The reclamation of the Gulf of Jakarta is expected to affect the livelihoods of many fishermen living nearby. Why is it that a country that is not land-scarce needs to reclaim land? Is this going to be another white elephant project with no direct benefits to the people? Have anyone done a proper cost-benefit analysis of this project?
Isn’t it better to invest in improving the transport infrastructure? Isn’t it better to invest in improving the drainage system?
Thursday, September 8, 2011
Sunday, September 4, 2011
The Case of Bookstores in Indonesia
In a fast-changing world where the viability of certain industries are being questioned and their demise are taken in stride, I was surprised to find an article in an Indonesian newspaper whose purpose was to sustain bookstores operating in small cities and towns via policies that I believe to be against the spirit of fair competition. Don’t get me wrong. I am not against small bookstores or under the payroll of big publishers. I just think that it is wrong to sustain industries whose viability is dependent on unfair policies.
The story of these bookstores is a common story among many industries, particularly those that used to sell their products via middlemen. In the past, lack of efficient infrastructure and local knowledge meant that producers had to rely on middlemen to get better market access. With improvements in infrastructure, it became more efficient to access these markets personally and so producers began to bypass the middlemen. In this specific article, the story goes that publishers used to sell their books to schools via these bookstores but now do so themselves. Unhappy with the turn of events, the owners of these bookstores said that the government should enforce the policy which states that publishers have to sell their books via these bookstores, instead of bypassing them. They also stated that since schools are getting more resources, they should be willing to pay more for books (which is likely to be the case if they obtain their books from the bookstores instead of the publishers).
These just do not make sense because logically, agents will choose the most efficient outcome for themselves. Publishers will choose to bypass the bookstores and deal directly with the schools because they will obtain higher profits. Similarly, schools will choose to deal directly with the publishers because they presumably will get better price for the books. It doesn’t matter whether they have more resources or not because the idea is to make the most efficient use of available resources. In fact if we argue the case from the perspective that schools need resources to cater to the concept of well-rounded learning, the additional resources that they obtain may not be sufficient even if they purchase books directly from publishers.
Instead of delaying the inevitable from happening, I think it is better if these bookstores start to explore other options. These can include diversifying its business, looking at services that publishers cannot provide to the schools or exiting altogether.
The story of these bookstores is a common story among many industries, particularly those that used to sell their products via middlemen. In the past, lack of efficient infrastructure and local knowledge meant that producers had to rely on middlemen to get better market access. With improvements in infrastructure, it became more efficient to access these markets personally and so producers began to bypass the middlemen. In this specific article, the story goes that publishers used to sell their books to schools via these bookstores but now do so themselves. Unhappy with the turn of events, the owners of these bookstores said that the government should enforce the policy which states that publishers have to sell their books via these bookstores, instead of bypassing them. They also stated that since schools are getting more resources, they should be willing to pay more for books (which is likely to be the case if they obtain their books from the bookstores instead of the publishers).
These just do not make sense because logically, agents will choose the most efficient outcome for themselves. Publishers will choose to bypass the bookstores and deal directly with the schools because they will obtain higher profits. Similarly, schools will choose to deal directly with the publishers because they presumably will get better price for the books. It doesn’t matter whether they have more resources or not because the idea is to make the most efficient use of available resources. In fact if we argue the case from the perspective that schools need resources to cater to the concept of well-rounded learning, the additional resources that they obtain may not be sufficient even if they purchase books directly from publishers.
Instead of delaying the inevitable from happening, I think it is better if these bookstores start to explore other options. These can include diversifying its business, looking at services that publishers cannot provide to the schools or exiting altogether.
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