I hate this peace time! Bring back the good 'ol days!

Crap. No more wars? We want fights. Anyone, please find us enemy. That way, we can do real fight and win and claim "Kebangkitan Nasional".

 

That is what I read from this article.

Why of why Kompas editor is so careless: "Why is the concept of trade-off so damn difficult?" and "Subsidy can be a sin, but yes, we need it" - departments

First, Fadjroel argues that the government should provide BLT and/but BBM price should not be increased. Next, he says BLT is the right of the poor, because it comes from the cut of BBM subsidy. So basically he says: cut the subsidy, but don't increase the BBM price. How convenient.

Fadjroel argues that students should refuse BKM because he thinks it's a sin to receive money from the government and that it would damage students' morale. What about the public education subsidy they have been enjoying so far, Fadjroel?

Why of why Kompas editor is so lousy: "I need to publish an article whatever flawed stuff I have to put in it; the point is I just want to see my article published" - department

I can't believe Kompas print this. What an embarrassing display of logic breakdown.

argumentum ad hominem

"I think that guy has a good idea. Let me tell you..."
"No, wait, which guy? What's his name?"
"XYZ"
"What's his position?"
"Adviser to the government, among all"
"OK, I got it. It must be a crazy idea. I don't want to hear his argument. Whatsoever!"
"You sure you don't want to hear his idea? Just the idea"
"Hell no. His argument MUST BE bad. Because he's close to the government".
"I see. So who should we listen to?"
"Anyone opposing the government. Students, street protesters, politicians, populist newspapers, pick any of them. As long as they oppose the government"
"No matter what their arguments are?"
"What are you a philosopher? Of course we don't need to know their arguments. They MUST BE good"

we want it too. just cheaper.

Say, "This whole thing is stupid. Comparing BBM price here and there in richer countries? That just doesn't make sense. We're poorer for crying outloud! So cheaper BBM should be the case!"

It's like saying, "We want a computer with exactly the same specs as those the guys in richer countries use. Just, we want it far cheaper".

whom to spoil?

Say, "Those cash transfer is spoiling the poor. Stop it". Read between the lines: "Please don't quit spoiling us, the middle class. Pour your subsidy on us, the richer. We don't care with the poorest, really. All we want is your subsidizing our car tank every day. Please, please. Don't take the subsidy away from us in order to give it to somebody else, that poorest".

Finally...

Yes, finally the government has the guts to increase the BBM price.

As for our novel project, the politician is so happy that 1) the government really increases the price 2) the people are angry. He and his friends throw a party all night long. Their next program: impeachment. Our politician smiles: it's a matter of time... we will win this, he tells himself. He puffs.

Macro vs micro

Another support why, even though assigned to teach macro, I always emphasize to students that macro without sound fundamental micro is at best undefendable. Of course my nits might not be as big as Kling's. One reason is, to understand Indonesian economy (or let me put it slightly differrently: to understand economic fallacies brought by popular economists here), you need to at least know the macro framework.

As an aside, the previous Kling's post is also interesting. I happen to be interested in (and have been trying to keep up with) number 1 all the way to number 8, skip number 4 on his list. Yes, I suck at finance. I guess I (pretend) to substitute international trade for it.

Self-sufficiency? Yeah right.

A good read for Anton Apriyantono.

Consumer protection once again

Becker:

Important exceptions notwithstanding, the overall trend toward greater regulation of consumer choices is disturbing. Consumers make worse decisions when they are not responsible for their decisions, or when they can sue or otherwise get compensated when they make bad decisions. Consumers make mistakes, but they learn from them when they have to bear the consequences of their decisions. They are generally far more competent to make decisions in their own interests than are regulators or lawmakers as long as consumers are the ones who benefit from good choices and are hurt by bad choices. This is why I continue to be a minimalist on government regulation, and greatly prefer the controls over behavior that stem from consumer responsibility and the discipline of competition.

More ideas for the ambitious novel project

Thanks for the comments on my dream project. At least I can now tell Rizal of Cafe Salemba that I'm ahead of him: he's still reading and pretends he's an intellectual, while I have moved into a whole new world: writing a novel! (even though it is just in a dream).

OK, back to this would-be-the-first political-economy novel with Indonesian setting. One commenter suggested that it might as well be a non-fiction. Ehm, that's an interesting idea. Except that I don't feel like doing factual investigation with interviews and all that. So let's keep it fiction. That way, I can escape any accusation or allegation of defamation or things like that (or can't I?). Right, maybe I should not name my president character SBY. I'll try SBX.

But still, SBY is my very inspiration, I confess. So I'll keep this SBX guy as a president who is so indecisive, boring, yet warm-hearted. He, the character, will always have hard time whenever a decision making is due. By the time he announces something, things have changed. Right, that was all the description of our protagonist character at this stage. I'll update you as it grows.

What about the antagonist? Of course it's the evil politician. I haven't got a name, so drop me any suggestion, if you have. Think about someone who is trained in economics but everything he says as a politician is economically nonsense. He is also a teacher, maybe. He teaches economics at one big-name university but that's is the only place where he can be identified as certified and sane economist. Everywhere else he is a socialist: parliament, newspaper, TV talkshow, you name it. So, if Ayn Rand is famous with her character's "Who's John Galt?", our antagonist here will be known as someone who always says "Theoretically, economics bla... bla... bla... But, in reality bla bla bla".

But of course I don't want to make this end up like sinetron where the characters' attitude and behavior are either black or white. You can choose to be a total evil (who will die with face full of maggots) or an extreme angel (who has no heart to kill a stinking mosquito), but never in between. While I want something like Jekyll-Hide persona. Or at least a good person who sometimes slips, like a normal person. Or a bad guy who loves children and flowers. In short, I want the readers to be confused whether or not to like SBX or the politician (note that I have dropped the adjective "evil" now). In fact, the terms "protagonist" and "antagonist" should later be irrelevant.

Any ideas? Next time let's talk about plots and possible major scenarios.

my new novel (dream on)

I feel like writing a novel or at least a short story. The key character would be an evil politician. Here's what he would tell his fellow party members:

We should topple SBY down. This is a good time to do that: BBM issue. We should make sure that he finally really increase the BBM price. That way, it is easier to beat him in the upcoming general election. But we should also make sure that the public at large keep believing that fuel subsidy is good. Yes, this has to be played smart. Because on one hand we want SBY to cut the subsidy and on the other hand we want the public to hate that, so later we can use the public sentiment against the president. So, let's keep opposing the plan, but let's pray that SBY continue with it. Play smart, fellas.

NY and WI projects

Following our successful project in Illinois, we are now finalizing two similar projects in New York and Wisconsin. Here (pdf, big) is the initial report of the latter two. Two academic papers are under review. The team now consists of John Braden, Laura Taylor, DooHwan Won, Nicole Mays, Allegra Cangelosi, and me.

Are you populist already?

Easy. Says Sowell:

If you want cheering crowds, don't bother to study economics. It will only hold you back. Tell people what they want to hear-- and they don't want to hear about supply and demand.

No, supply and demand is not too "complex." It is just not very emotionally satisfying.

HT: Mankiw.

Technorati's flaw?

What is going on with Technorati? It keeps responding with proxy error notification or things like that. Most annoyingly, it calls this blog 403 Forbidden. What the heck is that?

New paper (in Bahasa Indonesia)

Ekonomi Perubahan Lingkungan Pariwisata di Tanjungpinang: Aplikasi Model Utilitas Random

Luhur Fajar Martha (Litbang Kompas)
Arianto A. Patunru (LPEM-FEUI)
Dorodjatun Kuntjoro-Jakti (FEUI)

Jurnal Kebijakan Ekonomi Vol 2(3): 203-223, April 2007 (ISSN: 1858-2311)

Abstract:

This study examines the impact of visitors on changes in the quality of the Tanjungpinang tourism environment and measures the economic loss/profit from these changes. Using a random utility model applied with conjoint analysis, this study combines revealed preference and stated preference data to expand the depth of the analysis. The qualitative approach consists of interviews and field observations to complete the quantitative approach. The research found that (a) changes in the natural environment will impact the number of visitors in Tanjungpinang; (b) the potential decrease in compensating surplus from visitors as a result of loss to the natural environment in Tanjungpinang is Rp 5.04 billion per month, while the potential increase in compensating surplus from visitors as a result of additional natural environment positive amenity is Rp 7.94 billion a month; and (c) there exists a potential for a decrease in Tanjungpinang regional government revenue as a result of damage to the natural environment.

Keywords: environment, tourism, random utility, conjoint analysis

The Politics of Rice 30

Is it, world food crisis, that serious? Yes, apparently. Here some excerpts from The Economist (The silent tsunami, April 19th):

Famine traditionally means mass starvation. The measures of today's crisis are misery and malnutrition. The middle classes in poor countries are giving up health care and cutting out meat so they can eat three meals a day. The middling poor, those on $2 a day, are pulling children from school and cutting back on vegetables so they can still afford rice. Those on $1 a day are cutting back on meat, vegetables and one or two meals, so they can afford one bowl. The desperate - those on 50 cents a day - face disaster.

The Politics of Rice 29

From Becker-Posner Blog, Posner condemns US farm bill:

There is no justification for the [US] Farm Bill in terms of social welfare. The agriculture industry does not exhibit the symptoms, such as large fixed costs, that make unregulated competition problematic in some industries, such as the airline industry, about which Becker and I blogged recently. It is true that crops are vulnerable to disease, drought, floods, and other natural disasters, but the global insurance industry insures against such disasters, and in addition large agricultural enterprises can reduce the risk of such disasters by diversifying crops and by owning farm land in different parts of the nation and the world. If a farm enterprise grows soybeans in different regions, a soybean blight in one region, by reducing the supply of soybeans, will increase the price of soybeans, so the enterprise will be hedged, at least partially, against the risk of disaster. Supply fluctuations due to natural disaster create instability in farm prices, but farmers can hedge against such instability by purchasing future or forward contracts. There is no "market failure" problem that would justify regulating the farm industry. All the subsidies should be repealed.

and he raises the paradox of protection:

The small number of American farmers is, paradoxically, a factor that facilitates their obtaining transfer payments from taxpayers. They are so few that they can organize effectively, and being few the average benefit they derive (the $50,000 a year) creates a strong incentive to contribute time and money to securing the subsidies. The free-rider problem that plagues collective action is minimized when the benefit to the individual member of the collective group is great.

to which Becker offers explanation:

I believe that the explanation for the very opposite treatment of farmers in developing and developed countries is interest group competition (see my "A Theory of Competition Among Pressure Groups for Political Influence", The Quarterly Journal of Economics (Aug., 1983), pp. 371-400. This analysis shows that small groups, like farmers in rich countries, often have much greater political clout than large groups, like farmers in poorer countries. The reason is that even large per capita subsidies to small groups, such as farmers in the US, impose rather little cost (i.e., taxes) on each member of the large groups, like urban and suburban residents of the US. As a result, these large groups do not fight very hard politically against the small per capita taxes used to subsidize farmers.

By contrast, a large subsidy to farmers in developing countries would require imposing high per capita taxes on their relatively small urban populations since farmers are a rather large proportion of the total population in these countries. Instead, the same political pressures as in developed countries lead poorer countries, regardless of the nature of their political systems, to subsidize the smaller urban populations at the expense of the larger farm populations.

Of course any serious econ student should have read that Becker paper. It sounds Olsonian, too.

Olsonian or not, the difference between the cases of US and Indonesia lies a lot on the composition of the farmer group. That is, when it comes to talking about Indonesian case, dividing farmers into net producers and net consumers is critical.

Ebert's blog

It has come to my attention that Rogert Ebert has been blogging, here. I was a regular visitor to Ebertfest, a film festival initiated by Roger and has been going on in Champaign, Illinois (that is in the historical Virginia Theater) for ten years. The festival is about overlooked, high quality films. I miss it (the last time I attended the festival, there was a great movie, El Norte and discussion afterward).

Domestic Trade Barriers

The study is out, here. This is a blog entry by Neil McCulloch. Here's an intro:

Road Transportation, Regulations and Charges in Indonesia

 

To assess the size and nature of domestic road transportation costs, The Asia Foundation, in partnership with the University of Indonesia's Institute for Economic and Social Research (LPEM-FEUI) implemented a comprehensive survey of domestic trucking costs along nine routes in Indonesia. The survey explicitly examined licensing costs, road charges and the costs associated with poor infrastructure. Through GPS tracking and interviews with firm managers and truck drivers, the survey identifies exactly who is charging drivers, where they are being charged and how much.