Building blocks of democracy

http://www.thejakartapost.com/detaileditorial.asp?fileid=20070227.E01
Editorial
February 27, 2007

Chief economics minister Boediono's observation over the weekend about the linkage between the per capita income level and the sustainability of democracy is not a choice between India's democracy and China's authoritarian path, nor an issue of development first, democracy later.

Rather, the essence of his speech Saturday during his inauguration as professor of economics at Gadjah Mada University in Yogyakarta was a strong warning that without significant improvement in the living conditions of the people, the democratic process in the country will not be sustainable.

With decades of experience in political and economic issues, Boediono is highly competent in analyzing the links between poverty and the sustainability of democracy. He supported the conclusions of several economic studies that the country should reach some sort of middle-income threshold to be able to sustain democracy, citing a per capita income of more than US$6,000 on a purchasing power parity basis (PPP), as a strong foundation.

Since Indonesia's per capita income is still $4,000 on a PPP basis, the democratic process in the country could be highly vulnerable to political and social instability.

How does poverty threaten representative government in Indonesia, the world's third-largest democracy?

Democracy means little to the 40 million unemployed and underemployed people, and the 110 million who live on less than $2 a day. It means little to poor people such as unemployed university graduates who have nothing to lose. They are instead ripe for being exploited by radicals for causes they think would dramatically change the condition for their own good.

Mass poverty, income inequities are fertile soils for radical groups, whether religious- or secular-based ones. Democracy therefore must be supported by a broad-based social-economic development to make the process sustainable.

Chronic, absolute poverty, which increased last year by almost 11 percent, means an increasing number of people have become increasingly impatient about what they think as the failure of democracy to deliver better living conditions.

Economic hardships could play into the hands of religious and political extremists, as disillusioned people get more and more desperate, and radical ideas and solutions they used to reject sound more acceptable. Poverty and unemployment make people frustrated and make them highly vulnerable to being manipulated by extremists or radicals eager to organize the people's anger into a force that can sabotage the democratic system.

Hence, productive employment is key to reducing threats to democracy, because as long as people are content, there will not be the kind of dissatisfaction that can breed violence or militant extremists. If young people have work then they are busy and less likely to fall in with extremist groups.

Boediono's message warns that the failure to cope with poverty and unemployment could strengthen radical movements in Indonesia, thereby threatening its nine-year-old democracy and the path toward a market-based economy. Worsening living conditions also could foil military reform, which is a central component of the democratic process.

However, as Boediono also asserted, democracy is only one of the prerequisites for equitable economic development. The rule of law is another key factor, especially in a country such as Indonesia, which is still in a transition from three decades of authoritarian rule into a nascent democracy. The fact that the masses are accustomed to following authority has thus far left room for politicians to escape accountability.

The chief economic minister's observation should prompt the government to focus on equitable growth, the kind that generates a lot of jobs, because inequitable income distribution also threatens democracy.

The government has acknowledged that the quality of growth over the past five years has declined, in that one unit of growth produced a smaller number of jobs because investors tried to avoid labor-intensive businesses, citing the high costs of what they see as overly rigid labor regulations.

If this trend continues it will require an annual economic growth of more than 7 percent to absorb the unemployed and new job seekers entering the labor market annually. This is rather a bleak outlook because the economy grew only 5.5 percent last year, down slightly from 5.6 percent in 2005. It is projected to expand by only 6.3 percent this year. Even that target has been seen by most analysts as too optimistic, due to the slower-than-expected pace of economic reforms.

The strongest message of Boediono's observation about the link between per capita income and democracy is for the government to demonstrate stronger leadership in speeding up reforms, not only in the economy but also in basic infrastructure and public administration.