Good governance or illusion? (2)

Good governance or illusion? (2)

This is the second of two articles on the possibility of
Indonesia emerging with good governance following the
International Monetary Fund intervention.

By Makmur Keliat

SURABAYA (JP): Belt tightening economic measures, imposed
through cutting government subsidies and the budget, will bring
about differing impacts on different social strata.

It is true that many developing countries have designed and
established unproductive large-scale projects such as monuments,
conference centers, modern clinics, resort hotels and highways in
big cities.

If developing countries follow the IMF's prescription, all
these kinds of "beacon" projects would of course need to be
eliminated. However, in most cases this cannot be manifested as
it reflects a political illusion. The reason is politically
obvious.

All these prestigious projects are generally very close to the
vested interests of people in power. Consequently, belt-
tightening policy is only undertaken to the cost of the poor,
namely by reducing their consumption level. In most cases, this
is imposed through reducing government subsidies on gas,
education and health services.

Indeed, the report that was released by the Willy Brandt
Commission in 1980 already strongly criticized IMF policy. In the
report, the commission said that IMF policy has taken the side of
developed countries (the North) and sacrificed the economic
interests of the poor in developing countries (the South).

IMF policy on occasion has also created political turmoil in
developing countries. The report even further pointed out that
"The fund's insistence on drastic measures, often within the time
framework of only one year, has tended to place unnecessary and
unacceptable political burdens on the poorest, on occasion
leading to an "IMF" riot and even to the downfall of
governments."

Regardless of the possible political impact, some observers
have pinned their hopes on the prospect of great change in
Indonesia. They have surmised that the drastic depreciation of
the rupiah could possibly bring a new mood to the way the
government behaves.

For them, the sudden fall of the national currency is teaching
the ruling government a lesson in the importance of good
governance in managing the Indonesian economy.

However, it is important to note that the term good governance
itself was not picked out of the air, but popularized by the
World Bank and the IMF in the 1990's.

The term refers to efficient public services, independent
legal institutions and accountable public funds.

All are perceived as inevitable requirements for the
acceleration of economic growth. For this purpose, the state
would only play a minimal role in the economy and democracy would
be necessary to institutionalize the accountability of public
funds.

Accordingly, there has been a shift in IMF and World Bank
policy with regard to the correlation between democracy and
economic growth.

While the previous impression was that economic growth should
precede democracy, now economic growth and democracy are
considered as two sides of one coin, because without democracy
how can a nation savor the idea of public fund accountability?

The widespread belief is that poor economic management always
goes hand in hand with the excessive role of the state in the
economy. Under these circumstances economic policies launched by
the government do not represent the people's interests.

They are nothing less than an extended arm of those who
control the state. To put it in other words, they are not an
outcome of rational choices made by technocrats.

There is also the conception that the excessive role of the
state in the economy has a strong tendency to create a self-
willed government.

Though economists and technocrats may have been formally
appointed ministers, it is a mistake to assume that they are
puppeteers and the government their puppet.

The ground reality is the reverse. Their placement in the
cabinet structure is largely aimed at using them as a rubber
stamp to justify government economic policy.

It is merely for political parlance if some argue that the
economic policy launched by the government is the genuine voice
of economists.

What is happening at the empirical level is that unproductive
profit-seeking activities, such as discriminative tariff
treatments for certain industries and rent-seeking practices
through monopoly facilities for certain business, have become
rampant.

Hence, it is highly advisable that people exercise effective
control of the state, since it is presumed that the apolitical
attitude of the people will create a misleading democracy and
lead the state to misuse its power.

If people become active in struggling for their rights, it
will be they who control the state and not the other way around.

Some political scientists, and those who champion
democratization working through various non-government
organizations, are convincingly behind this idea.

They see that the time is ripe to speed up the process of
people empowerment on the grounds that the government is
presently not so strong and is being put under strong external
pressure to resolve the monetary crisis.

Therefore it will be interesting to observe whether Indonesia
in the coming days is truly heading toward good governance. If it
is so, then we should properly say, welcome good governance. If
not, then it would also not be an exaggeration to say, welcome
political illusion.

The writer is a teacher at the Department of International
Relations, Faculty of Social and Political Sciences, Airlangga
University, Surabaya.