THE CHRONICLES OF A CAPITALIST LAWYER

RANDOM THOUGHTS OF A CAPITALIST LAWYER ON LAW, ECONOMICS, AND EVERYTHING ELSE

Showing posts with label Public Policy. Show all posts
Showing posts with label Public Policy. Show all posts
  • Al-Maidah: 51 dan Politik Islam yang Tak Kunjung Lepas Landas


    Minggu lalu saya diminta untuk memberikan komentar atas artikel berjudul "Politik Islam di Indonesia: Ideologi, Transformasi, dan Prospek dalam Proses Politik Terkini" yang ditulis oleh Muhammad Zulifan. Karena menurut saya artikelnya juga berhubungan dengan artikel Zulifan lainnya tentang Tafsir atas Al-Maidah Ayat 51, maka saya akan menggabungkan komentar saya atas kedua artikel tersebut dalam tulisan kali ini.
  • Mahasiswa Sebagai Agen Perubahan? Jangan Berharap Terlalu Banyak!


    Membaca artikel soal kampus sebagai wahana kaderisasi pemimpin bangsa ini mengingatkan saya ke kejadian di bulan Agustus 2001 ketika saya mengikuti acara orientasi mahasiswa di Fakultas Hukum Universitas Indonesia. Kejatuhan Suharto di tahun 1998 masih terasa seperti kemarin sore dan Gus Dur juga baru saja tersingkir sebagai Presiden RI. Mahasiswa-mahasiswa senior masih lumayan semangat meributkan soal peranan mahasiswa sebagai agen perubahan dan harus bisa mendidik golongan masyarakat akar rumput.

    Bosan mendengar pidato yang tak berkesudahan itu, saya akhirnya berdiri dan menyatakan: "anda semua ini sedang mempraktekkan kesombongan intelektual, apanya yang agen perubahan sementara sebagian besar dari anda saja masih hidup di bawah lindungan orang tua." Sayang saya tak bisa berlama-lama menyampaikan uneg-uneg saya karena rekan-rekan seangkatan sudah memelototi saya. "Orang macam gini nih yang bikin angkatan bakal dihukum ramai-ramai," mungkin itu yang ada di pikiran mereka. Tapi saya jujur memang tak suka dengan klaim bombastis itu, khususnya ketika mereka mengklaim mahasiswa sebagai pencerah masyarakat akar rumput. Mungkin karena saya salah satu korban krisis 1998, saya tak bisa berleha-leha memikirkan nasib bangsa karena yang saya tahu kalau saya tak cepat-cepat lulus dan punya prestasi, nasib masa depan saya tak akan jelas-jelas amat.

    Saya tak habis pikir, bagaimana caranya orang-orang yang sangat cerdas dan terpelajar ini berpikir bahwa mahasiswa bisa dididik menjadi agen perubahan yang peduli pada nasib rakyat dan sebagainya sementara pola orientasinya sangat feodalistis. Contoh nyatanya? Komisi disiplin, sebuah komisi yang menurut saya tak ada gunanya selain memberikan kesempatan kepada mahasiswa yang lebih senior untuk memarahi anak-anak juniornya. Dan untuk apa? Menciptakan kedisiplinan? Kedisiplinan macam apa yang akan didapat dari marah-marah tak jelas seperti itu? Masuk kuping kanan keluar kuping kiri. Cocok buat lucu-lucuan setelah selesai, tetapi kalau program ini diharapkan akan mengubah pola pikir mahasiswa secara fundamental, lupakan saja itu.

    Pada saat angkatan saya diminta untuk mengurus acara orientasi untuk mahasiswa angkatan 2002, saya mendapatkan posisi mengurus tim Mentor Akademik. Saya bermimpi bisa menciptakan sistem mentor yang baik dimana mahasiswa junior bisa mendapatkan rekan senior yang akan membantu mereka di bidang akademik, memberikan petunjuk tentang apa saja yang harus dipersiapkan dalam menghadapi kegiatan belajar di kampus dan agar hubungan antara mentor dan adik kelasnya bisa berjalan baik. Tapi sayangnya acara mentoring lebih banyak dipotong dan oleh karenanya menjadi tidak efektif. Untuk apa? Tentu saja untuk acara kedisiplinan yang maha seru itu.

    Kisah saya belum selesai. Setelah program ospek (versi lebih kasar dan keras dari orientasi) dihilangkan di tahun 2000, tiba-tiba muncul ide jenius dari fakultas untuk mengembalikan ospek terhadap angkatan 2003 dan angkatan saya diminta untuk mengurus acara tersebut. Katanya acara ini diperlukan untuk meningkatkan solidaritas angkatan dan supaya murid tak kurang ajar kepada seniornya. Heh? Ini luar biasa, sudahlah angkatan saya sebenarnya menikmati tak perlu merasakan ospek, sekarang kita akan memulai lagi ritual bodoh itu? Saya hanya bisa menyampaikan kemarahan di forum angkatan, tetapi acara itu pada akhirnya tetap berjalan dan sejauh yang saya tahu masih tetap berlanjut. Dikembalikannya program ospek membuat saya makin bertanya-tanya, apa sebenarnya yang dimaksud dengan menciptakan mahasiswa sebagai agen perubahan? Apa yang mau diubah kalau tradisi yang buruk saja justru diulang kembali?

    Tahun 2004, saya diminta mengisi acara orientasi untuk mahasiswa baru sebagai pemenang kompetisi Mahasiswa Berprestasi Utama FHUI. Acara yang menyenangkan, kapan lagi saya punya kesempatan untuk menyampaikan kepada para mahasiswa baru bahwa seluruh sistem yang dibangun di kampus adalah sistem feodal? Ekspresi muka komisi disiplin dan beberapa dosen di kursi belakang auditorium ketika saya mengkritik sistem absurd itu tidak akan saya lupakan, priceless. Dan saya tidak menyesali sedikit pun kalimat yang saya sampaikan di forum itu: "Mahasiswa harus ambisius, harus mandiri, dan punya cita-cita jadi orang besar. Lebih penting lagi, hargai rekan yang juga ambisius dan berani untuk mengejar cita-citanya." Saya minta beberapa mahasiswa yang waktu itu berani bicara untuk menyampaikan pandangan mereka, dan kalau bisa, dalam bahasa Inggris. Setelah selesai, tak lupa saya ingatkan untuk memberikan tepuk tangan meriah karena mereka berani bicara. Kenapa tidak?

    Apa yang anda harapkan dari sistem pendidikan yang hanya diwarnai kekerasan dan doktrin-doktrin tak bermutu tanpa memperhatikan insentif manusianya sama sekali? Saya belum pergi ke Amerika saat itu, tapi saya bahkan tak perlu pergi jauh-jauh ke Amerika sekedar untuk menyatakan bahwa sistem orientasi universitas kita sedari awal sudah tak masuk akal dan tidak dibangun berdasarkan data atau pun teori yang valid!

    Tak kalah penting dari isu feodalisme, mana mungkin mahasiswa bisa menjadi agen perubahan kalau etos kerja dan belajarnya culun? Kuliah jaman saya adalah kuliah yang gampang. Saya punya banyak waktu untuk membaca buku-buku lainnya karena untuk kuliah saya hanya perlu belajar diktat. Sebagian besar bahan ajar (kalau bukan 100%) ada di diktat. Bahkan sebenarnya beberapa mata kuliah tidak perlu pertemuan. Untuk apa? Baca saja diktatnya, semua sudah ada di situ. Beberapa mata kuliah juga hanya menguji kekuatan hafalan kita (dan jelas lebih banyak dibandingkan dengan soal yang bersifat analitis). Tidak sulit karena tidak membutuhkan analisis yang mendalam. Apa ini metode belajar yang akan kita terus gunakan untuk menciptakan agen perubahan?

    Saya berani menjamin kalau dulu saya diterima dan mengambil Master dan PhD di University of Chicago segera setelah lulus kuliah, saya kemungkinan besar tak akan lulus. Alasan utama mengapa saya bisa menjalankan tugas membaca paper dan buku ratusan halaman per minggu serta ujian yang sifatnya murni analitis adalah karena saya sudah bekerja bertahun-tahun sebagai konsultan hukum. Kalau tanpa etos kerja sebagai konsultan, bubar jalan dengan beban seberat itu. Tak heran Chicago menyediakan layanan konseling psikologi untuk mahasiswa hukum sekaligus pasangan hidupnya karena tingkat stress mahasiswa bisa berpengaruh ke pasangannya.  

    Tentunya saya berpikir positif bahwa pengalaman buruk saya di Indonesia hanya terjadi di jaman saya, dan bahwa kini pandangan saya itu sudah usang dan tidak sesuai fakta. Tetapi ketika saya sempat diberikan kesempatan mengajar di FHUI dan FH UGM di tahun 2013, saya mendapati bahwa ternyata etos belajar mahasiswa belum banyak berubah. Makalah-makalah yang saya bagikan gratis tidak dibaca sama sekali, walaupun sepengetahuan saya, kampus kita di Indonesia belum cukup kaya untuk membeli akses terhadap jurnal-jurnal yang saya bagikan tersebut. Tetapi yang membuat saya lebih kecewa lagi adalah karena bahkan tidak ada perasaan bersalah sama sekali dari para mahasiswa tersebut. Mereka tertawa renyah ketika saya tanya, "kalian semua tidak ada yang baca papernya ya?"

    Oke lah, mungkin saya berharap terlalu jauh kalau etos membaca dan belajar itu bisa dibangun dalam sekejab, tetapi 10 tahun sudah berlalu sejak saya lulus kuliah dan saya masih menemukan kasus seperti ini di 2 universitas yang berbeda? Atau mungkin sampel data saya tak mencukupi karena hanya 2 kelas. Tak representatif sama sekali, cuma anekdot. Sunguh, saya berharap saya 100% salah, bahwa kondisi yang saya temui itu hanya anomali belaka dan bukan kenyataan secara umum. Karena kalau ini berlaku secara umum, negara kita benar-benar berada dalam keadaan darurat, darurat yang serius, bukan darurat yang mengada-ngada yang dibuat demi pencitraan murahan.

    Saya sudah menulis panjang lebar sebelumnya soal isu pendidikan di Indonesia dalam tulisan "Mendidik Bukan Sekedar Pengabdian." Kalau tulisan tersebut berbicara soal penawaran (supply) pendidikan (soal bagaimana kita memberikan insentif kepada dosen/pengajar untuk memberikan kinerja terbaiknya), sekarang kita berbicara soal permintaan (demand) terhadap ilmu. Saya tak berbicara tentang bagaimana menciptakan mahasiswa yang siap bekerja. Itu sudah merupakan suatu keharusan, saya berbicara tentang bagaimana caranya agar mahasiswa bisa memiliki etos belajar yang kuat, mencintai ilmunya dan mau berpikir secara analitis dan mendalam. Tidak grasak-grusuk dan tak sabaran.

    Jujur saja, saya melihat ada semacam kecenderungan di negara yang kita cintai ini bahwa intelektualitas itu tidak terlalu dibutuhkan. Bahwa isu intelektualitas cuma berkutat dengan teori. Dan tanpa praktek, teori-teori itu tak ada gunanya. Mau tahu hasilnya seperti apa? Hasilnya seperti yang kita dapat sekarang, ketika gema "kerja, kerja, dan kerja" tidak didukung dengan "riset, data, dan analisis." Ngasal sekali kalau mengklaim orang pintar di Indonesia sudah kebanyakan, dan yang kurang adalah yang mau berpraktek langsung. Kalau benar jumlahnya banyak, bagaimana mungkin kebijakan disusun secara ngasal?

    Atau anda pikir anda sudah jagoan di lapangan, terbiasa berpikir pragmatis dan kreatif? Anda tidak akan bisa jadi orang pragmatis kalau pengetahuan teoretis anda melempem. Saya bicara dari pengalaman saya menjadi konsultan hukum yang menangani beragam transaksi kompleks bernilai ratusan juta dolar. Richard Posner tidak akan bisa mengembangkan filosofi pragmatisme dalam mengadili kasus hukum sebagai hakim seandainya dia bukan salah satu orang paling pintar dan paling banyak baca yang pernah saya lihat di Amerika Serikat. Kalau anda pikir mengurus negara bisa dilakukan dengan modal niat baik dan niat kerja saja, anda tak layak jadi pemimpin. Dan kalau dari kecil anda sudah berpikiran seperti itu, kaderisasi kita berarti gagal total!

    Bagaimana mungkin saya tak khawatir, sebuah lembaga pemberi beasiswa negara sempat berpikiran bahwa cara terbaik untuk melatih para peserta beasiswa adalah dengan jalan latihan baris berbaris dan program motivasi. SALAH! Mereka tak butuh program-program seperti itu. Mereka butuh program yang bisa membuka jaringan baru bagi mereka, yang memberikan panggung bagi mereka untuk menunjukkan bahwa mereka layak dan bermutu untuk menerima beasiswa tersebut. Kalau mereka sudah diterima di universitas top dunia, artinya mereka sudah lulus seleksi, tinggal mengembangkan saja. Untuk apa lagi diberikan program pelatihan yang tak nyambung? Kenapa bisa begini? Ya kalau universitas saja masih membiarkan program orientasi berbasis gaya feodal, jelas saja pemikirannya mandeg sampai usia tua karena sudah dibiasakan feodal sejak kecil. Anti teori pula, cukup pakai wangsit dari alam gaib.  

    Kemudian anda pikir isu penyusunan kebijakan publik itu semudah membalikkan telapak tangan? Saya ingat sempat diundang menjadi pembicara untuk acara diskusi di FEUI dengan tema Victimless Crime. Saya sampaikan, judulnya saja sudah salah. Kalau kita menghitung kemaslahatan sosial (social welfare) secara menyeluruh, maka tidak ada yang namanya kejahatan tanpa korban, karena setiap kerugian terhadap satu individu akan berpengaruh terhadap kemaslahatan seluruh masyarakat. Contoh: seks bebas. Apakah seks bebas tidak ada biayanya? Jelas ada, biaya kehamilan yang tidak diinginkan, penyakit menular, stigma buruk secara sosial, dan sebagainya. Pertanyaannya, kalau kita disuruh mengurus isu ini, kebijakan apa yang akan diambil? Apakah akan kita hukum pelakunya? Siapa yang melaksanakan pengawasan? Memangnya kita bisa mengawasi seluruh rumah dan hotel di seluruh Indonesia? Atau lebih baik kalau kita misalnya menggunakan pendekatan pendidikan seks dan kontrasepsi? Pendekatan moral tidak akan bisa memberikan solusi karena pendekatan ini cuma bisa bicara "pokoknya."

    Di acara itu juga dibahas soal prostitusi. Beberapa mahasiswa berargumen bahwa prostitusi lebih baik dilegalkan karena akan memberikan pendapatan kepada negara dalam bentuk pajak. Saya katakan bagus, tapi jawaban seperti itu levelnya baru sekedar lulus tahapan pemberantasan buta huruf dalam ilmu ekonomi. Di tahap yang lebih tinggi, kalau kita melegalisasi suatu industri, maka akan ada juga biaya pengawasan untuk memastikan bahwa semua pemain bermain sesuai aturan. Berapa biayanya? Lebih murah dibandingkan dengan seandainya prostitusi tetap ilegal? Lalu katakanlah kita akan memajaki industri prostitusi  dan mengumpulkan mereka di satu lokasi. Seandainya pajaknya terlalu tinggi dan harga prostitusi menjadi terlalu mahal di atas harga pasar naturalnya sehingga permintaan menurun, akan ada insentif untuk memunculkan pasar gelap yang menawarkan harga lebih murah supaya industri tersebut tetap bertahan, dan jelas akan ada biaya untuk memastikan bahwa pasar gelap tersebut tidak berjalan. Ini berarti legalisasi saja tidak cukup kecuali kita juga memikirkan efek substitusi dalam bentuk penciptaan kesempatan yang lebih baik bagi pelaku prostitusi.

    Dari 2 isu di atas, sudah bisa dilihat kompleksitas dari permasalahan yang seringkali hanya dilihat hitam-putihnya saja di Indonesia. Ini baru 2 masalah, dan percayalah, masih banyak isu yang lebih penting dan mendesak di Indonesia. Negara kita tak pernah kekurangan masalah. Pertanyaannya, apa mungkin kita bisa memberikan jawaban yang tepat kalau landasan keilmuan kita serta penguasaan sarana teknisnya tidak mencukupi? Jelas tidak! Tanpa pengetahuan teoretis yang cukup, anda cuma akan jadi generasi asal bunyi. Lebih buruk lagi, sudahlah asbun dalam berpikir, lantas merasa bisa mengubah dunia dengan modal niat baik, tak tahunya berhasil mendapatkan jabatan publik dan langsung berpraktek dengan ilmu seadanya. Resep sempurna untuk menciptakan negara odal-adul.

    Teori dan praktek saling membutuhkan! Sebelum aktif berkiprah, inteleknya juga harus mumpuni. Sayangnya saya belum melihat etos untuk mengejar ilmu setinggi-tingginya tersebut sudah berjalan secara maksimal di Indonesia. Semua ingin diburu-buru, serba instan. Yang penting terkenal dulu saja, mikir belakangan. Apakah kita akan mengulangi lagi kesalahan yang sama seperti yang sedang kita lihat saat ini? Merasa bisa memperbaiki bangsa, tak sabar menanti prosesnya, sehingga akhirnya dengan semangat yang meluap-luap yakin bisa menyelamatkan masyarakat akar rumput? Halo, kita semua adalah bagian dari akar rumput tersebut! Sendirian, kita semua bukan siapa-siapa bahkan sekalipun anda masuk daftar 100 orang terkaya Indonesia versi Majalah Globe. Negara ini terlalu besar untuk dipegang satu orang. Lupakan model berpikir dimana kita sendirian bisa menyelesaikan semua masalah. Anda perlu bagi-bagi tugas. Inilah fungsi pendekatan multidisipliner.

    Jadi, bagaimana agar ada insentif bagi mahasiswa untuk bisa menjadi kader dan agen perubahan yang diidam-idamkan sejak lama itu? Apakah ada kewajiban moral untuk menjadi agen perubahan? Saya tidak percaya kewajiban moral yang tak jelas, saya lebih percaya bahwa setiap orang ingin memaksimalkan manfaat yang ia terima. Pikirkan kembali insentif dan prioritas anda. Ingin lahir, hidup, dan mati sebagai orang biasa? Atau ingin menjadi orang yang luar biasa? Kalau ingin menjadi luar biasa, sudah dipikirkan bagaimana caranya agar langkah menjadi luar biasa itu akan tercapai? Atau hanya akan menjadi impian omong kosong saja? Apakah cara untuk menjadi luar biasa hanya ada satu atau banyak?

    Satu hal yang pasti, anda tak bisa jadi luar biasa kalau etos belajar saja belum punya. Tanpa rasa keingintahuan yang tinggi, kita akan cepat berpuas diri akan pengetahuan kita, dan tak lama kemudian kita merasa sudah tahu segalanya. Ini mengapa saya bersyukur pergi ke Chicago dan sekali lagi mengalami perasaan frustrasi yang amat sangat ketika saya harus menerima kenyataan bahwa pengetahuan teknis saya masih tertinggal terlalu jauh. Ilmu hukum saja tak cukup ternyata untuk menghadapi kompleksitas permasalahan dunia.

    Saya tak bilang bahwa kemudian mahasiswa tak boleh berpolitik atau berorganisasi. Seperti yang saya sampaikan, anda semua punya prioritas masing-masing. Pesan saya hanya pastikan benar-benar bahwa langkah yang anda ambil itu sudah dipertimbangkan masak-masak. Dunia mahasiswa adalah transisi dari masa remaja ke dunia orang dewasa, pastikan langkah yang akan anda ambil tidak akan anda sesali di kemudian hari. Mulailah bertindak dewasa dengan memilih jalur hidup anda sendiri. Selamat memilih!
  • On Victimless Crime


    One of my favorite legal issues is the existence of victimless crime, usually defined as non-forceful actions whose participants are not complaining for their participation and no direct injuries are inflicted to non-participants of such actions.

    Victimless crimes are traditionally associated with actions performed by consenting adults which harm the society's moral foundations but not the society directly. These include drugs use, prostitution or non-marital sex and gambling, to name a few.

    Some economists would argue that rather than criminalizing the above acts, it would be better to instead legalize them. Not only that those acts can provide additional income to the government in the form of tax, it can also minimize the costs of legal enforcement. A good example would be the war on drugs which has caused a significant costs in the form of money and lives.

    Contrary to the above opinion, I, on the other hand, argue that victimless crime does not exist. If we are calculating the general welfare of the society, the costs imposed to each member of the society, even if they don't directly affect other members, would still matter.

    There are costs involved associated with drugs usage, health costs of the user. There are also costs associated with prostitution, costs related to sexually transmitted disease and possible costs to marriage relationship because yes, marriage too is a form of investment between the parties.

    And how about gambling? It is a form of property transfer which may easily fall into an inefficient form of resources allocation. Why? Because the game is usually designed to ensure that the bookie will always win.

    A simple example: most gamblers' chance of winning is very slim in many types of games, while the winning chance of the bookie depends on the probability of the gamblers losing the game, i.e. 1 – whatever the probability of the gambler to win. If the gambler only has a chance of 1 percent or 0.01, the bookie will have 99 percent chance to win the game. A really easy way to gain money.

    Sure, we always have the usual argument: those adults have already given their consent and they must take the responsibility for themselves. And it is also true that the regulations are not always consistent.

    Take the cigarette industry as an example. The business is legal and they pay a considerable amount of taxes to the government each year in order to maintain the business.

    So why don't we do the same for other type of "victimless crimes"? Let us view this not from moral point of view, but from economics point of view. Usually most people forget that when we legalize certain acts, it does not necessarily mean that the enforcement costs will disappear into thin air.

    You still need to spend money to ensure that the "legalized" business will comply with the rules set out by the government.

    As an example. If you criminalize drugs sale, you will need to allocate funds to enforce the law and  punish the violators. If you legalize drugs sale, you will spend funds to also supervise the business, ensuring that these "business men" will play in accordance with the rules on drug sale. And if they don't? You will simply penalize them again.

    How about income from tax? Well, you don’t need to legalize an act in order to gain additional income via tax, you can simply change the rule so that instead spending times in the prison, the criminals are required to pay all of their profits to the government. The effect will be similar to a tax and the government will receive money too.

    How about prostitution? Legalizing the prostitution might reduce the costs of supervision because legalizing the business is usually associated with its localization. This will reduce the possibility of sexual diseases transmission and improve the protection of the sex workers.

    But it is also not without additional costs. Localization may also increase the costs of the prostitution business. The procurer will need to pay taxes and the building lease fee, not to mention that there will be additional costs for moving the business place. With increasing costs, the service fee will also increase.

    Who will guarantee that it will not create incentives for a black market with cheaper services for consumers who don't have enough money to go to the valid prostitution area? This will again impose another costs for legal enforcement, i.e., eradicating the illegal prostitution outside the legalized area.

    Through these examples, I would like to show that thinking about victimless crime is not as easy as imposing tax and reducing legal enforcement costs. Instead, for every action, there would be economic consequences and if we want to make a proper policy, we need to carefully calculate the costs and benefits of such policy.
  • On Why Indonesia Needs a Regulatory Czar


    Just when we are still absorbing the decision of President Susilo Bambang Yudhoyono to create an anti-pornography task force, Cass Sunstein, the head of the United States Office of Information and Regulatory Affairs and former professor at the University of Chicago Law School, is reporting his success in fostering a more efficient regulatory environment in the United States, at least from the perspective of government agencies. This news just made my day.

    No words can perfectly express my deep envy of the above news. For a lawyer who pursues the art of law and economics, having an Indonesian governmental task force whose main purposes are to evaluate the costs and benefits of all existing regulations and to provide recommendations — or even having power to revise or cancel regulations that are not justified — might be a faraway dream. Yet, the dream is still there and we have many good reasons to pursue it.

    Too often we see Indonesian regulations that are not justified, not only based on the costs but also their basic reasoning. What is the purpose of having regulations? Regulations exist to maximize the welfare of the society (which include maintaining order and promoting justice).

    The fact that regulations are applicable to and will affect the lives of many people means that no regulations should be promulgated unless we clearly understand the intended and unintended consequences of such regulations to society.

    In an age where people demand more accountability from the government with respect to the use of their tax money, doing a cost and benefit analysis prior to issuing a regulation and evaluating the issued regulations periodically should be the norm that must be satisfied at all times. It is a continuous process because no law will ever be perfect for all times and places. Yet, I find that many people cannot understand (or maybe refuse to understand) this very simple principle.

    If the president really loves to create task forces, this is the ultimate task force that he should make in the first place. The rest can be disbanded immediately simply because we don’t see any justification for their existence other than for wasting our money.

    What would be the task and scope of authority for this task force? The task is simply to evaluate all existing regulations in Indonesia, assessing the costs and benefits of having those regulations, especially the actual benefits and costs of enforcement. The task force should also be authorized to revise any regulations issued by governmental agencies, making it a super body standing at the top of the hierarchy of governmental agencies, ensuring that all policies of the government will be synchronized.

    For laws issued by the legislature, the task force should only have the power to make recommendations. After all, the legislative body represents the basic idea of our democracy. While I support an efficient and effective government, it does not mean that I support tyranny. Thus, the authority to change regulations should stay within the scope of governmental agencies.

    I don’t think that the task force should be granted the power to issue regulations by itself. That part should still be the main job of various governmental agencies and departments, assuming that they have a comparative advantage in starting the process.

    By focusing on evaluating and revising the regulations, we can save the costs from doing a redundant job. In short, one body to make the regulations, another to evaluate the regulations. In addition, we cannot expect the drafters of regulations to review their own products. Hence, naturally, the authorities must be separated.

    What ideas should be promoted by the task force in evaluating regulations? First, flexibility within the rules. We should always favor flexible rules except in special circumstances. The fact that the world can change drastically in a short time means that there should be less room for rigidity in the law. More freedom should be given to society while the government ensures stability via security maintenance and institutional support.

    Second, efficiency. The regulations should aim at maximizing benefits while reducing the costs. This means less administrative procedures from the government side. Don’t make things more difficult when you can make them easier. It’s as simple as that.

    It also means that government should only regulate important things when the costs of enforcement are justified. As an example, government should not waste its time to regulate and enforce the laws on private conduct that might be better enforced by family members such as in the case of pornography. Instead, it should focus enforcement on reducing crimes that are disastrous to the society, such as corruption and money laundering. We have limited resources, so please focus only on the pressing matters.
  • The Tale of the Evil Car Company (Part 2 - Proposed Policy)


    I have received several comments for my previous post, and I thank all of the commentators for the effort. I must say though, if only I set a prize for giving these comments, I would definitely give such prize to my brother, Prasetya Dwicahya, for his excellent comments (no family bias involved here). So if you have not read his comments, you better check it out before going further with this post.

    Anyway, most of what I will say has already been covered by Prasetya's comments. Thus, I'll focus instead in analyzing his proposed policy to find out whether such policy can be the best option to be pursued by the government. Prasetya's proposed policy is something that we call as the freedom of choice policy which is in line with the concept of free market and pareto efficiency (a condition where as a result of the policy, some individuals are made "better off" without making any individual to be "worse off"). People is free to choose whether they want to use the car without the safety device or bear an additional costs in order to install the safety device. The company is free to produce its products (even if there is a defect) provided that it discloses all material information to the public so that people can make an informed decision and the company can reduce its marginal costs. And the Government has the role to enforce the law to ensure that the company will pay the expected compensation to any victim of the car due to the unavailability of the safety device .

    Theoretically, this can be a win-win solution that promotes efficiency to the maximum. With this kind of policy, the costs of legal enforcement by the government would not be too expensive (assuming that the rate of accident is low in accordance with the probability that has been set out by the company), the company will not be burdened with huge additional costs, and the people will have many options to choose in order to maximize their utility and preference (i.e. getting an absolutely safe car or playing with the laws of probabilities for a huge jackpot). But it seems this is too good to be true. Or isn't it?  Or do you think this idea disgusts you, that it is a morally reprehensible choice? I mean, how do you even sure about letting people take a bet with their life in the line, even though the probability is very small?

    In practice, we let people take this kind of risk all the time. We know smoking is dangerous, yet we are not able to prohibit people from doing it. And suppose you say that there is a huge interest group behind smoking activities, there is even a better example which is more similar to the above car case. We know overeating and poor exercise are a good recipe for health problems and they also increase the probability of getting caught by various diseases, including heart attack. Yet, I bet that the government will not issue any law that prohibits people from overeating and force them to exercise routinely. My main question, if we care about our people (like in the case of the automobile company), why don't we just choose the path of regulating people's daily life? There are many answers to that: the enforcement costs will be too big, it's an invasion to people's privacy, it's another form of "big brother"/dictatorship, etc. Now, if we can give those lines of arguments to the overeating problem, shouldn't we take the same position for the problematic car?            

    What I would further argue is this, the above proposed policy that respects the element of freedom can potentially be the best option for the automobile case in any possible way. Let us tweak the case a little bit. Suppose now the probability of having an accident due to the unavailability of safety device is 80%, meaning that from 2,500,000 cars, 2,000,000 cars will go haywire. Will our proposed policy save the problem? Or should the government forces the automobile company to install the device? I would say there is no need for the government to do that. Using a simple costs and benefit analysis, the company will definitely realize that the costs of not having such safety device will be too big to be borne by the company. In this case, their best option is to install the safety device.

    Now, another tweak. Suppose the costs of installing the safety device is not US$10 per car, but US$100,000 dollar. Will our proposed policy work? I bet yes. In this case, the marginal costs of producing the car (i.e. the costs of producing an additional unit of the car) will defeat its marginal benefits. Simply saying, the automobile company will never produce the car in the first place.

    Having said the above, I need to put a caveat. Our world is very complex and a solution for a problem may not work for another problem. What I want to show here is how economics can be used as a handy tool in formulating our laws and policy. I'll continue to use this theme for my next articles and hopefully we can try to apply it in different cases with different policies. One thing for sure, this exercise should be fun.
  • The Tale of the Evil Car Company (Part 1 - Question of Policy)


    Suppose one day a major automobile publicly listed company announces that it is selling a new cheap product that will allow people to have car more easily (for the sake of discussion, we will not discuss the externalities that people will face with more cars in the road).  The car is a huge success for the company, generating a huge profit, and the stocks' value of the company has also increased several times in a year. But then, an accident happens, a gruesome one. Further independent investigation shows that while the probability of the accident is very low, around 1:100,000 per year, it can be avoided if only the company install a safety device.   

    Facing this result, the company announces to the public that to cut the costs of the car, it did not install the safety device required for preventing such accident. Why? Apparently, the cost for installing the safety device is around US$10 per car and since they produce 2,500,000 car a year, the total additional costs that the company will bear for a year is US$25,000,000. Meanwhile, by attaching a value of at least US$100,000 per person as a compensation for each accident and with the assumption that the car will be purchased entirely, the company estimates that the total costs of the accident per year wouldn't be more than US$2,500,000. So, by a simple cost and benefit analysis, the best option of the company would be not to install such safety device.

    Soon this controversial information fills all the major newspapers. The enraged citizens are calling this company as an evil car company, and politicians demand the company to be responsible for such matter. Assuming that you are a policy maker, what will you do with this case? What kind of policy that you will formulate against the fact that the company has chosen not to install such safety device?

    This is the first part of my post that deals with the basic question. I'll post my proposed policy but I would like to see first how my readers will respond to this kind of question. Your comments will be much appreciated.
  • In Need of Better Coordination Among Government Officials


    Here is an interesting article on coordination among government officials. Apparently, the United States faces the same problem with Indonesia, a lack of coordination between officials. I guess this is the problem when we have too many regulators. Some classical legal scholars argue that there are 3 pillars of a government: (i) the legislative (the house of representatives), (ii) the executive (the president), and (iii) the judicial authority (the court). However in this modern world, we need to add another pillar of government, the quasi-regulator a.k.a government agencies. Some examples in Indonesia: the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) and the Investment Coordinating Board (BKPM). Not to mention that specific ministries also have authorities to issue technical implementing regulations. The Ministry of Communication and Informatics could be a good example as this ministry governs many important sectors such as broadcasting and telecommunication.

    From my experience, there is definitely a lack of coordination among government officials. To be honest, I don't understand why these guys don't meet and start to seriously work together in formulating clear and consistent policies, especially for sectors with high economic impacts. For ministries, this should be coordinated by the Coordinating Minister and supervised by the President, but I guess, that's still a dream in Indonesia.

    By the way, the last time I joined a coordination meeting among different ministries for issuing a simple government regulation, it was a mess. Some officials only talk about the old precedent and don't want to make changes (which are actually necessary) simply because they need to discuss it again with their respective ministries. No coordination, no decision maker, and to add the problem, they don't want to listen to suggestions if those are not covered in their manual. Sometimes I wonder, with this kind of government officials, do we actually need a government to survive?
  • Public Policy Making Principles (Indonesian version)


    You can read my article on public policy making principles here. I have decided that this blog will be dedicated for English version articles, and all Indonesian version articles will be posted at Politikana or any other media as I see fit. No worries though, I will always update this blog whenever I post articles in other media.

    Kind regards,
    The Capitalist Lawyer
  • The Know-It-All Government vs The Down-to-Earth Government


    Here is a very concise article about the role of the Government. A must read for those who would like to understand policies differences between the "big" and "small" government. I can understand why most people will be in favor of the "big" government" during the term of crisis. We love saviors aren't we? For most of us, those smart looking officials seem to have all what it takes to save the country (and ahem, I'm not referring to the officials of my country).

    Well, you better think again. I agree that the government must have a role in the development of a country, or else why we need to have a government in the first place? But we must also acknowledge the limitations of the government. They are, after all, made from the people and they definitely could not know and understand everything, including the entire risks and benefits of their policies. A good government should know when to stop making policies to avoid over regulation which could turn into a mess in the long term, or even in the short term.

    By the way, hat off to Mr. David Brooks for his intelligent and easy to understand analogy.


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    Legal Positivism and Law and Economics -- A Defense

    Third Indonesian National Conference of Legal Philosophy, 27-28 August 2013 | 17 Pages | Posted: 22 Aug 2013 | Last revised: 3 Sep 2013 | Date Written: August 22, 2013

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    Jurnal Hukum Jentera Vol 22, No 7 (2012) Januari-April | 14 Pages | Posted: 12 Nov 2011 | Last revised: 8 Oct 2012 | Date Written: May 7, 2012

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