My one-year twitterexperience

I think Twitter is fun - more so than Facebook. Because: 1) Twitter is shorter and hence more efficient, 2) Twitter has an instant reward-penalty system: you tweet good, you're treated well; you tweet bullshit, you're treated harshly. Think about that Golkar guy Bamsoes who was constantly lambasted by the whole Twitter universe, because, well he deserved it.

I'm rather new there. And passive, I guess. So what I'm sharing here is just based on my short experience observing what people do in the Twitland. Oh, maybe a little disclaimer first: I'm a fan of a group called #somaykrat. I think they're interesting without being pretentious. To many they're probably boring, especially when they go #kode or #kasus and all that childish stuff. But hey, I like 'em. Why am I probably biased? Because some of them are baristas here. (Yes, I'm considering how to best cut their pay in the Cafe 'cause they now rarely serve the drinks). Who are all the members by the way? I don't know, 'cause it seems the group is growing from time to time.

Now about other twitter (or, should I say "tweeter"? - have to be more careful now, as those somaycrats are typo nazis -- exactly, who the hell do they think they are? But I don't want no #ctarr or #pritt). I don't follow many people (can't keep up with too many). But from time to time, I see RTs from whom I follow. If they're interesting, I usually read their timeline (is that a stalking, I dunno).

First, I've seen some people who I knew from Blogosphere now living in the Twitland, too. Some appear more interesting than when they are blogging. There is this one guy who blogged really well and also tweets cool stuff. But he likes to go after anyone he dislikes and engage him/her in a debat kusir. There are some guys who give lectures in the Twitland (hey, I'm serious). This lecture-in-tweet is called kultwit - sounds a bit Freudian, I know, but who cares. Some kultwits are useful, imho. But when they hit number 30 or something, I get so sleepy, especially when everything of it you can get easily from the wonder of the web. But, to my surprise, some people demand more of it. Whenever they don't know something, rather than google or wiki it, they would just go "kultwit dong". Like we live for them, spoonfeds.

And then there are people who take Twitter so damn too seriously. They would expect politicians to tweet only about politics (or even "they should reach out more to their constituents.. bla bla bla") or economists to tweet about economics and economics only. Or law thingy for legal scholars. How boring if we all do it that way. C'mon, this is supposed to be for fun. Right? (oh God, I'm patronizing. Sorry).

There is also a few Twitters who like to expose other peoples' privacy to public. For example, if they know someone's relative are in the Twitland, and they don't like that someone, they will tell the public "Hey, I found his daughter. Here's his account. Go get her instead" - or other sentences to the same effect. Wow. Some respected(?) blogger even do it so the relative can "give insight to her father" - he hates the father (all do, but that's beside the point). Respected? Hah.

And some just love to teach others how to tweet. Like "don't RT this or that", "you should've replied, not RTed", et cetera, like they are Zuckerberg himself. Usually the same people, when get cornered in some debate (What? A debate in the Twitland? Are you out of your mind?) will use the discussion stopper "Read my timeline" (a Twitter-equivalent of "Talk to the hand").

Anyways, I'll stop here. Some barista complains I write too damn long. But I just like to thank Twitter. For it is fun. It also reveals the true colors of people like Tiffie and his ilks. Or some lousy pemreds who do everything to protect their muddy boss.

#Bye #now, #tweeps (is this the correct way?)

My dream end-of-year presidential speech (cont)

My dear fellow countrymen,

So those are important issues, mostly on the economic side. Before I move into the politics, let me say a few more things. First, when we talk about poverty, it is important to look at the bigger picture. That is, we should not just address the income poverty - the poverty related to income and usually measured with the poverty line, be it the national line (anchored mostly to calorie intake, translated to consumption to about 1.55 dollar per day) or standard line (1.25 or 2 dollar per day). There are other dimensions to poverty that are non-income in their nature: access to sanitation and clean water, access to basic education and health, infant mortality rate, maternal health, etc. Reports have shown that in general, these "non-income" poverty dimensions are worse than income poverty. In addition the urban-rural wedges in these dimensions are also bigger than that in income poverty.

In addition to the importance of non-income poverty, we have long acknowledged the fact that the near-poor - those living between 1.55 and 2 dollar a day - are abundant. They are fragile to the change in poverty line. This, along with other reasons, calls for better social protection system. In conclusion, tackling the poverty issue in Indonesia can not afford not to frame it in its big picture. Indonesia's poor may be generalized into: rural, farm agriculture, informal, and to a lesser extent, Eastern. So any policy for poverty eradication should be directed towards these factors: easing the migration from rural to urban (or equivalently developing rural areas to become urbanized areas), migration from farm to non-farm agriculture, informal to formal, and focusing infrastructure development (and hence connectivity issue) in the Eastern part of Indonesia.

One more thing. We should not forget about the environment. The world is seeing a climate change. It will impact almost all dimensions. But most importantly, food security and energy security. As this will proportionally be more difficult to deal with in poor and developing countries, it is in our interest to do something about it. As one of the biggest carbon emitter, we have declare our commitment to cut our emission rate. But it is not just to make a show off. Cutting emission would be good for our own sake. It is part of the whole program to explicitly recognize the role of environment and natural resources in development (or, to borrow economists' jargon: to internalize the externalities). All this should be seen in a sustainable development paradigm (which, by the way, not just environment, but also social and economic facets). That is, to leave at least the same options for the next generation to choose from as we do now.

In this regards, it is important to underline here again that we have to change the way we consume energy. Our dependence non non-renewable energy is worrying. And that is because we have all the incentive wrong. We subsidize the unproductive use of non-renewable energy in a grand scale that hinders our ability to build infrastructure and to fight poverty. And of course, it also speeds up environmental degradation and resource depletion. As long as we keep this subsidy regime as it is now, there will be no incentive for business to invest in renewable energy nor for consumers to be more energy-conscious.

Now, the politics. While we're still at the subsidy issue, I would like to share with you that cutting the unproductive subsidy is also a politically sensitive issue. The DPR members have shown their reservation. I understand that they have valid reasons to be reluctant to this proposal, but we really should find a better way to allocate the limited budget into its productive uses. Speaking of budget, we will keep the discipline intact. This includes prosecuting tax criminals who have stolen the taxpayers money to enrich themselves.

Finally I'd like to address the issue on democracy and pluralism. Democracy has its weakness, no doubt. But our civilization has yet to see a better alternative to it. We will keep it while respecting our true, unique blessing: diversity - Bhinneka. It is saddening to see our fellow countrymen restrained from undergoing their religious rituals in peace. We will not tolerate such intrusion and attack from groups of thugs who hijack a certain religion to suppress the others.

Dear my fellow countrymen,

Those are the things we would focus on next year. At the same time we will continue our active role in international fora. We will assume leadership of ASEAN next year and APEC in 2013. We also continue our active engagement in the G20. As a part of modern global civilization, we will stand firmly in our support to fight global poverty, to undertake adaptation and mitigation of climate change, and to improve the world peace and harmony.

God bless you all, happy new year.

My dream end-of-year presidential speech

Dear my fellow countrymen,

We soon will say goodbye to 2010 and hello to 2011. As the president, I'd like to make a little reflection on the foregoing year while also share my expectation of the year to come. We entered 2010 with a big expectation. In fact we survived the global financial crisis rather impressively, along with China and India. But that is no excuse to be working less. This year we have seen other - almost all, I should say - countries recovering very well. On the other hand, we also continued growing - but somewhat slower. It's not that we had not expected such growth rate. Given our current situation, it is still hard to achieve the potential rates as we did before the Asian financial crisis.

Which leads us to the question: what is really the constraint? I am aware that we still have numerous problems and issues on the table. But we should prioritize. If I were to pick up, say, the two most binding constraints to growth, that would be high logistic costs and very rigid labor market. The former deals a lot with infrastructure provision - both soft and hard infrastructure: so not only the roads, ports, and bridges but also the system and human resources thereof. As for the labor market, we have yet to settle a mutually benefiting labor law to employers and employees. As a result, businesses are reluctant to hire more workers on permanent basis while workers have few choices other than accepting unfavorable contract terms or else move to informal sector whose job security is minimal.

We have done many things regarding these two problems. But certainly not sufficient. Infrastructure development will continue to become the main theme. It involves among all, completing the trans-roads and the 10K megawatt electricity, improving the ports and their national single window system as well as refining the public-private partnership schemes. The latter is crucial as we know the government capacity to finance the needed infrastructure development is only 30 percent.

As for the labor market issue. I know this has always been very sensitive. We tried to make a revision in 2006 but it failed. Apparently we need to work harder together to resolve this issue. Otherwise, the labor movement between sectors (including formal-informal) and across regions (including urban-rural) will remain hindered. We also need to reduce barriers at the border. This includes negotiation with other countries on job safety for our migrant workers. In addition, we should be ready to anticipate foreign demand for our workers. Otherwise, we can not reap the opportunities out there: China's labor wage has increased and some companies therein have started to look for other countries to relocate. Japan is having a serious aging problem: their old yet rich population need young, productive workers that the country lacks. We have them.

Those are the two most important factors of our development at the moment. They are rather short term with regards to policy. Meaning, the approach to tackle them should be implemented as soon as possible in order to switch to the higher gear. That is to say, we also have long term problems that need structural - and continuing - solution or approach. In my view, it is and will always be human resource. While I am proud to see young Indonesians ace international competition, in general we still need to improve the quality of our people. That requires sustainable improvement in health and education.

One might ask, where is the poverty issue? Well it is in all of the above. Improving infrastructure will open more economic options to the poor in the remote areas. Making the labor market more flexible allows more hiring and many of those in informal sector can move to the formal one. Improving health and education is by default directed towards the poor as top priority.

[continued]

On Funny Punditry (or The Allure of Instant Fame)

Recently I and Ujang talked about the making of Indonesian "funny" pundits that we observed in the last of couple of years-- thanks to widespread of so-called social media and free press.

If you care enough to look at it carefully, there has been a glint of intellectual dishonesty out of this kind of punditry. The obvious one is the habit of setting up a strawman. The less obvious one is to promote something deemed as "new" or "groundbreaking", whereas, in fact, the ideas have been around for years, if not decades, in particular discpline or profession.

Surely, branding something as "groundbreaking" always attracts ones who are not trained on the subject --thus the blame are not theirs. But those funny pundits are, supposedly, aware that the claim might not be as spectacular as it may sound.

Yet, for them, the incentive to commit in such dishonesty is indeed rather high. There are always gullible cheerleaders (and media) out there, eager to celebrate anything labeled as trendy, new, or revolutionary, under the pressure to appear, in our popular lingo, "eksis". Fame, for these faux pundits, is therefore imminent.

Now, in the free-market of ideas, where are the competing forces for such funny punditry? Those well-equipped with training or analytical rigor that can not be easily persuaded with snake-oil jargons and populism.

Here is the Catch-22: most of them are already very busy and occupied with their jobs in the universities, in private sector, and in public sector. They spent great deal of their time pursuing professional objectives -- perhaps, admittedly, for their own different definition of fame or power. In short: they lack of incentive to counter popular fame-inspired pundits in popular (social) media. For many of them the pay-off for engaging in many times repetitive debates doesn't add up with the time they need to allocate for properly analysing the issue.

Moreover, they are also not trained and used to engage in an exchange in which the opposite side are those with "palu gada" attitude (Read: "apa lu mau, gue ada"; or in plain English, the "anything-goes").

Do I believe in wisdom of the crowd then? Yes. Sooner or later, the crowd will know what/who is lemon and what's not. Think of Roy Suryo, if you want.

In the meantime, I believe many people with knowledge, in their limited spare time, look at such funny punditry with amusement (and, perhaps, as source of entertaining gossip over coffee or lunch).

Raise it, not cut it

You love football. You paid for watching the semifinal. Your fave team won. Next week there will be the final match. Which one is more likely: your willingness to pay for watching the final is higher or lower than that for the semifinal? Yes, higher. So more expensive ticket, not cheaper, makes more sense.

Now, you are a sportman. You always struggle to win. You did win and got an appreciation (be it trophy, money, etc.), so you deserved to play in a higher level. Do you expect more or less appreciation should you win? Yes, more. But where does the money to buy trophy come from? Assume, just assume, partly comes from the ticket sale. What is the implication? Yes, ticket price for final should be higher than that for semifinal.

Finally, you hear that the ticket price for the next game is lowered. Do you expect longer or shorter line at the ticket booth? Yes, longer. If you could afford the semi, would you be paying a premium for whoever promises you to stand in line on your behalf? I would. What is the implication? Black market. If black market is not possible, what would be the stadium look like? Crowded like hell, and possibly with some fights over seat here and there. You would need extra security forces. Which means extra cost.

All the three hypothetical scenarios above are, well, hypothetical. You could of course find them and the likes in any intro level economics.

The president, who ordered the football association to cut the price for final match is, by the way, an economist. He should've flunked his intro class.

Special for everyone

How to make the term "special" irrelevant? Assign it to everybody. This furor over whether or not Yogyakarta should keep its special status has been long and boring. The president triggered the controversy, the sultan joined the fray. Then the parliament and media made it even bigger a deal. One side says Yogyakarta should not be granted a special status anymore, because "every province belongs to the Republik of Indonesia, NKRI". The other side says Yogyakarta should retain its special status because, well, it is special.

Here's my suggestion. Don't touch Yogyakarta. Don't change anything. Change everything else, instead. That is, grant special status to each and every other province in the republic. Then, let the people decide if they want a king or a governor or whatever.

To borrow from Gus Dur, "gitu aja kok repot".

Warteg, tax, and vulgar paternalism

What is tax for? Revenue generation for public good provision, incentive mechanism to discourage certain consumption, or wealth redistribution. When you work and make money you use resources. Some you buy some you borrow. For warteg (street vendor selling food), space or street light might qualify as public good provided by the government. Tax in this case also filters out the inefficient ones; maybe by forcing some too small ones to merge and hence able to afford paying the tax. Or, maybe it is simply fair: you tax bajaj driver, why not warteg? So, yes, there are arguments for taxing the wartegs.

But, some politicians go too far. The chief of Democrat Party says wartegs have to be "nurtured and supervised". What the heck? Nurtured and supervised by whom? By the government? Parliament? You? Do you even think you're smarter than them the warteg sellers, so you should teach them how to make money? Do you realize that by issuing some regulation to "nurture and supervise" the wartegs you basically provide a room for yet another rent-seeking activity? Is tax not good enough?

WikiLeaks that is overshooting

Many people were impressed by Julian Assange, the brain behind WikiLeaks. Some even called him hero.

I'm not sure. At first I thought this guy was something. But then even Assange seems to underestimate the power of price. His leaked infos are now decreasing in "price". Why? Because it's just way too many. Seriously, who wants to invest time digging on 250,000 cables? When he leaked a few classified info, people were taken by surprise. And people wanted more. The price increased.

Then, he flooded the market. Of course I don't have numbers. But I think the position is now an excess supply. Which means the price has gone down.

Too much information is close to worthless information. In such a situation one might not care anymore which one is classified and which mere gossip.

The President's iPad

So the president just made another laughing stock: his iPad. Now I almost conclude two things. First, he likes gadget. Second, he's so clueless when it comes to image building (or lack thereof). The combination of these two has proven ridiculous. It's still fresh in our memory how he came up with a brilliant solution to the oft-abused Indonesian migrant workers abroad: give them a handphone each. No need to elaborate on this -- 'cause you're already laughing.

But he just made another homerun. With iPad, that is. I mean, hey, there's nothing wrong with him having and playing with an iPad. But a president, holding an uncased (or was it transparrent silicone?) iPad with the famous logo on camera, up close and personal? The only thing better than that is if he had a Coca Cola can on his other hand.

Clueless. Now suddenly my iPad's value has gone down a bit.

And contrary to what people say, I think his showing off his iPad live is not a free promotion for iPad or Apple. It is a good promotion for Samsung Galaxy.

Figure that out.

Keef's Life

Last week, since I had a 40 percent off coupon plus 5 bucks reward from a bookstore here, I asked barista Aco and Ujang what books to buy.

Ujang, somewhat unsurprisingly, came up with the Handbook of Development Economics. Aco, however, had (better) idea: the biography of Keith Richards, Life.

It's the book everybody in town now talk and write about. From David Remnick of Newyorker to Michiko Kakutani of NYT to our own Taufiqurrahman --who lambasted a mediocre review by a music critic-turned-political pundit in our you-know-what daily.

I ordered my copy. Keith Richards', that is.

To celebrate Keef's biography, the Cafe plays Happy from Exile on Main St. album and Salt of the Earth from Beggars Banquet album.

Lighten up, Doc!

A letter to editor in Kompas today is a reflection of blatant anti-competition by an Indonesian medical doctor, a member of the Indonesian Medical Doctors Association (IDI). He complains about a doctor from Singapore who keeps advertising himself in Indonesian news media.

He argues, had local doctors been allowed to do the same, all media would have been full of private doctors selling themselves. Some might even offer promos like car or free ticket to go abroad. All sounds sinful to his ear, as the letter implies.

I wish the opposite is true. If Indonesian doctors advertise themselves in the media, that would lessen my search cost. And yeah, I want the prize.

Oh by the way, the complainer, by sending such a letter to the (biggest) newspaper in the country, is, urgh, advertising himself, too. No?

Mentawai and Merapi

My condolences to the victims of tsunami in Mentawai, Sumatra and of vulcanic eruption of Mount Merapi in Central Java, this week.

Alas, same things repeat: slow response and lax coordination from the government, stupid minister blaming accidents on the victims for not obeying the God's rules, media blunders, insensitive netizens posting pictures of victims on soc meds, and so forth.

RIP: Nizam A. Yunus

Let me write about someone that unless you had attended FEUI, you probably don't know this nevertheless very fine gentleman, Nizam A. Yunus.

Bang Nizam was the Associate Dean for Student's Affair when I, Ape, and Aco, were in college years in the 1990s. Being active in student magazine, BO Economica, we had close contact with him.

And he was the best, most unpretentious, university bureaucrat one can possibly wish to have.

During 1997-1998 tumultous protest days, Bang Nizam played important role in letting the students to protest and go down to the streets. Unlike other University bureaucrats, he never tried to stop students' movement.

I still remember the nights Bang Nizam spent in his office in Depok on the days of students protest, just to make sure that FEUI students were safe. He was the only campus official willing to do this in those days.

Sometimes I just dropped by to have cold Coke and had conversation on, mostly, unimportant stuff. He had a small refrigerator in his office, I think. Funny man himself, talking to him was always fun.

He also called himself "gue" and his students "elo".

I thanked Bang Nizam for making FEUI feels like home and my college years was very much memorable. In his own way, he really took care of students of all stripes, myself included.

So long, Bang.

Save JifFest by paying higher prices than before

I love JifFest - that's Jakarta International Film Festival. It's coming (if I'm not mistaken it's going to be the 11th this year). Like in the last years, it's coming with poor financing. I feel sorry and I would love to contribute my suggestion.

Which might not be popular. And hence I would just post it here.

Here's the thing. I think the ticket prices to JifFest have been too low. As a result, they can't rely on ticket revenue even to cover the overhead, maybe. I understand their argument: ticket should not be expensive if you want to introduce good stuff to as many people as possible.

But there lies the problem. Festivals bring about good, selected movies. Usually this kind of movies have pre-selected audience. That is, serious movie watchers, artists, people who appreciate arts more than others, et cetera. And they "should be" willing to pay higher, because they value these movies higher than "ordinary" ones.

By charging low prices (even worse, by subsidizing) they forget one thing: the filter effect of price. Because the prices are too low, even those who don't care or who don't appreciate these movies will come. But for different reasons: to kill time, to hang out, or to find a place to date boy- or girfriend cheaply. These are the people who would talk and make noisy chit-chat while the movie is rolling. These are the people who talk over handphones making it hard for us to appreciate the ongoing movie..

But if you charge a "more correct price", you filter out these non-serious watchers. And give us better ambience to enjoy the otherwise excellent movie experience.

Of course I'm not suggesting a very expensive price. For super high prices might as well scare even the serious watchers. Let's just say a little higher than the prices of non-festival, usual movies in Jakarta.

Just saying.

FAQ

Soon Cafe Salemba might serve FAQs menu on history of Indonesian economic thought to answer boring repetitive rap on said topic.

In the meantime, you may wish to read essays by Thee Kian Wie published in this book in 2004, especially on the ill-fated Indonesian industrial policy.

Somaykrat? (2)

Oh, they have a website: http://somaykrat.tumblr.com/

Damn, I'm starting to smell a competition here..

Somaykrat?

I came across this subtle, funny, yet loose group self-named Somaykrat in the Twitland. To my surprise the baristas are there! No wonder they're seldom post here lately. I'm so gonna cut their paycheck.

But then, out of curiosity, I went over their timelines, the members (or so I guessed), aka "somaykrats". And they're damn interesting. Seems like they're after typos and food. But they also ridicule the shameless Senayan guys and other foolish politicians and their ilks in businesses. I have to say I like them, the somaykrats. So far, that is.

Ah, before I forget, I should calculate the penalties for Aco, Ujang, and AP.

In defense of Qory

The media, social or otherwise, have been attacking Qory Sandioriva, the Indonesian beauty pageant queen who competed in the world contest, and failed.

Most of the attacks take the form of mockery on Qory's broken English.

Shame on you people. Qory did nothing against you. She's beautiful, she worked hard for that competition. She had the courage to compete abroad unlike many of you. She is great. And you think a broken English is so sinful? How about yours?

Grow up.

Reading the Nationalism-o-meter

On the way to Metro station this morning, I asked Sisil why Indonesians in twitland and fb became suddenly very nationalistic on Aug 17 -- and we don't.

She thought it's a wrong question. It is not that these people's nationalism-o-meter increases these days, but the urge to update twitter/fb status. The latter motive will pick up anything closer to home in one particular day -- any mass psyche deemed relevant on the day, like nationalism in every Aug 17 or religious revivalism in every Ramadan.

I concur.

In Defense of Mall

So my two professors went to Manila this summer. One of them was amazed on how cool the malls over there, and the other offered an interesting interpretation: it's in many ways a form of private government.

Here is the reason.

Operating such huge (and usually integrated with business and residential complex) mall needs sophisticated technology and management. And it has to be efficient. With thousands of human resources involved as well as state of the art logistic, it needs high skills and knowledge to run the complex.

Now enter the common explanation for under-development in developing countries: lack of skills and "modern" culture.

These malls show that these line of reasoning doesn't add up. The businesspersons running the mall can deliver not only private goods (you know, from branded bags to broccoli to two bedrooms apartment) but also public goods, like open to public parks, between-the-shops-aisles for window shopping, or the water fountain dancing New York New York (to the dismay of barista Aco).

They are like government -- while the real government is busy doing something else. And the key is, I think, incentives that works, and it is profit motive.

I think it's a right observation. The mushrooming malls as well as those clustering real estates somehow also shows that government has failed, and, to some extent, private actors stepped in. And the blaming for lack of "modern culture" among the people seems to be unfounded.

A Short Trip Note

So I managed to stroll around the area much of The Warhol Economy describes. It's a cute neighborhood or cluster that makes the city magnet of the young creative people -- and of course a perfect place for a great coffee time talking about, for example, what Varvatos doing at the ex-place of CGBG?

But that's just one face of the City-- and I heard the truly striving creativity has been somehow moved across the tunnel to Williamsburg. The rent has just been unaffordable.

The other part is a place where probably has the world's highest the density of neon ad-lights per metre square. A classic tourist trap. But you may want to go there at 5.30 am to get different feel.

There when the neon light mixed with the early sunshine between skyscrapers and the Good Morning America does not event start yet, you may catch the glimpse of how NYC made of -- well, some of it. Trash collector truck, street vendor who sells coffee and the Times in that early hours, the City finest, and limousine driver in front of ABC studio --probably waiting for Sheryl Crow.

"Life in here is very regimented", said a parking attendant, "I want to move to South Carolina"

I guess he already said it twenty years ago, but somehow he's still there in the city that never sleeps -- even when Lehman Brothers across the street is no longer there.

Much comedic ado about nothing: FPI and the piggybanks - by Lynda Ibrahim

Hi, this interesting-as-usual piece by Lynda got into my inbox in the first weekend of the month. But I was off and so couldn't post it right away. My apologies to Lynda. But you readers can surely see, this juicy piece is worth the wait. Enjoy! -- Kate

MUCH COMEDIC ADO ABOUT NOTHING: FPI AND PIGGYBANKS -Lynda Ibrahim

I commenced the week rather ominously, broke a tooth while lunching on entirely harmless spaghetti. Gushing blood as scrambling to my car, I hit fence in swerving mad dash to the dentist. Dented tooth and dented car, a classic episode in accident-prone life dating back to my baby steps-- my parents barely bat an eye when their klutzy child arrived at their house for much-needed supply of TLC and soft foods. Just as well, since the week soon turned into a grander, free-for-all comedy, it got my mind off the painful root canal.

First, FPI, who has ran amok freely for many years, smashing people and properties left and right, tearing through Indonesia’s collective fabric of tolerance, while shamelessly borrowing God’s name for textbook thuggery, is finally facing its strongest opposition yet as legislators and activists are calling for its much-deserved demise. A legislator even publicly let out a suspicion, long-held public rumor I may note, of FPI’s all-powerful backing.

Heck! If it were up to gazillions concerned citizens like me, FPI would’ve been disbanded many moons ago, least of after they beastly attacked the pluralistic alliance peacefully rallying at Monas for minority Ahmadiyah sect on a sunny Sunday in 2008. Many were furious upon learning that, after largely went unpunished for ransacking bars and McDonald’s, baton-wielding FPI members were now chasing unarmed civilians including wheelchair-bound Mrs. Abdurrahman Wahid. Yet, few voiced their objections loudly. Perhaps fearing to be called heretics if seen standing against so-called defenders of religion in this piety-valued nation, or fearing FPI would come after them Mafia-style.

Thus, vigilante FPI thrived on. Halting church constructions? Dispersing group prayers and private in-house baptism? Generally getting offended at anyone or anything they mistakenly deemed as enemies of Islam? Majority floating mass remained silent.

Yet tide might turn as lately FPI started protesting against the traditional West Javanese attired Three Ladies statue in Bekasi, claiming a display of Christian trinity proselytizing tool, then barged in on public discussion attended by few legislators in a common restaurant, throwing outdated accusation of communism. While delivered menacingly the two shenanigans were stupendously ludicrous on so many levels that they were reduced to slapstick jokes that we could just openly laugh out loud at.

Either my eyes deteriorating or their delusion peaking, since after squinting for hours at variously-angled pictures of the statue, I still couldn’t see, for the life of me, any trace of Christian trinity. And it got more hilarious as the befuddled Balinese sculptor, called for comment, earnestly inquired what exactly a Christian trinity was. I’m waiting for FPI, any minute now, to swiftly calling the statue a projection of Hindu Trisula.

And as for the communism allegation, no doubt loosely based by one of the legislator’s father’s PKI past, were FPI sleeping through the ‘90s and missed the colossal crumbling of communism? Dude, if you gotta openly accuse someone, at least do it with flair and pick something sexy!

Then, another kind of hilarity unraveled, when the weekly Tempo published a controversial report on, as they titled it, fat bank accounts of high-ranking policemen.

While I won’t comment on the report’s content, I found hysterical this quaint notion that, upon publications of a considerably scandalous piece, a disturbed party would still bother to locate newspaper agents at such ungodly hour, while others were cheering on World Cup or devouring post-clubbing lamb fried rice, to shell out presumably hard-earned hard cash in a spectacularly futile attempt to evaporate the offending issue, considering that not only it’d fuel rumor mill further, the report could easily be accessed online in this digital age anyway. Moreover, some copyrights-ignorant schmucks would quickly make photocopies and retail them at every street corner, as they evidently did within hours after the magazine magically disappeared.

The cake on this klutzy comedy week, however, is won by the flaring verbal joust as National Police, exercising their rights notwithstanding, amid their 64^th anniversary nonetheless, decided to sue Tempo, and here goes the kicker, for the cover illustration. Of all the flame generated by the 9-page reportage! For those who haven’t seen it, see attached the fussed-about cover of a man resembling uniformed police walking off three plump, perky, pink piggybanks on a leash. The spat in summary:

Police: Those pigs are an insult!
Tempo: They only depict piggybanks, really.
Police: But in this country, the ceramic vaults for kids to save pennies (celengan) are shaped like chicken, so the pigs are baseless and hence insulting!
Tempo: Well, if you want to go down that road, celengan is derived from the word celeng (slang for ‘pig’), anyway.
Writers: So, do we start translating celengan to chickenbank from now on? Or should someone consult the chickens first?

Happy anniversary to police corps! Along with sincere thanks for some hardwork that’s been delivered, I humbly remind here that trust must ultimately be earned. Corruption fight needs clearly measured results beyond agreeable magazine covers or disgruntled general singing like canary to media. And the longer you stand idly, the more thugs seizing control and robbing you off public trust. Please watch Alejandro Amenabar’s epic Agora-- see how the FPI-like parabalani eventually managed to publicly humiliated a lawful ruler by ordering him to physically kneel in submission. Not so funny anymore at that point eh, generals?

To the silent Indonesian mass, now that we’ve all had a good laugh, wake up! Indonesia is progressing, with long homework list. There are more pressing issues like crumbling school buildings, depleting ozone, hospitals for remote islands, teenage drugs, or city mass transportation. This busy, bustling democracy has no room for petty pimples like FPI.

To me a practicing Muslim, FPI was never defenders of Islam, and neither should you be manipulated nor keep your silence anymore! Islam’s image actually needs defense from their cheaply employing Islamic wardrobe and sacred terms, like Allahu Akbar, whenever they swing arms to hurt others. Seriously, watch Agora and see outnumbered academicians stood in Serapeum library, literally the last bastion of knowledge, as uncounted mob circling closely and pelting stones, then asked in eerie disbelief, “Since when they’ve become so many?”

They have become so many since we let them, filthy thugs in any coat, to exist for so long. It’s bloodier than a root canal, and that’s no comedy at all.

Jakarta, 4 July 2010

Whither Macroeconomics?

Yesterday, I went to the Second Story Secondhand Bookshop warehouse. The front store is located at Dupont Circle, but the warehouse Maryland, about one mile away from Ujang's apartment -- and he unbelievably has not came to that place yet :-D. It was not so much like The Strand of New York to find new books -- although they have some review copies --, but it's the place to look for some standard/classic off-print -- important stuffs that have been published in, say, the 80s or 90s.

Moreover, if you are a macro person, that's the place where you can still find a copy of Sargent-Wallace, or Tobin, books.

Looking at the economic section's shelf, it strikes me that the Reagan period (the late 70s and early 80s crisis) has produced substantial books on macro discussing the business cycles. It was a war between Lucas/Sargent/Wallace versus Solow/Tobin/Modigliani -- all are the giants of the professions. But the puzzle is that in recent crisis of the 2000s, macro people have been strangely silent. No books come out yet, so do the published article.

I mean, look at a series of respectable books on current crisis by Raghuram Rajan, Gary Gorton, and the likes. Mostly micro - with an exception of, probably, Shiller and Akerlof's Animal Spirit, which is, to me, more a sketch of reminder that uncertainty matters than a neat macro explanation on what is really going on.

Maybe macro people are truly caught on (and complacent about) the Great Moderation period, in which they think they knew how to tame business cycle -- and by that, leave the once a lively discussion on equilibrium, expectation, and market clearing process.

Is it the end of macroeconomics we at the Cafe used to know it? I don't know. But surely some books from macroeconomics perspective dealing with the latest crisis would help to confirm that macro is still able to generate ingenious ways of seeing things. The magic that in the past had been amazingly spelled out by Keynes, Friedman, Lucas, Tobin, and the likes.

Nothing, really

Hi, I am at the public library -- a great shelter to avoid scorching heat. Not much to tell lately. Everyone is into the World Cup -- the FIFA's World Cup as those TV anchors here call the event. Probably talking about the World Cup is of little use and value added because everyone has already had her/his own related info needed. This is four-yearly event when everyone can entitle themselves pundit, and everyone else don't care about such punditry nor the biases.

So really, this is a posting about nothing (to follow the abstract of a funny paper by Dixit)

Is Economics Hard?

Recently, there has been a discussion in the blogsphere, sparked by a short essay of Kartik Athreya: Economics is Hard, Don't Let Bloggers Tell You Otherwise.

Well, economics is hard, at least for me, and I believe for the baristas here too, who have spent days and nights trying to understand one chapter of, say, a standard micro or macro grad textbook.

Then, why the baristas here seemingly make economics fun?

Because it is indeed fun, and we want to share the fun to you all, including the non-economics students, by skipping most of those technicalities and jargons. We at the Cafe want to convey a simple message that you can use economics to see things differently. The most politically motivated purpose is probably just to warn you against ill-informed press corps.

I have no illusion that hanging out in the Cafe would substitute for a proper formal economic education -- but it is equally annoying to see some people believe he/she has mastered economics simply by reading one or two popular books by Stiglitz or Krugman. This is why sometimes we launch a sharp-tongued attack against his/her arguments (note: the argument, not personal)

Is econ hard? Yes. So are anthropology, political science, English literature, biology, and any serious attempt to understand things rationally and systematically.

Supposedly Summer Reading List

OK, most of you will be glued to TV watching the World Cup. Aco has been deriving some lemmas regarding optimal direction for penalty kick, taken from Levitt paper. I know, you may think we economists have funny way in seeing things, including football, but, sorry, just live with that, OK? You will get used to, as many of you already did.

In the meantime though, the Cafe is preparing to buy books for your summer perusal. Here is the list
1. Fault Lines, by Raghuram Rajan
2. The Company of Strangers: A Natural History of Economic Life, by Paul Seabright
3. The Upside of Irrationality, The Unexpected Benefit of Defying Logic at Work and at Home, by Dan Ariely
4. Zombie Anthology -- ask Ujang for detail
5. Primates and Philosophers: How Morality Evolves, by Frans de Waal

And, oh, I start to, -whaddayacallit?-, tweeting.

What 15 bn IDR Can Make

If I had 15 billion IDR (1.62 mn USD) at my disposal, I'd buy a new espresso machine.

With that, I can make a new brewing called espresso aspiratiano a.k.a pork-barrel, sold exclusively to Indonesian lawmakers.

There Is Something About Bagel

I was sitting in a bagel shop this bright mid-morning with Lintar. Overlooking an intersection in a typical suburb scene, you can always tell some of people's psyche from traffic and city landscape -- the way Sartre did on New York city some decades ago. Or, you can do it by observing simple things like a cup of coffee and donut, like what Umar Kayam did on the same city.

And if you come to think about it, I guess 95 percent of our life and thinking is spent for things that are trivial and, quite simply, light, in Kunderan sense. Like bagel with sun-dried tomato shmear -- or a lone old man sitting behind me with his iPad on, reading probably today's WaPo's gripping stories on retaliative killings in the southeast neighborhood.

All these make the idea of politics is getting harder to comprehend. It gets me thinking why people with vast resources in his/her hand are interested in politics. After all, a bagel and a cup of coffee cost you about two bucks and they can make your day.

Maybe, for them, it is a game worth playing and winning. But for what? Is evading tax a good game? Is crushing many people's hopes for a long-awaited reform a game worth playing?

Those politics and the following rhetoric also tend to suffocate. I am recently reading the biography of Marx (Karl, not Groucho, nor Richard). Putting him into perspective as a human being, albeit brilliant, really lifts up the heaviness of Marxist ideology. With politics, the complexity of a human's mind is wrapped into talking points and, in many cases, guns. Of course, this is not just the case for Marx, but also for many others brilliant minds whose thoughts are evolved into political movement.

Enough said. Moral of the story is that, perhaps, even Noam Chomsky and Gary Becker need to sometimes just have good bagel and coffee.

In the meantime, let the Cafe play jazz rock and roll to you, now. This time, double LP of Exile on Main St. by The Rolling Stones.

A Short Note

It's been quite awhile. We, the baristas, are busy doing something else -- like twittering or discussing Indonesian public debt somewhere else. Kate, I believe, is planning to visit DC this summer. She wants to see The Phillips Collection.

Maybe it is time for Naryo to start delivering his kind of brew. But he said that he is not yet confident about it and still needs some time to master his skill on wit and rhetoric (and conspiracy theory) under tutelage of our friend Haryo Aswicahyono.

We'll be back with another economic serving soonish. I know Ape is working on something about the monopolistic nature of medical doctors' market in Indonesia.

In the meantime, why don't you spend some time in this long weekend pondering this Oxford University's All Souls College essay exam?

The Day I Morosely Picked a Side (by Lynda Ibrahim)

Dear all,
We are sad that the country's top reformist is finally leaving us. Sri Mulyani Indrawati is our role model, as we believe she is to many of you, friends. While wishing her success in her new endeavor in Washington DC (Rizal, Ujang, please take care of Mbak there, will you?), Cafe Salemba would pay tribute to her. Today, Lynda Ibrahim share hers with us. Kate



THE DAY I MOROSELY PICKED A SIDE

-Lynda Ibrahim-

One rainy afternoon in November 2008, I attended a birthday soiree in a South Jakarta’s novelty patisserie-cum-café. The US credit crunch was fast snowballing into a global financial crisis, and everyone was bracing for the worst.

On domestic front, Finance Minister Sri Mulyani Indrawati was persistently defying all kinds of pressure to bail out Bakrie-owned mining company Bumi who got itself into a mess by, in laymen’s term, having borrowed more than its assets could ever pay back for. She rightfully stood her ground, declaring that her main job was to manage or safeguard the country’s assets and created policies for market player, not to rush rescuing the assets of market players who got into trouble. Or as I unreservedly added—a player who got into trouble due to their own imprudent corporate practices and complete disregard of Corporate Finance 101, duh.

There were three male guests in the soiree that I found myself debating with amid lattes and piecrusts. A man who might know more than he could say, a man who wanted to know more than what he said, and a man who wanted to be known for knowing everything and everyone. Despite the psychodynamic sidebar, they shared an opinion that, after crusading against corruption and publicly taking an opposite stance from the Bakrie the Behemoth over Bumi, in addition to having previously refused to open the state’s coffers to compensate for Bakrie-owned Lapindo Brantas’ mudflow victims, Mulyani had garnered enough enemies that her Cabinet days were numbered.

Fueled by linear logic, trust of human intelligence, conviction of greater good, and perhaps too much caffeine, I ardently argued that our dear President certainly understood that not only his Finance Minister stood her ground for some valid, nation-serving, reasons, she was also a highly valuable asset on his Cabinet who was valiantly trying to reform deep-corrupted institutions under her ministry. An uphill battle that was long overdue, until she stepped up and shook down both Custom-Excise Office and Tax Office, Indonesia’s most notorious devil’s lairs of corruption. The boys called me over-optimistic, and I called them status-quo suckers.

SBY got reelected on a landslide about a year later. Indonesia was relatively shielded from the global crisis’ worst nightmares thanks to Mulyani’s rock-solid acumen and policies. Seemingly oblivious to the plentiful of accolades, Mulyani went tending to her business, riding the reform wagon further up and around. I thought about those three doomsayers from the birthday soiree and was seriously tempted to call and sing ‘nyah, nyah, nyah’—but resisted and danced to Mamma Mia tunes by my living room instead.

What a difference six months make! Last Wednesday, still limping from a podiatric procedure, I almost tripped when news broke that Mulyani stepped down to work as World Bank’s Managing Director. For two days it was all hazy for me, and it wasn’t the work of the painkiller prescribed for my left sole, but because I just couldn’t settle with the issue. I refused to believe that, after showing unwavering focus and unflagging spirit in carrying duties, even during months-long Centurygate that soon reshaped into a personal vendetta against her, she just went off to accept some job to enjoy a greener pasture, to spite the seemingly thankless stakeholders, or as insultingly suggested by some political potheads, to flee the country avoiding legal battle. Probably the same potheads who said that the prayer beads she was seen clutching under desk during Pansus hearing as a sign of fear—whereas I saw it plainly as a pacifier in dealing with loaded questions and hostile attitude served before her for 12 straight hours. Heck, there were some blatantly nasty moments then that, had I been her, and clearly this is why she’s the Minister and I’m not, I probably would’ve leapt off the desk in an ass-kicking, take-no-prisoner, Jennifer Garner’s Alias way.

The weekend prior to Mulyani’s resignation I just had watched Alejandro Amenabar’s latest epic, Agora, which starred Rachel Weisz as Hypatia, the fourth century’s renowned philosopher and astronomer who taught in a much-acclaimed science academy under the dome of the legendary Alexandrian library. As a remote Roman province, Alexandria was a melting pot that wasn’t spared from the embroiling conflict among the old guard of pagan belief-- mostly Roman-educated and Greek-influenced scholars such as Hypatia--, the fast-growing Christians coming off centuries of oppression and now armed with their FPI-like parabalani, and the struggling Jewish population.

Religion or realpolitik, Agora’s blood-curdling scenes that were eventually followed by blood-spilling kind showed that once a leader standing idly as a limited group’s vested interest was schemed as public issue and maneuvered onto public stage, bolts would unscrew sooner than Paris Hilton undress, and by then it would be too late to enforce any legitimate law and order unless, or even in spite of, a sacrificial lamb being served up the platter to appease the berserk beasts. Ancient Alexandria and modern Indonesia have so much in common I still have chills down my spine 10 days after I watched the movie.

This past week there have been so many rumor swirling around, ranging from the ‘hush-hush’ to the ‘you spill, we kill’ variety. Maybe this was the graceful exit for her, or the most amicable solution for many. Maybe she is being ‘safe-kept’ until sensibility returns. Maybe she retreats to regroup, so she can return for a bigger ticket in 2014. Everything and anything is possible at this point— but to me one thing is crystal clear. I grew up dancing and I can spot choreography, however subtle, when I see one. And this was one.

I started out objective when the whole Centurygate unfolded. I admittedly got disturbed by the Salem witch trial style that some Pansus members were demonstrating during the hearing week that I made my thoughts public, yet I still strived to remain fair. But somewhere along the way gloves have been off, claws are out. And although I didn’t draw the first blood, on the morose Wednesday May the 5th, I got to pick a side.

And as I understood, so did many previously non-committal, middle-ground mass.

Hence, for those of you dancing victory laps screaming ‘rah-rah’ around the bonfire, just thought you guys might want to know.

Jakarta, 10 May 2010

RIP: Hadi Soesastro (3)

I believe it was in 2002, in a discussion at the CSIS on, of all topics, Hayek, that I came to know Pak Hadi personally and I am grateful to have that opportunity for many reasons.

As a scholar and intellectual, no doubt he was among very few Indonesians that the world highly regards. The title of one of Asia's best minds is also of no exaggeration. In some international meetings and conferences I happened to join in, everybody seems to know Hadi Soesastro and want to talk to him.

He was also a very fine economist with a strong awareness for political constraints and context that made him an effective consensus maker. In particular, Pak Hadi was very well versed in trade and technology issues -- two hot topics in contemporary Indonesian economy; but he seemed to avoid (media) controversy and quietly worked in an unassuming way in trying to materialize the benefit of trade and technological progress to the country.

His passion to international cooperation also showed that he believed that the country can only move forward by getting along with the world's community -- a perspective that, alas, many of the country's leading figures tend to underestimate and dismiss, probably due to some inferiority complex. But he was no self-willed and this is why you might find him talking to the other discontented parties, sincerely listening to their concerns -- no matter how absurd they appeared to me.

Above all, Pak Hadi was a very good mentor and teacher. From friends at the CSIS, you would hear that Pak Hadi had put lots of confidence to his younger colleagues to present paper or attend prestigious meetings here or abroad. But his attention was not limited to his home-base. I am not working for the CSIS, but that was what he had done to me, too.

Pak Hadi sent me to one of the earliest conferences where I present paper -- the ASEAN Economist Forum. Probably little that Pak Hadi knew, I was nervous like hell. He also asked me to join the working group for manufacturing industry policy of the Indonesian Economist Association (ISEI). I still remember how I felt in awe sharing the same table with Thee Kian Wie and the likes prominent economists discussing (more accurately, listening to them talking about) what happened to our manufacturing industry.

For that, I sincerely thank Pak Hadi in believing in me as then a young economist to gain academic and policy-related experience. Those exposures mean a lot to me, Pak.

The last time I saw Pak Hadi was in the PECC meeting in DC in which he also asked me to join. Among other things, we talked about food. Pak Hadi knew good food and he suggested me to visit Central where the food is good and --this is important for student like me-- the price is affordable.

He was always modest. I was surprised to learn that Pak Hadi, after the meeting, continued his trip to New York City by taking Chinatown bus with his son late at night. The reason: for him it's comfortable enough and inexpensive. I am speechless. With his stature, taking Acela would not be too much, but his modesty was really admirable.

Last thing, I regret that I would not be able to fulfill my promise and take him to Ray's Hell Burger next time he visited DC, but I guess, Pak Hadi, you will always get the better burger up there. And the ice cream too.

So long, Pak Hadi. May you rest in peace.

RIP: Hadi Soesastro (2)

As a rejoinder to AP's obit, please allow me to copy-paste my twits from Twitter this morning.

1. 1. I took his class, "Technological Progress and Economic Development".
   2. He tought us how you could push the production possibility frontier by advancement in technology
   3. Yet you should not pursue technology without considering the entire economic development stage
   4. He was a great teacher. Soft spoken, fatherly. At times we held the class in CSIS Tn Abang. He made us feel at home
   5. With Mari Pangestu and others he brought CSIS up to international calibre. He was respected as one of the leading economists in Asia
   6. Hal Hill (ANU) dubbed him as 1 of 4 economists saving Indonesia in the aftermath of 97/98 crisis. Others: M Sadli, Thee K Wie, Boediono
   7. Seeing him with his mastery of the topic, we were all proud. Of him, and of the country.
   8. Last September we went to Tokyo. He briefed the audience on the current geopolitical landscape of Asia and the rising Indonesia's role
   9. In that Tokyo event he looked so healthy, after having the cancer for quite some time
   10. Last March he attended a China-Indonesia event in Beijing. To my regret, I couldn't join (was in Incheon). His condition dropped again
   11. After Beijing conference his condition continuously worsened. He had to cancel many trips and schedules. Yet, he's a man of commitment
   12. He texted me Apr14 "Maaf Sdr Aco, saya krng sehat, tdk bisa hadir dlm Sadli Lecture bsk". I always protested the prefix "Sdr" :)
   13. He also emailed us "Maaf, sy tdk bs selesaikan chapter saya untuk buku Pak Emil". We understand, Pak.
   14. Then came the coma. As I visited, he was all tied up to machines and cables. Brain hemorrhage. My heart ached, eyes teary.
   15. April29 last week was his 65th birthday. Now he's gone. Selamat jalan, Pak Hadi
   
   

RIP: Hadi Soesastro

This morning I was shock when my wife Juli found out in Facebook that Hadi Soesastro passed away. We've been anticipating this when we heard pak Hadi was admitted to Pondok Indah hospital in a deep comma following a brain hemorrhage. But still, it was a sad sad news.

My last communication with him was in April 15th. I asked him if he could write an introduction for my 'book.' He replied shortly, "Please send me your draft. I'll see what I can write." Two days later he was admitted to Medistra Hospital because his Hb dropped. He left Medistra a few days later, and he was OK. But then in April 24th I heard he fell into a comma and rushed to Pondok Indah. He stayed unconscious until his last day.

Pak Hadi has been battling against his prostate cancer for the last few years. He's been back and forth to Melbourne for his treatment. In an email he sent in December last year, he mentioned that the cancer has been expanded to his bone. A radical approach is needed to remove the cells. I sensed an admission that he's done almost everything, and whatever comes next would be beyond what human can do. But at the same time, it was a very positive and inspiring email. Yes, anybody who knows him would say that Hadi Soesastro is one of the most positive thinking person.

Everybody can tell how a great economist and researcher pak Hadi is. But to me and all CSIS current and former staffs, and I believe to many other people outside CSIS, our interaction with pak Hadi is much more than a professional one. He's been a big brother or father (grandfater for some) figure for many of us. He was a senior, a mentor. But he preferred to be considered as friend or colleague. In 2001, in a seminar at CSIS, I addressed pak Hadi as 'my boss' to Julia Suryakusuma. Pak Hadi corrected me. "Colleague," he said.

You can see him during a session break in may CSIS seminars, even the international ones, wandering around with a bell, urging people to start the session. Yes, him, the Executive Director. He is also a warm figure in the office, and outside. As an Executive Director, he regularly come upstairs to meet us, his junior staffs. Sometimes with an information about a scholarships, a seminar, or even just to say hi, chat with us, and even... gossiping. In many occasions during my study abroad, he'd invite us to visit his place. As usual, he's always been a nice and entertaining host. His oxtail soup in Canberra (around 1999-2000), or his mushroom and salad in NYC (New Year's Eve 2006) are some example.

In autumn 2005 pak Hadi and bu Janti visited Harvard. Juli and I visited them in the hotel at breakfast -- we planned to take them around Boston. Then we learned the couple's habit of 'stealing' bread rolls from the hotel. "What for?" we asked. "To feed the birds in the park," they answered. So then we went to Boston Common and feed the birds with the bread they brought from the hotel. After that we invited them to spend a night in our small apartment. Pak Hadi agreed, in one condition: it didn't create any hassles for us.

I can go over a very long list on his accomplishment, on his warmth and greatness as a person, and so on. But still that won't be enough to describe him. In short, in many ways Hadi Soesastro is a person you'd want to be like.

One last thing. In 2006 when our daughter Rara just joined our family, he presented a Teddy Bear. We named him 'Teddy Hadi' or 'Hadi Bear' (now I wonder why it was not 'Teddy Soesastro'). Someday Rara will learn that it was a precious gift from a great person.

Don't Tell Kate

that three of her five full-time baristas just have had a rendezvous in a bistro and rather obscured cafe far away from Salemba.

It's labor day, for crying out loud.

Esther Duflo

I first met Prof. Duflo in 2004 when I was a student at the Harvard Kennedy School. She came as a guest lecture in our seminar series. She presented her work on the impact of a quota for female politician in India's local government.

During my two-year time in Cambridge I hadn't had too much opportunity to interact with her. But I learned much about her works and MIT-based Poverty Action Lab, the organization he leads with Abhijit Banerjee and Racherl Glennerster. Her most cited work was, of course, her dissertation-turn-seminal paper on measuring the return on education using Indonesian data. In the paper, she exploited the fact the SD INPRES policy in the 1970s could serve as a exogenous quasi-experiment. By comparing the average years of education and wages between the pre- and post-INPRES cohorts, she corrected the endogeneity and omitted variable biases.

In 2008 I had a privilege to get involved as one of the te aching assistants in the Poverty Action Lab's short course in Bali. There I had some chance to discuss some technicalities in doing randomized experiment studies with her and her co-workers. I also learned that she likes to go hiking and mountain climbing. In fact, after the Bali course finished, she and Pascaline Dupas went to Lombok to climb Rinjani.

This week the American Economist Association awarded her the John Bates Clark Medal (see the story here and here). It is a highly prestigious award, given every 2 years to "American economist under 40 who have had a significant contribution to economic thought and knowledge." (Note: Prof. Duflo is now 37). Former medalists include Milton Friedman, Joseph Stiglitz, Paul Krugman, and recently Steven Levitt, Daron Acemoglu and Susan Athey. Duflo is the only second medalist after Susan Athey. And in the past, Clark Medal is a good predictor for winning the Nobel Prize.

Prof. Duflo had her Ph.D from MIT, and has been working there since then. In the US academic job market (in economics), it is very unusual for a Ph.D to work in the same institution immediately.

If I can summarize her contribution, it will be 'helping to understand which development policy or initiative work, and measure the impact, using randomized experiments.' True, there has been so many debates over the use of randomized experiments. The fact that is has been debated only shows its importance. Although Prof. Duflo was not the inventor of the technique, she and her co-workers are the ones to make it popular not only among academia, but also for policy makers and pracitioners.

For those who have always been skeptical, even hostile, to economics and economists, please spare some time to take a look at her and the Lab's website, and see how diverse the discipline has been.

And The Medal Goes To

Esther Duflo of MIT. She obviously very well deserves for the medal indeed. Congratulation.

Your barista Ape, her fellow randomista, will probably serve you a review on what Prof. Duflo has done and brought her to the prestigious John Bates Clark Medal.

Torture of Book Sale

I am at my local library now and could not decide what to buy from their ridiculously low-priced ongoing book sale: Goethe's The Sorrows of Young Werther, Carlos Fuentes' A New Time for Mexico, or Toni Morisson's Sula.

One thing I know I won't take is anything from Michael Moore.

I think I'll go for Goethe.

Update: Goethe's Werther has gone. No wonder, it costs just 50 cents.

Who Wants Industrial Policy?

Dani Rodrik of HKS is one - with some twist from the old definition.

Nonetheless he said:

The standard rap against industrial policy is that governments cannot pick winners. Of course they can’t, but that is largely irrelevant. What determines success in industrial policy is not the ability to pick winners, but the capacity to let the losers go – a much less demanding requirement.

Uhm, I am not convinced. Letting the losers go is very hard, and probably equally demanding with picking winners. I made a serving in this Cafe sometime ago, arguing that old policies don't simply die.

Which books?

Dear Kate,

I'm off to Kelapa Gading today. The Gramedia there runs a handsome price discount. Any suggestion on books?

Thank,
Bookbuff @ Karet

Dear Bookbuff,

First, forgive me that I doubt you're a book buff. Book buffs don't ask suggestion on books. They know what they want.

But I'd tell you anyway what I just did in my latest shopping spree. I bought SuperFreakonomics (Levitt-Dubner), Nudge (Thaler-Sunstein), Animal Spirits (Akerlof-Shiller), The Return of the Great Depression (Krugman), and The White Tiger (Adiga). All but Tiger are with econophone, but Tiger is equally entertaining - it's the winner of 2008 Man Booker Prize. My usual formula in bookshopping is 4:1, four econ and one literary work.

Oh, while we're at it, why don't I share with you what I would not buy? Here goes. I don't buy books of authors who put their academic titles on the front cover. They're usually bad bad bad. I don't trust self-help books. And I don't like books with dry title.

Finally, I also judge books by their cover. And sometimes I buy books just for the sake of ridiculing them: John Perkins, Naomi Klein to name two.

Happy shopping,
Kate

For Auction: Freshman Seats

Greg Mankiw told us that Harvard admission committee has decided to auction off 100 freshman seats for the next academic year to overcome their budget shortage.

Of course, you may want to be little bit careful in reading the date of such announcement.

On the second thought, the idea is not as outlandish at it may seem. What about the FEUI follows the suit and would launch an open auction for, say, 30 seats next year -- and use the money to buy books for library and send their junior lecturer to study abroad?

I think it is a good idea as long as they make it open and transparent. On a smaller scale, they can try to auction off seats in Aco's class -- I wonder how much the true market value of his lectures is :-D

What do you think?

Pricing the environment

Dear Kate,

I gather, you took a minor in environmental economics. I once heard that you guys like to value clean air, healthy water, sequestered carbon etc by putting a price on them. How do you do that?

TreeHugger @ Borneo


Dear TreeHugger,

There are many ways to do that. Let me take one here, called hedonic price estimation. You are Foke that governor. Suppose you want to clean the Jakarta's air. Calculating the cost is easy: sum up the prices of labor, equipments, capital, etc. But you would need an estimate of benefit. After all, you can only approve a project when its benefit outweigh the cost - especially because you're using public money from the taxpayers, you would be held accountable. Measuring the benefit of cleaner air is not straightforward, because air is not market good ie it doesn't have a price tag ready like the t-shirt you buy in Plasa Senayan.

This is where hedonics comes into rescue (I'll tell you someday why it is called 'hedonic' approach). It measures the benefit of non-market good via the price of a market good. How? Think about the time when you were about to buy your house. What were your factors of consideration? Of course you would care about its price, its structure, its location, its neighborhood. But you also care about the environment, the air right? With only price and environment vary, other things being the same, which one would you buy: House A, cheaper but with dirtier air, or House B, more expensive with cleaner air? Keep in mind, life is about choosing and tradeoffs.

That is what hedonic approach exploits. It tries to extract the environmental part in your set of consideration when you buy a house. Using an advance econometric approach, you set all variables but price and an environmental proxy unchanged. Then you can see what a change in environmental variable would impact on the house price. Then you multiply this number by the population house in the area. This is the social benefit of having clean air in Jakarta.

You want more? Ahem, hire me :)

Greeny yours,
Kate

Twitter

Hi, I'm officially on Twitter now (@katesalemba). As in the other social networkings, I'm a latecomer. I gather, the baristas are there too: Aco (@acopatunru), Ape (@ari_perdana), and Ujang (@ujangw). Rizal is still in denial, while Sjamsu 'can not handle one more additional networking' (what, is he Paris Hilton or something? Haha).

So, let's see how this Twitterati plays out. Wanna bet how long I'll be ... what's the term, tweeting?

Twittery yours,
Kate

Gary Becker's World View -or Something Like That

One feature I like from Chicago political-economy school is their optimistic view on market-like competition and the ability of people to generate it --regardless of any (usually government) attempt to suppress such competition.

Gary Becker interview here is one example. Unlike the right-wing radicals who saw the passing of healthcare bill as a doomsday for America, Becker remains rather optimistic that voters as well as competing interest groups generally would place more realistic assessment and control on this political and politicians' product.

I share his view on the role of interest groups competition - including on the latest Pansus brouhaha.

My favorite lines, however, is his explanation on people's anti-market bias. Becker says at ease:

"There's one bias that we're up against all the time: Markets are hard to appreciate. People tend to impute good motives to government. And if you assume that government officials are well meaning, then you also tend to assume that government officials always act on behalf of the greater good. People understand that entrepreneurs and investors by contrast just try to make money, not act on behalf of the greater good. And they have trouble seeing how this pursuit of profits can lift the general standard of living. The idea is too counterintuitive. So we're always up against a kind of in-built suspicion of markets. There's always a temptation to believe that markets succeed by looting the unfortunate."

Yes, indeed market is hard to appreciate - mostly based on appeal to emotion.

Akerlof and Kranton's Identity Economics

Do economists simply disregard social norm in their analysis?

Contrary to common belief, economists have tried to incorporate social norms in at least three ways. First, in collaboration with psychologists, they tried to model an agent's maximizing utility behavior with additional constraint of psychological bias. Second, they also tried to take into account other's utility function into the representative agent's utility function; known as endogenous preference approach.

This first two approaches still hold up a single representative agent behavior as micro-foundation of a social phenomena.

Akerlof and Kranton, in their latest book, Identity Economics, 2010, offer a different perspective. They use more than one representative agent and respective utility function (they called it identities) in looking at a certain social pattern.

I have read this interesting and readable book for the general public, but haven't had time to peruse the more technical academic journal articles behind this book --those on the bibliography. With that in mind, this is my knee-jerk reaction: how do we decide the number of agents' types and utility functions we need to put into account in analyzing, say, gender and labor market in Indonesia? Two, three, four? What is the general rule for determining that number?

Nevertheless, the book shows that economics, after all, has never been an isolated subject full with stubborn students. It did not stop with Milton Friedman's book on Price Theory.

Obamacare, this week's name of the game

Obamacare, or the triumph of Obama/Democrat's health reform bill in the House is the name of the game this week. (Especially after Liverpool's loss to MU).

The whole process is interesting to follow. Not for its 'heroic' moment for Democrats. Not for the contents, which I am still learning about. Well, I like that there is finally an attempt to fix the problems in the US health care, including the market failures associated with it. But, like Greg Mankiw wrote, we still need to understand the trade-offs of each policy choice.

For professional purpose, I have been trying to follow the issue, read here and here. Oh, by the way, the blog is my new playground -- a nerdier version than this Cafe.

I was entertained by how the politics are played in Washington. Not because it's beautiful. On the contrary, we've seen the good, bad and ugly side of Washington politics. Where ideas, idealism and ideology meet pragmatism, negotiations and bargaining.

Also on what I considered as 'the cattenaccio of politics' played by Obama. He distanced himself from the micromanagement, orchestrating the Democrats in both chambers of Congress to get bogged down with the nitty-gritty details. When Mass. senate seat went to Republican Scott Brown, eliminating Democrat's supermajority, they changed the tactics. House voted for an earlier Senate version, so they don't need another round of vote from the Senate. Big kudos to Nancy Pelosi who led a successful army of arm-twisting, nail-pulling efforts, making sure the bill was passed.

Now, compare that to the Pansus drama...

Sure, some friends argued it was all about ideology. It was the triumph of government over market and big corporations. Well, fine if you think that way. But for all the pro-government enthusiasts, two things are missing from Obamacare: a government-run commercial insurance and single-payer system.

Ah, and of course some DPR members failed to get the story right. This guy screamed Obama's Asia-Australia trip delay was a sign of diplomatic failure. Our government (SBY, that is), failed to convince the US that Indonesia is safe. Well, what can we expect?

Undergrad Student The Cafe Would Love to See More

I used to think that going to Juilliard and studying whatever there is always more fun than taking economics. Thus it came as a bit surprise that taking economics, after all, is more interesting than studying violin, even at Juilliard, at least for A.K Barnett-Hart.

And more importantly, her excellent undergrad thesis on Collateralized Debt Obligation (CDO) is indeed worth perusal (see the link on that WSJ piece)

The Cafe would like to see more undergrad students like her, not those who love to throw stones at KFC or fight against the police. In fact, the Manager is thinking to give free coffee to students who produce an A+ thesis.

(HT: Greg Mankiw)

On Obama's visit

Visitors of this cafe might remember, I wasn't very thrilled by Obama when he was first elected (as channeled by the guys here in Warung Sebelah). But I shared many observers' view that he's much better than Bush.

Now, with Indonesia's rising role in international fora (e.g. G20) as well as its impressive economic achievement (e.g. upgrades by Fitch, Moody's, S&P), I think the Obama factor has become even more important than before. Yes, there's an ongoing change in the geopolitics in the area with China's leadership esp. as the locomotive of the so-called regional production network. But issues like currency talk, global economy rebalancing with US and China will be around for quite a while. Add the tension between China and Japan on ASEAN+3 or ASEAN+6 to it, we would all see that Indonesia should really take these other countries very seriously. And that includes giving proper respect to their leaders, including that of the US, namely Obama.

But why am I bringing this up? And why here in the cafe rather than there in the boring and pretentiously serious Exegesis? Well maybe because I'm sick of this die-hard Americo-phobia displayed by many elements in the community, e.g. HTI and some other religious-based groups. Ah yes, some lazy students too plus narrow-minded media. So I'm saying this with the usual cafe angst.

And I post here so as the other baristas will chip in :D

On Good Coffee, Jazz, and Economic Data

Let us discuss those things this Cafe loves to talk about.

First, coffee. Finally New York City took their coffee seriously. This is actually a problem for almost all of American cities, that is, low per capita good coffee places. Come on, if you think Illy is the best coffee you can get, then you're in a serious need for better taste caffeine.

Unlike their counterparts in Europe, America needs much more good coffee -- and bread, I must add.

Second, jazz. Brad Mehldau is about to issue a new album, Highway Rider (HT: Sisil). It looks promising and you can listen to some of the sample here. Mr. Mehldau is one of Cafe Salemba's favorites for contemporary jazz --along with Joshua Redman and Branford Marsalis, to mention some. Of course we also listen to Vampire Weekend and Arctic Monkey, while on Lady Gaga, there's been a wide disagreement amongst us.

In this new album, apparently Mr. Mehldau is back to his old style as in Largo album. He seems indeed really good in expressing the melancholy of journey in life.

Third, economic data. Google launched visualization of the World Development Indicators subset (HT: Tyler Cowen). Any serious development economist must have been familiar with this data set at one point or another. The visualization is fun too. You can now see how good (or bad) Indonesia is, relative to other countries, using a real data --not an appeal to emotion.

(Not) the Java Jazz

I've overheard that the Java Jazz Festival 2010 was disappointing.

Well, I am not sure if it's true. But anyway, you still have us, the Cafe, keep playing the jazz as we know it.

Here some for you, a real cool (and touching) piece from Dave Brubeck's Allstars Quintet, The Jazz Ambassadors of US Army Field Band, and The Four Sons of Dave Brubeck, played the medley of Unsquare Dance, Kathy's Waltz, Take Five, Blue Rondo ala Turk, and Happy Birthday, honoring Dave Brubeck at the Kennedy Center, December 2009.

And John and Toni who, again? :-D

There Are Many (Much) Better Reasons to Hate Economics

Emmanuel Subangun wrote in Kompas 2/27/10 op-ed:

As recognized by anyone who ever attended university and had economics course, economics suffers from two plagues. First, to support the claim of economics as a science, the limitation has to be clear. In economics lingo, economics has to be separated from other social facts -- boldly called as, from Latin, ceteris paribus. From this point, economic model is born and, alas, all economic policies are based on models generated this way. The second plague, economics(sic!) is not willing to be registered as social science, so that (sic!) it self-regards as a star (science) that has best understanding on social issues. This creates a superiority complex.

Geez!

Those who ever took econ courses (and elementary research methodology) seriously would understand that ceteris paribus doesn't mean a separation from the so-called economic and social facts. Ceteris paribus (or all else being held constant) means that when you try to explain the effect of a change of variable, you assume that other variables are constant.

Let me repeat this clearly: This has nothing to do with separating the facts, let alone between economic and non-economic facts.

It is about how to tell the effect of, say, proper Econ 101 education, on ability to write a well-informed op-ed. In your observation, you can not really tell it if you do not hold other variables (e.g overall educational level, writing skills, exposures to relevant readings, political bias, the number of economist friends, etc) constant.

Moreover, who said that economists do not consider non-economic facts in their analysis ? Mr. Subangun probably needs to read a whole series on non-economic factors in economics at the diskusiekonomi blog.

On his second claim that economics refused to be categorized as a social science, well, it surely has different methodology than, say, sociology, but it is a social science. Suppose it weren't a social science, does it mean that now we have social sciences, natural sciences, and economics?

Then Mr. Subangun also thinks that Boediono and SMI represent scientific economics, while Pansus common sense. The former fails to convince the latter, hence political communication dysfunction.

Common sense makes you think that the sun revolves around the earth.

Beside, Pansus does not use common sense, but play ill-informed politics. They just either, like Mr. Subangun, don't get the economics right, or, worse yet, for whatever reason, refuse to take well-founded economic arguments for bailout.

Additional flaw: From the quote, Mr. Subangun argues that economists want to separate non economic social facts; but at the same time he suggests that they claim to have best understanding on social issues. Alas, this argument is a contradictio in terminis.

Happy Birthday, Village Vanguard

Yesterday, the Village Vanguard had its 75th anniversary.

To celebrate, Cafe Salemba plays some memorable live recordings from that mecca of jazz. Here is the line-up and you can listen to the youtube link we put on the song's title:

1. Sonny Rollins' Old Devil Moon, from the album A Night at the Village Vanguard, 1957
2. Bill Evans' Alice in Wonderland, from Sunday at the Village Vanguard, 1961
3. John Coltrane's Spiritual from Live! at Village Vanguard, 1961
4. Brad Mehldau's Monk's Dream from The Art of the Trio 2, Live at the Village Vanguard, 1997 (sorry, no youtube link found)

Enjoy and please don't spill the coffee over the last AER you just read.

Why I'd Rather Buy Two Cups of Coffee and Muffins

Following a Facebook discussion here, Ujang and I are amazed on how our friends on the left take Naomi Klein's Shock Doctrine seriously. I can not say anything on Klein's argument since I haven't read the book. And here is why.

Imagine you have 10 bucks in your pocket. Then somehow you read Tyler Cowen's review that says

Rarely are the simplest facts, many of which complicate Ms. Klein's presentation, given their proper due. First, the reach of government has been growing in virtually every developed nation in the world, including in America, and it hardly seems that a far-reaching free market conspiracy controls much of anything in the wealthy nations. Second, Friedman and most other free market economists have consistently called for limits on state power, including the power to torture. Third, the reach of government has been shrinking in India and China, to the indisputable benefit of billions. Fourth, it is the New Deal — the greatest restriction on capitalism in 20th century America and presumably beloved by Ms. Klein — that was imposed in a time of crisis. Fifth, many of the crises of the 20th century resulted from anti-capitalistic policies, rather than from capitalism: China was falling apart because of the murderous and tyrannical policies of Chairman Mao, which then led to bottom-up demands for capitalistic reforms; New Zealand and Chile abandoned socialistic policies for freer markets because the former weren't working well and induced economic crises.

You may then say, but hey, Tyler is a conservative free-market economist. Fine, what about Dani Rodrik -- a respectable Harvard's KSG economist who is sympathetic to industrial policy and once write a book asking whether globalization has gone too far?

You may expect at least a kinder view. Instead he said that Shock Doctrine is a bad book needs to be trashed and it is very hard to understand how Klein felt good about Argentina in 2002 that just collapsed into a severe economic crisis, with a more than doubling of the share of population in extreme poverty and a 10 percent decline in GDP.

Need more evidence from the left? What about Will Hutton from The Observer, UK?

In her delusional, Manichaean world view, privatisation, free markets, private property, consumer freedom, the profit motive and economic freedom are just other terms for corporate self-enrichment, denial of voice, limitation of citizenship, inequality and, sometimes, even torture. The discredited electro-shock psychological treatment of the Fifties, we learn, informed the thought system of the free marketeers; it is guilt by association and assertion rather than proof, a weaknesses of too much of the book.

The only positive review I came across is from Stiglitz (I can see your baristas here yawn). But even he said:

Klein is not an academic and cannot be judged as one. There are many places in her book where she oversimplifies.

Enough said, it is a small wonder that I'd rather spend my 10 bucks for two cups of good coffee and muffins than Klein's book.

But then the Facebook discussion and the overwhelming praise from my comrades on the left gets me thinking that probably I should give Klein a fair chance. Maybe I can borrow the book from local public library, if they have a copy. Yet one thing for sure, it would have a very hard time to compete with other books I considered worth reading -- and I have a long list of them already.