Tuesday, March 27, 2012

Argumentum ad confusion

Some cause-versus-effect confusions circulate the Twitterland. Here's a few:

  • Attack and destroy the "Mafia Migas" (apparently this refers to some mafia who takes advantage on the current fuel and gas market in Indonesia), before removing the fuel subsidy. I'm dumbstruck. The main reason why mafia exists in the first place is to take advantage of price difference. Holding the fuel price well below it's corresponding market price is the best recipe for smuggling and hence a good reason for a mafia to form. You want to discourage the mafia? Cut the incentive. That is, reduce the price gap.
  • Develop alternative energy before reducing the fuel subsidy. Eh? What makes an investor attracted to a particular line of business? The expected price of the goods or services it will sell. Now, who wants to invest in renewable or alternative energy when the current fossil-based fuel - the competitor - is sold at a price too low? One might say, well, since the private will not be interested, the government should be the one developing the renewable energy. Great. So, the government should keep the huge subsidy now for fossil fuel. And in addition to that, the government should also allocate yet another bulk of subsidy on renewable energy. Au revoir, infrastructure. Good bye poverty eradication. Never mind basic education and health.
  • The government should wipe out corruption before adjusting the fuel price. This one is not so controversial, actually. I'm all for fight against corruption. But why wait until all corruption has been eliminated, then do the right thing on fuel price? The government should do both. In fact, the fight against corruption is an infinite task of the government. Here I can understand people's frustration to the President. This was one of his signature promise during the election campaign: to fight corruption. Now that his party is so tarnished with corruption allegation, unfortunately he doesn't seem to make an effort enough about it. But again, fighting corruption is one thing. Fixing the dire distortion in fuel market is quite another.

Finally, I was dumbfounded, when somebody tweeted about countries where gasoline prices are so cheap. "Oh, how fortunate them people living on those countries", said him - or something to that effect. Now, look at the list of those "fortunate countries". Many of them just experienced political turmoil aka Arab Spring. Some of them are authoritarian countries. Some are too rich and with state-of-the-art infrastructure and probably they can just waste their oil money to subsidize their people. Oh, there is of course Venezuela with a confused leader  - oops, I think I just offended his fanboys here. Sorry.


Addendum: Oh, I forgot to mention. The last time I checked, we're no longer sitting in OPEC, that is, the organization of petroleum exporter countries. Why? of course because we're now a net importer. So, wishing our country selling cheap oil like those exporters (setting aside infrastructure, poverty and other issues) sounds like a bad comparison, no?

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