When something is free, nobody is responsible

December 14th, 2013 § 0

This was an online polling at tempo.co:

Tempopoll

The poll asks whether ‘Bintaro II’ tragedy has managed to deter people from ignoring railroad crossing barriers. Bintaro II tragedy of course refers to the recent collision between a commuter train and a fuel truck, killing a number of people as a result. Earlier in 1987, another accident took place around the Bintaro area where two commuter trains collided head on, killing 156.

A natural tendency after a disaster is to blame it on someone. In the recent accident, the popular verdict is to rest the blame on the driver of the fuel truck, which is also implied in the Tempo poll. I’ve also had Facebook friends posting comments to admonish people who don’t wear helmet, jaywalkers and other kinds of traffic miscreants recently.

Of course, it was wrong for the truck driver to ignore the warning signs and the barrier, knowing full well of the risk involved. But a more important point that is missing from the discourse is who the ultimate blame should be with.

Imagine what would happen when someone at a Coca Cola bottling plant inadvertently spilled a toxic substance into the bottles, killing Coca Cola customers as a result. What would predictably happen is calls for boycott against Coca Cola, government investigation, or even criminal charge against the company.

This would be totally acceptable, because it is the company managers’ responsibility to ensure that their operations are safe and guarded against any risk.

Now why hasn’t this happened with the Bintaro accident, or most other public transit accidents for that matter? First of all, many people might not realize that just because something is ‘public’ doesn’t mean nobody is responsible for it. Public transit is an economic good, because it is scarce and there is demand for it. Just because it is socialized and provided by the government (rail transport is also managed by a government owned company here), doesn’t make it less of an economic good.

What happens to an economic good in a free market is that it is subjected to constant improvement due to competitive forces. Take that free market away by imposing a government monopoly, and you lose the competitive factor and therefore improvement.

In the Bintaro accident, you have a provider of rail transport failing from making sure that the path of their trains is cleared, and you have a provider of roads failing to ensure that drivers cannot cross railroad crossing when trains pass.

Why aren’t people clamoring for a boycott against these providers?

Di mana lagi kalau bukan di negeri dongeng?

October 21st, 2013 § 0

samad

Indonesia memang negeri dongeng. Jutaan orang yang mengecap bangku sekolah di sini disuapi dongeng tentang kekayaan bumi, tanah dan airnya. Mereka jadi percaya bahwa semua kekayaan itu sudah ada; tinggal menunggu seorang pemimpin adil yang bisa membagi-bagi kekayaan itu dan membuat semua orang makmur sejahtera.

Mereka lupa mengajarkan bahwa kekayaan alam atau nonalam seperti apa pun berharganya harus dicari, diolah dan dimanfaatkan dalam kegiatan ekonomi agar ada nilainya. Mereka lupa mengajarkan bahwa tidak mungkin kekayaan bisa dimiliki secara kolektif oleh ‘seluruh’ rakyat, karena siapa pun yang berjasa mencari, mengolah dan memanfaatkan kekayaan tersebut pasti lebih berhak untuk menikmati hasil kerja mereka, dan mereka harus bisa menikmati hasil kerja mereka tanpa khawatir kehilangan hak itu.

Dongeng seperti itu juga yang mendorong serikat buruh seperti tak pernah puas memaksakan tuntutannya. Di pikiran mereka pengusaha punya kekayaan tak terbatas dan selalu bisa membayar upah lebih besar lagi kalau saja dipaksa oleh regulasi. Di pikiran mereka kalau mereka mendapat upah layak, semua orang akan makmur dan sejahtera.

Mereka lupa mengajarkan para pengurus serikat buruh di sekolah bahwa upah sama dengan harga, dan harga selalu tunduk pada hukum permintaan dan penawaran. Mereka lupa mengajarkan (atau sengaja melupakan) bahwa upah minimum sama dengan price floor, dan konsekuensi dari price floor yang lebih tinggi daripada harga ekuilibrium adalah adanya surplus pasokan pekerja. Dengan kata lain, memaksa upah minimum naik sama saja dengan melarang orang yang produktivitas marjinalnya di bawah tingkat upah minimum itu bekerja. Dengan kata lain lagi, memaksa upah minimum naik sama dengan memaksa orang menganggur.

Makin parah lagi, dunia dongeng yang diinginkan serikat buruh itu seolah dapat justifikasi dari pemimpin lembaga yang sedang naik pamornya. Di acara serikat buruh hari ini, ketua KPK bilang seperti ini.

Ketua KPK Abraham Samad mengatakan salah satu penyebab kemiskinan adalah korupsi. Menurut perhitungannya, jika tidak ada korupsi, pendapatan per kapita masyarakat Indonesia mencapai puluhan juta rupiah per bulan.

Dari sektor migas saja, menurutnya hampir 50% perusahan tambang di Indonesia itu tidak membayar royalti ke pemerintah. Angka tersebut jika dirupiahkan mencapai Rp 20 ribu triliun.

“Coba dibagi dengan 241 juta jiwa. Maka kita akan menemukan angka pendapatan terendah adalah Rp 30 juta per bulan,” kata Abraham Samad dalam dialog kebangsaan di depan puluhan ribu buruh di Istora, Senayan, Jakarta, Senin (21/10/2013).

Pertama, yang dimaksud “pendapatan per kapita masyarakat Indonesia” oleh beliau itu sepertinya “produk domestik bruto per kapita ekonomi Indonesia”.

Menurut BPS, PDB total Indonesia secara nominal harga tahun 2012 adalah sekitar Rp8 ribu triliun, atau per kapitanya Rp33.3 juta per tahun. Itu sekitar Rp2,7 juta per bulan. Menurut beliau, seharusnya PDB per kapita Indonesia itu Rp30 juta per bulan, atau Rp360 juta per tahun. Sedikit koreksi pak, kalau dikalikan 241 juta populasi Indonesia, itu PDB totalnya bukan Rp20 ribu triliun, tapi sekitar 87 ribu triliun! Wah ke mana hilangnya yang Rp79 ribu triliun?

Nah, itu. Menurut beliau itu karena hampir 50% perusahaan tambang di Indonesia tidak membayar royalti ke pemerintah. Waduh, kenapa bisa begitu? Beliau lanjut begini.

Ironisnya menurut Samad, para pengusaha itu bukan tanpa alasan tidak membayar royalti ke pemerintah. Mereka justru menghabiskan uangnya lebih banyak untuk menyuap oknum aparat.

Pusing saya. Jadi menurut beliau nilai ekonomi yang jauh lebih besar daripada nilai produksi seluruh ekonomi Indonesia itu bisa hilang begitu saja karena dipakai untuk membayar aparat dan pejabat korup.

Hore! Logika hebat!

Begini. Royalti itu, kalau pun tidak dibayarkan ke pemerintah, tidak lenyap begitu saja, apalagi nilainya sedahsyat itu. Kalau pun uang itu dibayarkan ke aparat dan pejabat korup, pertama, kegiatan ekonomi yang menyebabkan ada royalti yang harus dibayar itu tetap akan menghasilkan nilai ekonomi. Kedua, aparat atau pejabat korup itu pun akan melakukan kegiatan ekonomi dengan uang haram yang didapat. Apa iya mereka semua kompak menyimpan berbundel-bundel uang kertas di rumah masing-masing sehingga sama sekali tidak ada jejak ekonominya? Menyimpan uangnya di bank pun akan tercatat sebagai kegiatan ekonomi, pak, apa lagi ‘mencuci uang’ dengan membeli aset. Uang yang masuk ke bank juga akan menghasilkan laba bagi bank atau dipinjamkan ke pihak lain sehingga menghasilkan laba juga bagi pihak lain. Uang yang dipakai membeli aset menghasilkan laba bagi penjual aset, menciptakan lapangan kerja juga.

Jadi nggak mungkin hilang tanpa jejak ekonominya sama sekali.

Yang paling parah menurut saya adalah pandangan bahwa pendapatan, dus kesejahteraan masyarakat, yang terdiri dari individu-individu dengan pribadi, minat, keahlian berbeda-beda, semuanya ditentukan oleh negara atau pemerintah belaka.

Kalau begini, kata serikat buruh, untuk apa mereka menuntut upah minimum naik jadi Rp4 atau 5 juta saja? Batasnya langit!

What makes the chicken go?

September 27th, 2013 § 0

Ayam

Here’s a typical economic news in the media. This one talks about the price for whole chicken that’s been inching up for some time. A chicken seller in Bandung, West Java, offers his opinion.

"Price had actually started to come down last week to Rp30,000, but now as we’re approaching the Idul Adha (day of sacrifice) holiday it’s going up again."…

He said that increases like this are the result of manipulation by wholesalers.

In a socialistic culture, big business is always the suspect of every crime. Prices go up? It’s the wholesalers. Prices collapse? The speculators are to blame. Prices aren’t moving? Why, its because the wicked big players are fixing them.

Now prices for everything have been generally on the rise for quite a while in Rupiah terms. That’s largely due to the inflation ‘imported’ from the US with the Federal Reserve undertaking their unprecedented monetary stimulus called QE. Recently, foreign money has been flowing out due to rising interest rates in developed countries. On top of that, the government also reduced fuel subsidy this year, which exacerbated domestic inflation.

Another reason is the government’s misguided move last year to cut beef imports as part of their goal of self-sufficiency in beef. The drastic cut led to acute shortage, sending beef price to the sky and causing households to cut down on beef and opt for the next best thing, chicken. Even more amazingly, the government’s solution is not to admit that they were wrong and stop meddling with the beef trade, but to try to buy up land in Australia and tell one of the state-owned companies to operate a big-ass cattle ranch down there.

Now as the Idul Adha approaches, cattle and goat raisers are setting aside a significant portion of their animals for fattening to make them available for the day of sacrifice. This is causing even more shortage in animal protein options for consumers during these days, and the price of chicken surely has to go up to reflect that scarcity.

All these reasons should be enough to explain the rising price of chicken. But of course, it’s a more difficult story to tell than just blaming everything on some nefarious fat men controlling everything from behind the curtain.

Stories like these are always more compelling emotionally when you also describe the plight of the consumers, like the next person quoted, who buys whole chicken for her restaurant.

…That’s why Lia is hoping that the government take action to control the price of chicken.

"Last I knew the price was Rp30,000 per kilogram, but it’s gone up now."

Of course most consumers probably aren’t aware that it’s the government’s action that caused the whole thing in the first place, but they should be. Whenever there’s some imbalance in an economic situation, the first thing is to ask what the government has been up to in that sector.

But of course, that rarely happens.

Truth will always set you free

September 23rd, 2013 § 0

Our so-called money is a perpetual non-interest bearing liability of an insolvent central bank, whose balance sheet looks like a bad hedge fund. I don’t know why we couldn’t do without them.

Let the tax go

September 23rd, 2013 § 0

LCGC

"Jakarta gets ready for cheap car assault" says a news headline. The article talks about the ongoing spat between some central government officials and the Jakarta administration over the central govt’s tax incentive for so-called ‘low-cost green cars’.

Low cost car sounds good, right? Except Jakarta administration doesn’t think so. Governor Jokowi was quoted to say that it’s not what the people need, as if one person can determine what millions of others need. He believes that letting manufacturers offer cheap cars to consumers will make traffic congestions in Jakarta even worse.

One of Jokowi’s campaign promises was to fix the city’s aptly described traffic nightmares by setting up extensive public transport networks. People have yet to see this promise made good by the governor, which is reasonable given the complex problems relating to land acquisitions, financing schemes and overlapping government transportation policies.

However, the low cost car scheme is part of the central government’s tax incentive program that was put in place in the middle of this year with the intent of encouraging investment by car manufacturers here to produce high-volume products for the local and ASEAN markets. They do this by lowering the ‘luxury goods sales tax’ from 25 to 100 percent, depending on the fuel economy of the car.

Anything that results in less tax going to the government is always and everywhere a good thing, whatever the reason or intent. It leaves more money at the hands of private people who will make the best choice on how to use the money they have themselves made, instead of giving it to a bureaucrat to spend at his arbitrary discretion.

It’s wrong to support Jokowi’s cause by calling for the tax cut to be scrapped. What people should be calling for is for the government to get rid of tax for all kinds of cars, not just the ones they arbitrarily call ‘green’, remove all the complicated bureaucracy like price controls and licensing requirements for public transport that make it hard for private investors to invest in transportation profitably and let the market do what it does best: allocate resources effectively.

Indonesia a development miracle?

November 18th, 2010 § 0

Harvard economist Dani Rodrik writes:

Which are the countries that have improved their human development indicators the most since 1970 relative to their peers? You’d be surprised, as I was, to find that the top 10 is dominated not by East Asian superstars, but by Moslem countries: Oman, Indonesia, Saudi Arabia, Tunisia, Morocco, and Algeria. This year’s Human Development Report is full of neat analysis and results, including this one.

Noting that not all of them have had high economic growth, he said that their success is due to expansion of educational opportunities and health access and creativity to come up with developmental approaches that fit their own conditions.

However, what’s interesting, and in contradiction of what U.S. President Barack Obama said about economic development and political freedom in his speech in University of Indonesia a while ago:

What is somewhat puzzling, as Rodriguez and Samman also note, is that these countries have not made nearly as much progress in democratization.

Is UNDP affiliated with the Chinese?

Don’t be in a crisis, be on top of it

December 3rd, 2008 § 0

Chairman of the Indonesian Entrepreneurs Association Anton Supit urged the nation’s leaders to declare that an economic crisis has taken place in Indonesia and be ready to make tough, though unpopular decisions.

I think asking an incumbent administration that’s going for reelection next year to be ready to lose popularity could be the ultimate Zen paradox.  Mr. Supit said:

We’re already in a crisis, but still unable to change our attitude.  We keep blaming others and working without a good plan.  Hundreds of thousands of people are being laid off, so don’t say that there’s nothing serious to be concerned about.  We need leaders who are ready to be unpopular by declaring that we’re in the middle of a crisis.

Here’s the definition of an economic crisis according to businessdictionary.com:

A situation in which the economy of a country experiences a sudden downturn brought on by a financial crisis. An economy facing an economic crisis will most likely experience a falling GDP, a drying up of liquidity and rising/falling prices due to inflation/deflation. An economic crisis can take the form of a recession or a depression. Also called real economic crisis.

Yet, official statistics are indicating that the economy is still in a relatively good shape.  GDP is still growing 6.1% year on year, and it is spread across all sectors though not equally.  Sure, export industries such as textile, shoes manufacturers are taking hard beatings with order cancellations from global customers on the rise, but it’s hardly a cause to announce a nationwide crisis and risk losing consumer confidence as a result.

In fact, with consumer confidence index still creeping back to an optimistic level after three months, the most irresponsible thing to do for the government right now is to create panic in the market.

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