Friday, October 10, 2008

Khaki Economist: F Von Hayek and the Caravan of Doom

A label best applied to Sumatra's economy--and society--is "Accidentally Hayekian".

The rulers of Sumatra probably haven't read their Friedrich Von Hayek, the 20th Century economist who, by witness of some of the nastier sides of Statism (fascism, Communism, etc.), thought it silly to let governments meddle with much. They have, though, created a Society to make Fred proud. People go about their way here guided mainly by ritual and self-preservatory instinct, but not by rules. The state limits itself to its most proper role--revenue collection--without much appearing from the other end. No roads, hospitals, or General Order.

The lack of Sanctioned Order, while apparent, does not mean Sumatra is a place without systems. Traversing the island, en rout to our destination, Pulau Nias, provided us the opportunity to see "market organisation" at its most efficient.

In Padang, the capital of West Sumatera, we found there was no "four hour bus to Sibolga" as advertised online. The motorcycle hirer laughed at us, refusing us any of his fleet. The bemo driver was less mean; "I take to someone" gesturing wildly "Sibolga". That someone knew someone else, until we were ping-ponged into an empty ticket office in Bukittinggi, West Sumatra. "Wait!" Our last driver told us. We didn't for long; the perfect deregulated transport market, with its little profit-seeking actors, hadn't made us wait all day--it wasn't going to start now.

A main argument for the regulation of markets, though this necessarily implies inefficiencies, is for the creation of standards: product standards, quality standards, method standards, etc. When the benefit of standards exceeds the cost of them, in terms of efficiency, their adoption is a good bet. It is my professional opinion, as an immensely unqualified trainee economist, that the long-haul busing system in Sumatra wants standards.

It seemed normal enough. We were given printed tickets, seat numbers, and had our bags put in vans. From our trip up, I knew vans made sense in this terrain; Sumatra is slung on a spine of volcanoes, like a large wet towel on a small picket fence. Navigating the place requires a decent understanding of "North". The driver also seemed quite normal, by Sumatran standards--an open shirted chainsmoker, with a twitch. The ticket-master smiled, waved, and wished us a safe fifteen hour trip.

A frequent criticism of unregulated Capitalism, especially by namby-pamby leafletters with limited personal hygiene, is that in pursuit of profit, shortcuts will be taken. We argue back that those who spike their baby-milk powder with melamine will be taken aside and shot, in a process Schumpeter (probably in German) called "creative destruction". The Omniscient Market would quickly discover their shortcuts, and drive them from business, leaving only the most efficient, high quality firms.

Somehow, our bus operator has escaped a creative destruction, I reckon by sheer luck. CV Nasional's petrol-saving shortcut is to lower the wind resistance on their buses, by having them draft off each other. This method of power conservation is very effectively used in pro-cycling, like in the Tour de France, but there to save Powerbars, and is normally something I'm ok with--I am, after all, very tough.

This peleton of minibuses, though, brought me an indescribable amount of fear. It wasn't all got by their petrol-saving closeness (each three or four feet from the next), so much as their incredible speed--at least double any other vehicle's.

Sumatra, about the size of Victoria, has forty million, most living in villages strung along the main highways. The Caravan of Doom roared past half these, as they looked in horror. Mothers, hearing the four buses' honkings, gathered their children and herded them inside. Youths threw themselves from the streets, leaving their satay sticks. And oncoming traffic, seen by the lead driver as an obstacle, swerved off in hope of longer life.

On-board, the feeling was rather like being held by the scruff off a high cliff, for the entire ten hours, with no knowledge of how to tell the dangler "excuse me, Sir, but I'd prefer you don't dangle me from this cliff".

I'd read in last week's Economist the brain, when under-slept and over-stressed, was capable of inserting REM dreams into a woke conscious, resulting in hallucinations, like the Simpson's Apu thinking he was a hummingbird. My sister pictured Michael Jackson in the front seat. I, a catholic Athiest, began to pray. I can verify now those moments before certain death are the longest.

We arrived in Sibolga, ominously, as the dawn prayers rang through the city. "الله أكبر", they began, "God is Great!".

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