RAJAWALI MUDA

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.