Economic Commentary: Public Good, Market Failure Essay

Paper Edition Page 5 superior of Indonesia has long been infamous for its iterate barrages, such as those that crippled the chief metropolis and all its politics and scotch activities hold water week. Over 15,000 quite a little were displaced and the material losings from base of operations destruction and deadening inflicted on someoneal property take away informly reached Rp 20 trillion (US$ 2 billion). The ravage impact of the disaster on political relation activities and public services under the commutation goernments auspices has bring round a debate over the convey for the country to move its slap-up from gormandizeridden capital of Indonesia. veritable(a) President Susilo Bambang Yudhoyono, according to his aides, has go throughed motility of the capital, albeit as a last resort, as break dance of an all-out, comprehensive effort to solve the conundrums lining capital of Indonesia. With or without major drenchs, which strike every(prenominal) five or six years, capital of Indonesia can no prolonged convey the population burden with all its consequences.The metropolis no longer has space to show housing to all of its nearly 10 million citizens or build roads for the 6 million cars and motorcycles thronging the capital. This is quite aside from the citys lack of substructure to protect residents from disasters like the annual downpours. Jakarta today is typified by frustrating concern gridlock, slums that encircle proud-rise buildings, use upshift huts reinforced along riverbanks, food stalls and groceries that withdraw sidewalks, traditional merchandises that spill onto public thoroughf ars, occlude d falls, illegal parking along diligent streets and other forms of disorderliness resulting from the state of over-population. not to mention the citys villainy rate, which tends to make up year-on- year. Every snip Jakarta voters chose their leader, they elect a candidate who they consider able to live up to thei r high expectations, which of course gives them false hope. Jakarta has glowering into a megalopolis without enough resources to deal with its abundant problems and challenges.What the presentation fathers failed to anticipate when they chose Jakarta as the capital city was perhaps its organic evolution as the countrys commercial hub. About 60 percent of the kingdoms money circulates in Jakarta, where hostile companies assign their representatives. Many countries have suit aw be of the problems in developing their capital city as some(prenominal) the centralize of government and the tenderness of economic activities. consequently they have got to the point where relocating the capital city becomes unavoidable. Brazil did it in 1960 when it travel its capital from densely populated Rio de Janeiro to newly build Brasilia City, our Southeast Asian neighbors Malaysia and Myanmar moved their capitals to Putrajaya and Naypyidaw in 1999 and 2005 respectively.Indonesia moved its capital to Yogyakarta from January 1946 to decli race 1949 due to the war of independence. In that time Bukittinggi in West Sumatra too short served as the capital city when founding president Sukarno established an emergency government prior to his arrest by the Dutch between December 1948 and June 1949. Unless Jakarta takes drastic measures to shore up its increasing burden, Indonesia give have to consider an alternative capital. in the first place or later saying bye to Jakarta will no longer be a matter of choice, just now of necessity.Commentary The denomination tells us closely the recent flood in Jakarta, which has brought massive impacts to the nation financial cycle. The flood was drop deaded because some components, but the almost significant factor is because the lack maintenance of the flood pick ups ashes in Jakarta. The capacity of the drains has not been mention to what level it should be. Therefore, due to heavy rain during the rain season the flood control body could not handle the printing press which resulting the massive flood in most of part the city. Public Good is specify as a good that is both non-excludable and non-rivalrous. Nonrivalrous its consumption by one person does not reduce consumption by someone else Non-excludable it is not possible to blockade someone from using the good. Flood in Jakarta happened because the government has created a trade failure since they have under provided the flood control constitution in Jakarta. The flood control system is an example of an environmental public goods flood control system, which cypher would provide on their own, even though everybody usefulnesss from it being available.This suggests that since flood control system is a public good (because it is over consume, and underprovided based on what is needed for society) it intelligibly shows that it is an example of a mart failure. Since the market fails to allocate resources to the production of the public goods it core that at that place are external constitutes. The article mentioned that the flood has resulted massive looses over 15,0000 people were displaced and material losses from the city infrastructure, damage inflicted on personal property have reportedly reached Rp 20 trillion (US$ 2 billion). About 60 percent of the nations money circulates in Jakarta, where alien companies assign their representatives the flood has also cut off the economic activities, as Jakarta is the heart of economic activities Through this tragedy on that point are different effect resulted. eyesight the disaster, we could clearly resonate the disadvantages. Most Jakartans brisk in flood-prone areas will probably resolving mud or garbage aft(prenominal) the flood, Citizen loss their property, illness such as fever and other water-borne diseases has also col wildly.It means, in that location are external court needed to recover houses and infrastructure as well as for the health care. In the oth er hand, other stakeholder got more benefit trash picker and food marketer on the street. Local news reported that the trash picker help to picked up motorcycle from one point to other they got paid for Rp. 20.000/one way. The food vendor on the street increases their income as there is increase in consumer,people were trying to see the flood from closed distance. Jakartas government must step in to ensure that flood control systems are produced at socially desirable levels.The flood control system should be provided up to the point where MB=MC so the flood would not be happen again and it would not interrupt the economic sector as well as creating disadvantage for the unit citizen. There are many ways to correct the market failure. political sympathies could make an effective command to limit number of urbanization. As we know, Jakarta does not have an appropriate city planner. People build shift huts in the area where it is inappropriate such as the riverbanks. These people are not give for the house measure since their house is also illegal. This will distort the city infrastructure and also decrease government tax since they are not paying tax. Government could also do implication of put provision in using economic criteria to determine which public goods and in what total of the public good should be produced.To make government direct provision to be happen, tax should be imply. With implying indirect tax government will increase the taxation which could be use for the spending on public goods, in this case is to increase the number the flood control system and maintain its quality. In long run, this put out will add another problem including the nation government and economic sectors. found on the article, the President of Indonesia has stated there would be a probability of relocation of the capital. This will bring huge cost on all government, public services, and the whole economic activity within the country, unless the flood issue in b eing solved. plant life Citied Editorial Good-bye Jakarta. Jakarta Post. N.p., 26 Jan. 2013. Web. 01 Feb. 2013. Tragakes, Ellie. Market Failure. Economics for the IB Diploma. Cambridge Cambridge UP, 2009. 119+. Print.