convinced, read the paragraph saying "the selling price (of the "reconditioned" TVs) are darn cheap and tempting". So, what's the problem? Information. Failing to tell the consumers what's inside while deluding on lower price can be seen as a cheat. That's why we need the label, bro.

Oh, did we forget to give a job to the government? How about this: enforce the labeling. Inspect once in a while, pick at random, and punish those who violate (selling a refurbished TV with no label saying such).

Tuesday, March 21, 2006

Cut the tax!

While I'm not in favor of their approach (look who suffers), I think what the transportation associations demand is in the right direction. The government should take this momentum to further cut taxes in other areas, too. There's no point of collecting so much tax, if the government is incapable of handling it.

Monday, March 20, 2006


When economics is studied only marginally on the discussion about corruption while the rest are a total conspiracy theory, this kind of article is very likely.

Speaking about conspiracy, how about constructing a new one? Try this: some politicians conspire with businessmen to overthrow a multinational from a particular country. It's easy. Create chaos. The share value goes down. Buy the corporation, low. Then sell high. Sounds good? Probably. Can I prove it? What? No! And that's the beauty of conspiracy theory.

Ultranationalists strike back

This kind of crowd always gives me anxiety attack. Old soldiers (and friends) really never die.

Supply chain, service.

Dede is right on. We have to take part in international production network. I would go further: if we can't really produce, we should facilitate the flow of goods. Then we charge for the service. Transhipment, anyone?

Monday, March 13, 2006

It's called "service", no?

Read this article and let's try to have a bigger perspective. What's really going on? American and European shoemakers can't compete against Chinese. So they ask their governments to help them through high tariff (In case you forget, the effect would be that US and EU people should end up with more expensive shoes). Chinese would respond by rerouting their delivery through Indonesia. Indonesian shoemakers freak out, 'cause they also can't compete. Even though it is obvious that some ex shoemakers are better off enganging in the "modern value chain", the association thinks it's not a good idea. I think otherwise. If we can't really make competitive shoes, why force? Now that international modern business are switching to borderless value chain, we should be happy to become one of the first players. Of course Singapore has been doing it all this time. And it's called "service"...

Here's a fable to think about.

Wednesday, March 08, 2006

Delayed posting for the delayed package

I have been meaning to welcome the government policy packages recently announced. It was supposed to be "January Package" as promised before by Minister Budiono. But apparently it had to wait until early March to have it announced. Here is the policy package for investment climate improvement. It complements the earlier package for infrastructure policy and last year's "October Incentives".

Some comments on the investment climate improvement policy package. First off, it's not bad. It covers four important areas: 1) Custom and excises (the most troublesome, as far as investment climate is considered), 2) Taxes, 3) Manpower, and 4) Small and medium esterprises and cooperatives. The good things include, in no particular order: 1) Explicit mention of responsible ministries and time target (so they are at least qualified for anti-moral hazard verification), 2) Promise to streamline (and eliminate, if necessary) of problematic regulations that have been hindering investment, 3) Promotion of more flexible labor market, 4) Effort to clean the bureaucracy hurdles, especially in the MoF, 5) Simplification of visa and working permit issuance procedure.

Hope all these are not just promises. And it'd better be worth the wait.