Debunking the Activists on Gasoline Subsidy

On Gasoline Subsidy

The usual argument used by activists is that gasoline subsidies are basically for the poor. On the contrary, most of the benefits of fuel subsidies in Indonesia go to commercial users and wealthier households. In addition to the fiscal burden and risks of the fuel subsidy system, there is also a concern that the current fuel subsidies do not assist the poorer segments of the population who are most in need of such support. I've argued elsewhere that fuel subsidies bring more dead weight loss since wealthy households (who consequently consume more fuel) will be subsidized more. In fact, according to the February 2009 Survei Sosial Ekonomi Nasional (SUSENAS, National Household Socioeconomic Survey), 40% of the direct benefits to households from gasoline subsidies go to the richest ten percent of households, and less than 1 percent to the bottom 10%. A breakdown of the household component of gasoline consumption by socio-economic group indicates that the top half of households accounted for 84% of gasoline consumption, with the highest consumption decile alone accounting for almost 40%. In contrast, the bottom 50 percent of consumers accounted for just 16% of total household fuel consumption, with the poorest decile accounting for less than 1%. Figure below.

Source: World Bank's Indonesia Economic Quarterly, April 2012

In addition to that, a detailed examination of reported fuel consumption in the household survey indicates that around two-thirds of poor and near poor households do not consume any gasoline whatsoever, and the likelihood of consuming gasoline and the actual quantity consumed rises sharply at higher income levels. Figure below.

Source: World Bank's Indonesia Economic Quarterly, April 2012

To put it in terms of a household’s budget, fuel subsidies are estimated to transfer a car owner who consumes 50 liters of gasoline a week (200 liters a month) IDR 1,115,000 per month (based on the difference between the economic price of fuel and the price of subsidized fuel as of March 2012). This is in contrast with the average motorcycle user who consumes 5 liters a week (20 liters a month, according to SUSENAS, 2009) and only receives a transfer of IDR 111,000 per month from the fuel subsidy scheme. Over a year, this equates to these wealthier households which use a car receiving a transfer of IDR 13,382,000 – 10 times more than the average motorcycle user which receives IDR 1,338,240 and many times the indirect benefits from subsidized fuel that may be received from those households without a car or motorbike.

If we continue subsidizing fuel, assuming oil prices of USD 120 per barrel, the World Bank estimates that Indonesia’s budget deficit in 2012 could move up to 3.1 percent of GDP. If oil prices stay high and the fuel price adjustment is implemented in the third quarter of 2012 the World Bank projects a deficit of 2.5 percent of GDP, compared with a revised Budget deficit level of 2.2 percent (with an oil price assumption of USD 105 per barrel.) Note that the revised budget includes the option of a IDR 1,500 fuel price increase provided the ICP price is, on average, over a six month period, 15% above the revised budget assumption of USD 105 per barrel.

On Inflation

Let's compare the potential inflation in 2012 with the previous fuel price increases of 2005 and 2008. However, this exercise still has its limitations due the considerably different inflation contexts and macroeconomic backdrop. For instace, in 2005 the rising cost of market price for fuel was close to 3 times the subsidized pump price of IDR 1,800 per liter that Indonesian’s were paying, thus government increased the price by 150% within 5 months. This shock is starkly different to the 33 percent increase in fuel prices in 2008 and the potential 2012 increase. In 2008, unrelated to fuel price increases, food price inflation had reached 16 percent in April (the month before fuel prices increased) due to rice and cooking oil shortages. This meant headline inflation was already 7.4% before the fuel price increase and food inflation continuing to build. In contrast to this, in 2012 inflation was at a two year low of 3.6% in February (less than half the level of 2008) and food inflation was at an eight-year low of 2.9%. Not to mention, with the 2008 global economic downturn, most of the downward movement in economic indicators in 2008 occurred not in response to the fuel price increases in mid-2008, but to the global financial crisis in late 2008. In 2012, economic activity has been robust at 6.5% in each of the previous four quarters and, while there remain risks to the outlook from the ongoing fragility of international markets and weakening of external demand, it is expected that growth will remain above 6% for the year.

Taking the previous considerations in projecting 2012's inflation, here's the figure:

Source: World Bank's Indonesia Economic Quarterly, April 2012

It's still lower than those occured in previous price increase.

On Cash Transfer

It's also oftenly argued that cash transfer like BLT (Bantuan Langsung Tunai or direct cash assistance) or BLSM (Bantuan Langsung Sementara Masyarakat or temporary community direct assistance) is not good for poor people as it will create dependancy or so. But let's examine the data.

Current proposal form government was a cash transfer to be distributed to 18.5 million poor households (the poorest 30% of households) of IDR 150,000 per month for 9 months with a total budget of IDR 25.6 trillion. The second compensating program, to assist those indirectly affected by rises in transportation costs, due to the higher fuel price was an increased subsidy for public transport (public service obligation) economy class (passenger and goods) with an estimated cost of IDR 5 trillion for 9 months.

Using BLT as projection for BLSM (I won't cover the effectiveness for other social assistances like education/BSM, health/Jamkesmas, and the others, as it will be too broad, maybe next time,) here are the results:

1. BLT was delivered when it was most needed and allowed households to continue spending regularly. The transfer levels (of IDR 100,000 per household per month) added 10-15% of expenditures and lasted long enough (12 months in 2005/6 and 9 months in 2008/9) for households to adjust spending patterns to new relative prices, especially at times when at the time when fuel prices were increasing fastest. Household expenditure was protected for BLT households, especially in regions where local economies were weakest and not generating noticeable community-wide growth, while communities with more BLT recipients (whether economically strong or weak) saw increased consumption gains for non-BLT households. BLT households removed their children from labor at increased rates while overall health service utilization also increased more for BLT than non-BLT households. In 2008/9, when a BLT payment coincided with due dates for school enrollment and registration fees, households with BLT reported using it to pay these fees and keep their children in school.



2. BLT helped households find work and did not create dependency. In fact, households who received BLT were more likely (by a significant margin) to find new jobs than households without BLT. And there was no difference between non-BLT and BLT households in the rate at which they left or were dismissed from jobs. In other words, BLT was responsible for a net increase in employment. Here's the figure:

Source: World Bank's Indonesia Economic Quarterly, December 2010

Overall, the targeting of Indonesia’s social assistance programs, as measured by coverage of the poor, is pro-poor and in line with international benchmarks. Less than half of the poorest and most vulnerable 40% of households receive BLT and Jamkesmas.

However, there are some caveats. The larger programs – BLT, Raskin, Jamkesmas, BSM – spend too little on administration and support operations and weak socialization and resulting of the lack of accountability. All programs suffer from inadequate socialization guidelines, leading to reduced program transparency and legitimacy and heightened potential for corruption. Monitoring and evaluation, complaint resolution mechanisms, and budget execution are all underdeveloped. All programs have descriptions (in regulations and manuals) of program monitoring arrangements and some details regarding the content of monitoring procedures and reports. However, program monitoring and reporting is most often carried out by local-level implementers and delegated with very little financial support, technical support, or systems for quality control. Knowledge on eligibility rules, program objectives, and beneficiary rights and responsibilities is usually spread thinly among beneficiaries, eligible households, communities, and local-level program implementers. Therefore, bottom-up monitoring of the targeting and benefit distribution process is limited while intra-community jealousy and misunderstanding are often high. SA programs – with the exception of the pilot Kemensos (Kementerian Sosial, Ministry of Social Affairs) cash transfers – do not include an explicit facilitation or outreach process. This limits beneficiaries’ effective access and leads to increased capture by those already familiar with the services offered, especially for Jamkesmas and BSM.

Hope it helps to debunk some of those self-proclaimed "pro poor" activists' arguments.

Luck, Richness, and Tax

Whenever I say or hear motivational speakers (Mario Teguh? Hell, Donald Trump?) emphasizing hard work and effort as the way to be rich I can help but ponder, is it so? Turns out this rationale is also oftenly spewed by conservatives whenever they want to oppose taxation; how taxation "punishes" and disincentifies those who exerts more efforts than others. Few things come in my mind. Is it really true that I can get rich as long as I work harder and those who are poor basically just don't work hard enough? I don't think so.

Hard work, effort, will, discipline, initiative, persistance, drive, etc. are good virtues - and remain so, but they aren't that independent of brute luck. How? It began even since our conceptions. We are lucky enough to be born with good talents and without defect genes. We are lucky enough to be born to "able" parents: those who can afford giving us good nutritions ever since we were babies, those who can afford giving us decent homes, those who can afford giving us educations, those who care so much to our development, etc., etc. We then grew up as educated and healthy persons with sound mind. It is simply because of good luck that we weren't born in North Korea or Ethiopia, where some kids trapped in endless cycles of poverty; poor parents that can't afford to give us education, nutritions. We might end up as malnourished and uneducated kids. In the end, we can't afford having decent jobs to improve our lives and our families' lives. Not to mention if such conditions made worse by endemic diseases or war.



But let's say you say that that's the end of our luck, that after graduation, what shape us to be rich lawyers, businessmen, stock traders, or motivational speakers (!) is purely (or mostly) because of our dilligence and persistence. But that's not so true either. Why? Because we live in the world that has market system that happens to reward what we do, our jobs, very well. Disproportionately well*. The important variable for richness, however, does not seem to be our dilligence or hard work, but profession. If we’re in a high-value profession, hard work can do us a lot of good. If we’re not, it may not do you much good at all however hard we are working everyday. We're lucky that we were born in a time and place where the hard work we're good at (say, stock speculation or legal knowledge) are valued over the hard work that other people are good at (say, carpenting or repairing air conditioner.) That's the difference between the hard work of a stock trader and the hard work of the person who repair the AC in IDX tower.

So "anyone can get rich** if only they work harder" is not just untrue, it's also insulting. We can't have a society where everyone is a lawyer or a stock trader. We can't have a society where we have to pay 100 million rupiah to every good and hardworking military personnel, policeman, nurse, firefighter, schoolteacher, carpenter, electrician and all of the other professions that civilization needs to survive (and that rich people need in order to stay rich.) These military personnel, policeman, nurse, firefighter, schoolteacher, carpenter, electrician may work 100 TIMES HARDER than you every day; some of them even risk their lives everyday while you sit comfortably in your office, yet, they will never make as much money as you businessman make. So be grateful.

And that's where tax comes in. As what John Rawls said***, to compensate people those who are disadvantaged from this brute luck, we tax the riches to give adequate basic scheme for the worst off and reduce inequality, so that we can imagine that even though we end up being so poor, social arrangement permits and guarantees us to basic scheme like security, education, and healthcare. This is by no means punishing those who are working hard and being rich, this means that something needs to be done and those who are above average have the capabilty to do so. The analogy will be like asking tall person to pick a book in the top shelf: this isn't a punishment for her being tall, but since no other person is tall enough to get it, then she has to get the book. Those who are rich tend to be able to pay not only more rupiah but also a larger share of their income without suffering. Thus those rich folks who refuse to pay higher tax is just egoistic and immoral. We can't do everything by ourselves. Our houses and schools were built by other people. Our cars were made by other people, run by gasoline drilled and processed by other people, driven in roads made by other people. And so on.

Say you can do all of that, and refuse to pay tax, but what if there's bad person is trying to take your wealth? What would you do? Your security measure won't fend them off -- suppose they have more weapons. What will you do, call the cops? That is, other people, who will risk their lives while being paid with still tax money, who will try these bad guys in a court funded by tax money, under laws passed by legislators paid with tax money? Accept that, you can't live alone by yourselves. Caring for other persons - by paying tax, is one of the requirements to be a moral person.

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Post Scriptum

*) For instance, the ratio of CEOs' pay to average workers in United States are 475:1, and it takes 14,000 years for average Sri Lankan workers to earn Nike CEO's annual pay. This discrepancies is so huge, despite both CEOs and workers are equally important for companies' operation.

**) Simple logic dictates that "anyone can get rich" is true on individual level - but not on collective level (i.e. "everyone can get rich.") Why? Resources are limited. Money supply is limited as well. Suppose population of Indonesia is 1,000 person, and there is 100 million rupiah of money supply. Let's say parameter of richness is by having 1 million rupiah, there will never be more than 100 person that is rich (but then 900 others have no money at all, not to mention if several people have more than 1 million rupiah - even more people will have no money.) Printing more money so that each person has at least 1 million rupiah won't work either. Why? As you print more money, money supply is increasing and inflation occurs, and the value of money drops. 1 million rupiah after printing more money will always be less than the value of 1 million rupiah before printing money.

***) Ironically, Rawls seemed to against progressive tax, despite his difference principle must require progressive tax and transfer scheme. I also prefer Amartya Sen's capability approach to Rawls' in this matter.

Gasoline Subsidy? Think Again (Revisited)

Yep, it's kinda late to talk about this. But my gut is somehow tingled when I (still) heard about people on Twitter complaining about the proposal of limiting the consumption of subsidized gasoline per April 1st, 2012.

Most of the whining came from private car owners, asking for treatment as if they are poor people who need subsidy. As one of major causes of pollutions and traffic congestion, especially in Jakarta, my first thought will be, "Bitch please." They ARE NOT justified to receive the benefit from subsidy, taking into account their financial capability and negative externalities that they cause. They sound very similar like corruptors who steal poor people's money.

Arguably, in-kind subsidy (subsidy that attached to a commodity) like gasoline subsidy brings bigger dead-weight loss than direct transfer to poor people. Why? Since this subsidy doesn't discriminate the financial capability of the receiver, it gives the chance for those who actually aren't qualified for subsidy to receive the benefit, like those car owners. Even worse, since rich people consume more fuel, most of the subsidy is spent on these rich households instead of the poor. Banning these car owners to buy subsidized gas will reduce the gasoline consumption up to 14 millions kiloliters and save up to 28 trillions rupiahs in government budget that can be allocated elsewhere, like in education, health care, better public transportation service and infrastructures (to attract people to use it instead of using their own cars,) and poverty alleviation.

Then how to deal properly with the inflation that may ensue? First, we can slowly phase-out the subsidy, allowing society to have time to adjust with the price. Government must follow this with the launching of public relations campaign, broadcasting the explanations of the need for the oil price increases. Second, we can do targeted assistance for poor people as what we did in 2005. We were able back then to give direct cash benefits for approximately 15.5 millions of poor people (roughly 28% of the population.) This was not without problem, though, as there were mistargeting (the cash was randomly distributed to the poorest 40 percent rather than the initially targeted 28 percent,) and leakage (some people who were supposed to not receive subsidy received it.) That's why the preparatory work to identify beneficiaries and design effective and efficient ways to deliver assistance should be given top priority. Government then must empower her citizens to provide assistance and monitoring for this program. Thirdly, government must allocate this 28 trillion rupiahs of budget to provide better and cheaper public services for her citizens, so that even though the gasoline price is high, the cost for citizens to have decent education/health care can be reduced substantially. This requires the participation of both government and citizens (including NGOs and independent monitoring groups) to ensure the accountability and transparency from the budgeting process to its executions.

We were successful back then in 2005, now it's time to do it again, as oil price will keep on increasing in the future. We must realize that the reliance on gasoline subsidy is very unsustainable for both the societies and government.

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Addendum:

It has become government's decision not to prohibit car owners from buying subsidized gasoline, but also to increase its price altogether from IDR 4,500 per liter to 6,000 per liter. My responses for this is still the same as above, however, there are some things that must be dealt.

First is the accusation that oil pricing that is used by Ministry of Finance is downright wrong. Some of the rationales used are the comparison of oil production cost structure between Indonesia and other countries and that we actually book profit even with today's price. But we can see that currently Indonesia is a net importer country when it comes to oil (thus using world's oil price as a standard of pricing gasoline is not wrong,) and the second calculation didn't take into account recoverable cost and net contractor share.

But let's say that the calculations above are right, that we have surplus on oil, I can't imagine how people can be so egoistic.

Why? Firstly, even if it's surplus, with the current economical growth of Indonesia (thus oil consumption will keep on increasing) and the fact that oil is a very scarce commodity, isn't it better if we also save it for our future generations? Since government's appeal asking people to reduce oil consumption is not effective, price comes as a stronger negative incentive to shift her people's consumption patterns. With that, not only we save the oil for future, if consumption of oil in Java (as the biggest oil consumer in Indonesia) is reduced significantly, there are more oil to be distributed outside Java, in which in some anecdotal reports gasoline is difficult to get and its price can reach up to IDR 6,000-12,000 even when in Java it's just IDR 4,500. Secondly, I believe there will be incentive to look for other alternative souces of fuel. People in Indonesia are mostly oblivious and lulled by subsidized gasoline. They are unaware of the environmental impact (pollution) and scary economic consequences if we keep subsidizing oil: in the future, assuming we keep the price on IDR 4,500 per liter, the moment when unsubsidized gasoline actual price is so high that we can no longer subsidize it (for instance IDR 12,000 per liter,) the sudden blows of 167% of price increase will cripple the economy even worse than if we slowly phasing out the subsidy little by little, perhaps IDR 500 per year.*

Second, on the effect of increased oil price. It's correct that increased oil price will trigger inflation. But let's see the case in 2005. Even when gasoline price increased almost 100% at that time, inflation rate was just around 17,1% in 2005, and next year was down to a mere 6,60%. How could that happen? Because fuel is a variable cost thus will not severely cripple purchasing power.

Let's say Mr. A sells bakso using his motorcycle, expecting inflation, he increase the price of his product 500 rupiah per bowl. It means he has some added revenues to cover the costs of increased oil and/or other commodities prices, his purchasing power is not affected. But for some people, this adjusting period when price is still sticky will indeed decrease their purchasing power. For instance, when people are paid every month, thus their current wages can't keep up with the inflation, or when price shock occurs; there comes the direct cash aid. During these adjusting periods (goverment says it's for 9 months), we flow some cash to compensate their costs first. And after that, we can allocate the money for infrastructure, public transportations, job creations, and other social safety nets, so that even though there is price increase, cost for other basic needs like health care and education can be reduced.

Government can also manage inflation as long as she can keep the money supply steady**. And this is why I don't oppose government proposal. Oil price is increasing and so the cost of subsidizing it is increasing; I am sure that these activists will vehemently reject if we add more loan or increase tax. So from where must the money to cover the subsidy come from? I dare to challenge those who oppose this proposal to come up with solutions:

What will YOU do as government in facing this situation?

Post scriptum

*) My personal observation tells me that cigarettes price is steadily increasing, yet no one is protesting against such increases. Most Indonesian smokers is not that burdened to buy a pack of cigarettes costing IDR 12,000 PER DAY, which may cost that person IDR 3,6 to 4,4 milion per year. My personal observation also tells me that usually most people buy fuel at max IDR 50,000 per week, only IDR 2,6 million per year. It's still LESS than the money spent on cigarettes.

**) I am tempted to say that using monetarism approach, we must increase interest rate. This is bad, as loans will be more burdenful, and may cause double-blow for enterpreneurs. However, using Keynesian approach to increase tax may not be good either, as tax decreases disposable income (and when in times of inflation, person who are caught in fiscal drag may suffer even further.)

But, of Course, SOPA

Written in the name of internet freedom.

So what's the dig on SOPA? Well, if you don't know what it is, then read this first (quick, before SOPA kills Wikipedia!) Done? Great. Now what I'd like to say is that I don't support SOPA.

Firstly, I don't think that file sharing constitutes a copyright infringement. Simple analogy: if I buy a Sherlock Holmes 2 DVD then watch it with my family and friend, or buy a Harry Potter book then lend it to my neighbors, do I infringe the copyright? The answer is a simple no. File sharers never acknowledge that the music or movie that they share as their intellectual property. They also share it for free, which means that they never profiteer over the file.

Secondly, although I don't think that online piracy doesn't create any harms whatsoever, the claim that it causes $58 million dollar is simply bogus and misleading. How about the claim that it damages entertainment industries? Well, take a look at this:


(Courtesy of Techdirt.)

It turns out that the US entertainment industries are just fine. In fact, they thrive amidst the collapse of global economy. How about the claim that it causes 19 millions of jobs losses? Nope. As of 2010, the number of workers in US entertainment industries is nowhere near 19 millions, it is only 374,000. File sharing also will not hurt the US economy as a whole. You might remember the broken windows fallacy: the money that is not spent for buying original CD will be spent for buying other goods or services.

Aside from that, as you can ponder, SOPA will not affect that much regarding people's preferences. Even before SOPA, there are so many people who still choose to watch movies in cinemas and buy original CDs/DVDs or published books despite there are free mp3s, movie videos, and e-books on the internet. One of the reason maybe because there's a physical form of it that can serve as a collectible item. On the other hand, people who download from internet will not simply switch into buying original CDs/DVDs/published books due to SOPA. Maybe there is no access to buy its original form (for instance in China) or the cinemas simply suck for not playing some movies (like here in Indonesia.) The fact that Harry Potter books' sales could break the world record even though there were free e-book versions of them serves as an example.

Another reason the entertainment industries can survive is that because of they already are recapturing much of that revenue through “complementary” purchases. For a movie maker, they can sell licensed merchandises. For a musician, instead of selling recorded albums, they switch the trend into selling live concerts and ring back tones, which, as I observe, remain lucrative businesses. As what is analyzed by Oberholzer-Gee in his paper, recording industry numbers show large increases in concert revenues corresponding to the drop in recorded music sales.

File sharing gives benefit for indie artists to be heard. Arctic Monkeys and Secondhand Serenade owe their success to file sharing. On the other hand, established artists like Trent Reznor (Nine Inch Nails) on his album "Ghost I-IV" and Radiohead on their album "In Rainbows" were still able to book millions of dollars in profit despite letting people to buy their songs for whatever price they wanted to and many of them downloaded the albums for free.

After all, SOPA will not stop file sharing, anyway. You may recall how in 2005 US Supreme Court's "Grokster" decision that ruled that file sharing networks could be held liable for copyright infringement if they take "affirmative steps" to encourage infringement, went backlash as peer-to-peer (P2P) sharing flourished after the decision. Moreover, the punishment is horribly unjust. You can get 5 years in punishment for uploading a Michael Jackson's song. That is one year longer than the sentence for a doctor who apparently killed him.

Surprised?

An Inquiry of Gold Fuss

This is quite wonkish. With all the fuss to invest and hold in gold (even the talks in my office and my diploma 3 taxation class of 2008 Facebook group, for Christ’s sakes), I think I have to set things straight.

First of all, gold is not a good choice of investment (albeit good for hedging, but that’s another story.) As what Warren Buffet also noted, with the world’s 170,000 metric tons of total supply of gold valuated at approximately $9.6 trillion, choosing to invest to this asset that isn’t capable of producing anything (unlike investing in companies that can give you dividends or interest revenues, or managing a farmland that can produce commodities) is not wise. Secondly, despite its limited supply, its price can be shaken up by market condition of other financial products like bonds, stocks, etc. Its volatility can be shown during 1980. The gold price went from $560 per ounce to $850 over three short weeks in January 1980. After that gold became much less precious as it hit back to below $600 and plunged to bearish market. It never crossed $850 and above again until January 2008

So what drives the hike of gold price currently? We don’t know for sure. Perhaps Krugman was right that the increase of gold price is driven by deflation and/or the falling of expected return of other investments, following the Hotelling rule. Perhaps he was wrong as there is no sign of deflation (for instance, average global inflation rate is projected to reach 3.4% in 2012 and bond rates of PIIGS are high,) and this chart shows (courtesy of Lior Cohen) that the spike in gold price (at least in US) came after the recent two quantitative easing plans from The Fed in 2008 (QE1) and 2010 (QE2.)





That means, instead of being driven by deflation, it’s driven by inflation expectation or depreciation of dollar against other currencies. And it is exacerbated by the negative elasticity of gold price: because of the expensive cost of gold mining, when the gold price rises in the short run, the miners tend to mine the poorer quality veins of gold first in order to maximize profitability in short and medium term; and that pushes the price of better quality gold used for investment further.

That being said, we still don’t have a good grasp of what causes the gold price to soar. Maybe its price goes up because of people are buying it, and people are buying it because its price goes up, some sort of self-fulfilling prophecy. And since more people are buying it, it attracts more people to buy it because of the herd mentality (surprise, surprise: bubble!) But if you ask me whether I want to invest in gold, I’d say: nope. I’d rather invest in Microsoft or Google’s stocks and probably hedge it with emerging markets’ bonds. Just saying.

Confession (Kokuhaku): A Review

What would you do if life seems unjust to you? Would you do revenge?

This is the central theme explored in “Confession” (“Kokuhaku”), a 2010 Japanese film directed by Tetsuya Nakashima, which was also Japan’s entry to Oscar’s best foreign film category (which unfortunately didn’t cut it). Confession is barely a mystery/thriller movie, as it gives you away the antagonists near the beginning of film. This is a drama movie, albeit a very dark one.

The story starts with a monologue containing an epiphany about life told by the teacher Yuko Moriguchi (portrayed exceptionally by Takako Matsu). The students were nonchalant at first, but then went shocked after she revealed something disturbing: about how the father of Manami, her daughter, got HIV and how Manami, which at first thought to be died from drowning actually murdered by two of her students. The students, dubbed A/Shuuya Watanabe (played by Yukito Nishii) and B/Naoki Shimamura (played by Kaoru Fujiwara) were the murderers. She then told them her personal revenge, as A and B will likely to escape harsh punishment due to Japanese juvenile law. She injected the HIV-containing blood from her daughter’s father to A and B’s milks, as it would give them time to repent and think about the meaning of life. Naoki then went psychotic from the thought of dying from AIDS. He refused to go to school and take a bath, as he equated smelly hair and body odor to being alive. Shuuya, the smart mastermind, kept on going to school, and all students but Mizuki Kitahara bullied him sadistically.

As the story unfolded, we were told about problems and motivations that gave rise to the murder. Shuuya, who was shunned by her mother, wanted to prove to her (and to the world) that he mattered, that he was talented. He tried his best to show his talent, but the world ignored him, choosing to talk about the sensational murder done by a teenager (you’ll be surprised by who is this murderer) instead of his winning in a national school science award. He then chose murder as his raison d’être, a method to be known by this world. Naoki, on the other hand, went on murdering Minami by throwing her to pool (as the attempted murder using electro-shocking wallet by Shuuya failed) as a gesture to validate himself to Shuuya, whom he thought was his only friend. I won’t give you the rest as it will spoil you the story, but the story goes to be more disturbing from the “confessions” told from the point of view of other characters (including Naoki’s mom.)



Confession is a movie about ambition. It tells us that ambition is dangerous; it makes you stronger, but too much of it will destroy your lives. Confession is also a story about dysfunctional society, be it a family, educational system, or legal system. It tells us that what you do and give to your kids will shape their future, and should you fail as parent, the consequence will be horrible. If you are too demanding of them and ignoring even their smallest achievement, they can be obsessed to you (as what is hinted by the Oedipus complex Shuuya). If you are too protective of them, they can grow up as antisocial (as what is hinted by Naoki.) It also tells us the dire consequences of the failure of teaching respect and morality to kids, leading them to grow up without a sense of discipline, remorse, or even compassion.

“Confession”, in my opinion, seems like a combination of “Dexter” and “Dogtooth” (“Kynodontas”), directed by Lars von Trier. The usage of slow motion montages to dramatize the scene reminiscing me of von Trier’s “Antichrist,” albeit overused. Its characterization is superb, especially the detached teacher played by Takako Matsu who is able to portray a cold-blooded avenger who tries her best to conceal her sadness. The kids’ acting also looks convincingly brutal. The choice of soundtrack (one of it is Radiohead’s “Last Flower”) matches the very bleak tone of the film.

Overall, this is one of the best Japanese films I’ve ever seen, on par with its predecessor in Oscar, “Departure” (“Okuribito”) which won the 2009 Oscar best foreign film award. It’s a shame that it didn’t make into the Oscar best foreign film nominations. Nonetheless, as revenge is best served cold, Tetsuya Nakashima also served “Confession” with a chilling, cruel notion of life and death.

The Economy of Valentine's Day

Just found this on 9GAG. Really funny. Happy Valentine's Day, everyone!