Saturday, May 27, 2006

Thug War

This is what happens when you have lame Law. Or, even if you have Law, your police is simply impotent. These cowboy gangs. They're all the same. They think they are Law.

War war is stupid and people are stupid
And love means nothing in some strange quarters
War war is stupid and people are stupid
And I heard them banging on hearts and fingers

Saturday, May 20, 2006

Happy birthday, John!

Today, May 20th, is John Stuart Mill’s 200th birthday. J.S. Mill is arguably1 one of the most important figures in liberalism.2

Let’s take a moment to remember Mill. The following are excerpts of his “On Liberty and Other Essays”:
[T]he sole end for which mankind are warranted, individually or collectively, in interfering with the liberty of action of any of their number, is self-protection.

The objections to government interference … may be of three kinds … [F]irst is, when the thing to be done is likely to be better done by individuals than by the government … [T]here is no one so fit to conduct any business, or to determine how or by whom it shall be conducted, as those who are personally interested in it. … [S]second is, though individuals may not do the particular things so well, on the average, as the officers of government, it is nevertheless desirable that it should be done by them, rather than by the government, as a means to their own mental education. … [T]hird is, the great evil of adding unnecessarily to [the government’s] power. Every function superadded to those already exercised by the government, causes its influence over hopes and fears to be more widely diffused, and converts, more and more, the active and ambitious part of the public into hangers-on of the government, or of some party which aims at becoming the government.

Sounds like he’s our man.

But no so fast. JSM was an ardent nationalist:

Free institutions are next to impossible in a country made up of different nationalities. Among a people without fellow-feeling, especially if they speak different languages, the united public opinion necessary to the working of representative government cannot exist.

That's from "Considerations of Representative Government".

Ain't really the man. Ain't really.

More clever and informative at Catallarchy.

1 "Arguably" being the operative, considering Mill's tendency toward "soft-socialism" -- Rawls as an avid follower. See e.g. Hayek's criticism on Mills.
2 Note, I said "liberalism", not "libertarianism".

Friday, May 19, 2006

The Politics of Shoes 1

What is really entertaining when we follow the attitude of businessmen is their split personalities.

Now it’s about shoes. Indonesian shoemakers are so happy that European Union imposes an antidumping policy to China and Vietnam. As a consequence of this policy, Timberland, Lotto, Diadora, Lacosta and probably more later are relocating their production to Indonesia.

But the EU’s policy is harmful. It is harmful for EU’s consumers even though it is beneficial for some producers (who are also consumers of other stuff), and it is harmful for China’s and Vietnam’s economy. It’s probably “good” news for Indonesian shoemakers now. But not in the long run. Someday, when the demand for Indonesian-made shoes increases, the wages start to creep up. Until a level where EU starts to concern again. And if EU is to be consistent, it will impose an antidumping policy to Indonesia, just like what it does now to China and Vietnam. And Timberland and friends will fly again, trying to find better places.

At that time our shoemakers will change their mind. They will say: EU should not impose antidumping policy to us. They will forget already that they have praised what EU did to China and Vietnam.

(A fable here)

The Politics of Cement 1

I don't know the rules of stock market very well. I also don't collect the complete history of Cemex-SG fiasco. But this news (and others in that series) bothers me.

If you buy a share in some company. That means you've got an ownership, correct? What if you don’t want it anymore? Sell it. You have the right to sell anything you own to whoever you want and at whatever price you agree with the buyer.

It looks like it's not how it works here in Cemex-Semen Gresik thingy. Or is it just my ignorance? I gather, the Minister of State-Owned Enterprises (yes there is such thing here) Sugiharto is not happy if Cemex sells its shares to Rajawali. I'm having hard time to understand that.

Apparently the government can't keep Cemex from selling its shares. The only way for the government to keep its stake (whatever it is, in addition to the 51% it already has) secured is to, well buy them. Sounds fine? But... it has no money! The answer should be easy: then don't buy.

But as usual, they're stubborn. Especially under the pressure from nationalists or even worse, primordialists. Read here on Sumatera Barat’s governor statement. He insists that his people want the shares to be bought by the government (why don’t you buy them yourself?). And he thought, “To be more secured, the government should own more than 51 percent”. That’s laughable.

I won't be surprised if the government will again turn to their usual cash cows: other BUMNs, as they are not permitted by law to use APBN/D fund. Sugiharto has shown such intention.

Thursday, May 18, 2006

The Politics of Fertilizer 3

You produce and sell Good A. For some reason, the price increases. You now have more incentive to produce more of this Good A. In producing Good A, you use Good B as one of the inputs. As your production increases, you demand more of Good B. That's a good news for those producing Good B. Because the demand for Good B increases, the producers of Good B naturally increase the price of Good B.

OK, that's a total simplification. Yet, that's very natural (if this is a T-Shirt, it will read: what part of it you don't understand?). We can add complication by issues like elasticity and all that. But let's just use common sense.

Apparently it is that common sense that is lacking from the government. It has been forcefully attempted to keep the price of rice higher than what it is normally be (which is a mistake by its own). Then it tries to suppress the price of the input, fertilizers. What is your reaction to this, if you were fertilizer producer? Hide your fertilizer, and try find a place where you can sell it well, because there are people who are willing to pay higher. (Minister Apriyanto will not be happy -- he will ask the police to get you).

This all is so predictable. The rice price is subsidized. If you can't afford to subsidized the inputs then you'll be in trouble. It goes on and on. And they never learn.

Wednesday, May 17, 2006

The Politics of Fertilizer 2

Said VP Jusuf Kalla:
Actually our fertilizer production is enough... But due to the increasing demand, it seems like it's not enough...
What is it are you trying to say, Pak?

In the meantime, Minister of Agriculture Anton Apriyantono explained that the government would increase fertilizer maximum retail price ("HET"). And that's due to "increasing fuel price". Further, he said, the government and the police would punish those who sell fertilizer above this HET.

How thoughtful.

As if this is a game or something, our honorable parliament member has to have his say, too. (And so this post qualifies for the "Politics of Rice"-series, no?). He urged the government to also raise the paddy's buying price ("HPP"). Because "farmers would have hard time if fertilizer price increases".

By his logic, we should also increase the price of ... everything.

Friday, May 12, 2006

Mannerless "Hero"?

Is there a hero without manner? Yes, his name is Ahmadinejad.

Before you get me wrong again, let me be clear and blunt. I don't hate Iran, and I don't have problem with its nuclear program and all that. Nuclear competition is healthy. That leads me (or you) to the natural question: so how about United States? Alright, I don't hate America. Well I like it, actually. But in case you're one of those generalists, let me be very clear again: I hate Bush. I think Bush is one of the most tragic accidents in American history (Ross Perrot and Ralph Nader come close).

Back to this Ahmadinejad. I applaude his strong determination -- regardless of what he's up to (for that matter, should I also applaud Evo Morales or Hugo Chaves? Well, let me put it this way: I feel sorry for them two).

But what makes me unhappy with Ahmadinejad is that he seems to be lacking of manner. I know, it sounds trivial as in: "For God's sake Aco, why do you even bother with such a small thing?" But think about it: a president who does not respect agreed time and schedule? In his meeting with SBY, for example, he took 30 minutes of SBY's allocated time (well that's partly SBY's men's mistake -- they should've cut him) . In his visit to University of Indonesia, he spoke 45 minutes longer than he was supposed to. And finally he stood up the press people who were desperately waiting for the scheduled press conference -- for two hours. You can do a lot in two hours.

Many students (who love everything against America) declare him a hero, nevertheless. (Yes, Morales and Chaves are also in their list).

A mannerless hero. Now that is an oxymoron.

Thursday, May 11, 2006

Do we have Law? Maybe. Is it enforced? Maybe not.

My co-blogger at Café Salemba, Ujang, asked: "Is the [Indonesian] legal and regulatory environment better than two years ago?". I don't think so.

In fact, I think it's becoming worse. Now people are more afraid of FPI, FBR, and the likes than of the Law itself. The police seems useless. The media seems to be afraid of being attacked if they cover the violent actions of these people. If they don't like an action by a particular citizen, they terrorize him/her. Until the poor citizen apologizes. And they will go to frightened media, appear on TV saying "This is what you get if you are bad. Apologize to us and don't repeat your sin". The Law, in the meantime, is silent.

We might have the Law. But it's yet to be enforced. On the other hand, bylaws are produced every week. No matter how far off they are from the Constitution.

And Court is happening on the streets. Just yesterday hundreds of students in Makassar went to the street threatening Chinese-Indonesians, because of an alleged maid murder by an employer who happens to be of Chinese ethnic. Why did the students go to the street? It might be a reflection of their skepticism toward law enforcement. Worse yet, it's also an indication of economic tension, if we remember similar tragedy in 1980 and 1997.

Law simply doesn't work. You read news about soccer fans burning a trailer because one kid died after falling from and got hit by the trailer. The driver hopelessly explained to the media that he had repeatedly asked those kids not to jump up onto the trailers, because it was dangerous. Another day, you read hundreds of soccer fans from Surabaya destroying street vendors in Jakarta because they refused to hand them food for free.

And don't you forget about all this forgiving business. Political leaders are now talking about dropping the corruption case of the former president Soeharto and giving him an amnesty, due to his "poor health and old age". I'm totally for forgiveness, but hey, do we really not have any system? I'm afraid we're giving the wrong signal again. That is, you're free to commit corruption and all that. Enjoy the money while you can, and later, be sick and old. Because you'll be forgiven anyway. Hm, sounds familiar. Another wrong signal has been given a couple of months ago. Saying: you can abuse other people's money as much as you can. Then run away. When you're home sick, feel free to come back, as long as you return the money. Without interest.

Ujang, afraid the answer is no.

Wednesday, May 03, 2006

Fuel rationing?

One week away, I missed this. Bappenas' Paskah Suzetta is going to ration fuel consumption! That's stupid. He goes, "We should do this (rationing) quickly. Because the (world) price keeps going up". Somebody should tell Pak Menteri that when the supply of a normal good decreases, its price tend to ... increase. International or local, it's all the same.

The only effective way to "ration" stuff is through price. Market price.

Quantity rationing as suggested by Paskah is stupid. It's stupid here, it's stupid in China, it's stupid in the Philippines, it's stupid in Africa.

Even if it's not stupid (but it is! It is!), it will not be effective.

Tuesday, May 02, 2006

Debt and Aid in Indonesia

I participated in a conference last week in Seam Reap, Cambodia. It was organized by CALD, hosted by Cambodia's opposition Sam Rainsy Party and sponsored by FNS. The theme was "Public Accountability in Official Development Assistance". I gave a presentation on aid effectiveness in Indonesia. Below is some excerpt.


Indonesia is highly debt-dependent. The total debt amounted to USD 134 billions or almost 50% of GDP. The government debt constitutes almost 30% of the total debt, of which, 68% is in the form of Official Development Assistance (both bilateral and multilateral arrangement, in roughly similar weight). The ratio of government development expenditure over ODA in 2004 was 14%. This might be a new evidence against Pack and Pack (American Economic Review, 1990)'s conclusion that aid in Indonesia is not fungible. Of course, we need to realize that out of the total government expenditure, only 18% went to development expenditure (2004 data). For comparison, 17% went to interest payment and 23% went to subsidies (of which, 85% for fuel subsidy). Looking further to 2004 actual budget, it is disheartening indeed. As we know, the government ran a budget deficit of 1.3% of GDP. At the same time, 3.4% of GDP was used to finance subsidy, 2% to pay foreign debt amortization (gross drwaing was only 1% of GDP, resulting in a negative foreign financing), and 1% to redeem government bonds.

Donor-Recipient "Romance"?

I looked at the history of Indonesia's aid dependency. The donors seemed to really believe in Soeharto's administration, despite the poor state of democracy (and for that matter, poor governance). As the regime collapsed in 1998, democracy movement was underway. But the trust seemed to vanish, as evidenced by increasing conditionalities. The challenge now, therefore, is to regain trust/confidence while keep pursuing on democracy. ("There's always a price for democracy").

Challenges Ahead

Which leads me to an apparent conflict of "freedom to use" aids and the attached conditionality on ODAs. We can't but to seek a balance, therefore:

The paper is still being refined. For complete powerpoint presentation, send me an email.