Friday, November 23, 2012

Sorry, Y

X is a worker. He is not happy with his wage. He gathers his fellow workers and together they demand for increased wages. Under pressure, the government says alright. The minimum wage is increased. A lot.

Y is X's cousin. She is unemployed. She's been hoping, after she finishes his SMP she could find a job to help her family. She wants to work in a garment manufacturing in her village, like her cousin X - even if she is paid below the minimum wage.

Now, thanks to X's demand, the minimum wage has increased - significantly even. All X's fellow workers are happy, too.

But Y and her fellow unemployed friends suffer. No business dares to hire and pay them below the now too high minimum wage. Y insisted, it's OK, she's willing to accept lower wage. "Please, you can even put me on weekly contract - not permanent". But the businessman said outsourcing and sub-contracting are illegal, too.

Wednesday, November 21, 2012

They can work here - but we also can work there

Kompas is wary of the ASEAN+6. The headline says "Foreign Workers Aim Indonesia".

Nowhere in the article says something about "this too can be a good opportunity for Indonesians to work abroad". Maybe we are too low of quality?

Fuel, again

Ministry of Finance offers 3 solutions to help ease the budget burden: 1) raise the fuel price by IDR 500/liter, 2) impose transition from fuel to gas for all (public?) transportation, 3) prohibit private cars to buy subsidized fuel.

Kudos for the first two (although, if the price is right, the transition should go automatically). But I'm confused with the last one. If private cars may not buy subsidized fuel and public buses should only buy gas, then whom the subsidized fuel are for? Supposedly motorbikes. But they're not the biggest consumers. Furthermore, who can guarantee there is no black market.

So I applaud the strong signal from the Ministry of Finance that the first option is the best.

Tuesday, November 20, 2012


Still on the rising price of beef meat in Jakarta. Kompas again runs a headline on it, saying that the market for beef in Jakarta is "vulnerable". Apparently this refers to the oligopolistic nature of the market, as indicated by a resource person.

Another article on the same subject again calls for "self-sufficiency" to overcome the problem. In fact, the author argues, this is the best time to impose self-sufficiency.

Which reminds of a good piece in the same newspaper that I overlooked yesterday. As the author said, competition is not always a bad thing. He gave examples of how competition brought good outcomes.

Once upon a time, the flour market in Indonesia was so distorted by a monopolist. The price went skyrocketing. The government finally decided, the only way to calm down the price was to open up the market to imported flour. Within days, the price was tamed. Search "Bogasari".

Monday, November 19, 2012

Price increase "abnormal"

The headline of Kompas today reads "The Price Increase [of Beef] Not Normal". It is reported that by the third week of November the price hit IDR 150,000/kg - while it had been hovering around IDR 80,000/kg in the foregoing six weeks.

The resource persons interviewed reason that 1) self-sufficiency should be achieved and import should be further restricted, 2) the domestic stock is actually sufficient.

The two explanations contradict each other. If the domestic supply is sufficient, then we don't need the call for self-sufficient anymore. We're there already. Secondly, if we are self-sufficient, there's no reason for foreign sellers to ship their meat here.

And both explanations contradict the title of the headline. If now the price increase is "not normal", then an increase in the supply should push it downward. Self-sufficiency and import restriction are likely to have the opposite effect. As for the second assertion, if the domestic supply is sufficient, price should be normal. Apparently, as the headline says, it is not.

Saturday, November 17, 2012

Few Updates

I must have been either very busy or very lazy (most likely the latter) lately that I don't serve anything in the Cafe or realize that a truly excellent and readable book on development economics has been around since April 2011. The title is More Than Good Intentions by Dean Karlan and Jacob Appel.

I just read the Introduction, but because I need to work on something else now -- like reading Karlan's article on Observing Unobservables -- , I'll be back soon for more review. I may also write about the current state of economics education in our universities which share a theme with a report on how (the plan for filming) James Bond in the country was turned down by those in power due to some deep ignorance.

In the meantime, we will play jazz in this cafe. This time, Fall by Miles Davis Quintet (youtube).