Showing posts with label principal-agent. Show all posts
Showing posts with label principal-agent. Show all posts

Saturday, November 24, 2007

Why Jakarta Keep on Flooding at Rainy Season?

It has not been raining for a while, but when it does rain for a couple of hour in Jakarta you can be sure that the street will to flood in many places.

Why can’t the government of Jakarta clean the sewer from garbage and mud before the rainy season, which comes rather predictably, so the water can flow smoothly?

Water on the street weakened the asphalt and after a repeated exposure demands a rehabilitation and outpouring of new layer of asphalt and rocks. Thus, more money from public budget need to be allocated to fix it.

Spending smaller amount of money on prevention of flood seems to be the logical action, right?

The Politics of Budgeting by Prof Rubin is a book that tries to shed light into the budgeting process in America. One insight that he offer is how the budget is a process.

If the item is a carry over from last year with approximately the same amount, then it is likely to get through easily since questioning it meaning questioning the virtue of last year appropriation and few people (especially politician) want to second guess themselves.

If one department does not finish the allocated budget and leave significant sum at the end of the year, then most likely that for the next budgeting year the department will receive less since the legislative will assume that the department can work properly with the smaller budget.

Having a larger budget meaning the head of the department have larger power and discretion (I will not discuss about corruption). The turf war is a never ending fight.

This could explain why there are many program are allocated at the end of the year (I will not discuss the probable interest gain by deferring disbursement).

Does the similar thing happen in Jakarta?

Having broken roads could mean particular department(s) in Pemda DKI will need budget allocation to fix it. Cleaning the sewer before the rainy season mean there will be less broken road. Thus, leave significant sum in the end of budget year which could resulted in less budget next year. What is good for the people of Jakarta may not be what’s best for some people.

But Napoleon once said, "Never ascribe to malice that which is adequately explained by incompetence."