Thursday, January 01, 2015

Indonesia Etc.

Finished reading Indonesia Etc. the other day and wanted to share a couple of excerpts related to economic matters. The first is on the impact of culture and customs on economic outcomes:
Outwardly, the gift of a buffalo is a mark of respect to the person who has died, and to his or her clan. Its splendid horns will be nailed to the front of the clan house, perhaps displacing some earlier, lesser sacrifice. To that extent, it's a gift that keeps giving; it visibly contribute to the honor of the clan for evermore. But in truth, Mama Bobo's trophy buffalo wasn't just about respect. It was about revenge. 
Nothing, but nothing, in Sumba is really a gift: it's always an exchange. If I 'give' you a fatted buffalo, you are immediately in my debt for a beast with horns at least as long. It's a debt you absolutely must repay whenever it falls due, that unpredictable time when my granny dies, or my husband does, or I do. If you don't have a buffalo to spare, what then? You do whatever you have to. You can call in debts from other people, or deepen your web of obligation by borrowing. If payback means taking your kids out of school, selling your rice fields, or just stealing a buffalo in one of the cyclical cattle raids that does the calendar of Sumba, so be it.  
...I met many young people in Sumba who had to drop out of school because some adat obligation fell due. What agony, to have to lead a prize buffalo into a ceremony and slit its throat, knowing full well that you are watching your hopes for the future drain away with the blood that seeps into the dust between the graves. When I ask young people if this makes them angry, they shrug. 'Adat is adat. What can you do?'
The second excerpt notes the distortionary effects which occur when subsidies interfere with pricing signals, and the accompanying efficiency losses:
Over the course of my travels in Indonesia, I spent hundreds of hours burning up fuel in intercity minibuses, not getting from A to B, but just driving around town for an hour or two before departure, looking for extra passengers. With subsidized petrol at just 4,500 rupiah a liter, bus drivers didn't have to worry too much that they'd burn up more in fuel than they'd make in extra fares.  
Households pay less for their electricity than it costs to generate it. In places with twenty-four-hour electricity, Indonesians seem to leave the TV on permanently and the lights on all night, if not in the bedroom itself, then certainly in the sitting room and on the veranda. The fear of ghosts outweighs the price of electricity.  
Power is subsidized for domestic consumers, not for industry, so the money the government shells out does little to create jobs or stimulate the economy. Through energy subsidies, the government is channelling a fifth of its total spending into the pockets of middle-class people with cars, air-conditioners and microwaves. Every mention of a price hike brings people out onto the streets and revives the ghosts of 1998, when a demo about rising fuel prices spiralled into the nationwide protests that brought down Suharto.
Voter turnout in Indonesia's 2014 presidential election has been placed at 80% for the voting age population, yet another reminder that there is no relationship between high voting rates and good governance or smart policymaking. 

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