RI waiting for a new 'messiah'

RI waiting for a new 'messiah'

Satish Mishra, Head United Nations Support Facility for
Indonesian Recovery, Jakarta, satish.mishra@undp.org

If we cannot go back in time, we must go forward. If we do
not, the present will devour the future. History is often
unforgiving to those who do not learn from the past.

The leadership and direction that we crave in Indonesia must
arise out of democratic processes and politics. It is not to be
found in the ranks of men with medals.

Times have changed. Social values and expectations have
changed. Fairness and justice are no longer words we read in
Stalinesque constitutions. The world is swept by the new age of
information and connectedness. Democracy is a very popular
concept these days.

Democratic polities appeal to different people for different
reasons. For some it is a desirable end because it widens
individual freedoms and capabilities. For others democracy also
makes sense as a means of development and economic growth. This
is especially important as an economy reaches higher levels of
sophistication and division of labor. Modern economies need to
coordinate millions of individual transactions. Democracy
provides the institutional anchor for such a system of individual
decision making.

A third major reason for preferring democracy as a political
system is because of the relatively greater stability of
democratic institutions. This is because democracies are better
at dealing with disagreements. Many economists have tried to
estimate this stability enhancing properties of democracies. They
have done so with complicated modeling and cross country
regressions. They have tried to show that democracies while not
always raising the tempo of economic growth have managed to lower
economic oscillations below the trend line.

Others have put the point more simply. Democracies are more
stable because they are able to evolve and mature without violent
revolutions. As Mancur Olson, one of the most influential of
institutional economic writers of the day writes:

"Not surprisingly, then, capital often flees from countries
with continuing or episodic dictatorships, even when capital has
great scarcity value in these countries, to the stable
democracies, even though the latter countries are already
relatively well supplied with capital and thus offer only modest
rates of return."

Olson cites that despite the experience of poor countries
which have grown extraordinarily rapidly when they have a strong
dictator with "unusually good economic policies", he notes that
"such growth lasts only for the ruling span of one or two
dictators."

Not surprisingly "almost all the countries that have good
economic performance across generations are countries that have
stable democratic governments."

In Indonesia today, a large part of the task of obviating
future systemic crises is to construct institutional structures
capable of withstanding unpredictable shocks. This is why
priorities of systemic transition, rather than just economic
recovery, must lie at the heart of a future action agenda.

What are the priorities so crucial to a successful management
of Indonesia's systemic transition?

The first is clearly a reaffirmation of a commitment to
democracy. This is fundamental because so much of the ills of the
past were rooted in a system of government that centralized
political and economic decision-making.

The second key priority is to dismantle the apparatus of crony
capitalism, itself the inevitable by product of authoritarian
rule under Soeharto. The central features are: the inter-
penetration of military, state and large business interests, the
entrenchment of powerful natural resource and infrastructure
monopolies, the suppression of independent labor unions and wage
bargaining mechanisms, the abrogation of individual property
rights, and entrenchment of a kleptocratic state. The result was
gluttony of economic growth with little regard for either its
environmental consequences or the efficiency with which scarce
capital was being used.

The third critical priority, as well as a pre-condition for
continuing systemic transformation is the adoption of a civil-
rights based social policy. This is needed for two reasons.
First, because for all the much vaunted redistributionist
initiatives of the New Order, the system remained in its essence
a system of wealth concentration. True, Soeharto was not a
Mobutu. The plunder of the state was regulated by a sophisticated
system of booty sharing. The number of absolute poor declined
steadily. But real wages remained near subsistence even during
the boom years of Indonesian industry. Industrial assets remained
concentrated in a few families.

Second, the credibility of an effective systemic transition
requires a clear signal of a break from the past such that the
individual citizen has an open stake in future institutional
arrangements for wealth sharing and a voice in the making of such
decisions.

One rather obvious way to do this is to adopt a universalist
social policy that will proclaim the right of every Indonesian,
qua citizen, to have access to minimum levels of education,
health, social protection, and food. Such a rights based social
policy will signal a regime shift and a barometer by which the
success of future governments might be judged.

A fourth priority for peaceful effective systemic transition
is to find ways of preventing social conflicts from spilling over
into national disintegration. Regional decentralization is a move
in the right direction, but will mean little unless richer
regions are prepared to assist the poorer parts in meeting basic
rights and entitlements.

Clearly, a cross regional consensus on key social priorities
is required. An effective way to move this agenda is through the
organization of an Indonesian Social Summit to arrive at a common
understanding of these issues across the regions. The time has
come to balance the center-region forms of communication to a
horizontal dialogue across the region, if necessary with the help
of the central government acting in concert with civil society.

The above is an ambitious agenda. That is how it should be.
Historic crises of the kind that were triggered in 1998 are rare
events. They challenge the very existence of the nation. This is
the time for innovation and boldness. It is a time for rebirth
and rebuilding. It is not the time to look for individual escape-
goats and culprits. This is so even when some such as the IMF,
the bureaucracy or the military make such time-honored targets.
This is all a sideshow. The principal task is to devise a
domestic agenda for action in the future. It is time to stop
running down blind allies.

The views expressed in this article are strictly personal.