Friday, December 26, 2008

Could You Purchased Knowledge?

Today I finally put aside the unfinished task to chase discounted books at Gramedia Grand Indonesia. The 35 percent discount is just too much too ignored for a bookworm like me. I arrived a bit after 10 am and finish the shopping before Friday prayers so I managed to beat the crowd.















One things that struck me is how books is a elastic goods. There are certainly more than 35 % increase in people coming (and the amount of purchase they make). More like 5 fold increase, and my friends told me yesterday and tonight is even more packed.

Elastic goods should get more revenue if they reduce price by getting larger sales volume. So why the bookstore doesnt hold sales more often?

Or maybe because this feel like a onetime only so people are more willing to splurge on it? Why there is a massive coordination failure when what is needed is to put a list of books we want to buy with friends, pooled our money and take turn reading the book? Where have all the library gone?

Even more systemic, why govenrment not following the steps of India and China by forcing major book published to print the book locally or buy the copyright (yes, some also just ignore it). Thus. reducing the price significantly.

Some people (like me) still believe that buying books will make them more knowledgable. Bad news, only reading will. So asked me what I learn after I finish the pile of books above, if ever.


Wednesday, December 24, 2008

Death, tax and alcohol


They say that the only certain things is death and tax.

I found an article in Freakonomics blog (click here) that after crack down on illegal trading and closing of an incompetent license holder there is only one legal importer of alcohol in Indonesia

So what happened when a supply is lower than demand? the price increase. In this case, when year end as the excuse of excessice drinking is nearing, four fold. (complete article here).

Another article in CNN report a study between death and alcohol tax (click here). Now we know the price to pay to reduce (alcohol-reated) death.

Isn't economics a great (if a bit gloomy) science?

We can't explain why the story is not reported in Indonesia newspaper though. Please comment and send the link if you find any

Sunday, December 21, 2008

Creative monetary policy

Found a 2004 paper with Bernanke (yup, the Fed chairman) as one of co-author.

It listed alternative policy when the rate cut is neither feasible nor having impact (click here to read in full).

America is so lucky to the someone so prepared for the crisis at in charge of the monetary policy. BI still have a lot of ammunition to cut rate but its good to be prepared.



Saturday, December 20, 2008

All you need is marketing


The maker of shoes thrown to Bush is surprise to see the demand for Ducati model 271, soon be renamed “The Bush Shoe”, sky-rocketed after the incident.

Click here for the full article
in Bloomberg.

The shoe-cide managed to send a sock-and-awe and in-your-face moment in marketing.


P.S.
If you need some weekend diversion, click here or here


Thursday, December 18, 2008

Rural is down but even more for urban


Very interesting article in Jakarta Post (click here) by Chris Manning, director of indonesia project at ANU and
Sudarno Sumarto, director of top notch Smeru research institute.


The highlight
Overall, compared with 1998, the looming economic slowdown may have a greater impact on less flexible urban labor markets than in rural areas, where small-scale enterprises are much more common.



Tuesday, December 16, 2008

To Keynes or not to Keynes

Well, the question is more of how much than either-or.

I am arguing that fiscal only interpretation of Keynes is not suitable for Indonesia since we still have room for monetary expansion.Read the article in The Jakarta Globe here.

Too bad the editor cut creative liquidity measures that I proposed.



Monday, December 08, 2008

The Political Economy of Iedul Adha

I am currently reading a couple of Ha-Joon Chang's books. The Korean-born and lecturer at Cambridge has fascinating analysis of globalization today and how we got to it; not by free market but selective industrial policy and protectionism.

In East Asia Development Experience. he cited import restriction of luxurious goods in South Korea as strenghtening national unity and work ethics. The rich and powerful are not seen as splurging with expensive imported goods while the worker is working his ass. The common practice is to used locally produce car as official car of government head (Proton in Malaysia, Toyota in Japan and Hyundai in Korea).

So what Iedul Adha has to do with all the above?

Ramadhan and Iedul adha is an amazing pair. In the first, all eligible population (rich or poor) is going through thirst and hunger together. While on the second, the richer population is getting the poor population some good and meaty meal; it even forbidden to fast on Iedul Adha. How is that for solidarity.

Maybe Indonesia should consider to restrict import of >1 billion car and >10 millions handbags in the spirit of Iedul Adha




Thursday, December 04, 2008

US-led Global Capitalism is Dead! Long Live US-Led Global Capitalism!

The first part is the title and opening while the second is the ending line of my today's article in the Jakarta Globe.

The editor change the title and cut the opening/closing line, I guess to make it more sexy and rebelling. Hope the careful reader still get my intended meaning.

The system of buying and selling with market is still the preferred option when it is the best means to increase welfare but stronger transparancy and government regulation is needed more than ever. The same with the role of US, they are still there in pedestal but maybe not much longer if they stumble again.


Tuesday, December 02, 2008

Roller Coaster, Sutainable & Stability


Indonesia must not have a roller coaster economy,
we need sustainable development"
-Prof Emil Salim in today's FEUI seminar-

"Stability is a public good"
-Title of
Tony Prasetiantono's book-



Sunday, November 30, 2008

The economics in the mirror

How bad/long would it be?

That's the most often question come out when people meet me after the crisis unfold and think I (am supposed to) know some economics.

Tim Hartford say it best:
"Consumers should cut back their spending if they believe that their earning power will fall for an extended period of time, but if they believe the hard times are temporary—say, a short period out of work—then they should "smooth" by borrowing in hard times and paying back when things pick up"
But what consumer belief affect their action and expectation of companies/banks while government trying to project both to come up with appropriate policies.

Since so much (but not all) of the problem is self-fullfilling and paradox then I'd suggest an (slightly altered- in italics) jadul song lyrics as big part of the answer

I'm starting with the economics in the mirror
I'm asking it to change its ways
And no message could have been any clearer
If you wanna make the world a better economics
Take a look at yourself, and then make a change


Little reunion with Keynes

Recent economic crisis has made me read and read again several macroeconomic theory, especially the Aggregate Demand and their relevant subject. This has lead me to one prominent economist in the century - I believe so. This economist is John Maynard Keynes.

I am not a big fan of Keynes as I am not also a big fan of Macroeconomics. But, I've just have little reunion with Keynes in very "introductory" ways. If you feel that you need to refresh some macroeconomics with Keynes, Greg Mankiw's article in The New York Times titled "What Would Keynes Have Done?" is an interesting one for you.

To lightened up further your reunion with Keynes, "An open letter to President Roosevelt" that appeared in the New York Times on December 31, 1933 is next to be your delicious desert.



Wednesday, November 26, 2008

They are all Indonesian now

What is the world if not Indonesian now? They got our crisis, only on larger scale.

The question is, what they can learn from our experience.
Hints, one of them is to treat the stock market like a lady.

More on my musing out loud at The Jakarta Globe column (click here)



Monday, November 24, 2008

The intuitive economy


New York Times has this incredible piece:

Since September, when the Dow collapsed, Mr. Taccetta, has talked with his psychic about once a month, roughly twice as often as a year ago. “There is no rhyme or reason to the way the market is trading,” he said. “When conditions are this volatile, consulting a psychic can be as good a strategy as any other....Ms. Hartman, the Los Angeles psychic, said her Internet traffic has picked up substantially, from about 30 visitors a day to more than 200. She charges from $150 for a 30-minute telephone reading to $500 for 90 minutes of “intuitive counseling."

So when the rational is down, the intution is up.

But when the market is a stochastic or random walk proces, any advice is as good as any.

Thursday, November 13, 2008

Another Move by Nelli Kroes.

DG of competition again fines another cartel with a record USD 1.12 bil. This fine beats the the previous highes individual fines to ThyssenKrupp in Elevator and Escalator Cartel and collectives fines to the cartel for Elevator and Escalator Cartel in medio 2007.

This is the news from IHT
"...In 2005, EU antitrust authorities raided several car glass producers across Europe following a tip-off from "an anonymous informant", the commission said in a statement.

The French company Saint-Gobain was fined €896 million; Pilkington, a British unit of Nippon Sheet Glass, was fined €370 million; Soliver of Belgium will pay €4.396 million; and Asahi will pay €113.5 million. ...."


This remarkable fine joins the lines of convicted cartel as the results of a tough DG Competition under Nelli Kroes. Furthermore, since June, 2008, this tough reputation of DG competition is added with kinda-soft program, so-called settlement program.
With this new program, DG can offer up to 10% fines reduction in exchange of a guilty plea of any cartel members. With this new program, cartel members is encouraged to plea guilty rather, thus the long-and-costly fight in courtroom could be minimized

Hopefully, in the next future, the combination of tough DG, Leniency program and Settlement
Program become a perfect mixture to detect and convict cartel.



Radical time call for radical solution?

I am pulling out some not-so-mainstrem ideas in article (click here) at Jakarta Post for global economic crisis. Most part are taken from a paper I wrote and selected to be presented in a conference at Bordeaux Uni - France, just added some update of the moments.

I do neglect the prudent behaviour of preferrential treatment of FDI and limitation of secondary capital outflow for stock/bonds. I expect monetary authority to be aware of that already, maybe I'll mention on my next article entitle "Its time to get moderate"



Wednesday, October 29, 2008

The Runaway Rupiah



Even thoug it is less than 30 % drop in Australian dollar, but this week saga has brought some panic in financial authority.

Will the ten steps help?

It was good policy and a detailed prescription. But we could not do it alone.

What needed now is real money put down the table by global institution or collection of economically strong states (east asia and middle east comes first to mind) saying they will help the country in need to protect exchange rate.


And by real money I am not referring to paltry USD 80 billion comitted at last ASEM meeting. Certainly not enough to scare off potential speculators.

I am disappointed that the amount was not even half the US bailout tag (USD 700 billion). Confidence to Indonesia's should is also headed south when our reserve shrunken more than 10 % (7 trillion rupiah) for Indover bailout.

This week will be a bumpy ride for rupiah. Hold on tight.

Addendum:
Indover is getting the bail out (click here) and rupiah is steady close to 11 thousand.
As Keynes said; "if one must forecast, forecast often." Especially true in this fast pace and changing policy



Tuesday, October 28, 2008

Economist are Running the Obama Campaign


Read this quote from Slate magazine on Obama campaign decision to used sms as major campaigning tools:

Green and Gerber estimate that a door-canvassing operation costs $16 per hour, with six voters contacted each hour; if you convince one of every 14 voters you canvass, you're paying $29 for each new voter. A volunteer phone bank operation will run you even more—$38 per acquired voter. This is the wondrous thing about text-messaging: Studies show that text-based get-out-the-vote appeals win one voter for every 25 people contacted. That's nearly as effective as door-canvassing, but it's much, much cheaper. Text messages cost about 6 cents per contact—only $1.50 per new voter.
If Obama win, dont forget the part played an army of economists with cost benefit analysis as weapon. Politician, ignore economists at your perils!

Sunday, October 26, 2008

And Bakrie's stock will be unsuspend tomorrow


Tomorrow will not be be bottoming out of the indonesian stock market after a month of sliding downhill.
Bakrie, how quick can you say suspension?
(my guess is less than an hour)

Addendum:
The suspension is extended. Thanks for treespotter for spotting it.





Tuesday, October 21, 2008

Do what you told to us, you lucky b*$&d

Well, that's pretty much what the essence of my article about US and financial crisis in today's Jakarta Post

Its kind of annoying but relieving to be told of being wrong but to watch the doctor have to swallow their own medicine that they gave to us.

Click here to read in full.

Wednesday, October 15, 2008

Its Krugman

Nobel Prize of Economics this year is fallen into Krugman's lap.

He got it for his contribution to trade and economic geography (Nobel citation here) but his role as columnist in Slate and New York Times is not less important. He is one of the consistent critic, with strong data and analysis, of Bush administration since beginning when everyone keep silent.

His explanation of monetary policy with baby sitting analogy (click here) is simply a masterpiece and who can forget that ideas move the world when couple of days after his famous column (click here) then Mahathir implement the highly successful capital control in Malaysia.

Three cheers for rigourous economist that also managed to communicate complex idea to the public.

Addendum:
Some post announcement analysis here, here and here as well as here

Sunday, October 12, 2008

Persepsi kemapanan versus krisis

Kita mungkin tidak pernah mengira persepsi mengenai kemapanan bisa menarik ke jurang krisis ekonomi. Sebuah tulisan di newsweek mengungkapkan bagaimana 'American dream' berubah menjadi resesi dunia. Bagaimana hal ini terjadi?

Konon di Amerika sono, persepsi kemapanan bagi masyarakat adalah masyarakat yang memiliki rumah dan fortofolio saham. Bagi negara yang pasar keuangannya sudah berkembang tidak mengherankan jika setiap orang mempunyai berinvestasi di saham. Demikian pula dengan rumah, kepemilikannya menggambarkan suatu ide dimana didalamnya hidup keluarga yang bahagia dan sejahtera.

Seperti apa persepsi kemapanan di Indonesia? Bagaimana persepsi yang sama berpotensi mendorong krisis? temukan bacaannya disini.

Saturday, October 11, 2008

By all means neccessary

That what the G7 leaders what they will do to unfreeze credit and money markets as well as reducing the impact of coming global recession (complete article here, complete G7 communique here).

Let's hope that the meetings of finance ministers in DC show similar resolve and more detail


Friday, October 10, 2008

Krugman - Minister of Finance of the world, (please) unite!

Krugman always has a knack for explaining complicated economics stuff. This time he outdo himself (click here to read in full):
The current crisis started with a burst housing bubble, which led to widespread mortgage defaults, and hence to large losses at many financial institutions. That initial shock was compounded by secondary effects, as lack of capital forced banks to pull back, leading to further declines in the prices of assets, leading to more losses, and so on — a vicious circle of “deleveraging.” Pervasive loss of trust in banks, including on the part of other banks, reinforced the vicious circle.
...
But on Wednesday the British government, showing the kind of clear thinking that has been all too scarce on this side of the pond, announced a plan to provide banks with £50 billion in new capital — the equivalent, relative to the size of the economy, of a $500 billion program here — together with extensive guarantees for financial transactions between banks. And U.S. Treasury officials now say that they plan to do something similar, using the authority they didn’t want but Congress gave them anyway.

...

The question now is whether these moves are too little, too late. I don’t think so, but it will be very alarming if this weekend rolls by without a credible announcement of a new financial rescue plan, involving not just the United States but all the major players.

Why do we need international cooperation? Because we have a globalized financial system in which a crisis that began with a bubble in Florida condos and California McMansions has caused monetary catastrophe in Iceland. We’re all in this together, and need a shared solution.

Why this weekend? Because there happen to be two big meetings taking place in Washington: a meeting of top financial officials from the major advanced nations on Friday, then the annual International Monetary Fund/World Bank meeting Saturday and Sunday. If these meetings end without at least an agreement in principle on a global rescue plan — if everyone goes home with nothing more than vague assertions that they intend to stay on top of the situation — a golden opportunity will have been missed, and the downward spiral could easily get even worse.

What should be done? The United States and Europe should just say “Yes, prime minister.” The British plan isn’t perfect, but there’s widespread agreement among economists that it offers by far the best available template for a broader rescue effort.

And the time to act is now. You may think that things can’t get any worse — but they can, and if nothing is done in the next few days, they will.


Minister of Finance of the world, (please) unite!!


Sunday, October 05, 2008

The economics of Iedul Fitri


The Jakarta Post wrote an interesting and blog-econ style article on the subject, click here to read.

Wednesday, September 24, 2008

The doctor of capitalism to swallow his own medicine

“Now the world need a new openness in international finance that would require private financial institutions to disclose far more information about their loans around the world and force investors to pay their share of the cost of bailing out troubled nations. The global economy cannot live with the kinds of vast and systemic disruptions”


Was the word above a criticism to Wall Street’s practice of slicing and hiding risky investment among myriad of exotic financial engineering that caused recent financial meltdown?

Nope, it was Robert E. Rubin, US treasury secretary in Clinton administration, pointing out weaknesses in Asian countries ‘ financial system including Indonesia ten years ago (original article here).

Touche!




Tuesday, September 16, 2008

rasionalitas kemiskinan

Meninggalnya 21 orang saat menerima zakat di Pasuruan, sangat memprihatinkan (disini). Zakat, disatu sisi merupakan salah satu mekanisme untuk distribusi pendapatan, namun disisi lain kesalahan dalam penyalurannya justru menyebabkan moral hazard, insiden seperti di Pasuruan maupun ketidakmandirian. Ketimpangan pendapatan jelas terlihat dari 40% penduduk dengan pendapatan terendah hanya menikmati 20% pendapatan sementara 20% penduduk dengan pendapatan tertinggi menikmati 40% pendapatan (disini).

Sebagai gambaran, potensi zakat di Indonesia cukup besar, sekitar Rp 17 trilyun setiap tahunnya (disini) bandingkan dengan alokasi dana untuk bantuan langsung tunai (BLT) sebagai kompensasi atas kenaikan BBM tahun 2008, sekitar Rp 14 trilyun (disini). Seandainya potensi zakat ini bisa maksimal, saat ini baru 2,5%-nya sekitar Rp 700 milyar, pemerintah tidak perlu mengeluarkan BLT dan alokasi BLT bisa digunakan untuk pengembangan program lainnya.

Insiden pasuruan juga mengungkap fakta nyata kemiskinan yang membelit masyarakat kita. Rasionalitas macam apa yang dimiliki oleh orang-orang yang 'mau' bersesak-sesak meng-antri pembagian zakat di Pasuruan itu? Bagi kita, mengantri untuk Rp 30 ribu mungkin tidak rasional, tapi bagi mereka yang kekurangan uang berapapun sangat bernilai. Saya teringat dalam ekonomi ada yang disebut bounded rasionality, rasionalitas yang tidak sempurna karena tidak cukupnya informasi (disini, disini). Kemungkinan besar ini yang sedang terjadi.

Ke depan, tampaknya perlu ada perbaikan mekanisme penyaluran bantuan (zakat, BLT dsb) agar lebih menjawab problema kemiskinan daripada sekedar menyentuh permukaannya saja. Tidak kalah penting, pemberdayaan yang menyertai penyaluran bantuan-bantuan tersebut, akan membangun kemandirian masyarakat.

Monday, September 15, 2008

The Economics of Bukber


One of the things that come with ramadhan is the bukber (buka puasa bersama) invitation.

From the casual meal with office friends to gatherings of highschool/uni/sport club, from circle of family to high power meeting (and yes, romantically inclined randezvous) can come under the label of bukber.

So what's with the rush of eating together?

Two economics concepts thought up by two Nobel Prize winner are involved: transaction cost and focal point.

Assuming eat together is preferable than alone (not too restrictive and realistic assumption), then people would not dine together if the cost and coordination is manageble.

People eat all the time but to coordinate time and dine together is rather complicated. In big & busy city with tight schedule it is very difficult to have many people together in the same time.

But during Ramadhan all of people that fast will eat at the same time, so the around sunset time is a focal point of time to meet. Coordination effort (transaction cost) can be focused on finding a place and getting people to come.


There are also demonstration effect, where the more people you know come the more you want to come.

After all, having decent meal
with great companions is indeed a step closer to heaven on earth.

Have a great bukber!

Tuesday, September 09, 2008

How to make the motorist behave?


According to Kompas, there are 575 death motorist during January to August 2008 period. In fact, there are 3,029 accidents occur during the same period. How to reduce this incidents for getting intensify?

Some people argued that it occurs due to lack of discipline among motorist as well as lack of particular infrastructure for motorcycle rider, i.e. special line for motorcycle. However, if we understand the behavior of motorist you maybe need to read and understand about Peltzman Effect. The key issue in Peltzman Effect as far as I understand is we need to compensate motorists lack of concern on risk of their bad behavior during riding motorcycle.

As we may seen recently, the technology and safety equipment for riding motorcycle are getting enhanced and sophisticated. All of those support system for making the motorist getting safer during ride make them feel secure and abandon the safety riding method during travel. In addition, the method to buy new motorcycle is getting easier with credit payment system. Combining those situation, we will see two simple fact about motorists and their motorcycle: 1) their population (motorists as well as their motorcycle) will increase sharply, 2) their behavior will become more "barbaric" and potentially increasing number of motorcycle related accidents.

Now, what is the effective solution to reduce that problem? My simple solution is raise the cost of admission for motorcycle licences (to get SIM C in Indonesia). In fact, if possible, we need to make that getting motorcycle licence (SIM C) should a lot more expensive than getting driving (car) licence (SIM A). Why? Higher price need to be established in motorcycle licence as signaling that riding motorcycle are having more risks than driving cars. With such policy, we will obtain two results:

1) reducing number of motorist
Of course, we will have "rich vs poor" motorist that potentially discriminate them on riding motorcycle. But, since the rich might be able to pay for the risk (of having accident) then it should make sense to give them more chance to ride motorcycle.

2) increasing discipline among motorist
Higher price of getting licence for riding motorcycle will make only selected and better-skill motorist that able to ride motorcycle. With extensive bribery activities in police department who issued such licences, higher price is the only way to maximize the objective to reduce number of accidents while facing lack of law enforcement in traffic.

What do you think, guys?




Monday, September 01, 2008

The Economics of Fasting


In welcoming the holy month of Ramadhan, I want to continue my long neglected first post on islamist economics series. But I first I must point out that fasting is not an exclusive domain of Islam, it is known in all religions and many ancient culture.

More is better, as the standard assumption in economics goes. Thus reducing consumption, the definition of fasting, should bring less utility right?

But there are also first Gossen law on diminishing marginal utility, meaning the more you consume of the same things the utility would be less on one additional unit of consumption. So less is more.

The first gulp of water at the end of long fasting day could worth more than a lavish meal on a full stomach. As they say, we don’t know what we got till we don’t get it.

So taking the two propositions above, could I conclude that less is better?

N.B

There are also interesting studies on how reducing calorie intake make bodies healthier and slow the aging process. Apparently human body work more efficiently if it has less inputs.




Monday, August 18, 2008

Happy Constitution Day

While many remember than august 17 is the independence day ( and start the repetitive debate of whether Indonesia is free), only a few even remember that constitution is ratified today 63 years ago.

If one thing Indoensia need right now, is to focus on rule of law and designing a better law. There are certainly not lack of good Indonesian scholar or academic reference. The growing school of law and economics definitely worth more than a second look by indonesian legal and economic scholar.

Benjamin Franklin, one of the founding father of America, was asked what kind of government the Constitution instituted, responded "A republic if you can keep it."

I certainly hope we the Indonesian prove ourself worthy to keep our republican it.

Monday, August 11, 2008

Proportional election = parliamentary corruption?




First I acknowledge there are many cause of parliamentary corruption.

Lax law enforcement (pre KPK) is certainly important factor. And so is the possibility of tradeoff between justice and money. The more money (from corruption) you have, the more likely you can hide evidence of wrongdoing.

But the path to become MP is very much up to discretion of party leader. At which province you will be put forward and at which rank number.

The discretion is basically something the party leader can disperse as he/she pleases since most party campaign not on individual MP but on a national figure and party history. And money is certainly one way to please a person. If a prospective MP has to pay significant to get his/her seat then the investment need to be recoup.

The incentive would be much less in district system where people choose a person. Each party has to put forward the most prospective candidate to win; a primary system where internal party election decides on candidate is even better.

Anyway, Indonesia certainly needs better campaign finance system so we know who give to party/candidates and how much.


Monday, July 28, 2008

Sjahrir, the political path of a political economist

I am saddened to read an article on The Jakarta Post today is entitled,” Economist and 1974 student leader Syahrir dies.”

I know Pak Ciil (as he frequently called) more through his writings and his TV show and few of his seminars that I attended. Actually my mother know him much better, his wife is my mother’s classmate, and frequently mentioned about him even before I entered FEUI.

I never took his class at FEUI. He decided to stop teaching the Indonesian Economy course at 1998 after the crisis and he said he couldn’t continue teaching the same things after so many things change

As far as I know he never teach in undergrad FEUI again afterward. He published some books (I have almost all of them) and increased political activity that culminated in establishment of New Indonesia Party (PIB).

Even though he had the name recognition as a popular economist frequently quoted in newspaper and appear on TV but his political party suffer the fate of his namesake Sjahrir with PSI (Indonesia Socialist Party); filled with intellectuals but apparently not appealing the masses and gather little vote. His last formal position is advisor to president SBY, economist till the end.

He is best known on his part of student leader in 1974 where the New Order jailed him for three years. Released from jail, he managed to get scholarship until PhD in Harvard University with dissertation entitled Political Economy of Food. Quite a prescient topic that still very relevant today.

I met him just last month, where we both speakers for a seminar in UNAS. He is still the exuberant and energetic self, even though he mentioned that he is on short leashes from his doctors but it doesn’t show a bit. He started his speech by expressing, boomingly, his regret and apology for the police violence on UNAS and then go on to analyzed globalization’s impact to Indonesia.

His departure is a loss for today’s and future economist. He has shown that economist needs to uphold a value despite the risk and to be able to communicate it to the common people.

Good bye Pak Ciil.


Friday, July 18, 2008

On competition


From Greg Mankiw's Blog, I couldn't agree more. Competition will benefited to consumers. It also encourage the business to be efficient, to some extent.

When I talked about competition, some people will speak behind me very softly, "Well, you are really do not care with other people business. Competition will kill those people's business".

Anyway, I will speak softly as well and said "I will not be a hypocrite by saying that I do not like cheap price. And I will definitely support any business that could offer me more. The rest is only about my budget and willingness."





Thursday, July 03, 2008

FEUI Economists and Nationalism

This is an unusual post which prompted by an extra-ordinary article written by first year FEUI student in Jakarta Post (click here).

FEUI, where all contributors of this blog get our bachelor degree, economists are getting more than our proportionate share of being called less than fully nationalist. Even accused by some of selling out .

The media played significant part to perpetuate bifurcation between the use of market power for the benefit of the people and to apply free market principled at all cost.


The first is usually FEUI economists' position and the second is what the public judge us to be.

One of the class by Prof Dorodjatun that still clearly stamped in my mind was when he stated that FEUI economist must always be ready to be summon to serve the nation and Indonesian people.

Putera wrote in his article that"The economics that I study at FEUI is not the science of greed; it is knowledge that can be applied to solve important social problems that Indonesia is dealing with at the moment"
....and that's why we (want to) become economist!



Friday, June 20, 2008

Do You Want Someone That Wants you?


To mark the release of Sex and The City in Jakarta, its time for another post on relationship economics (The issue of fuel raise has reach fatigue point anyway, at least for me)
.

The main plot connector in SATC is whether Carrie will end up with Mr Big. She (and the audience) is taken to emotional roller coaster along the path to find the answer.

But why she did not settle for a-less-emotionally-draining-but-sufficiently-good-and-rich-man ?

Groucho Marx once quipped that,”I don't want to belong to any club that will accept people like me as a member.”

The logic of the statement is when a club willing accept him, without needing him to go through lengthy verification of good credentials/network, then it is not exclusive enough and good enough for him to join.

Change club to relationship and we got the Carrey dilemma. Should she wait until the flashy-and -almost-perfect -but-unfathomable Mr Big to proposed or to “lower” her standard and go for another man that clearly want her.

The problem is unobserved and asymmetric information. People can’t really know the inner quality of other people and his/her as partner in romantic/marriage relationship until they are in it.

But selectability is a good cue and signal. If one person has many possible suitors then maybe the quality for Mr/Miss Right is there. They can’t be all wrong.

But if one is too eager or too wanting then the targeted person is justified to wonder whether that is the best s/he can get. Couldn’t I do better (note: the notion is subjective as it is multi dimension)?

So what to do in this conundrum? If one don’t want person that want them then nobody get together with anyone.

One gateway is quality certification. So the two know that they are both in the same range of desirability level and could not do much better. It requires an independent arbitrage trusted by both parties to do the assessment.

In a classic proverb, that’s what friends are for.





Thursday, June 05, 2008

Gender-in tuh BLT...


Rame-rame ngomongin harga minyak naik, mikirin nasib subsidi yang mau dikasih ke orang miskin. tapi ngomongin isu gender kaitannya ke BLT sepertinya masih jarang. silahkan baca dan komentar disini




Tuesday, June 03, 2008

A Case for Price Control

I know that economists are supposed to be against price control. Let market decide what is the appropriate value of goods and services.

But there is exception for every rule.

Galbraith wrote a little known gem entitled, Theory of Price Control. He was the price czar and ‘kind of” economic advisor to Kennedy in addition to be longtime economic professor at Harvard.

In essence he argued that price control should be in inverse proportion of market perfection. The worst the market function, the more price control can do to improve general welfare.

After the rise of fuel price in Indonesia, we fitness price of goods and services are rising. The bus transportation even pushes for 25 % increase for bus fee despite the fuel price increase "only" 28.7 %.

So we face some kind of prisoners’ dilemma in here. Everybody is raining the price of their product in anticipation of the rise of other products in order to protect there purchasing parity in addition of cost transmission.

In human term, the price increase is happening partly because increase in price of inputs and partlyattempt to maintain ability to consume similar bundle of items.

Considering the market for public transportation and agricultural goods are hardly perfect then what is needed for the expert (and economist) to start calculating the multiplier impact tof fuel increase, with solid methodological foundation, to the economy (especially tran sport and agricultural goods) and come up with just and appropriate price.

The Central Bank could help with a bit monetary tightening.

Somehow the public and newspaper overlook (again) that most people in Indonesia are public transportation user and food consumers that will bear the brunt of the price increase.

If the government need to step in to calm the irrational exuberance, so be it.



Friday, May 30, 2008

It's about increasing demand as well...


As incomes rise, economies use more energy for transport, heating and cooling and producing goods and services. A broad cross section of nearly 180 countries shows that doubling per capita income more than doubles per capita oil consumption (Chart 2). How much each country contributes to increases in global energy demand depends on its population and rate of income growth. Big nations moving quickly up the income ladder have huge implications for oil markets.

I am sick and tired with so many Indonesian experts and commentators that saying the recent fuel price hike should be canceled because Pertamina (Indonesia Oil Company) must be able to increase their oil production to meet domestic demand. Despite of inefficiency within Pertamina production strategy, does anybody aware that the 4th population rank in the world to some extent contribute to increasing demand of oil as well - at least at national level?

If we believe that economic activities in Indonesia still on going progress (in other words, Indonesian economy still growing), then it is quite certain that demand for energy also getting higher and higher. In addition to that fact, higher population also adding up the potential. This is the simple proof that pricing policy in oil sectors become ineffective. Why? Because higher demand for oil with wider price differential i.e. market price vis-à-vis subsidy price will creating potential greater market disequilibrium. In short, higher demand with great price differentiation will always distorting the market that cause the price constantly rising.

Then people will questioning, what should we do with such condition? There are only three solution in medium and long term. First, consume energy in efficient way. Second, please support and demand alternative energy, especially the renewable one. Third, keep consuming energy in efficient way no matter what energy source we consumed.






Thursday, May 22, 2008

Ready for higher fuel price?

Scarcity causes higher prices, and that's a good thing. Higher gas prices lead to conservation on the part of consumers, exploration on the part of producers, and innovation on the part of alternative energy entrepreneurs.
… Price controls, gas rationing, windfall profit taxes, gas tax holidays … are all bad policies that may make you (and politicians) happier in the short run but will make everyone miserable in the long run. Your solution to high gas prices is to adapt"

I wish that Indonesian start to realize how long they enjoyed BBM subsidy and what is the impact of those enjoyment. For more than 30 years, low price of BBM - due to subsidy, not only affecting national budget but also over-consumption behavior, under-production strategy, lack innovation on energy efficiency. And, another but very long run impact of such low price of BBM is our environmental quality degradation. It happened not only by giving up our natural resources - i.e. oil stock - simply for consumption, but also pollution externality and other degraded environmental depletion.

Now, you may tell me that I do not care for poor people?
I can answer you the same way you rejected increasing price of BBM, "There are still another way". There are still a lot of ways to help the poor. Keeping price of BBM low only give the poor pain killer, but not panacea. When you force us to swollen the pill of "BBM subsidy", then whether you realize it or not, you close the door for another way to help the poor.



Sunday, May 18, 2008

The Economics of Just-Do-It

What is someone told you that the price your favorite candy (mine is Polo mint) will go up significantly in two week? Most candy-cholic will buy more and stock some of the candy. It is legal and the rational things to do.

But what if many people also want to stock the candy? And after a while the seller of the candy also stock and hoard the candy. That’s mean you can only buy a few or not at all.

So who benefit from the knowledge of upcoming price increase? Those with the most access and money to buy candy and sell it later. It is a sure profit since the price will be increased for sure. Not sound so pro-poor to me.

Sometime the best things to do are to just do it. Planned well and prepare all the administrative/organizational detail, then make the announcement. Information are not always best when they are disseminated early. Even Stiglitz will approve that asymmetric information in some cases make better output than (almost) perfectly symmetric information

Change candy to fuel (both are addictive and hard to live without). And you got to read things like this in the newspaper.







Monday, April 14, 2008

The Economics of Poltical conflicts


Very recently, the media was bombarded by the clash within the Nation awakening party, the political party is divided into two different sides. I would like to see how the economics rational explaining it. It should be clear that I am not a supporter of both parties, it is interesting for me however, all that had happened are turn out to be logically rational.
A conflict by every means is costly, therefore they (both parties) are operating in a high cost, and below its optimum full production level. In economic term, we call it below the production possibilities frontier. This is represented by the graph on the left. any where inside the cone are feasible to enough to attained. In our case the two axis represent the two parties (M for vertical and GD for horizontal), the cone (PPF) is the number of potential voters, as internal split will cost them some voters, hence both are operating inside the cone, instead of operating in the blue line of PPF where the number of voters is much greater.

ISLAH on the way?
if that's the case, then why is so hard for them to do islah? it's not very surprising, because the islah is in fact not a sustainable point. This means that there are problem in dynamic inconsistencies in doing islah, preferences of both parties will change overtime. You see, say M is willing to accept islah, they might move from every point inside the cone to one point at the blue line, M groups are signaling, they are ready for peace treaty, calling disarmaments in their side. the problem with this, is that in the other side GD will now have a stronger incentive to wipe out all the M group, and therefore they will opt for a corner solution, choosing the 100 percent voters on the rightest point of the blue line. This happens for vice versa, with the benefit of the second mover. This explains why both parties decided to wait. As long as both parties don't have credible expected peace commitment there will no be islah. Both parties seem to send signals of continues fighting.

why are they fighting anyway?
I am not a politician, I honestly don't know. However,in economics literature conflicts might happen depends on the feasibility of such conflicts, internal splits or whatever we call it.
feasibility depends in two term, benefit and cost, according to Collier (2005,2006) , conflicts will happen wherever it is feasible to do.The benefit is high, since the general election is coming, more pie will be available in the near future, and if they are lucky, less mouth to feed. The cost is not enormous, some says in PKB, GD is irreplaceable, so preference toward GD is almost inelastic to external shocks. the last but not least is the probability to lose and to win, if we say the non-activating of M is a coup d'etat process then it's a rational thing to do, because historically, the other group tend to win anyway.

what about in the future?
the problem of conflicts is, it works in economies of scale framework, it gets better when it escalates even more. the losers will ask for friends and allies for help, and so do the winners, both parties accumulating their power in the expense of others which tend to be persistent Collier(2002) call this a conflict trap. I don't really understand politically, but fragmenting a political party in many small pieces is not very healthy for them, just look at PPP, or others. one thing for sure, if GD wins once more time, the more likely this things happen in the future, in an increasing scale of splits. this might happen in the future either because the probability of winning is getting higher, or whereas the cost turned to be insignificant. However no matter how significant that might be, it seems that the counter reaction is getting tougher everyday.

well, just see what will happen shall we?, time will tell.

by Rajawali muda


Wednesday, April 09, 2008

Globalization, neo tribalism & intolerance


Should the first lead to the second and third? There have been too many instances where it is what happened, especially when economic downturn opens up political niche.

Here is my take on The Jakarta Post (click here) on the release of propaganda short movie by Geert Wilder from the Netherlands.


Monday, March 24, 2008

Marriage and the City

Carrie Bradshaw once said that “Some people are settling down, some people are settling, and some people refuse to settle for anything less than butterflies."

Somehow the quote comes to my mind when I was reading an article in the Economist on Japan economy which said:

"Under the traditional (Japan) system, companies hired graduates and then invested heavily in their training and development. To keep workers loyal and protect their investment, they offered lifetime employment on steadily increasing pay, with generous fringe benefits and a lump sum on retirement."

Replace hired with marriage, companies/graduates with women/men and it could transform you to an episode to Sex in the City (by the way, the movie will be release soon)

In earlier (and better?) time, the women can focus on gaining skill on household chores and raising kid since they know the marriage is likely to last until death. The men would focuses on income generating skill. Division of labor works those days. But now marriage is not necessarily for life and people know it. What would be the rational response?

The Logic of Life (LIF) by Tim Hartford in the page 91-92 said that,

"The more people divorced, the more divorcees – that is, potential marriage partners – you could meet. …Because divorce was conceivable, women preserved career options. But because women had career options divorce became conceivable."

An interesting part of independence is that you depend less on other, and other less on you. Education and career bring all the above to both women and men. But it brings the credible threat (in game theory lexicon) that one can bail out of marriage in less hesitation than in earlier time. Maybe men refusing to marry up has rational reason (beside pride) after all since the outside option would greater as well for the woman.

LIF concludes on page 95 that,

'In the long run, the rational response is not for the couple to marry early and marry often; it is to divorce less and marry less… romantic couples are moving from boom and bust of marriage and divorce to a more stable arrangement where marriages are delayed… We know there exist something called an optimal divorce rate, and we’re 100 percent sure it isn’t zero”

I think Carrie Bradshaw would agree with that.





Friday, March 21, 2008

To Attend or Not to Attend Class

A student of mine post a fascinating post on his excellent joint blog which scattered with deep insights and youthful spirit, hence the name (for Youthful Insight click here).

He questioned the need for mandatory attendance in FEUI (click here for the post), the faculty even goes so far as to organize an online attendance list. (Disclosure: as student activist during undergrad, I took (much) more than my fair share of skipping class).

Let’s review the matter here. The goals are to impart knowledge and develop critical mind set among/the student. Lecture is one of the ways to reach those goals. As many studies in learning/cognitive psychology showed, sitting down listening passively to lecture has one of the lowest retention level.

I’d propose a drastic measure. Let’s do away with all lectures and classes.

Let’s distribute all the weekly topic, reading lists and lecture notes in the beginning of semester but replace lectures/classes with a weekly test (yes, every week).

If the students are able to muster self discipline and sufficiently understand the material, as the score would have shown, then the goal is reached without the need for any lecturer-student meeting. It should take less than one hour and lecturer assistances could handle the test taking/grading.

What if some students need feedback & further clarification? The lecturer could arrange for office hour (say, two hours every two weeks) where those students could come voluntarily, not for a lecture but with specific questions on material they don’t quite understand.

This is not as radical as it seems. Samuel Bowles, one of my professors in Siena that get his PhD from and used to be associate professor in Harvard, has done it halfway. We were given set of (quite difficult) questions that each one of us must be ready to answer in each of his class.

He specifically asked us not to attend if we have not prepared (and threaten to throw us out if we could not answered properly) since we will not get the most of the time spent in class and not contributing to knowledge/welfare of others. After the first hour of questioning he will go on with the lecture in the second hour, always a fascinating one.

But why not go for the full treat?




Saturday, March 15, 2008

Know Thy Purchase

The Oracle at Delphi that the Greek revered once famously exhorted seekers of wisdom: "Know thyself.

It has many profound implications since knowing oneself fully will enable us to understand other human more, people have much more in common than in contrast. Thus enable us to getting a closer glimpse on our place in the universe and, if you subscribe to the notion, thy maker.

Compare to that, the title of this post is disappointingly simple. If you know what you buy, then… . you know the value of what you buy and whether you are paying too much or too little. Is that it?

But that’s it!

But surprisingly smart people at hot shot company seem not to get it. Bear Stern, one of the largest financial companies on Wall Street, has followed (read article here) Citigroup and Merrill Lynch into financial debacle due to subprime mortgage over exposure.

Why? The so-called innovation in financial instrument has sliced and diced numerous kinds of asset back securities including house/apartment mortgage with non-negligible risk of default, thus the name sub prime (more detailed explanation here), with other more credit worthy assets.

But it becoming so complex with low disclosure requirement that the buyer don’t really know what’s behind their peace of paper that they bought.

Add the concept of self serving bias and herd behavior in behavioral economics. If other smart and rich people are buying the exotic (read: I don’t really understand it but other smart and rich people are doing it) financial instrument. Which one is more psychologically comforting? To check carefully whether smart adn rich peoples made a mistake and risk ridicules or proclaimed that “we get it” and get acceptance to the fancy club?

Sadly, the second options were in the majority.

And now the trusts are shaken and the lies exposed. It takes more than word of US Finance Minister (read his statement yesterday here) to calm the market. As any couple would know, it takes a lot to solved long ignored problem (click here). It takes sincere apology, full disclosure and strict rule not repeat it again. It means tight regulation and information availability. More promises unkept could only lead to more disaster ahead.

So much trouble for such a simple thing not done. Know thy purchase.

P.S.

If you are in blue over the subprime. Watch subprime mortgage blues at Greg Mankie’s blog here





Friday, February 29, 2008

Barack Obama and Behavioural Economics

This blog is not in the business of endorsing US presidential candidates. Nor we harbor illusion that our position can move votes there.

Nevertheless, as economist wanna-be I could not help but excited over an article (click here) that point how Richard Thaler, one of the early economist that point out behaviour anomalies could not be explain by standard model, is in close contact with the candidates. Behavioral Economics is currently getting stronger hearing in the mainstream after recognition from Nobel Prize committe in 2002 & 2005.

One of Obama policy attributed to his influence cited in the article is:

“For example, one key behavioral finding is that people often fail to set aside money for retirement even when their employers offer generous 401(k) plans. If, on the other hand, you automatically enroll workers in 401(k)s but allow them to opt out, most stick with it. Obama's savings plan exploits this so-called status quo bias.

Good to know that Obama that despite his soaring rhetoric (watch here and here), base his policy on solid and strong economic ideas. They say that economics has turned cynical and can do nothing but become empty shell of materialism. They say that economics can not bring insight about real human behavior into useful policy recommendation. To those charges, let us answer in three words. Yes, we can!

Addendum (01/03/08) from an article in The Economist:
"His chief economic adviser, a respected young academic called Austan Goolsbee of the University of Chicago, is sensible and pragmatic. His plan to save millions of people from struggling to fill out their tax returns is a gem. Anyone who earns only a salary and bank interest, both of which are automatically reported to the taxman, will be sent a tax return that has already been filled in, which they can accept or reject. At a stroke, countless headaches would be averted."




Wednesday, February 27, 2008

New pop-econ: Parentonomics


The popularity of Freakonomics and other pop-econ books (i.e. Undercover Economist, More Sex is Safer Sex, The Economic Naturalist, Common Sense Economics, Naked Economics, and so on) has lead to even more broader application of economic tools in our daily life. I've just recently read that there will be a new book published under this pop-econ genre. The book is Parentonomics

Parentonomics is a book that use game-theory tools to understand and solve problems of taking care of children or being a 'good' parents.   That's what I've surf so far in the blog of the author Joshua Gans - Game Theorist. The book is going to be publish soon. Are you ready to order it?

Some one whispering me, "I believe you need to do census first, to identify how many kaFE's member being married and having kids so the book will be applicable for them". Oh, I guess we can still read this book just to apply it with our nephew though. Doesn't need to have kids first to understand about parenting - especially using economic. Right?




Saturday, February 23, 2008

Modelling Art


An Attempt to Crack The Real-World Mechanism [1]

by: Dhaniel Ilyas

Enough about my humble attempts on econometric philosophy and ethics issues that I had written in my previous two writings, I will now try in lettering some words on some semi-technical econometrics topics with simple explanations. My previous writings were in Indonesian language. Since I know we have a noteworthy amount of interested blog-reader, I will now give a shot in making articles in English.

Most econometric models contain unknown parameters. An estimate of these parameters (in a model) is crucial in knowing the behavior of the variables relating to it. To compute the parameter estimates we need two things: A model describing interaction among variables with certain set of parameters and a sample made up of real observed data. Thus, if the model is correctly specified, it will describe the real-world mechanism which generated the data in our sample.

This process does not come without problems. First, nobody knows, even the smartest econometricians alive, the ‘true’ real world mechanism which generated the sample data.[2] Second, often the reliability of the data mining process from surveys is questionable. I have never tried to find any research concerning Indonesia’s Central Bureau of Statistics (BPS) data quality (may be someone can point me out to certain studies). Actually, there have been some techniques in econometrics for minimizing the bias that comes from ‘real’ data error measurement. But if the bias is severe, there is nothing much we can do.

Population is the base from which a sample is drawn. A model is made for explaining what is going on in the population, using the sample data, in order to make inferences and forecasting. Once upon a time, when statistics was biostatistics, their object of studies was the human population from a specific town, villages or country from which random samples were drawn. The average weight of all members in the population would then be estimated by the sample mean of individual’s weight. The sample mean was an estimate of the population mean. The idea was to represent the population by using the sample that could also save time and money. In contrast, the use of the term population in econometrics is simply a metaphor.

A better way to explain the last statement is by introducing the concept of data-generating process (DGP). By this term, any real-world mechanism that is at work in actual economic activity process, it is precisely the mechanism that our econometric model is supposed to describe. Thus, a DGP is the analog of the population in biostatistics as sample could be drawn from a DGP just as they may be drawn from a population. This seems too technical to be digested. Let just say that if I were the know-all-superman, and I have a magic-super-complex mathematical equation that can explain perfectly about all things that happened in the world describe in the form of parameters, variables and some well-defined stochastic element, I can explain the past, present, and future with remarkable accuracy. It is exactly what we after in building a model: cracking the real ‘true’ world mechanism (with our naïve and limited[3] mathematical and computation ability) as close as we can be.

A model is build to understand the existing phenomena. A class of models may have a general (mathematical) form within which the members of the class are distinguished by values of the parameters. In a model that are not mathematically tractable, computationally intensive methods involving simulations, resamplings, etc may be used to make the desired inferences. The process of model building required continous refinements. The evolution of the models proceeds from vague, tentative models to more complex ones, along with our understanding of the process being modeled. It is not possible to measure bias or variance of a model selection (from any arbritary set of models), except in the relatively simple case of selection from some well-defined and simple set of possible models.

Now, let me explain a bit into the practice of modelling. With our limitation to process all the data in the world, we need to create a reasonable strategy in our modelling process. First, we need to form a solid theory about the phenomena we want to observe. This is critically needed because basically we can throw any variables into our (simplified) model. Do you think a falling leaves in autumn will have an effect to certain stock price? Although some ambitious modeller could believe that this seemingly uncorrelated varibles can actually relate, I doubt that an economist will pursue such modelling strategy. And even if I have a good model that explain elegantly the change in one or some variables in terms of other variables, it does not imply true causation. Let me quote what Gujarati said in his book,”…a statistical relationship per se cannot logically imply causation…”[4]. From this apriori or theoritical considerations we go forward into the ‘jungle of empirical study’. Many of us experience surprising result that mounted into a variety of problems, but as life itself, we have to put up with it and struggle all the way. Thus we have come into what people say of a knowledge that is described more as an ‘art’.

Everyday, we look into the debate of outstanding economists, econometricians, physicists[5] statisticians, and mathematicians with their own economic model that they believe were superior, but at the end of the day the winner is hardly found in the mist of our limitation in comprehending the world perfectly. But we have to acknowledge also the positive result and insight from each of their models that shapes our economic advancement until today. Never forget that the ‘real’ judge is not a bunch of towering scientist that has a privilege to say a model is good or bad. It is the effect of the positive spirit in the model, acknowledge by the real advancement of human beings in all the related aspects, which will make a model superior. Thus as a modeller myself, I will say,”one effective and efficient model for one problem at hand.”



[1] For interested (highly) advanced reader, I recommend Russel Davidson and James G. MacKinnon book,”Econometric Theory and Methods”. I quote heavily from the book in the fourth and fifth paragraph.

[2] My Econometric Professor during a class session made this kind of statement. It was one of my most enjoying lecture.

[3] If our mathematical and computation ability were fully perfect, there will be no forecasting error. This statement create a philosophical trait: Is it all things in this world were just merely mathematics?

[4] See Damodar N. Gujarati book,”Basic Econometrics”.

[5] An of research come to be known as physical economics has been going on for some time until today.





Monday, February 18, 2008

Why Plastic (Bag) Should Be Expensive?


After I take the photo above, I realize why in many western country plastic bag should be expensive.

If plastic bags is free (like in all supermarket at Jakarta), then there is no need for people to think further about environment. Of course, it should be not as simple as that. But, if people cares with sewage flow, they should be care with garbage and waste that they thrown away into the river or brooklet or sewer. But, people obviously ignorant. If you take a closer look at the river or brooklet or sewer, you will easily find that all them are fully covered with waste and garbage especially plastic. When you are willing to spent a bit of time to count how many plastic bag and plastic wrap (e.g. for package food products) - among any other kind of waste, then you will realize that plastic waste are more than half of total waste. The implications for this neglected situation are water flow jammed, some sort of vegetation will grown in the banks, some sort of animal (snakes, lizards, rats, etc.) also build their nest there, in the long run you will see the water level rise, water born disease exposed the population and ‘Aha!’ flood is everywhere.

Ok, enough with the fortune teller stuff. (What?! It’s not prediction, it’s already occur now!). That is where the economics incentive/disincentive works. If you agree with me that the root of problem here is plastic waste, then the simple solution is reduce the plastic waste. To reduce the plastic waste then we have to reduce plastic usage. To reduce plastic usage, it must be “expensive” enough so people will reduce their use of plastic. Low usage of plastic will lead to lower plastic waste. Lower plastic waste will make our job a lot more easier to clean up river or brooklet or sewer everywhere, especially in our neighborhood. The long run impact of such achievement will be better environment that create cleaner, healthier, and economically efficient society. I will leave you all with such a “good-to-be-true” dream.

One moment, I am hearing someone ask me a question: "how we should bring our shopping goodies?" Well, I may answer: Why don’t we start bring our own bag, and you can decide the size depending on your own need. Or, why don’t you ask for paper box? See, there are lots of option actually...

See No bag, thanks! campaign for more photos prove on plastic ‘disease’ on earth