IO – The depth of the economic crisis is increasingly apparent, long before the coronavirus economic attack was felt in the trade sector. 2018 is the year of the biggest trade balance deficit in history. At that time the trade balance collapsed at US $ 8.5 billion, a sharp decline in exports.
Not yet finished with the trade deficit, other indicators show sluggish economic growth, only flat at around 5%, far below the average promise of the RPJMN [National Medium-Term Development Plan] of 7%. Inflation is low but is appreciated as a success. Though everyone knows, low inflation is a bad sign if it comes from weakening the demand side. This analysis received many objections from pro-palace economists.
In 2018 all focus on the hustle and bustle of preparation for the presidential election campaign, it is difficult to make politicians aware that there will be a major shock that will occur in 2020. The heads clashing at the debate table are filled with real ignorance. Even the issue of economic recession did not get a place on the debate table. Whether there is the coronavirus or not, a recession is sure to occur in 2020.
Presidential debate questions are always boring and do not touch the root of the problem. If I were not forced to make comments in the media responding to the boring debate, I would immediately turn off the TV because it was a waste of time.
Shocks began to arrive. The latest world trade organization, WTO (World Trade Organization) revealed that the condition of the global economy due to the coronavirus will create the same situation as in 1930 when the Great Depression occurred. The indicator in 2020 can reduce trading volume by 32%.
The unfinished US-China trade war, coupled with the plight of the coronavirus triggered chaos in the trade sector. Factories that are closed in China are forced to reduce the supply of raw materials in almost the entire world. Demand for palm oil, unsteady rubber. Instead of taking the risk of factories that produce automotive, textiles and apparel, it drastically reduces its production capacity. HIS Markit Indonesia PMI (Purchasing Manager Index) plummeted to 45.3 as of March 2020. This is a sign, the Indonesian industry is reluctant to increase raw material purchases, let alone want to expand.
Previously there were debates in many media channels, loud arguments sounded like “Indonesia’s economy is strong, we will not be slumped like 2008”. Or some say that the Indonesian economy is fundamentally stronger than that in 1998, an absurd response. One economist bravely compares the strength of foreign exchange reserves, fiscal and other indicators that are not the same compared to those in 1998.
Unfortunately, the debate in Indonesia is a bit late. It only compares conditions in 2020 to 1998 or 2008. As if we have only faced two major crises. The view escapes that the WTO might be right, we are preparing to reminisce again like 1930. Nobody imagined beforehand, The Great Depression before our eyes. The biggest crisis of all generations.
Simply put, The Great Depression is described as a year in which the capital market is falling apart, the unemployment rate in the US rose by 25%, the price of agricultural commodities fell by 60%. During 1929-1932 manufacturing industry production fell -46% in the US and -41% in Germany. While what happened was the deflation of -30%, the decline in prices of goods in general.
The crisis does not always lead to inflation, but also deflation because the contributing factor is sluggish purchasing power so that demand does not move up. As in Indonesia, don’t be proud of low inflation, let alone a few months before 2020 there was deflation.
In 1932 the suicide rate set a new record in the US. The photos in the newspaper capture the moment people jump from high-rise buildings. Stress, panic swept across the world. The tense atmosphere due to the Great Depression spread to the Dutch East Indies. 1930 was a hard time for farmers who were forced to work on sugar plantations by the colonialists. Sugar and plantation commodity prices declined sharply.
The ideological struggle was quite interesting in the 1930s when Adam Smith’s classic economic recipe was considered a failure and allowed the market to move wildly without control, the world turned to alternatives. From the ring of global capitalism, a reformer figure like J.M. Keynes. The tall and flamboyant economist who married the ballerina seemed to offer a new idea, the government must intervene and stimulate the economy if the depressions are not to get worse.
His advice was heard by many leaders from the western world, including the US. Keynes just wants capitalism not to go bankrupt, only to undergo a slight modification. The greatness of capitalism deserves a thumbs up, a crisis and capitalism is like a brother, right? A crisis is not to aggravate and bring down capitalism, instead, new methods for extending the life of capitalism have emerged, as Keynes tried.
In 2020, Keynes did not seem to sell well with a call to build infrastructure to absorb labor. In recent years, many infrastructure projects have been built, fragrant, magnificent, shiny. In photos of national newspapers, the inauguration of new toll roads, new airports are always astonishing. The facts behind the cement mix and the projects make anyone confused. The utility level of infrastructure projects is very low. For example, the new airport train to Soekarno Hatta Airport was such a case.
Kertajati Airport, a disaster that finally led to mutual accusation between the Regional Head and the Palace, “whose responsibility is this?” Usually, when a project fails, everyone washing their hands. Then Palembang LRT and Jakabaring Stadium were scattered after the Asian Games. Fortunately, Wisma Athlete in Jakarta can still be used for the treatment of corona patients, it was meant to be used as a hotel just after the international sports event was over.
We see Keynes’s tattered face when applied to Indonesia. The level of labor absorption is not optimal with the existence of infrastructure projects, business actors complain that many projects are not evenly distributed to the private sector. Thousands of contractors have gone bankrupt, a miraculous sight amid efforts to boost infrastructure.
The economic crisis also gave rise to fierce battles between left and right-wing ideologies. In other corners of the world, the response to the crisis is very different. The history of Spain in 1936 is filled with stories of civil wars between the forces of Fascism and Anarcho-Syndicalism. General Franco, who was fascist against the alliance led by anarcho-syndicalist CNT. George Orwell in his work entitled “Homage to Catalonia” nicely illustrates the inclusion of international combatants in the context of solidarity with anarcho-syndicalists.
Factories in the Anarko-Syndicalist territory were successfully controlled and operated based on the principles of help between workers. Anarcho-Syndicalists did lose in the end, Franco won. But Anarcho-Syndicalism is always discussed at the time of the great crisis in many countries.
Fascism was also present in Germany, where Adolf Hitler in 1930 was appointed Chancellor of Germany. Afterward, there was a united axis between Hitler’s Nazi, Benito Mussolini in Italy, and Hirohito in Japan. Why when a crisis can bring about fascism? The answer is that some people believe that when economic conditions deteriorate, political stability is disrupted, someone must be blamed in this situation. The politics of Blaming the Other is directed at the Jews and the Trade Unions in Germany. Fascism is synonymous with racism and anti-labor.
While in the case of Japan, Emperor Hirohito’s declaration of war highlighted the intervention of Western powers in China making it a real threat to Japan. Fascism is so anesthetized with propaganda that it is designed so that people support ways to eliminate certain groups.
In the context of Indonesia amid the 2020 crisis, has the seeds of fascism begun to emerge? What about the announcement from the police regarding insults to the President in the social media? The arrest of people who vent their anger at the slow pace of the Government overcoming the coronavirus, for example, can it be assumed signs are pointing there? Why does the Government not only focus on dealing with the spread of the virus, and does not need to care about the babbler’s chatter on social media? Waste of time right?
What is also interesting is the proposal to return to the state of civil emergency as an option, by implementing Perpu No. 23 of 1959, as that at which time Sukarno was dizzy from the PRRI/ Permesta rebellion. In a civil emergency, there is a search, there are arrests, there are articles related to tapping public conversation, posters can be confiscated. The Government is panic so that the discussion of civil emergency is not an ordinary sign. Are these signs pointing to authoritarianism, a prerequisite for fascism?
The situation in China is quite interesting, wherein 1934 Mao Tse Tung the leader of the communist revolution conducted a long march. The ideological battle variants found their praxis in the era of the Great Depression. Not just fighting in books written by intellectuals, but several countries are starting to try various alternatives that are deemed suitable, peacefully or with weapons.
The face of China changed completely after the great economic crisis. Farmers who follow the long march may not be aware of what happened in the US at the time of the crisis, but the fact was that there was a sharp decline in commodity prices, an increasingly repressive government towards farmers is a prerequisite for civil uprisings.
Then where is the world after the 2020 crisis? The answer to this question is getting more interesting day by day. The US government under Trump is mixing a trade protection policy craze for blaming China, supporting fascism in a white supremacist shirt, but on the other hand, distributing the basic income of US $ 1,200 per person. In the UK, proposals from conservative parties in the form of covering 80% of workers’ salaries are unique to keeping the economy running.
In Indonesia, what is clear is that the corporation will still be safe because tax incentives will continue to be provided, while there is no guarantee that companies enjoy incentives, then the workers may not be laid off. This means that in the condition of the 2020 crisis, Indonesia did not adopt Universal Basic Income programs, but instead showed a clearer ideology. PSBB (Large-Scale Social Restrictions) is implemented, assistance for the informal sector is not yet liquid.
Important: The government is looking for data for pre-employment cards, showing unpreparedness. Capitalism and Pro-Oligarchy policies are winning the ideological battle in the Republic, without wanting to hear other possible alternatives, so that the crisis does not turn into the destruction of the economic order and trigger the birth of fascism.