The European crisis: Lessons for Indonesia

Budiono Kusumohamidjojo, Jakarta | Mon, 12/26/2011 6:17 PM A | A | A | - Klipping The Jakarta Post

The European economic crisis was triggered mainly by a flaw in the euro currency mechanism in late 2009, when Greece suddenly came close to a state default. Italy was on the way to follow suit. The ensuing crisis is only part of more complex problems plaguing the old continent and it directly threatens the fabric of the European societies.

Capitalism does not appear to be adequate for rescuing the welfare society. It is beyond doubt that Europe is in need of an overhaul of its social and political structures and institutions.

The trouble shaking Greece and Italy has startled European leaders, as both countries are cradles of European civilization and are in many ways also important contributors to our present world civilization.

There is general acknowledgment that the whole crisis has its cause in the enduring tacit complacency of European societies and their political leaders. Like it or not, they have been oblivious during the pleasant achievement of having rebuilt Europe from the rubble of the Second World War. Economists, sociologists and philosophers alike generally agree that Europe is now actually facing the fact that “it is pay day”.

Only Germany seems to have kept its track, based on its eight centuries old Hansa tradition supported by even older guilds, which combines innovative hard work, producing and trading. Still, even Germany cannot escape being part of a Europe now compelled to undergo a process of reconstruction, and if not deconstruction, of its social-cultural structure and institutions.

The idea of freedom being the philosophical product of the Renaissance and the French Revolution of 1789 has certainly played a decisive role in shaping European civilization. However, any civilization has its own failings. In some respects the idea of freedom and the creativity it stimulates has its price. Grave new problems, beyond human recognition, come to the surface and startle the “sacred” welfare society.

The good thing is that the European summit held recently in Brussels drew important lessons from the precarious situation. Seventeen of the 27 members of the EU have agreed to stringent disciplinary measures to bring the crisis under control. Still, in the depth of the crisis EU leaders also seem capable of reflecting the wisdom of the French Noble Prize winner Albert Camus (1913-1960), who once said something like, “if you are happy, don’t forget yourself, and if you are desperate, don’t kill yourself.”

Indonesia can learn a lot from the European experience and how their leaders are responding. Indonesian leaders should prepare for 2012, as the decisions made in Brussels will ensure a sort of austerity that will be felt in other parts of the world. The European golden economic ball of the 20th century is over.

The seeming anticlimax of the European civilization has obviously dragged the European leaders into resignation and concern about the future of Europe, while they concurrently watch the rise of new global players, particularly in East Asia and South America. And yet, compared to Europe, Indonesia is being confronted with more tremendous challenges not from forgotten achievements, but indeed from home works carried forward from the past, present pressing problems and looming challenges of the future.

Indonesia has neglected many of the problems of its own past. The dangerous thing is that many Indonesians even pretend to have forgotten them. We have yet to work on our nation building of a people inheriting a complex diversity that unites us simply because we are “Indonesia”. This is proven by the endemic violence and conflicts in the various regions.

After a lapse of 13 years of “Reformasi” that put an end to the Soeharto era, we are yet to prove that we can govern ourselves reasonably. To date we are merely working hard to manipulate democracy to the benefit of the “primordial us” rather than the whole nation. We have yet to prove that we are applying democracy to achieve a better life for the masses and justice for everyone.

We cannot afford to be ignorant, especially about the intense competition among nations that will only become fiercer due to the diminishing availability of resources indispensible for the survival of any nation. By the time we have to face the revolutionary world economic situation, we should have put our homework of nation building and governing ourselves democratically in good order.

If Indonesian leaders fail to address these three grand challenges in due time, Indonesians will encounter a crisis that is many times heavier than the one now plaguing Europe, even before the arrival of the mid 21st century.

The writer is senior adviser at the Centre for European Studies, University of Indonesia.

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| | | | | | | | Post Comments | Comments (4)

Paolo Scalpini | Tue, 27/12/2011 - 07:12am

Europe’s major problems are:
1) Too much focus on financial gain instead of the real economy: unnatural financial constructs with no real value behind it except for spend-more-than-you-have consumerism have created gigantic bubbles of imaginary wealth as well as debt. This is both a problem of big (inefficient) government as well as a short-sighted badly regulated and greed-driven free-market of mainly financial ‘products’. In the meanwhile there is a decline of productive and creative prowess creating an ugly trade balance.
2) Lack of unity, vision and leadership: the example of the Euro has been given already, but also the absurd austerity competition will not necessarily make things better. When different EU policymakers and their advisors start screwing up the essentials of the real economy as well instead of investing in people’s skills and competiveness, we will be in a greater need of welfare than ever. We cannot afford to not being able to afford social security. The demons of the last century are looming behind the corner in such a case.
3) Demographics
Last but not least, other parts of the world simply do not realize yet in what dire strait they are in. Inefficiency, plain stupidity, selfish materialism and wastefulness are not European monopolies. In fact, while European civilization might have started in Greece, the current downfall has started where it has reached a crest with a major banking bailout. Other parts of the world will indeed be hit much harder, because artificial constructs and ratings, based on for example over-subsidized exports and fake monetary depreciations to severe social instabilities and unsustainable economic growths, will eventually come tumbling down with much worse consequences.

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san san lim | Mon, 26/12/2011 - 23:12pm

it is shown welfare society has failed, it is time we switch to sound money, limited goverment, cut spending by 70%, reduce gov. by 80-90% and let the free market take care of us. I believe we will be more prosper and less corruption. The bigger the goverment the more corrupt the goverment will be, you know "absolute power is equal to absolut corrupt"

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Job | Mon, 26/12/2011 - 22:12pm

A more cogent analysis would focus on the role of the Euro in the European economic crisis. By creating a common currency which no central authority can control, economic problems in 1 member of the Eurozone cannot be contained domestically, with resultant contagion.
The crisis originated in the USA, spreading to Europe by reason of the globalisation of international capital markets. this is an inevitable consequence of free trade and market economics. While capitalism may not be prefect, I am yet to see a workable alternative.

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Tessarajan | Mon, 26/12/2011 - 22:12pm

ACTUAL REASON for EUROPE COLAPSE, due to EUROPE LOST their CAPATILISM because they INVESTED EMERGING MAEKET in CHINA and IMPORT CHEAP PRODUCT from CHINA, That causes EUROPE manufactured PRODUCT LOST BUSSINESS in WORLDWIDE.

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