B. Herry-Priyono, Jakarta | Tue, 01/25/2011 11:07 AM
Just a few days after the government claimed to have cut the number of people living in poverty from 32.53 million to 31.02 million in one year, six siblings in Jepara, Central Java, tragically died after eking out survival on food made of processed cassava mixed with palm sugar. This survival grub is called tiwul, a sign that the family was in dire poverty.
When a chorus of criticism began to voice this contrast, somehow I anticipated the government and its critics would simply pass each other like ships in the night. As expected, the debates surrounded the issue of statistical accuracy. Quantification always creates an illusion of precision. But a claim does not become exact just because it uses statistics, since there is nothing to prevent correct statistics being factually flawed.
The problem has nothing to do with quantification. Rather, it is with the pre-selected assumptions that prevent one from differentiating poverty from other assumptions. If the poverty line is set at Rp 211,726 per month (0.78 US cents per day) the statistical outcome cannot depart from this line. In purely statistical terms, there is nothing wrong with it, but this neat clarity is bound to fail in reality. In order to include those living on the brink of poverty, I think a more realistic assumption would be $2 per day. By this, we end up with around 100 million Indonesians living in poverty.
But even if we accept the official fiat, the figures are deceptive. The claim that the poverty rate has declined is one thing, that the decline was due to the poverty eradication campaign is another. In the language of logic it is called a non sequitur, it doesn’t follow. Ordinary people’s drive to better their condition — with or without the government’s anti-poverty program — is more likely to have been responsible for the apparent reduction. Of course, less 1.5 million in the poverty figures is no small matter, but to claim it as the outcome of a systematic program raises a big question.
Amidst this statistical twisting and turning, something fundamental is amiss. It concerns the quality of growth that haunts the link between economic development and poverty eradication. When we say that economic growth lacks quality, the issue lies not in growth but in the link between growth and the welfare improvement for ordinary people. There is no need to spill blood over the meaning of the term “ordinary people” — 100 million Indonesians living on $2 or less per day are exactly to whom the term refers. Any act of sophistry to include the affluent into this category is like calling a tiger a kitten.
It is here that the fallacy starts. We confuse market mechanisms with the economy, which makes us lose sight of the fundamental truth that what is called “the economy” has in fact less to do with the market than with people’s livelihood. With all due respect to economic textbooks, most of us are slaves to this fallacy.
By mistaking the market for the economy, we are then obsessed with the workings of the market machine, as if by perfecting its mechanics we’ve done great things for ordinary people’s livelihoods.
That is why it is not unusual to find that the stock and capital markets are so bullish, yet the bullishness has no connection whatsoever with the improvement of people’s livelihoods. In short, economic growth rates can be driven to some double digits with statistical acrobats being marshaled in their service, but ordinary people remain drowning in poverty.
Why so? Let’s be blunt: Once we mistake the market for the economy, the concern is no longer about people’s livelihoods but rather about how to indulge those who can pay. Why? We should not forget the sacred principle of the market in which the highest buyers are the winners.
Of course the highest buyers can never be the poor! That is why replacing the notion of the economy with the market is always poisoned with a dangerous bias against the poor. Or, to put it mildly, the market will include the poor only insofar as the poor’s welfare is understood as a side-effect of the market’s need to indulge the greed of those who can pay. Since only the rich and affluent invest, and since only investment makes the market tick, it is not unusual that the market takes no bearings on the survival and livelihood of the poor.
This is why the economy is no longer concerned with the survival of the ordinary people, but rather with the accumulation process of the rich and affluent. The contrast between the accumulation economy and the survival economy is precisely what lies behind the current wrangles between the government and its critics. They are bound to pass each other like ships in the night, for the two are operating on completely different assumptions about the economy.
This raises another question: How to harness the market economy for the survival and livelihood of the poor? This is an urgent issue and the answer is likely to upset the present government’s grand economic design; it needs a different treatment. As for now, the dogs have barked, but the caravan simply moves on.
The writer, a lecturer in the Postgraduate Program at the Driyarkara School of Philosophy,
Jakarta, holds a PhD from the London School of Economics.
