How to Trick the Tricky Ones

(Getting fed up with the so called biggest feast for a democratic country, I tried to contribute something to society by sending this article to a newspapers, but, unfortunately, the editor has left the newspapers so my article was too late to heed so that it didn't get published, too bad, indeed. It's okay. Just see and give your comments please)

Preparing for the upcoming legislative election on april 9^th, every single ‘caleg’ has spent billions on ludicrous posters and banners to deserve one honored seat. Their becoming generous on this generates ambiguous effect. For entrepreneurs on posters and alike, this election is like a drop of water amidst dire economic downturns, whereas for laymen this is a kind of silly jokes. As an advertisement suggests along with economic theory: the more choices you have, the happier you are, but when the choices are off the limit, the less happy you are, indeed.

We are now facing the most perplexing days ahead until the day of election coming. We find people presumably trying to contribute something significant. Nevertheless, what can you expect from persons we don’t know promoting themselves with nothing as they promise but showing photos of celebrities, superheroes or even foreign statesmen? This article is trying to give a vignette of the situation of political competition nowadays and to give a little trick on how to choose the right person without even knowing their true personalities. The thrust of this article is not to sway you to vote ‘golput’. It’s up to the readers. I will only give some current situation, simple theory embedded on it, and how theory can guide you to the right choice.

First, I suppose that this current political atmosphere is somewhat similar to the case of used cars in the second-hand markets. The sellers try to conceal their cars’ qualities by showing up noticeable features, like colorful paintings, attractive accessories, newly decorated seats, while the machine is inferior. It’s similar to what ‘calegs’ do by now. They try to conceal their competence by showing either eye-catching sentences or pictures so that people can remember their names. For example, some ‘caleg’ tries to accentuate the fact he is a father of a famous singer, some person is proud of having a face looks like a front man of a band, while some feels profoundly happy with him faking taking pictures with Barrack Obama. Unfortunately, due to limited space, I can’t tell one by one of descriptions of how funny our ‘calegs’ are.

Second, a simple economic theory somehow provides a little trick so that we are able to pick the right one, assuming we are not into ‘golput’ societies. This simple theory called ‘lemon’s problem’ is drawn from a famous work of of 2001 nobel prize winner in economics George Akerlof. A simple explanation would be like this. Lemon’s problem is a problem that prevails when buyers can’t figure real quality of the cars they are going to buy, and thus buy the lemon (bad quality) ones instead of mint (good quality) ones, because dealers have more information than that of the buyers’.

According to Akerlof, dealers in second-hand markets are confined to limited quality cars because owners of moderate-quality cars who want to sell their cars due to high cost maintenance would rethink about it for their utilities for keeping their cars exceeding their utilities coming from selling with prices dropping significantly. Hence, cars left to be sold are the worst quality whose former owners’ utilities are at highest if they sell it because their cars have severe problems. If buyers are lucky enough, they may still find moderate quality ones in the show room as there are persons who desperately need money that they are willing to sell their cars.

The key word here: asymmetric information. At first the dealers don’t know the true qualities of cars offered to them until they pass it on to buyers who feel the same way with dealers at the first time. Feeling emphatic? You should be since it is akin to us facing legislative election coming in weeks, yes? However, the theory tells that we face unintended consequences: bad products drive out good products. Competent people don’t feel like plunging themselves into this feast assuming Indonesia’s political reign is full of deceptions and betrayals. I just want to say that not many good choices left. Indeed, it’s hardly.

The question now: what is the promised trick? It’s very simple in understanding yet difficult in practice. As explained above, ludicrous posters, banners and any media ‘caleg’ use imply lack of confidence of their own capabilities. We can therefore use the reverse logic. Choose the ones using proper promotions containing neither funny sentences nor pictures. It shows their confidence and capabilities. Unfortunately, it’s not that simple in practice. After narrowing down our choices to several people there is another additional homework to do: we need to do a little research on them. We need to heed their track records. There is no guarantee they don’t understand this theory. Just think for the best, prepare for the worst. Happy vote!

Life and Rational Expectation

What’s life? Is it something to be stressed about or something that we should be grateful at? The world where we live is full of opposites, of which are the most troublesome adjective for most people, I suppose. Please tell me if you know there is something which doesn’t have its opposite and none of us don’t get mad at, because I am very eager to figure it out. People always feel something bad and sometimes for God for their miserable life if something unexpected opposite happens to them. There is black, there is white; there is day, there is dark; there is man, there is woman; there is happiness, there is sadness, etc. Consequently, no need to deeply brood over it, since when something comes, its opposite will replace it, regardless of time period of the replacement. Believe it or not, sun rises in the morning and hides itself when moon starts showing up. It’s timely and kind of beset every day. I know it’s not something extraordinary.

However, when the winter comes, the period changes. It’s no longer like in regular days; we can change our prediction in the winter, then. I know it’s a poor analogy to life, but the basic moral of this is that when something bad happens to you it will be replaced by something good, vice versa. So, don’t be so upset when something bad makes a visit to you, and, vice versa, don’t be so happy when something good happens to you because it can be replaced with something you have never expected before. See? Expectation plays a big role in life. I am so grateful that I have got a chance to study rational expectation in economics that teaches me to change my expectation, when some variables change.

The main problem here is that not so many people can manage their expectations. In return, some people may consider this life as a kind of proof that you are an imperfect living creature, that can be angry, depressed, and, interestingly, happy in just the short period of time and not to be able to make rational decisions every time. Some people consider this life as a curse because they have been experiencing so much severe pain in his whole life full of torturing, grieves, lost, and so many hard feelings. As a result, most of them might ask not to be delivered in this world and hope to die in young age. For them, I can conclude, life is something to be stressed about.

In my definition, life is something that can prove your existence as a human being since in this life you can feel the bitterness and sweetness of life. Therefore, I feel like this life as something that would make you a ‘real’ human being. By living in this world, human beings can taste such things, which are challenges for our everyday life. Life can make you explore all of your moral, intelligence, and feeling capability in order to survive. And of that, you can be more perfect every minute. To a large part, it’s exciting, indeed. I am not saying life is to be grateful at or stressed about, either because I am far from being able to recall my memory of who I was if I happened not to be born in this world. Thus, I can’t make an objective comparison, then.

The only thing I can say is that I love to live in this unique world even though sometimes I don’t feel very comfortable with my life. What about you, folks? Do you think life is something to be stressed about, or the exact opposite of it, that is something that should be grateful at?

It’s Like Bambang Pamungkas Moving to Manchester United?

One of my highest-ever goals in my life is to continue my study to one of the top schools in economics in US, of course by getting scholarship. But, for a while I can’t keep thinking about the clean path to get into this school. How? I think it’s so difficult to get it because perhaps I am not a great student compared to other foreign students who have the same aims as me; I study in University of Indonesia which is relatively not well-known among other top universities in the world, which is an essential factor.

I can make analogy of this me getting into top school is like Bambang Pamungkas, which is one of the best of the best players in Indonesia, moving to Manchester United, which is one of the biggest club on earth.

And yet, I want to assure myself by upbringing possibility making analogy like Hidetoshi Nakata moving to AS Roma at that time so that I can have a little bit optimism…hahaha

I Must Have the Same Endurance Like a Camel!

When I reread Heilbroner’s The Worldly Philosophers I was refreshed by this sentence, which reminds me of how hard it is to absorb some of great texts I ever read:

“Economic reading is…a veritable desert of dusty prose…The student of economics must be prepared for long journeys without a single refreshing sentence; it takes the endurance of a camel and the patience of a saint to finish some of the great texts”

Oh, I am really embarrassed finding how I seldom finish some of great texts…hahaha…Anyway, I’ll try to have great endurance as a camel has…Ironically, I find it difficult to absorb all of the aims of Heilbroner in this book since it uses sophisticated English, like in literature or something…Why so complex, Mr Heilbroner??

“Why Agus and Pardede?”, says economic pundits; “Why Choose a Candidate?”, says me.

The fit and proper test to appoint the new central governor of Bank of Indonesia is coming. President SBY gave 2 candidates to fill the position. They are Agus Martowardojo and Raden Pardede. Both of them have a lot of experiences in banking in Indonesia. Agus is now the main director of Bank Mandiri and Pardede of PT Perusahaan Pengelolaan Aset. Alas, both of them were rejected by DPR

As I know, rule of thumb for the status of central bank to the government is independent to each other so that they don’t intervene much. Actually, I could not understand why, while empirics evidences show that if an economy is to succeed, there should be a solid coordination between fiscal and monetary. Anyway, this is not the point of my writing this time.

The point of my writing this time is that if the government is to be independent to the central bank then why should Mr. President choose a candidate to run BI? Should I be surprised? I don't think so!

However, I still can’t get it!

Why I learn Economics

After graduating from senior high school, I had never thought of being a student of economics. Not even once! However, after taking economics courses for about three years, I have got absorbed to problems and intellectuals intrigues after the birth of Adam Smith’s “Wealth of Nations”.

Learning quite carefully, I have found out that Economics allied with politics are two sciences ruling the world. I know that exact sciences and technological informatics development have played a salient role in determining and directing human race’s civilization and, in most cases, wealth of nations. But, I also realized that at the same time no matter how great a state is in sciences and technological mastering level, political economy is a very significance element in any developments of nations. In this little world or even in our daily life, in most cases the superior intimidates and often rules the inferior ones out.

Contemplating why I chose economics as major in college which means may determine my future career and life, the late Joanne Robinson of Cambridge helped affirm my objective in economics.

She said that “the purpose of studying economics is not to acquire a set of ready-made answers to economics questions, but to learn how to avoid being deceived by economists"

I am trying to learn economics so well that I can help build my country not to be deceived by other countries since I know in economics, there is a capitalism adagio, which turns to be real in any condition, stating that “there is no such thing as free lunch.” I know that our parents always remain us not to put a negative suspect on other people’s help, but world is cruel, pal!