RAJAWALI MUDA

Thanks for posting this and this quoting a part of it, enough to enlight my new day..

Rajawali adalah salah satu jenis burung yang selalu terbang sendiri, tidak pernah terbang bergerombol atau menunggu kelompoknya untuk terbang bersama-sama. Rajawali tidak pernah takut akan badai, bahkan ketika badai datang Rajawali terbang lebih tinggi lagi. Rajawali juga tidak pernah memanjakan anak-anaknya. Apabila sang induk menganggap anak-anaknya sudah siap untuk terbang, maka sang induk akan merusak sarangnya agar anak-anaknya “terpaksa” terbang dan mencari makan untuk dirinya sendiri.

Ketika Rajawali merasa hidupnya akan berakhir, maka dia akan terbang setinggi-tingginya ke arah matahari, sampai mati dan jatuh kembali ke bumi. Seolah-olah diakhir hidupnya dia masih berusaha mencapai “prestasi” setinggi-tingginya.

Well, for a start, Rajawali muda was the name of Apache-indian tribe,who save all the rest of red skins communities in the karl may's book, buat thanks for the inspiration.

Rosenstein-Rodan, and Nurkse in 1950’s concluded that coordination failure would lead to multiple equilibria -John nash work alike-, no single equilibrium would achieved, on the same fundamental, we could find various kind of equilibrium including the one that is more likely to be the “unwanted equilibrium”. Rosenstein and Rodan pointed out, that whenever we are investing in the wrong ones, and whenever complementarities between sectors interlinked, this would resulted in to two kinds of extremely deviated equilibriums.

Lets get back to the case of one guy hired at the MT’s, my proposition is, whenever a guy apply to one position without knowing that that’s her/his true preference, or whether that’s her/his second best choice, this could creates a grave coordination failure that should be even worse over time.

Whenever a company hired someone, it means that they are investing in that particular guy, what if the case of Rosenstein has pointed out occurred?, Just say that this hired guy is not –in reality- as capable as was shown at their CV, you are over invested him, a fresh-university graduate with lack of experience will do nothing, then the W is higher than his MPL, people on the top starts to worry, and displeased, enforcing the guy to work out off his limit, finally the guy just went out. Let’s say that the company getting a new fresh-employee, in contrast to the former, he is very diligent, and quite significant in increasing profit, the problem come up with the salary, because at that time, managers is cutting the position’s wage level, due to disappointing productivity before. This time the wage is way under the productivity, and so on and so on. The market mechanism without this stupid coordination failure will converge the MPL and wage almost simultaneously.

The problem that seems to be similar with Rosenstein and rodan’s case, is that over investing to one, means under investing to another, and the variance of over and under investing, (that is the variance of MPL-W =0) there are jobs that if the investment were right would initiate a greater effects in revenue and becoming greater each year, and there are jobs that is becoming less and less important,(under-developed?)in one company.

Hence,this is basically, the right man in the right place, in a perfect timing, but if we look more deeply, there are people who are so specialized, hence they could not move flexibly, change their jobs, and trapped in an unfavorable job, in the sense of salaries, fringe benefits, etc. In my opinion, that's would be one of many possible micro-explanation why, there are people who's continously trapped in poverty. Coordination failure in the job market.

off course,we should apply the coordination failure example above to various other job decision making. For instance why people morelikely to choose civil servant than an entrepreneur,or others.In my point of view, following Bannerjee et.al. that would be one of reason why people tends to be poor, and always be poor.

Human beings are so hilarious, don’t you think?

Early in the morning, I’ve read one of their jokes already.
It reminds me of the problem that make him receive a nobel, Coordination failure of the society, what would happen really if all people like these guys turns out to be the ultimate winner of the job market? Well nothing wrong with that really.

Ok then, first of all this man -à mon avis- is way out of his mind, really, applying for something that- I figure- he doesn’t have any knowledge about it. This is the case of some imperfect market that Akerlof has shown, in his famous melon theorem, and the used car market case. The thing is, the imperfect information of market of jobs creates two fundamental problems, adverse selection, and a moral hazard. In fact there are two ways direction of moral hazard, and adverse selection at one blow.

Consider it this way, neither of the two, the supply side of job (the one seeking for job), and the demand side (searching for employee) have adequate information about each one of them, as a result speculative attack appears to be the only solution. It seems to me that the job information in the adds is not sufficient enough to control this imperfect information, it was clearly defined, that his capacity is not even adequate to apply, instead, this guy apply anyway, even such more qualified guys-that is fresh-undergrad educated guys- would prefer to apply a more appropriate job, instead of applying as a manager.

As a fresh-graduated, -as we all have been there- this guy is desperate to have a job, and he didn’t understand what to do after his college, and then he starting to do some random-non-linier job application procedures, anything, anything he could ever think off, as long as he could find “management” word in the job seeker adds, the problem is they doesn’t even know what kind of job, -even worse- what kind of company he was applying. Therefore there are possibilities that this guy- who think he was totally expert in management, yet his limited experience- would choose the wrong job.

The company on the other hand, will never ever be able to even guess what is the real contribution of the future employee would be to its income, there are possibility it underestimate-or overestimate the marginal productivity of their future employee, which reflected on their wages, furthermore, companies will never be assured by the behavior of the workers, whether they going to be risk averse kind-or –kutu loncat – type of workers?

These imperfection leads to coordination failure in the market, resulting MPL= wage will never be achieved. Companies, naturally developed some other kind of screening process, called-management trainee-(MT in short) well, now they have many kinds of name, it almost the same anyway. Desolately, this MT programs is easily adopted, with relatively low benefit-cost gap, then suddenly fresh grad working as an MT in Bank Mandiri, and MT in some un-identify Company object’s MT would have slight differences. The same thing with the example earlier, the term “manager” and management would be biased to some imaginary working status. In short MT it self is a mystery for jobseekers, and CV’s is still one of the best tool of -fresh-graduate-job-seeker- to lie about their productivity potential. MT’s is also famously recognize for its difficulty and long time recruitment process, this hopefully will reduce this imperfect information would lead to the moral hazard and adverse selection. My conclusion : that’s true for Adverse selection (still in doubt, though) but not for the moral hazard.

Let me tell you a problem of a friend of mine, after completing its degree in an immense success, he tries his luck in MT program in a well known national Bank, as expected he passed all the easy stuff phase, at the last interview, he was a little bit worry at that time, this one is not easy, because interview is sometime a little bit unpredictable-well that’s what interview’s for, but there was some unbalanced information there, my friend has already knew the general questions in the interview, -based on his experience and some other hints from friends-. In the other hand the interviewers knew nothing about him, than what’s happened is the question was easily responded, and finally he was recruited.

Is it the problem of adverse selection solved? Well in this case yes, the bank has even over benefited so much in recruiting him. But not the moral hazard, after some time, my friends then find some other more interesting jobs, and scholarships abroad, as a result the on the job training is now become less favorable, my friends left the company, in the expense of some fine. Now that is clearly a moral hazard problem, he was forced to pay the cost of the company has spent for recruiting and training him, but still, this would be such a completely waste of time and a waste of resources for the company.

Well we’re talking about a bank here, weren’t they supposed to be the one who handling risk? Well they weren’t really good about it don’t you think?

(to be continued....)

Well this morning, digging up to one of my favorite blog, founding interesting article,Oke then, some questions revealed, whether rising price of rice would hurt the farmers or not?, well that's an old story i have had in the past, and really, till now, i'm still wondering why would that (ever) happened anyway.

The Quarrel between works of economist in development economics, in a certain manner would however change a cross time. My guess is the man, from whom kompas has quoted his words in this article is an old fashioned (-outdated-) one -if I say he to be an economist though.

What he’s arguing is a nowadays still being such a controversy among development economics, is it rising price of rice would make farmers better off?, or weather farmers will increase their production as a result of price effect?, would the income-marshallian effect would eliminate slutsky substitution effect ? Well I would say, that depends, depend on where do you look, what do you seek, and when.

You see, that’s the problem being Political economist, you’ll never be, or consider to be neutral, though I should say Economics were never been neutral anyway, but policy must be neutral, neutral with what you keep in your tiny head, cause your head could not keep up with all complexity in this growing market economies. Neither if you are market fundamentalist, nor I should say Structuralist.

That’s why I’m completely disagree with people consider themselves as an economist, development economist, talking to the news, about policy, without solid facts, they are nothing but politician need some vote for another election campaign success.What these guys were telling the news is that Farmers are often abused by the global market, and therefore we need to accelerate their income by keep the price (of rise) rising, well guys reveillez-vous … have you heard anything with such a complex problem with agricultural households? There is a problem called Separable problem, agricultural household is facing two intertwined problem in the same time, therefore their profit maximizing condition were constrained in a non-recursive way, and instead simultaneity occurred.
Even when price is rising up to the sky, farmers will surprisingly might reduce their production, and therefore cause a higher gap of income, cause the price effect is not only the rice, it multiplies a lot, through the other consumption goods rising as well.

So when will farmers will have a greater profit, and becoming rich?, frankly I don’t really know, what the answer for this, anyone has a clue? I’ve been thinking about this since I was studying Introduction to Development Economics, well I suppose that farmers will get better off by increasing their production, not by raising their price, because their welfare is endogen to the price.

Nevertheless some research as Benjamin(1992), Pitt and Rozenweig(1987) has proven that there is no such things like separability condition in Indonesia, well I think they have overrated our country, first of all, their research is only conducted in Java region, could not aggregate their result though, What happen if this separable thing were concentrated in some areas without adequate source of water, with pathetic quality of soil? What if Jakarta is so polluted, then what happened in Jakarta, would be totally different with what happened in Papua for instance. Secondly, their stories were way out of our time, it’s been almost 20 years now, and were facing a lot of up and downs in our economy. Thirdly, these researches were concentrated in labor market imperfect market, in a general term. Off course there should be another way in having another conclusion totally way around.

Another thing to look more precise is that often, the cause of separable is complex, it might comes from any different kind of market imperfection, and even the source might come from one market that is totally perfect ,why? Well because this one single market that is ironically perfect has caused some other market imperfect.-this is inspired by some of easterly critics of multi tasking of MDG-

Looking to the facts on the field, people has a large constrained of collateral, thus access in credit, Farmers have a large barriers of trade because no easy access to the market, then the transport cost is high, people in the mountains were so isolated that their cultivated their land on and on without sufficient fertilizers, there is too many imperfection against the farmers, and I agree that these guys need help. But saying that rising prices of basic needs is a fair deal for consequences of oil price shock, is confusing and misleading.

Instead of using our budget for subsidizing rice, we should increase the ability of trade and access on information, by giving them decent infrastructure, friendly bureaucracy, cutting some hands in the bureaucracy in export and import for example, do you know that rice produced in Thailand is far more “pulen” and More tasty, and it smell so good, that people would prefer buying it than other cheap rice. Here, thousand miles from Thailand, we eat Thailand product, and we pay in euro, and no indo-rice product made it to come here. Anyway how many Indonesian people, having opportunity to go abroad, who consume Indonesian rice, if they already had a chance to have Thailand rice? not many I guess, with a small disparity of price I’d prefer to let go my nationalism in rice, though.

You may argue that they are dumping their products, I would say, if they do that, why don’t we do the same thing? We import rice from Thailand, which is relatively cheaper, and then we export, say to France, all of our commodity, or may be even exported it to Thailand, in the end, the price would converge, and the only thing that that we could use in comparing the two is their quality, that is our base line, and In the end, no one will buy our rice, since we’re consuming the same Thailand rice.

So the bottom line is, the problem is not what Thailand has did with their price, but also why they could make such quality well known to the world. Another example is another close neighbor of ours, Vietnam, they Exported many kinds of things, small agricultural things, like chilies, spinach, etc, noodles, fisheries, fast food-kind of things, that were really fancy in this country. As a result, their price goes up, with a single addition in their package, a usual package of frozen “tongkol” mixed up with ingredients, will change to a well prepared Vietnam gourmand, with a little help of Microwaves, and so is fast food, we could get a tasty Chinese foods by buying all the ingredients available here.

A strange thing here is Indofood, and KOKITA stuff were easily found here, but no Indonesian imported it, it licensed to some Indian company, in contrast, Chinese supermarket “tang frere” were amazingly famous, and we can find all asian taste ingredients there, even Indonesian’s sambel oelek, what I’m going to say about this is that,global market were not so racial to the agricultural goods, the thing is you to improve your quality, your package, your additional values, and yet the most important increase your market potential. That’s where Chinese success came from, they have already ruled the world, even before Chinese open up their market. That’s why we always find Chinese restaurant every where, Chinese banks in every corners of the street of Paris.

What's I’m saying is, if you want your farmers to be rich, stop them of being a farmer and a farmer only, and becoming a farmer and entrepreneur at once, farmers in Indonesia were so characterized with lack of education, and information, they lack of source of money, but they need education and information the most,that is the information to reveal what is the real meaning of globalization, what is to have freedom to choose. And how they could sell their product, off course we have no means to give such policy like the common agricultural policy in Europe, and certainly we could not let the farmers hurt by the prices.

But still do not give up hope, we could make it, as long we stop complaining, and stop listening to politician, pretending as an economist.

Twenty or thirty years ago, anyone visiting the Soviet Union or China would have been taken aback by the dirt cheap prices of things. A monthly rental was about ten over dollars then; a suit at just a few bucks; a cattie of pork at a few dimes; and a movie ticket at merely a few cents.

Fabulous! Things were so cheap and you thought it was almost paradise.But,even as things were affordable, they were not necessarily available.
While rental was dirt cheap, you might have to wait for well over a decade before you could get someone to rent his apartment to you. If you were looking for a wedding suit, you might need to make an order before you even decided to look for a girlfriend. A movie ticket at only a few cents? But where to get it anyway, if you were not someone in the politics?

If you were dead hungry, perhaps you would think you shouldn't have been standing in the queue! But no. You still had to. In Beijing or Moscow, long queue s were omnipresent year round. Everyone was waiting to get nothing more than just a loaf of baguette or a few grams of pork.

Ordinary people spent most of their time waiting to get something. No more time for work or study and no time to run the machines. The society remained stagnant.
What use was it if things were cheap but unavailable?And now, while waiting for CROUS calling up my name for an apartment in what so called city of lights PARIS, sitting here wondering why,a boursier gouvernement français (as I have considered my self) is more likely probably called SDF ( sans domicile fixed) the picture of Pekinese and Muscovites lining up for baguettes or pork comes into my mind.

Between the two, we see resembling situations, similar problems, and identical mistakes.Under the planned economic system of a socialist regime, the government subsidises by digging deep into the state coffers to bring down the prices of goods. Although prices are lower now, production is stalled. In the end, the government's burden gets heavier and the country loses its economic dynamism, while people in the street are suffering from a chronic dearth of daily commodities.

The French government has spent a fortune to subsidize apartments prices, resulting in significantly low prices of renting an apartment for foreign students, . This has made these –what so called- residence CROUS is always (play!?!) hard to get. A bigger problem is that, it is way cheaper than other apartment in the city, students pay only 190 euros for their rooms, while others have to pay more than 450 euros. Thanks to CAF and other kinds of subsidies of personal apartment. This extremely noble act of French government has camouflaged the real price of apartment, thus the real cost of studying in France, as a result this gives rise to two problems. Firstly, the subsidy on apartment for student is too high; secondly, the gap between the prices of apartment for students and Paris citoyens uses is too wide, resulting in the flow of rich parisien blinded with jealousy towards students allocated apartments via all kinds of channels. In this case may be via Sarcozy Big ass

while greedy French home owners, were forced to use agencies to sell and lend their petites chambres in high prices, students, lacking of governmental support, and consequently ignorance of French government were forced to live on the streets. Once I had thought that French would be a excellent example of a great symbol of socialism that really works, then I came to the very same conclusion that : “If the government continues to subsidize, more and more cheap apartment will end up in the hand of pure franco-parisien or in the hand of rich and powerful, while students, especially who came from developing countries like Indonesia can only stay in the queue in utter frustration, or stare at the "sold out" signs in desperation, exceptionally, perhaps students of North Korea and India might have some privilege more, considering they still have their nukes..

What is the use of cheap rooms if it is not readily available? The only way to address the problem is to narrow the subsidy gap, or even do away with the subsidy entirely so people pay the same price for Apartment. Certainly our bourse must have some “in sense” than “non- sense” number, at least 1200 euros will do, a cheap ones, compares to your expenses to go to your pharmacies for having serious head-ache, thanks to unwanted students form Indonesia running around to your office, and make you lie to them each time they come.

The government can always think of some other ways to lighten the burden of students in studying and, for instance through cash transfer program, job fulfillment, or even by allowing them to charge higher fees in baby sitting, to offset their higher operation costs.

Subsidy policies which are economically inefficient are what socialist regimes used to have. These countries have learned from their past mistakes and begun to discard such irrelevant policies to embrace market economy.Today, in the malls of Beijing and Moscow, we won't get to see long queues of people jostling for daily commodities. Instead, in the well-stocked supermarkets there, goods are always in demand, although they are no longer cheap.
It is better to be affordable and available, than affordable but unavailable.