Ahead or Behind The Curve?

I identify the word ‘policy’ as an intense word; I define it as to rein a scope of complex problem. The first thing that a policy maker must do is to characterize the complexity of the problem, whether it is to find the ‘causal factors’, the ‘common factors’, or the ‘scenarios’ between factors. In addition , the attempt to know is also including each factor’s magnitude to intensively affect the complex problem and the timing of each factor’s impact; thus, there are two very important words of policy making ‘timing’ and ‘significance’…

Yes, even the act of knowing is a very hard thing to do….

I tried to metaphor policy making as cooking. I have to know the food’s ingredients, the composition, and the process to make the dish. However with a non-analogous condition, in cooking I can try as many times as possible to make the same dish until it tastes good, but in policy making, policies should be implemented as effectively as possible with the best result possible.

Ok now let’s cook….

Do research on the dish: which ingredients are the best, where I can found it, and the composition of the factors. One thing that I believe is best practice not always bring the best result. So, different cook put diverse ingredient depends on, for instance, the climate condition and consumer’s cultural background. After deciding the best composition, then let’s start….timing is very important! If I put the ingredient earlier the dish will be raw, the taste of each ingredient won’t be so delicious (not optimal). Moreover, as an inexperienced cooker, most of the time I put the items too late thus making the dish too cooked. Again, like the early trial the ingredients won’t be tasteful….the effectiveness of the factors is reduced…

Policy making is also an art of knowing and timing…whether we are behind or ahead the curve, we cannot be sure yet…

Associating it with Bank Indonesia’s job, it has to guide public expectation inflation; therefore, Bank Indonesia must implement policy ahead the business cycle, identify the turning point, and choosing the most effective tool to affect the market…Currently, inflation is predicted to be in a downward trend until the third quarter and slightly increased in the last quarter until next year. So, when is the right timing for BI rate drop to stop? Will it be ahead or behind the curve? We will see…

An Indonesian facing AEC

It is foretold that AEC will create comparative advantage for each nation so that increase each output. European Union is a proof that economic integration will craft greater confidence of the market. Nevertheless, does every tier of Indonesian people will enjoy the same impact?

ASEAN Economic Community is a concept where there is no border in economic activities among ASEAN countries by freer flow of trade, investment, and human resources. However it has several potential hazards, like unsmooth flow in resources among countries in the union, Indonesia’s decentralization system is still in its ‘baby’ stage, the wages rigidity compared to Vietnam and other country, plus do with different political stances and government policies’ structure a free flow area can be implemented? Won’t it cause an instability and big gap in resources allocation? Economics theory will always say that the unequilibrium of wide gap of prosperity will adapt so that economy will be efficient in the long-run. Nevertheless, do in the complex and globalize economy can made the long-run assumption lasts? Dynamic economy transaction is occurring in many areas that would not cause any long-run stability.

Supportive (familiar) regulations
This type of crutch has been elaborated, researched and even (dare to be) suggested by many international organizations. Among many suggestions that those organizations recommend are minimizing corruption, infrastructure investment and maintenance for trade, law enforcement, clear and protective Act for investors and entrepreneurs, bureaucracy reformation, depleting grassroots subsidy, encourage classical economic theory of the market’s invisible hands, and many others. I believe that the 1st rule of giving well advises am I had to be his/her best friend with empathy. Indeed that fairness and supporting infrastructure for business essentially important. But, do those counselors really have empathy? are they really our best friends? or without any distrust, do they really understand our conditions and cultures? not really I think…

Inhibit excessive capitalism
Taking people’s freedom is currently not from colonialism but through imperialism, like the adaptation of change, right now the war is changing from the borjuis and proletarian to consumers vs. producers. In which, this integration will be the solution. It will create comparative advantage between ASEAN countries make each country focus, yet the different added value each country produce is questionable. Without doubt, it will create efficiency for the alliance; still it will kill the inefficient enough SMEs. For that reason, Indonesia government must compose regulations to protect the ‘not enough’ actors. Decentralization has created an opportunity to do so, that choosing core competence and products with intensive labor (and still checking with other countries comparative advantage) will be a foremost step to take. Along the way, education and health level must be fueled to support the transform our human capital into a primed capital intensive labor. Additionally, technological transfer must be given incentive in the preparation of the 2030’s goal. The attack of monetary crisis is still vividly recalled; thus, stringent watch in the financial market is essentially needed to harness speculators and ensure its stability.

Nationalism that I believe
Our nation has a loose grip in our identity. Many have become individualistic and forgot about our principle of tenggang rasa (helping each other) that jealousy and dubiously create conflict in several areas; yet many are so considerate that it becomes the reason for corruption, collusion, or nepotism. Have we forgotten that our land is so fertile that it can grow anything? or the concept of harmony in our role that our ancestors always teach? are monetary things very urgent for us that the proud of becoming Indonesian only prevent us to become happy? Delayed hunger will not make us die but delayed thinking and believing will… Can’t we be proud in our country that obtains our own freedom? Can’t we be proud that we have so many cultures that it seems to complete each other? Can’t we be proud that many Indonesians are exceptionally smart? Can’t we be proud that we got abundant of legacy in philosophy from our ancestors?.. Proud is useless without understanding the essence.. Does our government really has the nationalism spirit or it slowly decayed? I hope they have because I sincerely believe that it is the groundwork of civil and economic regulations facing AEC

Like some know that now I am the part of the community and government. Maybe this is the enclosing question that I would ask to myself, am I going to be a person that only talks truthfully? or I will also be a person that do what I think and talk with integrity?...

Computational Sociology

I think most of the people reading my blog have interest in ‘human’, human matters that are well-known in social issues like poverty or pop-culture development. Moreover, human matters have motivated several experts to form theories in human behavior that many of it are used to rule in our own society.

A research institute in Indonesia founded by several young prospective scientists has great concern in sociology and this is a tutorial about their works in computational sociology. This is a very resourceful and inspiring tutorial indeed to read and for whom interested in sociology please have the time to visit Bandung FE Institute website (www.bandungfe.net).

The tutorial is written basically in the following scheme:

Sociology = Social Interaction
Sociology is always discussing about the interaction among people that creates community dynamics. Many experts approached sociology to explain the motives of human interaction. Readers may recall theories like functionalism, social trade, structures, marxism, the control of conflict, and symbolical interaction. Accordingly, many neo-theories are based on their predecessors. Then, theories of sociology are modified, combined, or diminished according to the world’s relevancy and the opinion of new-aged philosophers, yet there is a captivating question; where do those theories come from?

Speculation Sociology
For many centuries, sociologist is also called philosopher, yet the philosopher terminology nowadays may have different meaning. Plato is a philosopher of the early centuries who observe community’s behavior (analyze), think about the motive-mechanism-effect, think (again) about the truth of his deduction by observing (again), and after that publicized his findings. With the on-going inventions of statistics or simulations (computational methodology) to test the truth of the deductions, is it still relevant to only think then deduce without proving? Philosopher (for me) is still an out-of-the box thinker, a contempt observer, and a social-sensitive person. Nevertheless, now it’s a new era, science has developed, and change is the only absolute thing; thus, sociologist must not developed theories by speculation. Speculation will only blur the truth and in effect will transform human life into badly chosen life (so, does Keynesian or Marxism ring a bell? :))

Sociology and Physics are the same…
Like many have considered sociology is full of many debatable aspects and those that wins in a debate is the one who have the strongest dialectics, plus I also thought that it is always contextual and very normative. However, computational sociology has made me believed that sociology is the same as physics, it is also science. Science produce theories from social phenomenon, need to be proved empirically, and renew by more accurate theories. The new concept of sociology eliminated my pessimistic opinion in the validity of sociology theories debates. Obviously, in the long term, sociologist (and hopefully us too) aren’t trapped by definitive debates that obstruct community’s understanding. Sociologist will be developing their theories by counterargument of proves against prove. (So do you really still think that the ‘invincible hand’ or socialism is still appropriate to be implemented? :))

Simulation or Statistics
There are many debates in using the method for sociology. Many economists also neo-sociologists use statistics, to find out correlation between variables yet seldom giving the direct causal relationship between it. Moreover, statistics also involved tight assumption that many real world data don’t comply to the method. On the other side, there is an emerging method of simulation in sociology. Simulation basically construct real world issue by capturing it’s mechanism through cause-effect relationship or if logics. Nevertheless, simulation gives the disadvantages of not finding the degree of correlation. The interesting part is ‘neo-simulation’ (please mind me, I make the term myself) is developing towards its integration with biology and physics, like neural network, genetic algorithm, and memetics.

Despite of the ongoing debates, based on my experience in Industrial Engineering department and Techno-Economics interest group, I believed that both must be used to find the pattern and explain the relationship. Both tools will give the benefit to comprehensively understand about the system and its behavior, so that experts can generate theories most suitable to the society. One thing that I most agree with the tutorials is the concept of KISS (KEEP IT SIMPLE STUPID!!) hehe, if we get too involved IN the system then making it as simple as possible is very essential.

Computational Sociology
Computational sociology divided social system based on micro (individual) and macro (community/nation) level. One of the quotes from the tutorial is that ‘A simple micro pattern will emerge to a complex macro pattern’, that is why micro-modeling (or conceptualization) is fairly important for behavior study. Macro behaviors are mostly explained by macro-motives, yet never taking any account of micro-motives that is structured of the phenomena like the commodities-keeper during Ramadhan for price speculation. On the above picture, individual have decision system, behavioral psychology, and exchange theories that provoke each individual behavior or decision. Obviously, a simple reaction from each individual will correspond to the complex behavior of the macro level. The complexity of the macro level is characterized by social structure (the ‘how’ of every phenomenon in the study), like how does a vote occur in 2009 election, and social order, like how come GOLKAR may have higher vote in 2009 election influenced by the risk averse voters.

I believed that computational sociology will open a new path to applicable theory for the society; hence, giving more value to human interactions. Keynes theory of invincible hand and Marx theory of economic class absence have inspired several ideologies (though of its speculation thinking), yet its strength to create better society is still questionable. In a broader view, hopefully ideology like capitalism and communism that are developing in the society nowadays can be justified empirically (thus, truthfully) whether it’s good for the nation or those ideologies are implemented in certain boundaries.

Closing remarks..
I translated this section without major modifications (I like it very much)
Only a simple enclosing, the above picture can be a RABBIT or a DUCK depending from your point of view. We can construct social theory from any side of our main interest, yet it doesn’t mean that social theory is ANYTHING CAN BE TRUE because the picture is IMPOSSIBLE to be an object besides a RABBIT or a DUCK. By strict methodology and comprehensive definition, we can set whether it is a DUCK or a RABBIT, and which social theory is accepted or rejected….

PS. The tutorials are attractive, easy to read, and resourceful..highly recommended to read

Local Autonomy

Local autonomy has been happily welcomed by many experts and regional government officials, which were declared to be in force at the beginning of January 2001. It would not be an exaggeration to describe the official confirmation of this celebrated system as like a dream, which became reality, for after 32 years of the very centralist New Order government, the introduction of local autonomy system had never been imagined before. The government aim to establish important principles like democracy, local empowerment, equity and justice, also obliging local diversity and potential[1]. The system establishment also proposes to reduce homogenization policies among variety regions which Indonesia has and to accommodate grassroots unsatisfied with the so-called centralistic absorbent of their natural resources.

Each region economic development is sustained by the state’s policy to explore local core industry; thus, various local industries are expected to improve according to each local government framework. Moreover, the structure established each region’s independency to profile unique economy based on its (human, culture, or mostly natural) resources. Industrial Department of Republic Indonesia defines the industry that prolongs each region as local core industry or what Porter identified as competitive advantage. It has ignites regions to have different economic development like in corn, tea, coffee bean, rattan, wood sculpture, etc. Local core industry offers each region to be focus in developing certain resources and to provide various investments for domestic or foreign investors. Investors will have the liberty to choose where to invest giving bigger probability for Indonesia to accelerate its economy and people’s equity of well-being.

One of the regions that have excelled in developing its local core industry is Gorontalo located in North Celebes surrounded mostly by ocean. Having a big potential in agriculture and maritime, Gorontalo choose to focus its local core industry in corn. Its leader from 2001-2011 (thx Elvin for the correction), Fadel Muhammad, also implemented an unusual management strategy of entrepreneurship unlike in most region governments’ bureaucracy. The local government commitment and integrity in developing corn as the core commodity has resulted in 2000 a 34.412 ha corn field increasing to 56.556 ha in 2003; so that, producing 245.284 ton. The community empowerment of corn production reflected on each harvest contributed 6 months farmers’ living cost, plus hybrid corn can be harvest 3 times a year. Nevertheless, Gorontalo’s corn production has not yet complies with domestic and international demand. Malaysia has frequently become consumer for the past years, followed by South Korea as another potential market in the following year challenging a ton corn per year. The region’s proximity with the ocean has become an advantage for the export transportation easiness. In the future the government campaigns to construct a local harbor; thus, can aid the increasing trade in the area. Furthermore, the local economic growth is most-likely to continue as the region’s plan to expand the production to corn processing will empowered the community to discover corn-based products like cosmetics, cattle-food, etc.

Gorontalo is the most-known province for its success in developing local core industry supported by the local government’s proactive policies. The success is real since the central government acts as a supervisor and supports with constructive policies, technology transfer, or knowledge sharing; and the local government has the vision and integrity towards local well-being and empowerment. Moreover, private companies and individuals are expected to contribute in this success by becoming investors or channels for local products distribution.

Local autonomy is a good incentive for regions to be creative in finding their local core industry. The local core industry will become a significant aspect to ensure the economic equity in Indonesia’s diverse regions. Obviously, more of Indonesia’s provinces delivering their new unique local core industry are yet to come, other regions like Gorontalo are emerging creating variety economic hubs of Republic Indonesia.
[1] Direktorat Jenderal Otonomi Daerah Republik Indonesia