http://www.thejakartapost.com/news/2009/01/05/part-1-2-where-will-poor-go-year.html
Tuesday, January 6, 2009 4:36 AM Part 1 of 2: Where will the poor go this year? HS Dillon, , Jakarta | Mon, 01/05/2009 11:06 AM | Opinion "RI's richest poorer by end 2008: Forbes" read this daily's headline a short while ago. This immediately raises the question: Now that even the richest have become poorer, how will Indonesia's poor fare? As the Chinese are fond of saying, we are now living in interesting times. Free market economics without quality of governance has brought the world economy to desperate straits. Untrammeled greed and little supervisory zeal to temper the "irrational exuberance" has seen the downfall of 20th century capitalism, leaving humankind facing a global recession. When we went through something similar a decade ago, the number of poor households exploded. Decades of progress in creating pathways out of poverty, albeit under an authoritarian regime, were swept away by similar greed and complacency. The medicine prescribed by the IMF with the World Bank's blessing, i.e., bailing out the big players, allowed the culprits to emerge stronger. The poor got the short shrift. Although agriculture had generated around 5 million new jobs between August 1997 and August 1998, the state budget was directed away from agricultural investment. Rural infrastructure was allowed to deteriorate and irrigation works fell into disrepair, while health and education services slipped further away from the grasp of poor families. The IMF/WB/GOI Letter of Intent drove the last nail into the farm laborer's coffin by facilitating the dumping of agricultural commodities by the developed countries. If the number of poor had been reported to be 22.5 million in 1996, with the new BPS (Central Statistics Agency) definition in 1998 it had more than doubled to 49.5 million. A decade later, despite the billions spent on all sorts of poverty-alleviation programs, even the most ardent supporters of the regime have conceded that the number of poor households has continued to rise. Why the persistent poverty among such rich natural resources? It behooves us to try and understand the dynamics of poverty and prosperity in a real-life setting: How did the richest Indonesians manage to become so rich, and why have the poor Indonesians remained so poor? The enigma of rich natural resources and poor people is normally explained by poor development policies, improper sequencing, the inferior quality of institutions and poor governance. As is evident on Java, Sumatra, Kalimantan and Papua, different migrant groups have invariably fared better than the indigenous. Why couldn't the others embark on the same path? A fair treatment of this subject merits a doctoral dissertation, but on the whole the poor remain poor because they are marginalized and silenced; they are most often those who live in remote rural areas, are ethnic minorities or members of excluded groups, with lower education, fewer assets and less access to markets. The prevalence of self-serving officials at all levels has enabled extractive institutions to keep re-inventing themselves -- such as the banks that are channeling the savings of poor farm laborers into the coffers of domestic conglomerates. Such poverty traps manifest themselves most strikingly in two of our frontier regions -- Aceh and Papua. Despite the fact that both regions have been granted special autonomy and are awash in funds, poverty still appears to be intractable. Indeed, poverty has always had rural origins, and even today, in Aceh, rural poverty is twice as high as urban poverty, while in Papua, 94 percent of the poor are rural. It is due to precisely such poverty traps that the special autonomy dividend is yet to be shared by the populace in these two regions. These self-same poverty traps, exacerbated by poor governance across the legislative, executive and judicial branches, have generated great inequities. A cursory glance at the track record of our richest fellow citizens fails to reveal any well-conceived and perfectly implemented brilliant strategies. Neither do any outstanding technologies, innovations or breakthroughs make themselves evident. There is no denying that some had inherited fortunes from their forbears who had toiled endlessly and consequently bequeathed empires to their heirs. However, if one were to introduce values into the equation, roughly a third of our rich have been thriving on the smoking addiction of poor Indonesians, another third have capitalized upon the cheap land and money pushed upon them by corrupt officials and sleazy bankers to build agribusinesses, whilst the remaining had well-wishers very high up in President Soeharto's government handing out monopolies and lucrative government contracts. Of even greater importance has been the belief that wealth will trickle down to the poor. The two crises a decade apart have proven the failure of the unfettered market, when no one looks after the broader public interest. At the height of the boom, former U.S. Labor Secretary, Robert B. Reich, had warned that although investment values had gone through the roof, "the institutions that used to aggregate citizen values have declined". One needs to bear in mind that crises have long been considered as part and parcel of capitalism. Joseph A. Schumpeter argued that crises were instrumental in "creative destruction" necessary for the survival of capitalism, based on the belief that civilization only progresses when old methods of production (and consumption) are destroyed and replaced by better methods. We are now witnessing excess and hubris work through a cycle of boom and bust to humble even the best and brightest. What we need, therefore, are new forms of democratization and governance to ensure that market transactions lead to outcomes that are socially desirable -- that involve a more sustainable use of natural resources; that lead to a more equitable distribution of wealth and power and that promote patterns of consumption more in line with a carrying capacity of a world which we global citizens want our children to inherit. This calls for a paradigmatic shift to something known as "People-Driven Development". Herein, all policies formulated, institutions designed and technologies developed or transferred-in would be driven by the needs and capacities of the people. Identification of these needs and capacities demands an equal-discourse with the poor themselves. With proper sequencing, by starting with conception-control, working towards adequate food and nutrition, providing health services that reach out and are affordable, then designing education that addresses local needs, one reaches the final stage of infrastructure and institutions to create seamless economies. The poor, then, would be able to climb up such a ladder out of poverty unaided. The writer was Head National Coordinating Agency for Poverty Reduction, 2001. [Non-text portions of this message have been removed]
