Economic Commentary: Public Good, Market Failure Essay

Paper Edition Page 5 dandy of Indonesia has long been infamous for its repeated alluviums, such as those that crippled the dandy and all its g everyplacenment and scotch activities last week. Over 15,000 people were displaced and the squ atomic number 18 losses from fundament destruction and damage inflicted on personal airplane propeller call for reportedly reached Rp 20 trillion (US$ 2 billion). The devastating jar of the disaster on government activities and worldly concern services under the exchange governments auspices has revived a debate over the need for the country to move its capital from submergeridden Jakarta. Even President Susilo Bambang Yudhoyono, match to his aides, has considered relocation of the capital, albeit as a last resort, as part of an all-out, nationwide effort to solve the puzzles facing Jakarta. With or without major outpourings, which strike each five or six years, Jakarta can no durable sustain the population burden with all its cons equences.The city no extended has space to provide housing to all of its nearly 10 million citizens or build roads for the 6 million cars and rides thronging the capital. This is quite away from the citys lack of infrastructure to protect residents from disasters like the yearbook floods. Jakarta today is typified by frustrating traffic gridlock, slums that encircle high-rise buildings, makeshift huts built along riverbanks, food stalls and groceries that occupy sidewalks, traditionalistic food marketplaces that spill onto public thoroughfares, clogged drains, illegal parking along particular streets and other forms of disorderliness resulting from the state of over-population. Not to mention the citys crime rate, which tends to append year-on- year. Every time Jakarta voters chose their leader, they elect a candidate who they consider able to live up to their high expectations, which of traverse gives them false hope. Jakarta has turned into a megalopolis without enough resources to deal with its abundant problems and challenges.What the founding fathers failed to anticipate when they chose Jakarta as the capital city was perhaps its evolution as the countrys commercial hub. About 60 portion of the nations money circulates in Jakarta, where foreign companies assume their representatives. Many countries have become aware of the problems in developing their capital city as both the center of government and the heart of economic activities. Then they have got to the point where relocating the capital city becomes unavoidable. Brazil did it in 1960 when it moved its capital from densely populated Rio de Janeiro to newly built capital of Brazil 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 celestial latitude 1949 imputable to the war of independence. In that time Bukittinggi in West Sumatra in ad dition briefly served as the capital city when founding president Sukarno established an emergency government prior to his arrest by the Dutch amidst December 1948 and June 1949. Unless Jakarta takes drastic measures to shore up its increasing burden, Indonesia exit have to consider an alternative capital. Sooner or later give tongue to proficient-bye to Jakarta will no longer be a matter of choice, but of necessity.Commentary The article tells us about the new-made flood in Jakarta, which has brought huge impacts to the nation financial cycle. The flood was happened because galore(postnominal) factors, but the some significant factor is because the lack maintenance of the flood controls remains in Jakarta. The capacity of the drains has not been assert to what level it should be. Therefore, due to heavy rain during the rain season the flood control system could not handle the pressure which resulting the massive flood in most of part the city. Public Good is defined as a good that is both non-excludable and non-rivalrous. Nonrivalrous its consumption by one person does not debase consumption by psyche else Non-excludable it is not possible to exclude someone from using the good. Flood in Jakarta happened because the government has created a market failure since they have under provided the flood control system in Jakarta. The flood control system is an example of an environmental public goods flood control system, which nobody would provide on their own, even though everybody benefits from it be 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 clearly shows that it is an example of a market failure. Since the market fails to allocate resources to the production of the public goods it means that in that respect are external costs. The article mentioned that the flood has resulted massive looses over 15,0000 people were displaced and act ual 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 foreign companies assign their representatives the flood has also interrupted the economic activities, as Jakarta is the heart of economic activities Through this tragedy there are different effect resulted. beholding the disaster, we could clearly see the disadvantages. Most Jakartans living in flood-prone areas will credibly answer mud or garbage after the flood, Citizen loss their property, ailment such as fever and other water-borne diseases has also spread wildly.It means, there are external cost needed to recover kins and infrastructure as well as for the health care. In the other hand, other stakeholder got much benefit trash picker and food vendor on the street. local news reported that the trash picker help to picked up motorcycle from one point to another they got paid for Rp. 20.000/one way. The food seller on the street increases their income as there is increase in consumer,people were trying to see the flood from closed distance. Jakartas government essential 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 whole citizen. There are many another(prenominal) ways to correct the market failure. Government could make an effective commandment to limit number of urbanization. As we know, Jakarta does not have an captivate city planner. People build shift huts in the area where it is unlike such as the riverbanks. These people are not gainful for the house tax since their house is also illegal. This will distort the city infrastructure and also decrease government revenue since they are not paying tax. Governm ent could also do implication of direct provision in using economic criteria to determine which public goods and in what quantity 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 revenue 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 issue will add another problem including the nation government and economic sectors. Based on the article, the President of Indonesia has tell there would be a probability of relocation of the capital. This will make for huge cost on all government, public services, and the whole economic activity within the country, unless the flood issue in being solved. whole kit 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.