Optimizing The Trickle Down Effect Policy (2)

With the ideal scheme, the trickle down effect policy has been placed inappropriately in terms of implementation. Various researches have been done but it fails to reach the true answer. The basic accusation for the flaws in policy seems to lead to an inaccurate subject: Corruption. Yes, corruption is being accused as an antithesis of the policy in which functions to drain the resource that goes trickle up and more to become a paradox in growth. This is a result from an exclusive economic growth which leads to a widening in gap between rich and poor. It is agreeable that corruption would go against all norms, as it will impede development by the dysfunction of a political system or institution in which government officials, political officials or employees seek illegitimate personal gain through actions such as bribery, extortion, cronyism, nepotism, patronage, graft, and embezzlement.

But it is important to note that the above evil description of corruption would be true if the funds from the corruption flows outside from the country, the result would be different if the funds were invested domestically. This goes with the assumption of the trickle down effect idea about domestic investment. In an extreme scale, it can be said that a person who does mega corruption would not make the state runs into bankruptcy as long as they invest the funds within the country since in this way the ideal scheme of trickle down effect would work. Again, this is not a technical justification of corruption since I agree that corruption is a moral crime that should have the most menace compensation. But, the war against corruption in Indonesia still accounts as revolutionary and needs some political consideration. The question is how long the sustainability of economic development could withstand the pressure of political uncertainty? A most widely known word of John Maynard Keynes could be set as a background: “How long is the long run? In the long run we are all dead.”

The optimal solution to barricade the flowing funds in the country from going outside is through system of incentive, good governance is one of the ways. There are four main barriers that impede a sound investment climate in Indonesia: inefficiency in bureaucracy, the lack of labor regulation, the lack of tax incentive and the unprepared infrastructure facilities to support investment activities. The lack of investment is also caused by the high cost economy, the lack of government support to provide stimulus and the lack of bank financing. The government has to pay major role to tackle this problems so that the policy would function effectively.