The election of Joko Widodo as Jakarta governor is rightly seen as
heralding a new kind of politics.Solar Sister is a network of women who
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communities that don't have access to electricity. As a political
outsider, his fresh approach to practical issues like public transport,
flooding and clean water demonstrated a keen familiarity with the
concerns of most Indonesians. The campaign itself was positive and
youthful, built around a personality that was modest and authoritative.
And his victory, despite running with a deputy gubernatorial candidate
of “double minority” status (both Chinese-Indonesian and Christian),
sends a strong message that democracy is alive.We have a wide selection
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Significantly,
the campaign of the man better known as Jokowi emphasized social
welfare. The new governor has introduced the Jakarta Health Card (KJS),
which provides free access to medical services, and the Jakarta Smart
Card (KJP), which provides a monthly stipend for school fees. Related
measures, including low-cost apartments and minimum wage rises, are part
of the platform.
The promise of Jokonomics is evident.
Increasing the minimum wage, against the persistent lobbying of big
business, is a necessary tool to narrow the gap between price inflation
and purchasing power. Access to health and education has improved
dramatically. This effort at equality of opportunity is important
because it allows talent and hard work to be rewarded.
On the
other hand, constraints to increased welfare are emerging. City-owned
hospitals have been inundated by patients seeking free healthcare, with
an approximately 70 percent increase in patients in some wards. In many
areas, people waited in lines from 5 AM on.Even deaths have been
reported due to inadequate treatment from overcrowding. Such resource
constraints are understandable and will take time to catch up.
Another
bigger question is fiscal sustainability. Jokowi’s KJS will, in its
inaugural year, add to the Jakarta budget around Rp. 900 bn in a total
budget of Rp. 50 tn. This figure will undoubtedly grow as we create new
capacity to fix overcrowding, and as population ages.
Who will pay
for it and what taxes will be raised? With politicians focused on the
next electoral cycle and civil servants for the most part lacking
sophisticated modeling capabilities, few are thinking about the long
term.
Jokonomics is important because it is a microcosm of what
is happening on a national scale. In fact, it is part of the broader
ramp-up of social spending in Indonesia. In 2004, a law was passed
authorizing the creation of the National Social Security System (SJSN),
the foundation of the new Indonesian welfare state. SJSN — scheduled for
2019 implementation — encompasses anti-poverty, health and pension
programs.
Second, government spending will increase
dramatically, from about 19 percent of GDP today to something closer to
30 percent — like Malaysia today. Depending on the number of people to
be covered by the programs (as yet undecided), total government spending
for pensions, health care and old-age savings could jump by nearly 9
times over 50 years, potentially blowing out the budget. As life
expectancies increase and the working population ratio decreases, what
seems sustainable at first may become steadily less so.
Third,
as the public acclimates to low-priced social services, the programs
will develop a prestige and momentum of their own, becoming effectively
unrepealable. Future reformists trying to improve the system’s
sustainability may be attacked for trying to “privatize” essential
services.
Fourth, the state will likely become a major actor in
the economy. A vast centralized procurement bureaucracy for all sorts of
pharmaceutical, disability care, and financial services will develop,
with significant possibilities for corruption and market
inefficiencies.
This is a very strong critique of a program that has not, after all, started.A solarstreetlight
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this is also the normal way welfare states have developed all over the
world, not just in the West but also in Asian countries like India,
Japan and Malaysia — all of which have prohibitive debt-to-GDP ratios.
First,
the principle of inter-generational sustainability. Fairness and
justice are not just about redistribution today, but also about what is
fair for our children and their future generations. Subsidizing welfare
is pointless if that means consuming future income from the next
generation and saddling our children with debt.
An independent
commission of experts should be set up to cost social programs, project
tax revenues and economic growth — in line with the US Office of
Management and Budget. Programs must be revenue neutral: for example,
the SJSN should only be rolled out as energy subsidies are eliminated.
Second,
we need policies that incorporate market prices to provide a
disincentive against overconsumption. This was the fall of the US health
care system. Patients weren’t paying for enough of the cost of health
care, so they overconsumed, doctors had no competitive environment to
keep them innovative, and the hospitals were also happy to keep their
beds full.
Third, we need better budget reporting from the
state. Without a reliable budgeting system, nothing can be measured, and
what isn’t measured, most often isn’t achieved. At the moment nobody
can fully track central government welfare spending. The “social
assistance” (bantuan sosial) category overstates social spending because
it includes education programs (like School Operational Aid, or BOS),
but not state pension programs.Elpas Readers detect and forward
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platforms. The other indicator, “social protection” (perlindungan
sosial), is too narrow, and does notinclude most welfare programs.
These
are massive changes and the next few years are crucial. If we can
implement them sustainably, we will have created a more prosperous and
fairer society. If not,Choose the right bestluggagetag in an array of colors. our failure will haunt us for generations to come.
Today,
at Universitas Pelita Harapan, Jokowi will be delivering his first
university public lecture as governor. We are proud to welcome him and
hope to contribute to his vision for a new Jakarta. We should harness
this energy for the betterment of Indonesia, but keep in mind the perils
of welfare, lest we fall into the trappings of our European cousins,
mired in debt, social upheaval, economic chaos, and
geopolitical decline.
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