Flashback - Homer to Marge: Did you know Indonesia is at a crossroads?

Homer and Marge Simpson found themselves upgraded to the first class on a flight to Miami. They clearly enjoyed the luxury, and the following discussion ensued:

Homer: ‘Look at me. I’m reading The Economist. Did you know Indonesia is at a crossroads?'
Marge:‘Noooo!'
Homer:‘It is'
- The Simpsons, April 25th 2004

Yes, I know it's an old episode of The Simpsons but I don’t know how many of you read the edition of The Economist in the following week (5/1/04-5/7/04). On page 79, there’s a short article with the title:

Investing in Indonesia
At a Crossroads

The article talks about the legal uncertainty surrounding the Manulife vs Prudent Life Insurance debacle two years ago.¹ The "crossroads" refers to whether Indonesia, already burdened by endemic corruption, will move further in the direction of legal and regulatory chaos. Foreign investors were said to be driven away. Our FDI was recorded negative.

But of course for fans of The Simpsons who also happened to read The Economist, using “At a Crossroads” as the title of the article could only be interpreted as a brilliant and witty riposte from the magazine.

So that was two years ago. Even if you missed the episode and have not seen the article, there’s a chance that you have stumbled upon some websites that talk about it such as this, this, this, and this , just to name a few.

Two reasons why I'm posting this now.

First, two years after, the question is: where are we now? Is the legal and regulatory environment better than it was two years ago? How are we doing on FDI numbers? These are genuine questions, because we don’t talk much about macroeconomics here at the Café (maybe we should). I'm not a macro guy and in fact none of us here at the Café are hard-core macro person (hint: send your resumé²). Besides, for matters related to the political economy of businesses, foreign and domestic alike, I usually depend on the reporting of Yosef Ardi (see for example his excellent post on US businesses’ wish list a while back, just as an illustration). So, are we still on a crossroads?

The second reason for this post, totally unrelated to the first, is that The Simpsons reference was recently brought up again in the February 2006 edition of the Atlantic Monthly (subscription maybe required). The article discusses why The Economist, as a weekly magazine, seems to be more successful in terms of its readership as well as its influence compared to its competitors across the Atlantic Ocean. The author, who was also an editor of the magazine for 10 years, came up with these explanations:

• The snob effect: US consumers think British things are cool. It’s not an entirely outrageous explanation considering the number of ads and shows in the US that use British-accented actors (exhibit 1: Simon Cowell), supposedly to symbolize sophistication (okay, Cowell is a bad example). The snob effect is also exactly what the scene from The Simpsons was trying to portray.
• Unlike their counterparts in the US, The Economist never shies away from stating its position on various issues. After all, this is a magazine that is unbashful about its raison d’etre: “to promote free trade”.
• It is a magazine unintentionally targeted for a single global readership in the sense that the editorial never really sought its readers out. They did very little in terms of market differentiation. The order of contents of the magazine may be different between the US, Europe, Asia editions, but the sentences, the words are the same everywhere. This is not true for magazines such as Newsweek, or Time.

Well, the student organization I belong to when I was in college had a running subscription for The Economist. Even at that time (i.e., pre-crisis years- yeah, I’m that old), it was terribly expensive. Considering our organization was self-funded, I don’t know how we justified the subscription. Maybe we were awestruck by the free market orientation of the magazine. Perhaps it was the British wry sense of humor. But then again it could also be that we were just snobs.

Update: Indeed we might have just passed another crossroads. And took the wrong turn. In all likelihood, it seems that all charges against Soeharto will be dropped. Aco is clearly unhappy about this. If this is true, a collective mea maxima culpa from the political leaders is in order. A collective d'oh! would not be enough.

¹ Jakarta’s commercial court declared Prudent Life Insurance bankrupt, in a reprise of a 2002 verdict declaring Manulife bankrupt. Go figure. Anyone care to update me what happens to the case?

² Actually, no. Don’t send your resume.

The Economist The Simpsons The Atlantic Monthly