Social insecurity

By webadmin on 05:02 pm May 30, 2011
Category Archive

Farid Harianto

Ray Bradbury’s novel Fahrenheit 451 is a classic rendition of our contemporary democratic life. The book was adapted into a film in 1966, written and directed by Francois Truffaut and starring Oskar Werner and Julie Christie.

The rumor goes that Mel Gibson and director Frank Darabont have been contemplating a remake of the movie for years.

The novel is about a nightmarish society that can be portrayed as a mass of stolid farm animals; they are easily penned and led. If one would be separated from the mass of these bovine creatures, he would most likely be stepped on and killed.

The protagonist of the novel is one who thoughtlessly follows the animals in front of him. Yet, through a series of encounters with two free thinkers, he begins to realize his mass mentality and attempts to break away.

The protagonist does suffer for choosing to break away from the majority. At the end, though, he is safe while the majority is shattered. By destroying the larger herd and preserving the wayward one, Bradbury conveys his message: the free thinker will be saved from the terrible tyranny of the majority.

The Bradbury novel in a way reflects the on-going democratization of Indonesia. Thirteen years ago in May, a student-led protest erupted in Jakarta followed by a bloody racial riot that drastically changed the landscape of Indonesian politics, and led to the downfall of the Suharto regime. Since then political reform has taken place and free democracy has blossomed.

Indonesia’s journey to democracy is in great part a success story. Yet, larger questions remain pertaining to the problem of Indonesia’s democratization.

Political analysts tend to argue that the latest elections in 2009 were flawed in many ways and yet generally free and fair. The overall results were considered broadly in line with the electorate’s preference.

More worrying is the continuing frailty of political parties. The party system appeared to have become more stable over the years. Yet, the system remains volatile as the political parties largely do not have strong organizational roots, do not have ideological and policy programmatic distinctiveness, and are mostly involved in corruption and money politics. With these glaring shortcomings, the system tends to rely heavily on personalization of politics rather than the maturing and increasing institutionalization of political parties.

Voting in Indonesia is based primarily on the personalities of candidates, with policy issues rarely tipping the balance. Debates about ideologies and policy issues are atypical beyond the semantics. In reality, policy choices seldom get the vetting they deserve – be it within the government, in the legislature or in civil society and the media – and voters are simply alienated from these choices. Even worse, voters seldom feel any responsibility for these choices.

A good example of this phenomenon is the current debate on the development of our social security system. Since the enactment of the National Social Security Law (SJSN) in 2004, there has been a proliferation of social entitlements: free healthcare for the poor and now the idea of (free) universal healthcare coverage, free schooling, free child care, free nursery homes, (almost) free housing for the poor.

With our rapid demographic change (Indonesians are getting older, and fast) the costs of such entitlement will only spiral up. Of course, as most people do not pay taxes, they will vote and demand further entitlements. It does not cost them anything personally.
Indonesia has a labor force of 110 million out of population of 240 million, about 57% of which are in informal sectors. In 2010, the tax office claimed that there were 19 million tax identity card (NPWP) holders; almost half of them are public servants and armed forces. So in practice, there are only about 10 million private taxpayers who have to shoulder the burden of the state budget.

Any welfare program to provide some protection for the poor and the labor force in a time of structural adjustment is only fair and just. But we need to think about the fiscal consequences and to strike a balance between what we should and what we can afford to do. Unfortunately, under our political system today, such a policy discourse is simply absent. The sad thing is, in the absence of political ideology or policy debates, we are more and more forced to lean to the left because of our own ignorance.

Tyranny of the majority?

The example of social security portrays a very serious issue in our democratization process. This is the problem of the tyranny of the majority, and specifically of “two wolves and one sheep deciding democratically on what to have for dinner.”

The question of the tyranny by the majority haunted the founding fathers of the US. If the majority rules, then what is to stop it from tyrannizing the minority by enforcing the majority’s wishes – be it religion, culture or economic interest – on it?

James Madison’s well-known answer was in the structuring of the federalist government. He argued forcefully for a federal structure in which there is a clear demarcation between the federal entity and the states. The separation of powers among legislature, executive and judiciary at federal level would provide further protection against the tyranny of the majority.

Indonesia does have a similar separation of power among the three government branches, at least in theory. In reality, however, the balance tilts heavily toward the executive. More importantly, the Indonesian Constitution does not clearly protect the sovereignty of the individual, as the US Constitution does.

As the French historian Alexis de Tocqueville noted, the very foundation of American democracy rests in the principle of the sovereignty of the people. While the will of the majority might not always be prudent or just, de Tocqueville assumed that the majority would be “more or less well-informed, animated by interest and pride, relatively benign.” But that is hardly the case for Indonesia.

The current debate about the draft law on the executing agency for the social security system (BPJS) is a case in point. The draft law is prepared by the parliament and contains provision of the statue, power and responsibility of BPJS as the executing agency for the SJSN Law of 2004.

In the draft law, BPJS is modeled as an independent trustee and has the right to design social security programs, collect contributions from the general public, pay benefits and invest for the benefit of the members. The government in this case plays the role of paying the contribution of the poor (as defined), and guarantees the solvency of BPJS.

The government (i.e., the executive branch) has objected very strongly to such a draft law. The draft law is viewed as expanding the scope of the SJSN beyond what is stipulated in the 2004 SJSN Law. The effectiveness of a trustee in the Indonesian legal setting is not really known, as we do not have a trust law. The one example that is closest to the model is the mutual insurance company Bumi Putera 1912, which is now practically insolvent.

More worrying is the fiscal consequences of such an undertaking. The estimates prepared by the Ministry of Finance (MOF) indicate that, if given its way, the social security programs can cost between 8% and 10% of GDP annually 70 years down the road, before taking into account the demographic changes. That is about a half of the national budget.

As Indonesians are getting older and fast, the cost estimates are only going to go up. Also, as the draft law mandates BPJS to design the programs and the definition of the poor is not well specified, the fiscal consequence of such a draft law is still not known.

The draft law, however, is very popular with the general public. Workers are very supportive as they demand social security protection as stipulated in the SJSN Law of 2004: health insurance, pension, protection for the elderly, and benefits in event of labor displacement emanating from structural adjustment. Politicians are embracing the draft laws in order to feed their populist tendencies. Bureaucrats, especially in the ministries of social welfare and health, tend to see it as an enhancement of their role, with its attendant side benefits.

But, with the huge consequence to Indonesia’s fiscal capacity will the programs be sustainable in the long run? Remember the US social security fiasco. Is there any way that we can still achieve the ideal of decent social security protection and, at the same time, protect the integrity of our fiscal system?

The government is acutely aware of these challenges; its position is to clarify these issues and, if needed, to amend the SJSN Law of 2004. In addition, without knowing upfront the fiscal consequence it is very difficult for the government to allow a supposedly independent body such as BPJS to design and implement various social security programs without having a say on them. Therefore, the government wants to make BPJS an extension of and under the executive branch, and not an independent body per se.

We deserve it

What happens in our contemporary politics reflects who we are, and we get the politicians we deserve. We naturally expect to enjoy a good living and to have quality schools, universities, healthcare, public transportation, roads, parks, low-income assistance, elderly assistance and all other services without paying taxes if possible.

We have been living in the midst of crumbling and inadequate infrastructure and we know that massive investment in infrastructure is required to improve our quality of life and as a foundation for future prosperity. But these are long-term propositions, and the public is concerned more with the short-run provision of social security to protect their quality of life. In essence, we have tons on our wish list but our financial and fiscal resources are limited.

The key to providing a solution is to enhance our tax base. As it is today, Indonesia has one of the highest tax rates in the region (the highest tax rate is 30% for individuals and 25% for corporations) and yet, its tax ratio is among the lowest at about 13%-14% of GDP.

Two particular problems contribute to such relatively low tax revenue. The first is the low number of individual taxpayers. Second is the widespread corruption within the tax authority – as epitomized by the infamous Gayus saga – that leaks tax revenue.

We need smart discourses in terms of where we want to go politically, and what kind of republic we wish to live in. We need to have smart dialogues on the choice of social and economic policies that will guarantee our quality of life.

We need free thinking and freethinkers to achieve the above discourses. We need many more research centers and education that will facilitate the public debates. We need to move away from personalizing politics and more to institutionalizing both the politics and the policies. We need, in short, to strengthen our political system and our political parties. But until a working plurality of our citizens makes up our minds to do this, we always deserve what we get.

Taxation without representation was the seed of the Boston tea party and the American Revolution against British colonial rule. Representation without taxation is another malady that evokes the modern day (Republican) tea party: a protest against the domination of the majority, who only pay 47% of federal taxes and the resulting proliferation of social entitlements.

The readers of Fahrenheit 451 are familiar with the consequences of staying with and of breaking away from the majority. In the Bradbury novel, free thinking is the cure for the tyranny of the majority. In real politics, though, it is necessary to go the extra miles beyond free thinking.

Time will tell us whether our “reformasi” leads us to prosperous democracy, or if it fails due to the small-mindedness of our leaders in crafting a democratic structure that allows for healthy debates on our politics and policies. Political and policy institutionalization does matter.