Economist links poverty remedy to freedom
MEDAN, N. Sumatra (JP): Indonesian development economist Sjahrir says the government's attack on poverty should do more than reduce the number of people living below the poverty line by improving people's basic capabilities and freedom.
The problem of poverty should no longer be only seen from its statistics, there should also be an analysis of issues such as basic rights, capabilities and injustice, Sjahrir told the 13th Congress of the Indonesian Economists Association here.
"After all, the ultimate goal of development is to increase the capability of the people," he said at the three-day meeting which ended Saturday evening.
He defined basic capability as the ability to attain the condition of well being and the freedom to pursue well being or the freedom to lead one type of life or another.
Sjahrir saw poverty as one of the biggest problems which could threaten national integration prior to the 21st century.
According to Sjahrir, what matters more in poverty alleviation is the extent to which the poor can gain entitlements to their basic needs such as food, health, education and how protected is their freedom to enhance their capability.
"Statistical analysis of poverty can explain one thing but can at the same time hide something else," he said.
Sjahrir cited official statistics which show a significant decrease in the number of people living below the poverty line from 67 million in 1970 to 26 million in 1993.
"However, if the poverty line is raised from a daily consumption of Rp 930 (US$0.39) in urban areas and Rp 608 in rural areas even to as high as Rp 1,000, the number of people in absolute poverty will skyrocket to 77 million," he said.
What that means, Sjahrir said, is the blunt fact that a large number of the people are living on the verge of absolute poverty.
"This also implies that even the slightest mistake in the policy affecting the entitlement to basic needs will easily and immediately sharply raise the number of people in absolute poverty," Sjahrir said.
Given the complexity of the problem, the generous public spending under the special program to develop poor villages, launched in 1994, is necessary but insufficient in alleviating poverty, said Sjahrir.
He said the entitlement of poor people to basic needs and enhancing their basic capabilities counted much more in alleviating their poverty.
Injustice, he said, was another major issue within the poverty problem.
Economic development over the past three decades has not only succeeded in raising per capita income by more than 10 times, it has also led to enormous wealth accumulation.
He cited the 249 companies currently listed on the Jakarta Stock Exchange with a total market capitalization of Rp 183.84 trillion or 38.4 percent of the country's gross domestic product as one example.
"Since the majority of the shares of the publicly-listed companies are owned by non-indigenous investors or shareholders, such a concentration of asset ownership could become a potentially explosive problem," he said.
Besides the striking disparity in income and wealth distribution, Sjahrir said gross inequality in access to business opportunities as another problem which could threaten the foundations of the national integration.
The government, he said, could not let the market mechanism correct the wide inequality in the ownership of economic assets. "The government should enforce rules and pursue policies aimed deliberately at opening as widely as possible all the business opportunities to indigenous people."
But non-indigenous people should be granted wide access to activities in the fields of politics, military and government bureaucracy, Sjahrir said.
He said the problem of poverty and injustice should be handled from the perspective of equality, capability and freedom; not on the basis of political patronage. (vin)