Mobile operators guilty of prixe fixing

KPPU (Commission for Business Competition) found six mobile operators guilty of price fixing text message services.

Do that to Organda, too, then.

Taxi fares should be expensive, says well, who else?

Jakarta's Organda (that is the name of public transportation companies association) issues a decree for increase in taxi fares. It says, those who set price below that stated in the regulation will be punished.

Ridiculous.

On the investment climate

From the OECD meeting in Paris (too bad I was there not for watching Nadal beat Federer), here's my comments for the preparation of OECD's survey on Indonesia, to be launched next month:

1. In order to improve the investment climate in Indonesia, the government has issued commendable policy packages, including three presidential decrees (Inpres 3/2006, Inpres 6/2007 and another one underway), infrastructure package, financial package, and 2007 Investment Law. However, we often heard and learn that these good packages are followed by not-so-good implementation. Many packages could as well end up as laundry lists and evaluation on them are oftentimes reduced to routine check-listing that overlooks priorities.
2. Most concerns heard from the business community (domestic and foreign) deal with the new Investment Law and its derivatives (Presidential Regulations 76/2007, 77/2007, 111/2007) – albeit its praised, significant improvement over the old laws. These concerns include
1. The fact that attempts or needs to limit foreign investment are not entirely well-argued. E.g. in express delivery service sector, foreign service is perceived as competitor to the domestic service while in practice they are complementary.
2. Grey areas in the Negative List regulation. For example it is stated that the regulation "shall not reduce the obligation of investors to obey the prevailing provision and requirements to undertake business activities, which are issued by authorized technical institutions that supervise capital investment fields..."
3. The Report mentions about reducing the size and scope of government. Particularly important in this regard is the issue of coordination between central and local government.
1. There have been problems such as reluctance of local governments to undertake policies issued by the central government. For example, many Finance Ministers regulations are simply ignored at the local level either because they do not come from Minister of Home Affairs or because they are not in direct interests of local governments to raise their own-revenues.
2. There is issue about low capacity at the local level. For example, the government decided to delegate the authority to establish new firm to local governments only to find that it did not speed up the process but in fact slow it down and hence the central government decided to take the authority back to Jakarta.
3. The fact that the salary of DPRD (local parliament) members is a simple function of the local government's own-revenues has been found as a source of incentive for the local parliamentarians to quickly (and carelessly) approve any proposals from the government that lead to increase in charges and retributions (local taxes).
4. Bureaucratic reform. As we know the government has started to reform itself as has been demonstrated especially by the MOF. Alas there is a surprising reaction from the business community and that is their aspiration for not going too fast with the reform! To take a very recent example, a couple of weeks ago the corruption commission (KPK) raided the Customs Office at Tanjung Priok Port, following a neat and silent coordination with Minister of Finance and DG Customs. The Commission found hard evidence of illegal money collection and even caught some officials red-handed making illegal transaction. The raid was considered as a big success and was highly regarded by the media. However, it was followed by complain from some business people that that event might backfire as the Customs official may become "less cooperative" and as a result, slow things down at the ports.

This phenomenon is also evident in the local level. Our study on domestic trade barriers found that the trucking costs are very high in Indonesia compared to those in the neighboring countries. Many of these are due to illegal charges collected by police, DOT officials, and local thugs. But surprisingly, many respondents showed hesitance to cooperate with our researchers, because they were afraid that the study would come up with a recommendation to clean up the road from such charges that would then backfire in the form of higher level of insecurity!

These two anecdotal evidences are not to be underestimated. Are we looking at the "dilemma of reform" or to put it in differently: are these necessary costs of our long-awaited good governance and transparency (or bigger yet: democracy)?

5. Finally my colleagues representing the government has mentioned about the policy constraints of the Indonesian progress, including the nature of democracy that is still in the maturing process and the lack of trust from the public at large. What are the binding constraints, in the government's point of view, in terms of economic dimension? The Report implies that such constraint lies more on the supply side rather than the demand side. In particular, problems in infrastructure and logistics have been mentioned as key constraints. Is this a correct reading and are there any other constraints that bind?

Thank you

Malaysia follows suit

They, too, have to raise BBM price.

BI Rate Up

So they raised it 25 bps. Another 25 is coming. And another one before the year ends.

Phew Energy

Eureka! I have found a new source of energy! This is a clear winner. I call it Phew Energy. Here's how it works: take a deep, deep breath, hold it for 5 seconds, then blow big through your mouth, full power ... phew! I sure think you can move some stuff an inch or two with that.

Mind you, this is far cheaper than that Blue thing. Now, somebody please get me to Cikeas!

BI decision tomorrow

I expect, alright not only expect but also hope, that BI will raise its interest rate by at least 25 bps. And without much talking.

Why students' protests?

According to Ross McLeod and Steve Hanke,

Other protests [against fuel price increase] have been driven mainly by student activists from various universities, whose tertiary education does not seem to have imbued them with the inclination to properly analyze the policy issues involved. Absent this analysis, the conclusion is always the same: Price increases are bad, end of story. Perhaps their response might have been different if the government had been able to couch the fuel price increases in terms of a reallocation of spending away from consumption subsidies and into investments in Indonesia's future.

HT: Ross

The Unlaw of Demand

This law is not happening in here so long as subsidy prevents it.

HT: Greg Mankiw

Indonesia Project Blog

We welcome the new blog by friends at ANU.

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.

Bhagwati's new book: PTA is, again, bad

Of course, I haven't got one (it's out June). But I think I can guess what is written there.

Hikayat Lebah Ratu

The following has nothing less to do with economics. It just so happened that a friend invited me to come to his book launch. I thought I heard it wrong when he said he also wanted me to say something about his poems. I had no idea what to say. So I just mumbled:

Hikayat Lebah Ratu: Membaca Nirwan Dewanto

Arianto A. Patunru
Penyuka Sastra

Ketika Bung Nirwan Dewanto memberitahu saya rencananya meluncurkan Jantung Lebah Ratu, reaksi saya ada dua. Pertama, saya sadar: saya ini awam puisi, bahkan tidak mengerti dunia puisi. Kedua, judul koleksi Bung Nirwan mengingatkan saya kepada sebuah artikel dalam Journal of Law and Economics tahun 1973, "The Fable of the Bees: An Economic Investigation" (Hikayat Lebah: Sebuah Penyelidikan Ekonomi) yang ditulis oleh Steven Cheung.[1]

Hikayat Lebah-nya Cheung adalah kritik terhadap kisah. Tepatnya, penggunaan kisah untuk argumentasi. Ideologi mungkin bukanlah asing dalam perjalanan ilmu, termasuk ekonomi. Namun ia tidak musti sakral. Ia butuh bukti teoretis atau empiris. Argumentasi pun dibubuhi kisah dan hikayat. Mudahnya ekonom menutur kisah demi memperkuat argumennya mengusik Cheung. Dua puluh tahun sebelum Cheung ekonom James Meade berkisah dan berhujjah: pemerintah perlu memberikan subsidi kepada peternak lebah, karena lebahnya, selain membuat madu, juga menyerbuk apel di tetangga sebelah. Tanpa subsidi, jumlah madu dan nektar terlalu kecil.[2] Kisah itu setali tiga uang dengan kisah Arthur Pigou, tiga puluh tahun sebelum Meade. Tentang sebuah pabrik dengan polusi yang mengganggu masyarakat di sekitarnya tanpa ada kompensasi dari pemilik pabrik. Pigou berkata, pemerintah perlu mengenakan pajak polusi, agar udara kembali jernih. Tanpa pajak, jumlah sulfur dan karbon terlalu besar.[3]

Steven Cheung ragu. Benarkah kisah-kisah itu? Kuatkah mereka mendukung argumen-argumen di atas mereka? Cheung kuatir, Pigou dan Meade telah terlalu tergesa-gesa. Maka ia pun turun, bertemu bercengkerama dengan sejumlah peternak lebah dan petani apel. Dan ia menarik nafas. Tanpa pajak dan subsidi, pasar telah bekerja di antara peternak lebah dan petani apel. Dalam musim ketika penyerbukan tidak diperlukan, peternak lebah membayar petani apel agar lebah si peternak boleh berumah di kebun si petani. Dalam musim sebaliknya, petani apel yang membayar peternak lebah agar para lebah sudilah menyerbuk ke sana. Pesan dari Cheung jelas: jangan buru-buru memutuskan. Datang dan lihatlah.

Begitulah yang saya ingat.

Karenanya, ketika Bung Nirwan mengirimkan Jantung Lebah Ratu, saya kira saya akan membaca puisi-puisi lebah bernada Cheung: kepercayaan kepada mekanisme alam, yang dipertegas oleh mata dan telinga telanjang. Tentang kehatihatian memberi ruang kepada kesimpulan manusia. Puisi-puisi yang memberi kredit sepantasnya kepada lebah dan nektar: bahwa ada pasar di antara mereka.

Ternyata. Sungguh lebih dari sekedar itu.

Membaca Bung Nirwan membuat saya terhenyak lemas. Betapa lebih besar ketidaktahuan saya. Saya ingat: sempat saya pernah bersombong dan menyangka diri punya sedikit, ya sedikit saja, keunggulan komparatif dalam membaca sastra di antara murid-murid ekonomi (sekalipun mungkin hanya menang lebih duluan membaca Ahmad Tohari dan Sapardi Djoko Damono).

Saya salah, rupa-rupanya.

Dan Jantung Lebah Ratu menegaskan itu. Ini berbahaya: lebih memalukan daripada prediksi makro yang meleset.[4] Bahkan kosakata pun banyak yang tidak saya pahami -- kalau bukan cerminan dari kekurangakraban dengan kamus. Ada ara-ara, pring, balam, alah, kalis, nyiru. Lalu terwelu, bengkarung, obsidian. Beginilah kalau hidup serba kering hanya dengan inflasi, insentif, dan regresi: baca puisi mati rasa. Celakanya lagi, teori ekonomi ternyata banyak kakunya dan yang ada pun sudah tergambar jelas di luar sana.

Bahwa tidak selamanya kopi dan air atau kopi dan susu adalah komplementer, seperti kita terima saja di kelas pengantar ekonomi mikro kemarin.[5] Tunggu dulu. Menurut Bung Nirwan, ada persaingan di antara air dan kopi. Ada substitusi.[6] Atau paling tidak naluri bersaing alih-alih bersekongkol atau dibuat bersekongkol dalam fungsi produksi. Betapa lugunya penyederhanaan oleh contoh-contoh dan kisah-kisah klasik buku teks. Karena sesungguhnya puisi memungkinkan dua barang bisa sekaligus komplementer dan subsitusi. Sekaligus bertarung, bersetubuh, membubung. Untuk kemudian jatuh menghujani bentang koran pagi.

Bahwa lebah ratu pun berhitung biaya versus manfaat. Sebelum memutuskan untuk membunuh atau memuaskan lebah pejantan. Atau kombinasi keduanya. Sekalipun ternyata korbannya adalah bayang-bayangnya sendiri. Sungguh, lebah pun tidak lepas dari konsekuensi yang serba tidak diniatkan.

Bahwa jangan-jangan memang mungkin ada lembar sepuluh dollar di jalan, tergeletak tidak menarik siapa-siapa yang melintas. Ratna Manggali adalah buktinya. Tapi kemudian, siapa berani dengan Calon Arang? Maukah Anda memungut lembar sepuluh dollar di jalan jika di sebelahnya mendesis ular berbisa? Syukurlah, untuk yang satu ini diktum ekonomi masih berlaku. Ketika Empu Baradah membinasakan sang ular, lembar sepuluh dollar pun lenyap.[7]

Bahwa mengajarkan efisiensi tidak melulu harus dengan kisah pakaian dan kue, dengan si A dan si B. Karena Bulan pun melakukannya, bersama Kesedihan. Bung Nirwan berkisah, Sang Bulan meminta kenikmatan yang lebih, ketika Sang Kesedihan sudah tidak bisa memberi lagi, kecuali melukai diri sendiri. Vilfredo Pareto dan Francis Edgeworth menyebut ini sebagai keseimbangan efisien.[8] Namun Bulan hanya tahu meminta dan Kesedihan hanya bisa menangis. Dan akhirnya efisiensi itu pun dirusak. Oleh pengorbanan Sang Kesedihan, mengupasi dirinya sedikit demi sedikit. Yang dikuncinya hanya cinta. Efisiensi memang bisa kejam.

Bahwa di Broadway, hanya di Broadway, ada titik optimum global. Di mana merah telah jenuh, walau tak pernah sampai ke surga. Kunang-kunang Manhattan bisa bersaksi. Bahwa ketika Marno dan Jane berpisah, masing-masing mereka akan terhempas ke titik yang tanggung, optimum yang lokal.[9] Para ekonom, holy grail yang kita cari itu ada di Broadway, hanya di Broadway.[10]

Bahwa laku teori permainan ada dalam setiap gerak.[11] Ketika menghauskan diri, agar dimasuki; ketika meringankan jantung agar dilayarkan; ketika mentanahkan agar dihujani. Dan tanggapan terbaik adalah mengejar, menghempas, dan menghunus. Nash equilibrium pada akhirnya adalah cinta yang berkelindan. Betapa sederhana, bahkan matematika pun tidak perlu.

Bahwa jauh sebelum ekonomi menjadi buku, Ular sudah mafhum rahasia Adam dan Hawa: insentif. Tidak ada yang lebih rentan daripada pasangan muda-mudi mabuk kepayang. Yang salah memilih discount rate.[12] Sehingga tuli dan akhirnya terkulai di tepi sungai. Dan Ular bersabda: maaf, tapi sampai kapan pun, akan kugoda anak Adam dengan desain mekanisme.[13]

Bahwa dunia tidaklah rata, seperti nyanyian cempreng Thomas Friedman.[14] Karena ada penjinak binatang, ada peniti tali. Ada Adam ada Hawa. Dan peziarah manapun tidak kuasa memaksa mereka bersepadan di jembatan mawar. Mengapa David Ricardo begitu cepat dilupakan? Kita berdagang, karena kita berbeda. Kita hidup karena kita berdagang. Maka janganlah bumi ini menjadi rata.[15] Tidak peduli betapa kencang Marx berteriak.

Bahwa ucapan terima kasih bisa cukup untuk membela diktum "tidak ada makan siang gratis".[16] Karenanya, berterimakasihlah kepada laut, tukang jagal, asparaga, juru museum, kentang bakar, padang rumput Chien, atau peluh lautan. Seperti lebah berterima kasih kepada nektar dan apel berterima kasih kepada serbuk sari sang lebah.

Maka jika Bung Nirwan berterima kasih kepada susu masam yang mengembarkan payudaranya dengan aprikot jingga, saya berterima kasih kepada Bung Nirwan, atas terapi sengat lebahnya ini. Yang mengembarkan kosa kata saya dengan merah dan darah. Salam buat Lebah Ratu.

GoetheHaus, 17 April 2008

---

[1] S. N. Cheung, "The Fable of the Bees: An Economic Investigation", Journal of Law and Economics, 16(1): 11-33, 1973.

[2] J. E. Meade, "External Economies and Diseconomies in a Competitive Situation", Economic Journal, 52, 1952.

[3] A.C. Pigou, Wealth and Welfare, 1912.

[4] Maksudnya, prediksi indikator-indikator ekonomi makro, seperti tingkat pertumbuhan, inflasi, dll.

[5] Dua barang yang bersifat saling melengkapi disebut komplementer. Implikasinya, kenaikan harga barang pertama menyebabkan penurunan permintaan atas barang kedua. Atau sebaliknya.

[6] Dua barang yang bersifat saling menggantikan disebut substitusi. Implikasinya, kenaikan harga barang pertama menyebabkan kenaikan permintaan atas barang kedua. Atau sebaliknya.

[7] Berdasarkan P.A. Toer, The King, The Witch, and The Priest, Equinox 2002.

[8] Ketika interaksi dua agen ekonomi telah mencapai situasi di mana tidak satupun yang bisa menambah kepuasan kecuali dengan menurunkan kepuasan agen yang lain, situasi ini disebut Pareto-efficient (dari nama Vilfredo Pareto). Ekonom yang menggambarkan keadaan ini secara grafis dalam apa yang disebut sebagai kotak Edgeworth adalah Francis Edgeworth.

[9] Salah satu analisis penting dalam mikroekonomi adalah identifikasi titik optimum (baik minimum ataupun maksimum). Karena semesta himpunan-nya besar, seringkali ekonom harus puas dengan apa yang disebut local optimum – kondisi optimal di sekitar daerah yang membatasi pengamatan yang relatif kecil. Ada kumungkinan terdapat titik lain di luar daerah amatan. Jika tidak ada, maka titik optimal tadi disebut global optimum.

[10] Berdasarkan U. Kayam, Seribu Kunang-kunang di Manhattan, Grafiti 2003.

[11] Maksudnya, game theory, salah satu instrumen utama dalam menganalisis interaksi antara agen ekonomi.

[12] Discount rate atau tingkat bunga diskonto adalah besarnya tingkat kemauan seseorang mengkonsumsi sesuatu saat sekarang dibandingkan masa yang akan datang. Semakin tinggi discount rate semakin cepat agen ekonomi mengkonsumsi barang pilihannya.

[13] Maksudnya, mechanism design, sebuah pendekatan mikroekonomi untuk menciptakan sistem insentif-disinsintif guna meminimumkan kemungkinan kecurangan salah seorang peserta interaksi.

[14] T.L. Friedman, The World is Flat, Penguin 2005.

[15] David Ricardo adalah ekonom yang mempopulerkan comparative advantage. Bahwa antara dua orang pasti ada yang unggul dalam A dan yang lain dalam B, dalam hal rendahnya biaya untuk memproduksi X.

[16] "There is no such thing as a free lunch". Contoh lembaran sepuluh dollar tergeletak di jalan adalah salah satu varian dari diktum ini.

Arrogant minister

One Kompas reader wrote a letter about a minister who got mad because he was inspected by a security official at an airport. I could imagine, as if he were saying: "Look idiot, don't you see I am a minister? You can't run a physical check like this on your ministers! Get off me! I'm on state duty, so you back off!". Arrogant indeed. Well, maybe he was mad not because of the inspection but because he was not recognized? Because he did not forget the usual threat by state officials, that is, asking your name, as in "Give me your name, now. You'll regret what you just did to me!".

I fall asleep when I'm bored or when I feel peaceful

I couldn't help laughing at this news about President SBY being outraged by a participant who fell asleep while he was giving a speech ("Sleeping forum participant outrages President", The Jakarta Post, Wednesday, April 9). He asked others to wake this poor guy up and asked him to "go outside if you want to sleep". I have been in two occasions with SBY giving speech, live. They were boring. I fell asleep too, couple of times. Thank God the president didn't spot me! Well, come to think of it, SBY should have taken that as a compliment -- his voice is so soft and peaceful, you feel like listening to a lullaby. I'm surprised that only one person fell asleep.

In a call to my aunt this morning, we talked about the funny news. She, a long time admirer of Soekarno, said, "No one ever fell asleep when Soekarno was giving a speech". I guess Soekarno was not as peaceful then.

Freeing the ports

Here's part of the summary of Patunru, Nurridzki, and Rivayani (2008) that would appear as a chapter in D. Brooks and D. Hummels (eds), Infrastructure's Role in Lowering Asia's Trade Costs: Building for Trade (Edward Elgar). And yes, I'm happy with DPR's decision to pass the new maritime law that scraps Pelindo monopoly (Bisnis Indonesia today, 8/4/2008).

The study finds that there are some important trade-offs in choosing ports. Based on the survey, the implementation of certain regulations might affect port users to choose another port. Importers located in the hinterland of Tanjung Perak Port may prefer Tanjung Emas Port since customs in the latter is less strict than the former. This could imply on extra transportation cost since Tanjung Perak Port is relatively more distant. Another trade off is between location and safety in delivering the cargoes. Geographical condition could prompt the exporter to choose the more distant port to ensure that the cargoes are delivered safely.

Currently competition is not evident among ports in Indonesia. This is due to the fact that all ports are controlled by one authority, IPC. However, users demand that ports operate more efficiently. A certain degree of competition in port handling services might be needed to drive services providers to improve their performance. Higher competition could lead to more options for port users and in turns might alter their decision in favor of more efficient ports. In addition, the competition among ports is likely to be contagious to the hinterlands as they would themselves compete over the ports.

If the control of two ports falls into two different private bodies, the competition between the two ports is more likely. However, given the public nature of port services, privatization might have to be done gradually. A few key ports in Indonesia have taken the course partially and it is expected that the improvement continues to other ports as well. Obviously port competition is relevant only within a certain limit of geographical areas, as distance is a key factor in choosing a particular port. This implies that complete privatization of all ports are not necessary. Priority should be put on the most important ports.

However, drive to competition should also be seen as an opportunity to improve "soft infrastructure" with a focus on increasing efficiency. For example, privatization as a means to foster competition will force the port management to cut unnecessary clearance process and to eliminate any illegal collection.

The study recommends the authority to encourage competition among key ports in Indonesia. This might be achieved by gradually minimize the authority of IPC to manage the ports. One suggestion is giving opportunity for private operators to provide services to shipping lines and cargo owners. As of the time of writing, the government is preparing a draft of a new shipping law (UU Pelayaran). One of the issues that is being considered is the movement towards more competition and away from monopoly.

Needed: credibility

From today's The Jakarta Post, Vincent Lingga is right on ("Only credible contingency measures can reassure the market", April 7):

How could the government still claim the budget is anchored on prudent fiscal management when fuel, power and food subsidies will take up more than 23 percent of total spending this year?

 

How could the budget be seen as politically viable when energy subsidies alone will exceed budgetary appropriations for capital investment and social expenditure?

When subsidy is a norm

Proof that subsidy has become a norm here. From an article in today's The Jakarta Post (4/4/2008) -- emphases added:

Non-subsidized electricity costs between 17 and 22 percent more than normal rates.

Ideally, subsidy is an emergency help. That is, it should not become a permanent policy. But the fact that people perceive non-subsidy as not normal is a reflection of thinking the other way around.

Without altering the meaning, I could have written, otherwise, as follows:

Subsidized electricity costs between 17 and 22 percent lower than normal rates.

Wait, maybe it does alter the meaning.

Hating X does not mean asking for a ban on it

I hate high price when I shop. But I don't think asking the authority to impose a ceiling is going to be effective. What I do is bargain. Sometimes the price gets reduced a little bit and I am reasonably happy: although it is still higher than what I first bargained but definitely lower than what I was willing to pay. More often, though, the seller beats me in the negotiation process. For which case, I will postpone the buying (if my 'discount rate' is low), or go somewhere else or buy something else.

Now, you can change the term 'high price' into anything that might bother you: stupid words or phrases, crazy Dutch film-maker, Cinta Laura, disillusioned Health Minister Sapari, Andrea Hirata's economics, anything.

Furthermore, you are free to tell people what you feel: I hate Paula Abdul and Titi DJ, I love Sandra Dewi, and so on, and so on. Others will debate you, will ridicule your taste. Fine. You can't debate taste but you can express what you like or dislike. And others have the right to disagree.

Without having to ask for regulation or banning or anything like that.

The Politics of Rice 28

Yes, why have I not commented on the rice export ban?

Well maybe the right word is fed up. I'm fed up with the statements from Menteri Pertanian, HKTI people, people hijacking farmers' name, economic observers who claim to know price mechanism but clearly reveal otherwise, Prabowo's campaign on TV, and so on and so on.

Don't tell me you love farmers, dudes. Because that's bullshit.

Vulgar Indonesianism

Some stupid and funny words I noted recently:

• Vulgar and useless adaptation of foreign (English) words: 'kontestasi' (funny because it is supposed to mean 'competition' and stupid because Bahasa Indonesia already has a good word to mean just the same: 'persaingan').
• Same as 'koinsidensi'  (Bahasa Indonesia has a better 'kebetulan' -- maybe because 'koinsidensi' sounds more English, as in coincidence?)
• Or 'distingsi' (for 'distinction', while we have 'perbedaan')
  

I'm sure there are more out there. I know, I myself am not good when writing in Bahasa Indonesia. But at least, I don't adopt foreign words just because I'm lazy to find the right words. And even if I do adopt them, it is not because I just want to sound cool.

Diskusi Ekonomi discusses again

Just in case some thought Diskusi Ekonomi has died, no, it has not. Rizal just posted one of his pieces that was ignored by Kompas. Others (yes, more guest bloggers will participate) will resume posting there shortly. Sorry for the long absence.

Report and learn and report

We love this type of journalist. Who, when wrong, admits and qualifies. A rarity.

HT: Greg Mankiw.

New working paper

Zooming Out Indonesia's Supply Constraints

M. Chatib Basri, Arianto A. Patunru, Masyita Chrystallin
University of Indonesia, 2008

The paper argues that Indonesia's main problem that impedes its economic growth (and lackluster performance of export) lies on the supply side rather than the demand side. That is, in the aftermath of the economic crisis, the aggregate supply has become less responsive. This problem is traced back to problems of exchange rate appreciation, high cost economy (esp. bribery and logistic costs), and the change of investment pattern. To help ensure a sustainable economic growth, therefore Indonesia needs to resolve the problem of supply constraints which itself is closely related to the issue of investment climate. The paper, however, is careful not to over-emphasize the role of investment climate in explaining the performance of Indonesian industries. It summarizes the recent discussions of investment climate given such qualification and elaborate on its most important factors, namely regulatory framework, governance, and infrastructure. In doing so, it also gives an assessment to the ongoing regulatory and policy reforms with a highlight on the policy areas where improvements are needed the most. The paper ends with a discussion on the 'dilemma of reform': reforming the bureaucracy is pivotal, but at the same time it is likely to be much more difficult than reforming the policy, because the former will encounter strong political challenges from various interests and groups; its benefits come later while the costs are immediate; and there is always a lag of time between implementation and results. The paper suggests that in countries as complex as Indonesia, reform in a 'piece-meal' approach focusing on the most binding constraints is more sensible than a 'wholesale reform'.

Dentists call

Reported in The Jakarta Post today, Indonesian Dentists Association complained that Indonesian people only go see a dentist when they have toothache.

Of course. D'oh.

FB's take on BI's brouhaha

Faisal Basri's Kompas column today is interesting.

According to FB, the source of controversy is SBY's clear preference toward Agus Martowardoyo (AM) and hence Raden Pardede (RP) was just a "pelengkap penderita" (maybe "background dancer" is a good analogy). I think FB was right.

Next, FB said that ideally BI should just focus on monetary issues. Can't agree more.

FB also said BI governor should be eloquent in explaining economic dynamics to market agents in a laymen language. And he or she should be able to explain them himself/herself to DPR members. Implicitly according to FB, it would be weird if the governor always delegated hearing with DPR to his/her senior deputy. I don't quite understand this. What's the problem if such task is delegated? I agree that the governor should master the monetary and banking theories but that does not mean he or she should always entertain the DPR in person. That's why he/she has deputies.

As for the rest of the article, I'm not sure if I understand well enough. FB mentioned about "nilai-nilai" or values that the new governor should have. There was a notion about good, commendable "track record", strong personality, etc. Not really clear to me what that all means.

My bloghopping equilibrium

I have a long list of econ blogs in my Bloglines account. I can't possibly read them all everyday. But when I have the time I usually go in this order: Becker-Posner, Cafe Hayek, Marginal Revolution, EconLog, Env-Econ, Greg Mankiw, Dani Rodrik, Jim Hamilton, and Paul Krugman. Most of the time, I can only read them over the weekends (along with selected classic papers and while preparing my lecture notes for the coming week). Sometimes, I skip Krugman. Sometimes it is Krugman, Hamilton, and Rodrik. Becker-Posner is not as frequently updated as the others. So, many times I end up having coffee and the George Mason trio: CH, MR, and EL. That's probably my bloghopping equilibrium -- recently.

Of course Alfie can amend all that easily.

How a real researcher does stuff

Intrigued, curious, digging data (and that includes getting it from reputable sources), checking for correlation, questioning causality, drawing careful lessons, offering qualifications...

Tim Haab shows us what a real researcher would do to answer a question (or even a mere curiosity).

Note. I'm sure Tim Haab does not remember me. But I'm proud to have given a (yes, lousy) presentation in Kerry Smith's prestigious Camp Resources back in 2003. Tim was the chair of my session. A fun guy.

on BI governor

OK, I've been restraining myself for commenting on this issue. It's just too political, too cheap, and at the same time embarrassing. But I'll vent out what I recently had in mind, so I'll die in peace if the world ends next week.

First, we want a central bank governor who of course, unlike me and most economic commenters, knows monetary and banking theory. We don't want an agronomist or political scientist for that position. We don't require somebody with vast experience as a chief or head or director of some institute or organization or even a big bank. Experience does not matter much. Knowledge does.

Second, we want him/her to be unapproachable, anti-social, or in short: towering figure who doesn't speak much. We don't want him to appear giving statements every day in newspaper or television. That's a job for information minister, not a BI governor. Our governor should just appear rarely only to lead the market. He or she should the one who set people's expectation, not the other way around. He or she should say we want an inflation of X percent next year and the year after. And he/she will do anything to meet that, no matter what. If needed, he or she can forget about other macro stuff. Just set an inflation target and meet it. Don't play too much with credits for SMEs or things like that. They have ministers for that.

Third, we want a BI governor who can say NO -- to the President, MoF, or to DPR people.

I guess we don't have that person, after all. Damn.

The ugly face of the blatant self revelation

Following their refusal of Bank Indonesia governor nominees, DPR members issue funny statements. A particular one that is so "revealing" is this:

[A parliament member] says that the solidity [he seems to be meaning: the strong determination, boldness] of the refusing camp is an indication that this time, there has been no money politics involved... (my emphasis)

Assuming that Kompas quoted him right and that money politics is still the common euphemism for bribe, this can mean: 1) in all the previous time, bribery was at play, 2) when the House approves a government's proposal it is because there is money politics involved

Oh boy, you said it yourself!

Enlightening the people

An anonymous accused me for never "enlightening people or decision makers". I guess he was totally right. Because I think blogging at Cafe Salemba, Diskusi Ekonomi, and Exegesis do not count as "enlightening". In fact I do all that for a completely selfish motive: fun. I don't get paid for that, but I benefit from the comments and interaction with other people (not always in a nice way, I should add): to know what I thought I knew but I didn't. I don't care if it is enlightening or not.

Come to think of it, I'm now wondering: what is the best way to "enlighten people"? Here's what I could think of, based on what I have seen many people do:

• There are more people watching TV than reading newspapers. So get into that TV thing. Make your way to get invited into talk shows -- preferably those with some clowns in them or comedian host with pretty actress.
  
• If you don't like acting on TV, write op-eds in newspapers or magazines, preferably the populists ones. Write something that suits its editor's taste. Better yet, get a contract for regular column called "analysis" or something. Doesn't matter what you write in there (can be a total crap). But hey, the newspaper names it "analysis", so relax. People will adore you, journalists will ask your opinion.
  
• Give talks in as many seminars as possible, preferably those attended by guest celebrities. Doesn't matter if you are asked to talk about Indonesian Idol or inflation rate. Just don't forget one thing: never say you don't know when you are asked something. Mumble, if you like -- just don't stay silent.
  
• Make good friends with journalists -- especially the lazy ones. The professional ones would do cross-checking, fact-checking and all that -- you don't want them. The lazy ones will just print whatever you say -- or send via SMS.
• When interviewed by a radio station, mention the word "rakyat" as many as possible. Guaranteed, you'll be on air again soon.
• Do not blog. Blogging is stupid and does not get you anywhere: government officials don't read it, parliamentarians don't give a damn. So don't waste your time.
• But if you can't resist the temptation to blog, make sure you obediently link to a blog authority (usually the self-declared ones work quite well) so you can be famous through his or her endorsement (some sort of blogger of the year, maybe). Oh, don't blog with fake name or even worse, anonymously. You'll be called coward -- that's not good.
  

What else?...

Now let's see what I have done... Oh my god, nothing! I guess I'm just incapable or I'm a selfish little bastard... Or maybe a little bit of both.