My side project...

... is contributing to this music blog, initiated by an old colleague of mine, along with Jakarta Post's M. Taufiqurrahman (a.k.a. or own MT).

So here's the story. Philips just recently discovered a new hobby: hunting old, and new, vinyl records. You know, the old-fashioned records that we play in a turntable. Yes, in the era of iPod and MP3, this guy is a bit counter-culture. (In the old-school disco music, we often hear some unique voices, resulted from a technique called 'scratch' -- holding-and-releasing the record while playing. Oriental, Music Room, Stardust and Fire generations, stand up, please!).

Now he is focusing his search on records listed in Rolling Stone's 500 Greatest Rock N' Roll Album. We used to be a regular listener of M97FM, a radio station for classic rock fans. But the station ceased to exist; a great loss for us. At least we'd like to keep the spirit by blogging on some the albums on the list.

Here's my post on U2's The Joshua Tree, and Metallica's Master of Puppets.

Goodbye, Sjahrir (3)

Bang Ciil was passionate in everything he did: whether talking about poverty or debating the merits of a decadently delicious Sop Kambing (for some time a staple on his birthdays). In fact, one of the little lessons that I learned from him while I was his TA was that there's nothing wrong about discussing poverty over a good meal in a fancy restaurant.

Yes, it is always critical that we possess the hard facts and go beyond the soulless data to learn about poverty. It is also always essential that we are aware of the political economy of policies, historical contexts and institutions. But at the end it should not matter whether you're discussing poverty and do the analysis inside a hot tin shack under a city overpass or while sitting on a plush sofa in a lobby of a luxurious hotel. Of course it should not. In fact you'd want to have a cool head and let your analytical thoughts and economic intuitions run their course and if that means you need climate-controlled office space, so what?

Yet at that time it sounded so politically incorrect, almost blasphemous - especially when you were a scrawny undergraduate TA who were now and then still infatuated with left rethorics - despite your "neoliberal" Salemba training. But that was Bang Ciil in nutshell the way I remember him: always passionate, often emotional, but never let his logic be clouded. And then there's that challenge-the-conventional-wisdom, provocative streak (most times also thought-provoking, but often simply provocative), perhaps a remnant of his student years. Bang Ciil was, in more ways than one, Cafe Salembaish. Or perhaps it's more accurate to say that Cafe Salemba, in many ways, Bang Ciilish.

*Ujang was a scrawny undergraduate TA of Sjahrir for the FEUI course "Perekonomian Indonesia" in 1994/95. Ira and Aco were the other two TAs.

Goodbye, Sjahrir (2)

Never forgot his trademark remarks during the "Perekonomian Indonesia" class, "So what are you student doing? You are clearly not studying, but you are not protesting either..." It was in 1997. A year after the 27 July riot, and a year before the 1998 movement. (Aco and Ujang were his TAs when I took that class).

Then, in 2003, I attended his birthday ceremony in which he officially declared his presidential campaign. In his speech, Rocky Gerung announced that "next year, we will be celebrating Ciil's birthday in the Merdeka Palace backyard." The campaign turned disastrous, nevertheless. His party finished second from the bottom, with only 0.3% votes gathered (to which I contributed one vote). And Sjahrir never even mentioned in the presidential election.

Yes, in politics, Sjahrir is unfortunate, said Rosihan Anwar. But he's still a big man -- both literally, as well as metaphorically. May you rest in peace, Bang.

On Doha

Here's Puspa's take on the extended, heated meeting there in Geneva -- Manager

On Doha

by Puspa

With rising oil and food prices, and the woes of the US domestic economy still taking a toll and the consequences of the financial crisis still unfolding —who cares about trade any more?

News clips of hundreds of Californians waiting in line at various branches of IndyMac Bank to claim their money seem to have diverted attention away from any other developments in international economic policy. Meanwhile, those who are new to the American mortgage markets are amusing themselves trying to figure out what’s behind acronyms of Freddie Mac and Fannie Mae.

Yet, something went somewhat unnoticed in the news last week. Negotiations of the previously-suspended Doha Round were re-opened last week in Geneva. The Doha Round remains a tough deal to conclude. The negotiations, initially scheduled to end last Friday (July 25^th ’08) continued up until today.

The negotiations continue to pit the two competing blocks, the developing countries (spear-headed by Brazil, China and India) vs the developed countries (US and EU negotiators carrying the torch for their ‘important’ constituent, the farmers).

The core contentious issues are still the same ones, agriculture and NAMA. After several impasses, there is yet to be an agreed formula to reduce neither domestic agricultural subsidies (a concession made by developed countries) nor an agreed set of modalities to grant Non-Agriculture Market Access (NAMA), which is largely translated into slashing very high tariffs in industrial goods, a practice currently adopted mostly by developing countries.

These issues have been sharp and dividing for the past few years. Should be any reason, that in these troubled times, any of the parties involved are in a position to relax their respective stands?

The answer is yes, if you believe that concluding the Doha Round is part of a continued effort to uphold the institutional mechanism of a world trading system that has operated for over half a century. The reason should be yes, if you believe that a positive breakthrough on Doha signals commitment of countries that have agreed to continually liberalize and lower tariffs.

In difficult times, one should aim at picking low-hanging fruits. Pascal Lamy’s efforts to come up with a compromise proposal, with a more modest aim of tariff reductions for both agricultural subsidies and NAMA, should be applauded. It’s now up to the big players to adjust their bargaining positions accordingly.

Goodbye, Sjahrir

It was one of those long days in May 1998. That day, UI students from Depok went down to Salemba campus for a rally demanding Soeharto to step down. And that very day also turned violent as riots broke around Jakarta.

Salemba was quiet. Most of students had been evacuated through small alleys behind Cikini market to the train station, back to Depok. The remaining students, including I, had been tired, confused, and desperate while looking at Jakarta on fire. Salemba was tightly guarded.

Then at around 6 pm, an old man with an old Vespa came. I never knew how he managed to get into the campus. The Vespa was barely able to carry those white boxes. He was looking for "mahasiswa UI". When he found out that we were the students, he handed us those boxes. Lunch boxes. Suddenly we realized we hadn't had ate anything for the whole day.

And the Vespa man said to us, "It's from Sjahrir."

I always remember that line. Thanks Bang Ciil, thanks a lot. May you rest in peace.

Wanted: The History of Economic Thought Course

When Dorodjatun Kuntjoro-jakti was appointed as the RI's Ambassador for the US, and later Coordinating Minister for the Economy, I was thinking whether the benefit justifies the loss of the FEUI for not having him teaching The History of Economic Thought. Dorodjatun is always an engaging speaker, and was the best for the course.

In fact, when he was away from the academic, upon hearing that the Faculty was considering to get rid of the course, perhaps due to lack of capable teacher, Aco and yours truly (yes, shamelessly I) had planned to take over and co-teach for the course. Not because I am good at it, but we think the course is too important to be scrapped out from the curriculum.

Fortunately, now Dorodjatun is back to Depok and, I assume, so is the course.

On The History of Economic Thought, Sukasah Syahdan of Akal & Kehendak lamented (liberally translated):

On one hopeful side, there are many young economists who have been and are studying in the UK, US, Australia, and other developed countries to specialize in this science. Yet, economics itself consists of various fields of specialization. Most of the country's economists have had high interest only in the applied and pragmatic side of the science. This is my subjective and non-permanent judgment. Nowadays, not many Indonesian economists are interested in specializing in economic thought; or if they did, only as supplemental trim. Nowadays, the History of Economic Thought is hardly taught in (the universities -my note) in the country. Thee Kian Wie, senior economic historian, to whom I sometime keep in touch with by email, is the only exception today.

Isn't it sad?

Well, it's the catch-22. Those young economists, being trained in mostly mainstream higher education have faced a trade-off between mastering those (bloody, bloody) quantitative approach and techniques to understand those so-called applied and pragmatic side of economics and spending more time reading Politics, Philosophy and Economics (heavy, heavy) textbooks.

Most opt for the former, simply because to survive you need to work on what they demand you to --at least in the first and the second year. By the following years, you'd get the comparative advantage in doing the applied economics and by then there is less reason to work on the economic thought.

But I am still optimistic. Coming from various schools of thought and traditions (either European-North American or Freshwater-Saltwater rivalry), we can expect those new breeds to be engaged in more fruitful public discussion in the near future --not the ones we observe in the media now, between economists and faux economists, or, even worse, amongst those faux economists themselves.

Few of them, I personally know, are real good on the History of Economic Thought and PPE in addition to their superb applied economics analysis.

Wonderwall, Black Hole Sun

Does the words ring a bell to you, guys?

If the first thing that comes across to your mind is Berlin or Astronomy, it is very likely that this posting doesn't fit you :-). You may go on if it's the British band Oasis or, better yet, the Seattle-grunge band Soundgarden that clicks in your mind upon hearing those words. They are the titles of their songs, but that's not what I am referring to.

It's my favorite Brad Mehldau Trio's newest LIve album, recorded in the famous Village Vanguard of New York, in which they played the jazz reinterpretation of those two rock songs. And it's good to hear Mehldau back to the more standard tunes after some not-so-great collaboration with Pat Metheny.

He's indeed cool in rearranging rock songs into jazz, including the Radiohead's piece, Exit Music (for a film), in The Art of Trio Vol.3 and 4, which is also the OST for Luhrmann's Romeo and Juliet.

Recommended.

p.s: Hey Manager, play more jazz please.

Rizal was right...

... we don't need an uberpolitician or a Satria Piningit. We need a system that works. And when the system doesn't work, we may need... The Batman! Of course, to make the system works, we need something like KPK, or someone like Harvey Dent (before he turned into Two-Face).

Just like I enjoyed the recent heroic actions performed by KPK, I enjoyed watching The Dark Knight. It's a good sequel to Batman Begins. So far, the two films by Chris Nolan are better than the previous Burton-Schumacher series. And sorry, Superman and Spiderman, but if there is a 'Superhero Oscar' then I'd give the award to your fellow in that black suit.

But the highest credit must go to Heath Ledger. His last ever performance as The Joker really stole the show. May he rest in peace. Some people consider his acting was better than Jack Nicholson, who played the character in the Burton's 1989 version. I'd say, they both are tied. The difference being Nicholson was excelling alone in a somewhat weaker script, while almost everyone in The Dark Knight played well, especially Gary Oldman. He's really a brilliant actor, isn't he? Everytime he plays a character -- from Dracula, Lee Harvey Oswald, Sirius Black, and now the uncorruptible Lt. Gordon, seems that he's turning into completely different persons.

The moral of the movie was simple: institutions matter. When formal institutions fail, informal institutions will rule (see Dani Rodrik's post on how Taliban solves property rights issues when the state failed to impose it). Then we end up in a 'bad' equilbrium: we need another informal institutions to solve the problems created. Things got more harder if we have someone like The Joker, who does crime just for the sake of doing it; whose means is also the objectives.

There were also two good quotes from the movie. First, "Helping means choosing," told The Joker. He was clearly an economists, because he understands the concept of choice and opportunity costs.

Second, "The best way to decide is chance. Chance has no moral or prejudice. Everyone gets a 50-50 probability," told Two-Face. No, he didn't refer to randomized trials when saying this. But I think sometimes it's a good idea to apply the method to evaluate the impact of a policy. Or not?

Note: Chris Nolan made some changes from the original Batman stories: how Harvey Dent turned Two-Face, and the introduction of Rachel Dawes' character that has never appeared in any movies or comic versions (hence the Wayne-Dawes-Dent love triangle). I don't know how the hardcore fans think about this deviation, but I don't have any problem with that. I also don't know why Katie Holmes no longer features as Dawes, but I like Maggie Glleynhaal better.

Who Wants Über Politicians?

I share the frustration against our politicians fueled by series of their blatant scandals exposed by the media. But I don't share the tendency of many of the politically literate who long for messianic political leaders and look back in dead politicians like Hatta, Natsir, or Tan Malaka (If you deem the illiterates hoping a messiah to lead the country, the ratu-adil, a wishful-thinking, just don't repeat the mistakes.)

Virtuous as they personally were, it's not the most important thing we need now.

It's not a bunch of good men of learning, high minded politicians, that we need, but a mechanism and infrastructure in which those politicians --the ordinary rational human being -- must align their behavior with what most people want them to be.

The politicians, anywhere in the world, are the utility maximizer, subject to certain constraints; and by that, conduct cost-benefit analysis for any of their action, including asking money to pass a draft of law. It'd be more reasonable to analyze them with that rule of the game (using standard constrained utility maximization tools or game theory, if necessary) than expecting the über politicians to come as we never know what exactly made these special creatures.

And that is why we need our Anti-Corruption Squad, that works diligently to fix the disincentive to cheat; minimum government intervention in business to reduce chances to reap illegal benefit of power abuse; and any other marginal step to set the incentive right that leave very small option for politicians beside serving the majority's want.

As long as we are able to do it, albeit marginal and gradual, I remain optimistic that things would get better --even without Hatta, Natsir, or any other dead persons.

Addendum: I love to think that KPK is now cleverly setting new focal points by picking certain cases with strong elements of drama, involving action-espionage, celebrity-related, and flagrant hypocrisy (religious man from religious party can do no corruption), to knock people's head and spread the message that corruption is now a serious crime and somebody might go after you.

Whose Job Market?

Among the topics presented on this year’s job market were studies of the prison parole system in Georgia, (several) of HIV/AIDS in Africa , of child immunization in India, of the political bias of newspapers, of child soldiering, of racial profiling, of rain and leisure choices, of mosquito nets, of malaria, of treatment for leukemia, of the stages of child development, of special education, of war and democracy, of the effects of TV coverage on democracy, of bilingualism and democracy, and many others. (Among the leading departments, only Stanford’s graduate students appear to be working almost exclusively on traditional topics.)

The question: whose job market is that? a. criminologist, b. epidemiologist, c. political science, or d. none of them.

Yes, it's none of them. It's the US economist's job market in the year of 2007 --according to Angus Deaton of Princeton in his Letter to The Royal Economy Society of Britain last year.

I'm sure some cynics would give a snort and dub it as an economics imperialism, but I'd say it's cool. Very cool, indeed

HT: Marginal Revolution

The Worst Pick-up Line Ever is

"I hate to sound derivative, but I'd love to lie tangent to your curves."

Warning: apply strictly to the economist only --those dismal scientists.

The line also refers to Greg Mankiw's op-ed that basically says populism likely collides with the standard economics arguments (that includes legalizing marijuana, by the way).

Why? Not because supply and demand is too "complex." It is just not very emotionally satisfying.

Predicting poverty?

Last week I attended INDEF's mid-year evaluation on government policy, titled "Oil, Food and Poverty." One thing I particularly noted was their prediction that poverty rate will increase by around 1.3 percentage points next year. The main reason was the fuel price hike will create inflation, especially in the food, food products and transportation categories. They also predicted that inflation will rise to around 12 percent.

I've never been a big fan of economic predictions (though in my past job I had to do that). Among different indicators, I wonder if we can make a good prediction for poverty rate. Nevertheless, I wondered why they would predict poverty is to increase by 1.3 percentage points when, at the same time, they predict inflation will rise to 'only' 12 percent. In 2005, when the fuel price increased by 130 percent, inflation jumped to 18 percent, and headcount poverty rate increased by 1.8 percentage points. Now, with lower increase in both fuel price and inflation rate, they predict more or less the same magnitude of increase in poverty rate. Unless if we are facing a very difference situation between now and then, which, I think, is very hard to justify.

Their explanation in the Q&A session revealed that they didn't take the effect of BLT (cash transfer) into account. Well, perhaps because they, at least my colleague Ikhsan Modjo, one of the panelists, belong to the 'BLT is useless' school of thought. For sure, much to be done to improve BLT, and BLT is not a desirable long-term safety-net policy. However, discounting the impact of BLT in providing cushions for the poorest households is unfair.

In case you are interested, here is my comment and further elaboration on this issue.

Defender of French Culture

Tyler Cowen writes:

The French spend approximately $3 billion a year on cultural matters, and employ twelve thousand cultural bureaucrats, trying to nourish and preserve their vision of uniquely French culture. They have led a world movement to insist that culture is exempt from free trade agreements.

Creative Destruction, p.2

Twelve thousand bureaucrats to defend a culture.

But my question runs deeper: first, what is the so-called French culture? Hanging out in a cafe thinking about existensialism, deep-fried potatoes, or a certain smooching technique?

Second, what is a culture --the thing to preserve against free trade-- anyway?

Addendum: I think Asterix would be the best possible answer for my first question. Or Tanguy et Laverdure.

But I don't think Asterix and Obelix need any help from the government's bureaucrats. They know, if they are indeed competitive, thanks to their very own magic potion, even the mighty Romans would give up.

Hopkins (Johns, not Anthony)

OK, unlike AP, I don't watch TV series --except perhaps the old The Shield, because it was aired late at night.

But last night,incidentally, I was glued before the telly watching the third episode of Hopkins --they have six one-hour episodes out of 1500 hours footage.

It turns out that I like that reality show, named after a hospital in Baltimore, in which the doctors were actually pretty relaxing when playing god like doing a heart transplantation surgery. After all, that's their daily jobs and you can't expect one to be tensed in everyday's work, no?

And the scenes in surgery room were beautifully bloody.

And where is the economics, the moral of the story? Nothing. It's just a funny conversation with a customer relation officer good TV show.

Ec and the City

My wife and I finally watched the return these New York fab four. Yes, we are a fan of the TV series, so we've been anticipating the big screen version for quite a while. I thought the movie was a pretty good entertainment, and some reviews might be too harsh. I agree with Leila Chudori that the movie was lacking the series' twist and naughty plot. But, in the end, the movie is a 2-hour annex to the series. Not a repetition of the episodes when they were still at their 30s. So, please, it's not The Godfather or Little Women; it has the right to remain cheesy!

The plot revolves around Carrie and Big's relationship. How they decided to get married, then one of them got too obsessed and the other got scared, and how they got through with that. I tried to enjoy the movie by not thinking any economic theories. But still I couldn't help thinking of Becker's 'Economics of Marriage.' You can read Becker's account in his Nobel lecture here; a good summary of his theory (and how the theory evolved between the first JPE article in 1973 and his latter works, especially the 1981 Treatise) here; or in Tim Hartford's popular version here. But note that those pieces look at why do people decide to get married (and how do they choose partners) as opposed to being single. In Carrie and Big's case, the issue is why they want to move to one stable equilibrium (extra-marital cohabitation) to another one (marriage).

One of the movie's subplots is the troubled marriage of Miranda and Steve. The question is, when you have to decide whether you want to keep your marriage or terminate it, do you apply a cost-benefit type of calculation? Maybe. But, in the spirit of the movie, maybe not. It's harder to lose something you've actually had, even though you could 'trade' it with something you'd prefer to have in a counterfactual life. Economists call it the endowment effect, which may suggest, as this article argued, humans are irrational animals.

Or, in Carrie's words to Miranda, "Sorry, Harvard.. this time you need to make decision based on your emotions... not logic..." Ah, I think I'm too carried away with the movie.

Cultural What?

I am scratching my head.

Maybe you can help me to answer my (stupid) question: do you really think that the best way to to influence the perception of Islam in the U.S is to send

[...NU communities in Java have...] many amateur but excellent music, theater and martial arts groups that given the opportunity could easily capture a Western audience for a breathtaking hour or two. The very rich and sophisticated but relatively unknown performing arts of Banyuwangi (a traditional NU stronghold) for example, would be a safe bet to help shift perceptions of Islam in the U.S.

The same goes for the beautiful but devastating, obscure martial art of pencak silat. NU and its Pagar Nusa schools of pencak silat have many young and old masters who cannot only apply punches, kicks, takedowns, throws and joint locks, but can also, to an extent, defy gravity and demonstrate invincibility to fire and sharp blades. Managed creatively NU's artists could put together a show as entertaining as the famous Chinese State Circus, guaranteed to inspire and capture people's imagination.

and call it a cultural diplomacy?

Punches, kicks, sharp blades?

If you do think it is, then maybe the Jakarta Post's opinion editor was right.

Marx and Regular Basis Joke

From my used-book store visit yesterday, I bagged the 1976 first English edition of a comic book: Marx For Beginners (Karl, not Groucho), by the politically-funny Mexican cartoonist, Rius. On the way home, I overheard a woman said to a man on the escalator:

"You know, it's actually a kind of joke that I make on regular basis."

I burst into laughter myself.

Yes, the first derivative of utility function with respect to that thing you consume is positive and the second one is negative

From Murakami's A Wild Sheep Chase.

She nodded. She put the letters in her bag, which she fastened with a snap of the clasp. I lit up a second cigarette and ordered another whiskey. The second whiskey is always my favorite. From the third on, it no longer has any taste. It's just something to pour into your stomach.

In other words, du/dw = u' > 0 and u" < 0. The law of diminishing marginal utility, q.e.d.

Down with the Bear

If you have a long commuting trip, are stuck in a traffic jam, or don't know what to do to spend the weekend, I suggest you to pick up the latest Vanity Fair. No, not the Nabokovesque Miley Cyrus' (a.k.a Hannah Montana) photo shoot --that's in the past edition--, but this 8 pages long in the website version, or 16 full pages if you print it, journalist's investigation on the last days of the once mighty Bear Stearns.

It tells you how those big names in the financial world work, how influential the media is (CNBC, to be specific), and how the nervous Fed acted. If you don't know the different perceived style between Lynch, Sachs, Stanley, and Stearns in making money, like I do; or how important to speak up to the right news anchor is; or how close the Fed, Treasury, and Wallstreet are; then, perhaps, it's the right reading.

Here is what happened in that fateful night of the Bear.

That day was Dimon’s 52nd birthday, and he was celebrating with a quiet family dinner at Avra, a Greek restaurant on East 48th Street. He was irked when his private cell phone rang; it was to be used only in emergencies. On the line was Parr, who put Schwartz on as Dimon stepped outside onto the sidewalk. Schwartz quickly explained the depth of Bear’s plight and said, “We really need help.” Still irked, Dimon said, “How much?”

“As much as 30 billion,” Schwartz said.
“Alan, I can’t do that,” Dimon said. “It’s too much.”
“Well, could you guys buy us overnight?”
“I can’t—that’s impossible,” Dimon replied. “There’s no time to do the homework. We don’t know the issues. I’ve got a board.”

The people he should call, Dimon said, were at the Fed and the Treasury—the only place Bear could get $30 billion overnight. Still, Dimon promised to see what he could do to help. He hung up and dialed Tim Geithner at the New York Fed downtown. Twenty-first-century Wall Street is a highly interconnected world, with just about everyone lending billions of dollars to everyone else, and Geithner worried that Bear’s collapse might trigger a domino effect, taking down scores of other firms around the world; he urged Dimon in the strongest terms to think about somehow helping Bear. “Tim, look, we can’t do it alone,” Dimon said. “Just do something to get them to the weekend. Then you’ll have some time.”

In case you don't know the names: Jamie Dimon is the JP Morgan's CEO, Gary Parr a top investment banker of the Lazard Freres, Alan Schwartz the Bear Stearns' CEO, Tim Geithner the New York Fed's President.

A caveat, it's a journalist report, so don't expect for a heavy bibliography. Whether the account is true, let's wait for the responses from the parties mentioned.