published @TheJakartaPost
We are entering a new economy that will change the way we work, buy things and utilize our assets. Put it in a thumbnail sketch, the new economy will be: the return of on-demand/gig economy and the rise of sharing economy.
Long ago people did business directly through bartering. Later, the barter system was replaced by money. Due to increasing demand and consumers in the market, production became more complicated. A producer had to recruit more workers and orchestrate production in a more systematic way.
The Internet era has ushered in the new economy, digitally connecting people worldwide. The information barrier between producers and consumers has disappeared. Now it is easy for producers to connect directly with consumers through a single click.
Replacing the travel agent, airline tickets can be easily booked online. The Internet enables us to buy and compare ticket prices easily. As a result, conventional travel agents have lost their relevance in the new economy.
Mushrooming online stores offer a far wider range of products than agents or brick-and-wall stores. This advantage is not only enjoyed by consumers but by producers as well. Renting a shop to sell things is not necessary anymore, because everything, ranging from offering, selecting, paying, can be undertaken online, causing conventional shops to lose their relevancy in the new economy as well.
Working environments have also changed. In the job market, outsourcing is easily undertaken. Part-time jobs have become the new normal; people change jobs all the time. More people work on a specific project rather than working permanently for a firm.
The firms are still around, but redefined. Firms will have two functions: pure producer of goods and services and platform provider for a meeting point between producers and consumers.
We are inadvertently reverting to the on-demand/gig economy of the past, but now on a global scale.
Another feature of the new economy is the rise of sharing economy. The longstanding under-utilized assets such as cars, spare rooms, etc. are easily exposed and shared with others who need them. Again, all communication and transactions are undertaken via the Internet. These dormant assets are now being managed professionally and become new threats to conventional businesses such as taxi operators and hotels.
The Internet-based economy poses challenges to consumers, government and conventional firms.
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published @ The Jakarta Post
This is to respond to The Jakarta Post’s editorial entitled “Unbreakable dynasties” on July 10. I completely agree with the Constitutional Court verdict scrapping the discriminatory clause in Law No. 8/2015 on regional elections.
Previously, the law included unfairly banning relatives of the incumbent to run in regional head elections. In a democracy, as long as no law is being broken, people’s choice should be the only filter in the election.
A political dynasty is not necessarily a bad thing. In America — the pioneer of modern democracy — political dynasties are well-accepted. No one is complaining about the Kennedy family, Bush family, or Clinton family for dominating American politics.
They ascend to power simply because of their capability of public service. The dynasty grooms them well and politics is ingrained in daily life. Nothing is wrong with this. Unfortunately, instead of quality, the Indonesia’s political dynasties depend only on popularity.
The essence of democracy is crowd wisdom. The idea is that all eligible voters decide and the outcome naturally fits with the people’s interest. And the precondition for a functional democracy is the quality of voters. They must be aware of how a democratic system works.
They must know the wrong decision means disaster to their opulence. Dating back to early democracy, only the rich, professional and the likes whose interest need protection could vote. They were very rational and only voted for the candidates who would really take care of them. Gradually, more people became eligible and finally universal suffrage was applied.
Democracy was not invented here. Indonesia is not well prepared to embrace democracy. Since the beginning, Indonesia has implemented universal suffrage — no filter for irrational voters. Both rational and irrational voters will choose a leader. Unsurprisingly, the outcome sometimes is illogical.
The member of a political dynasty who achieved nothing in the past, even without experience, can easily assume office. Democracy goes haywire.
Accordingly, the key is the rational voters. People must have awareness of the consequences of their choices. Good education emphasizing logic might work for this goals. Since we can reverse the flow of democracy, to be fair, political dynasties must be accepted. To curb the much-concerned corruption, law must rigorously and indiscriminately be enforced. To avoid the low quality of popular candidates, the people must be filled with information.
In my opinion, in the long term this will work.
The problem of Indonesia’s political dynasties lies in the existence of rational voters rather than the political dynasty itself. Had the people become rational, the regional heads would have been democratically selected based on meritocracy. The best must lead the rest.
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published @ The Jakarta Post
Tragedy is surrounding Greece. Since the economic crisis in the eurozone in 2008, Greece has never recovered. The economy is shrinking and unemployment soaring. To fix the economy, Greece borrows money from the International Monetary Fund (IMF). As usual, the IMF’s recipe for handling economic crisis is focused on austerity.
In contrast with Keynesian economics — where governments spend to move an economy in recession — austerity measures involve government budgets tightening up and letting the economy grow by itself. This recipe is frequently wrong, and it has turned out to be wrong in Greece. The Greeks has suffered for years with austerity measures that don’t work. It is unsurprising that in the referendum recently held over approval of more austerity measures, the Greek people rejected them. Why does tragedy continue to happen in Greece? There are two reasons: the eurozone and the Greek welfare state.
The European Union was established to avoid wars among European nations. After two devastating world wars, the Europeans wanted unity of all countries, politically and economically, to strengthen peace in Europe. Of the EU’s members, some have adopted a single currency, the euro, which was introduced in 1999. The group of countries using the euro is called the eurozone.
Many, including EU members, had doubts about the idea of a single European currency. That’s why England has not adopted the euro. A single currency means a single interest rate for all countries involved. It is a flawed theory. Every country has a different economic performance and different economic problems. Germany is very competitive.
It failed in theory, and now it has failed in practice.
Make no mistakes, the other problem lies in Greece itself. Welfare-state policies introduced by the much revered Andreas Papandreou, a socialist, are to blame. He served two terms in office – 1981 to 1989 and 1993 to 1996.
His legacy has unintentionally contributed to Greece’s bankruptcy. For instance, the Greek pension system is “better” than that of Germany. In Germany, 40 years of service allows a civil servant to get a pension equivalent to 70 percent of their final basic salary. In Greece, however, after only 35 years, if you are 58 or older, you receive 80 percent of your previous salary.
The Greek tragedy of economic disaster is currently being written.
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