Fuel prices hike: Desperado in limbo<\/p>\n
B Herry-Priyono, Researcher, Alumnus, London School of Economics,
\nJakarta, herryprb@lse.ac.uk<\/p>\n
These are the days when public policy in this country walks
\nagain in limbo. And the way it walks in limbo is pathetic. It was
\ntriggered by a political-economic game to raise fuel prices, then
\nthe basic prices of electricity and telephone (Following public
\npressure the government on Tuesday cut fuel prices). All this
\ntook place after the Indosat divestment and a \"free dinner\" in
\nthe form of Release and Discharge (R&D) given to indebted
\nbankers.<\/p>\n
Insofar as we see all these simply as a series of events,
\nnothing will strike our chords. Once we go up to the broader
\npolitical-economic horizon, however, things start to stink. What
\nis taking place is a desperado move taken by the leadership of
\nthe Republic. Price hike is not unusual in the market economy,
\nbut some hikes are more unusual than others.<\/p>\n
As we know, the present government is deeply beset by a
\nrevenue imperative, in that it desperately needs revenues for
\nfinancing its administration. The problem is, the same government
\nhas for sometime been hostage to the dictate of the financial
\noligarchs and to the orgy of corruption, collusion and nepotism.
\nThe timidity and failure to overcome its subservience to them
\nplunge the Republic into the present predicament.<\/p>\n
Observe the following statistics of colossal looting. In Kwik
\nKian Gie's calculation (www.munindo.bre.de), the loss of revenue
\nfrom taxes alone amounts to US$24 billion, subsidies for the
\ndefunct banks $4 billion, losses from illegal logging and fishery
\n$9 billion, leakage from the state budget amounts to $7.4
\nbillion; in total, about $44.4. To this has not been added
\nbillions of evaporated money from Bank Indonesia Liquidity
\nSupport (BLBI) funds grabbed by several financial oligarchs.<\/p>\n
Equally startling is the fact that, while there is $9 billion
\nin the 2003 state budget allocated for bank subsidy, only $6.5
\nbillion is for development. No thoughtful person can simply shrug
\nit off as \"natural\". It calls for explanation, or, rather, the
\nfact explains many things of our current predicament.<\/p>\n
It is true that in 2002 subsidies for basic necessities
\namounted to $4.2 billion, but subsidy for banks totaled $5.9. In
\n2003, the latter has surpassed the first by $3 billion. The bad
\nnews is, this pattern is considered as a big achievement by the
\nEconomic Team. This is economic neo-liberalism in its naked face.
\nIt is the model of economics pursuing not the market, let alone
\nthe common welfare, but, in the words of former World Bank chief
\neconomist Joseph Stiglitz, \"pursuing the interests of the
\nfinancial community\".<\/p>\n
So, there is something gravely fallacious about the claim that
\nfuel price hike is justifiable because the implementation of fuel
\nsubsidy has failed. Using the standard of the 2001 state budget,
\nowners of Mercedes Benz, BMW and the like who travel 20
\nkilometers a day grabbed 425,000 Indonesian rupiah of fuel
\nsubsidy per month, whereas those traveling by cars like Kijang
\nobtained Rp 24,000. The poor? They received a meager subsidy of
\nRp 8.150 per month, Kompas reporter.<\/p>\n
There is something wrong in this pattern, which may be due to
\nits flawed design that led to a fiasco at the level of
\nimplementation. The intellectual bankruptcy comes in the form of
\nthe most brainless and ruthless twist of logic.<\/p>\n
The failure in the \"implementation of fuel subsidy\" is used as
\nthe basis to abolish the \"raison of fuel subsidy\". What a
\nhorrendous twist of logic, even from the most elementary standard
\nof philosophy! Instead of correcting the implementation
\nmechanism, public policy targets the scrapping of the basic
\nreason of subsidy. This is certainly not to say that all subsidy
\nis good. What it says is that these days there is an
\nunenlightened way of viewing subsidy in the public policy.<\/p>\n
The idea that Departments of Economics and Public Policy
\nshould be teaching philosophy may be laughable. Actually, if we
\nare to have any hope of a long-term future, it is essential.<\/p>\n
Indeed, economics is the study of how to manage unlimited
\nwants with limited means. Nevertheless, looking at the statistics
\nabove, we ought to ask: Whose wants? Advancing the insatiable
\nneeds of financial oligarchs by concealing them in the abstract
\nterm \"unlimited wants\" is an unscrupulous neo-liberal game of
\nruthless power that brings havoc to our shared life.<\/p>\n
Again, it surely takes money to suppress prices at certain
\nlevels. But why target only subsidy money for basic necessities?<\/p>\n
Why the silence about much higher subsidies for banks? This is
\nwhat Stiglitz has unmistakably called the economic model that
\napproaches \"the problems from the perspectives and ideology of
\nfinancial community\".<\/p>\n
A form of warning may be aired as a rhetorical question, \"Is
\nour desire for cheap fuel so strong that it is worth risking a
\nbanking panic?\" This is a scare being posed by some financial
\nbrokers to justify subsidies for banks but undo that for basic
\nnecessities.<\/p>\n
A sermon on \"trade-off or sacrifice\" is convenient, but
\nsacrificing the lives of ordinary citizens at the orgy table of
\nfinancial oligarchs is another matter. It is called 'brutality'.<\/p>\n
In the financial world, this warning may not be without basis.<\/p>\n
But, beware, the occurrence of a banking panic is usually used
\nand abused as proof that scrapping subsidies for basic
\nnecessities, instead of that for banks, is the most logical
\nchoice. What a ruthless manipulation of logic, again!<\/p>\n
A banking panic, if any, is no proof that scrapping subsidies
\nfor basic necessities, and maintaining that for banks, is the
\ncorrect choice. Equally, the non-occurrence of banking panic
\nafter the scrapping of fuel subsidy is no criterion of success
\nfor public policy. It simply means a neo-liberal victory. As we
\nknow, the victory has more to do with being power hungry than
\nwith validity.<\/p>\n
In the end, the rise in fuel prices can only be acceptable by
\nordinary citizens if, and only if, the looted amounts as
\nportrayed above have been pursued vigorously. Seek the looted
\nmoney first, and the price hike should come later.<\/p>",
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