Fuel prices hike: Desperado in limbo
Fuel prices hike: Desperado in limbo
B Herry-Priyono, Researcher, Alumnus, London School of Economics,
Jakarta, herryprb@lse.ac.uk
These are the days when public policy in this country walks
again in limbo. And the way it walks in limbo is pathetic. It was
triggered by a political-economic game to raise fuel prices, then
the basic prices of electricity and telephone (Following public
pressure the government on Tuesday cut fuel prices). All this
took place after the Indosat divestment and a "free dinner" in
the form of Release and Discharge (R&D) given to indebted
bankers.
Insofar as we see all these simply as a series of events,
nothing will strike our chords. Once we go up to the broader
political-economic horizon, however, things start to stink. What
is taking place is a desperado move taken by the leadership of
the Republic. Price hike is not unusual in the market economy,
but some hikes are more unusual than others.
As we know, the present government is deeply beset by a
revenue imperative, in that it desperately needs revenues for
financing its administration. The problem is, the same government
has for sometime been hostage to the dictate of the financial
oligarchs and to the orgy of corruption, collusion and nepotism.
The timidity and failure to overcome its subservience to them
plunge the Republic into the present predicament.
Observe the following statistics of colossal looting. In Kwik
Kian Gie's calculation (www.munindo.bre.de), the loss of revenue
from taxes alone amounts to US$24 billion, subsidies for the
defunct banks $4 billion, losses from illegal logging and fishery
$9 billion, leakage from the state budget amounts to $7.4
billion; in total, about $44.4. To this has not been added
billions of evaporated money from Bank Indonesia Liquidity
Support (BLBI) funds grabbed by several financial oligarchs.
Equally startling is the fact that, while there is $9 billion
in the 2003 state budget allocated for bank subsidy, only $6.5
billion is for development. No thoughtful person can simply shrug
it off as "natural". It calls for explanation, or, rather, the
fact explains many things of our current predicament.
It is true that in 2002 subsidies for basic necessities
amounted to $4.2 billion, but subsidy for banks totaled $5.9. In
2003, the latter has surpassed the first by $3 billion. The bad
news is, this pattern is considered as a big achievement by the
Economic Team. This is economic neo-liberalism in its naked face.
It is the model of economics pursuing not the market, let alone
the common welfare, but, in the words of former World Bank chief
economist Joseph Stiglitz, "pursuing the interests of the
financial community".
So, there is something gravely fallacious about the claim that
fuel price hike is justifiable because the implementation of fuel
subsidy has failed. Using the standard of the 2001 state budget,
owners of Mercedes Benz, BMW and the like who travel 20
kilometers a day grabbed 425,000 Indonesian rupiah of fuel
subsidy per month, whereas those traveling by cars like Kijang
obtained Rp 24,000. The poor? They received a meager subsidy of
Rp 8.150 per month, Kompas reporter.
There is something wrong in this pattern, which may be due to
its flawed design that led to a fiasco at the level of
implementation. The intellectual bankruptcy comes in the form of
the most brainless and ruthless twist of logic.
The failure in the "implementation of fuel subsidy" is used as
the basis to abolish the "raison of fuel subsidy". What a
horrendous twist of logic, even from the most elementary standard
of philosophy! Instead of correcting the implementation
mechanism, public policy targets the scrapping of the basic
reason of subsidy. This is certainly not to say that all subsidy
is good. What it says is that these days there is an
unenlightened way of viewing subsidy in the public policy.
The idea that Departments of Economics and Public Policy
should be teaching philosophy may be laughable. Actually, if we
are to have any hope of a long-term future, it is essential.
Indeed, economics is the study of how to manage unlimited
wants with limited means. Nevertheless, looking at the statistics
above, we ought to ask: Whose wants? Advancing the insatiable
needs of financial oligarchs by concealing them in the abstract
term "unlimited wants" is an unscrupulous neo-liberal game of
ruthless power that brings havoc to our shared life.
Again, it surely takes money to suppress prices at certain
levels. But why target only subsidy money for basic necessities?
Why the silence about much higher subsidies for banks? This is
what Stiglitz has unmistakably called the economic model that
approaches "the problems from the perspectives and ideology of
financial community".
A form of warning may be aired as a rhetorical question, "Is
our desire for cheap fuel so strong that it is worth risking a
banking panic?" This is a scare being posed by some financial
brokers to justify subsidies for banks but undo that for basic
necessities.
A sermon on "trade-off or sacrifice" is convenient, but
sacrificing the lives of ordinary citizens at the orgy table of
financial oligarchs is another matter. It is called 'brutality'.
In the financial world, this warning may not be without basis.
But, beware, the occurrence of a banking panic is usually used
and abused as proof that scrapping subsidies for basic
necessities, instead of that for banks, is the most logical
choice. What a ruthless manipulation of logic, again!
A banking panic, if any, is no proof that scrapping subsidies
for basic necessities, and maintaining that for banks, is the
correct choice. Equally, the non-occurrence of banking panic
after the scrapping of fuel subsidy is no criterion of success
for public policy. It simply means a neo-liberal victory. As we
know, the victory has more to do with being power hungry than
with validity.
In the end, the rise in fuel prices can only be acceptable by
ordinary citizens if, and only if, the looted amounts as
portrayed above have been pursued vigorously. Seek the looted
money first, and the price hike should come later.