"During Indonesia’s New Order era, if you wanted to become handsome, you would seek out Bento as your mentor. You’d chant his name three times—Bento! Bento! Bento!—and instantly, you’d become the most handsome person across the equator. That’s all about what Iwan Fals and friends used to echo.In the Kingdom of Lojitengara, where Bambang Pecruk Panyukilan, known as Prabu Welgeduwelbeh, reigned, things were different. If you wished to become handsome, you didn’t need to chant Bento’s name three times. Instead, you simply needed to utter the ‘magic words,’ such as “This was all thanks to Prabu Welgeduwelbeh,” “Only Prabu Welgeduwelbeh could do that,” or “Our hopes rested on Prabu Welgeduwelbeh,” and so on. Once you said these ‘magic words,’ you would immediately become handsome, even more so than before.One day, Prabu Welgeduwelbeh, the ever-dynamic ruler, decided to embark on a grand escapade. With his trusty emerald steed—a green 2018 Kawasaki W175 custom motorbike—he gathered a band of merry jesters: Citrawarma, Dursilawati, Citraksa, Citraksi, Yuyutsu, and Surpanaka. Together, they set off to explore the newly paved Royal Pathway to the future capital, Nusantaraville and introduced a confusing term 'Soft Ngantor', as if an imitation of 'Soft Opening.'As they rode, the jesters documented every pothole and pebble, ensuring the kingdom’s subjects were entertained by their daring adventure. Prabu Welgeduwelbeh, ever the showman, revelled in the attention, waving to the cameras and flashing his royal grin.Night fell, and the Prabu retired to the grand Garuda Palace in Nusantaraville. But alas, sleep eluded him! The symphony of hammers and saws, the unfamiliar bed, and perhaps the ghost of unfinished projects kept him tossing and turning. Critics, ever vigilant, seized the moment. 'A sleepless night for the Prabu? The item isn't finished yet, why did you force yourself?' they cried.Meanwhile, the kingdom’s subjects watched with a mix of amusement and scepticism. Some cheered Prabu’s efforts to communicate with his people (read: the investors), while others grumbled about the spectacle overshadowing more pressing matters (read: national debt). In the end, Prabu Welgeduwelbeh’s motorbike adventure became the talk of the kingdom, a tale of governance and interest aggregation, with a dash of sleepless nights. And you could faintly hear the King singing Coldplay's Viva La Vida: 'I used to rule the world, seas would rise when I gave the word. Now in the morning, I sleep alone, sweep the streets I used to own'.""Governments can play a pivotal role in fostering entrepreneurial activity," Seruni continued the conversation by adding another perspective related to the previous topic."This highlights the important influence that government policies and actions can have on encouraging and supporting entrepreneurship. But this pivotal must be under several key conditions. A stable political environment is essential for entrepreneurial ventures. A stable and predictable political climate encourages investment and long-term planning. Policies that promote economic growth, such as low inflation, reasonable tax rates, and sound fiscal management, create a conducive environment for entrepreneurship. Investment in efficient and effective infrastructure such as transportation, communication, and utilities reduces operational costs and improves market access for businesses.Clear, fair, and enforceable laws and regulations protect property rights, enforce contracts, and ensure fair competition, which are crucial for business confidence. Governments can foster a culture of entrepreneurship through public campaigns, awards, and by facilitating networking opportunities for entrepreneurs. Trade policies that open up domestic and international markets provide entrepreneurs with opportunities to expand their businesses.Funding for research and development (R&D) and policies that encourage innovation help entrepreneurs develop new products and services. The availability of funding through government grants, loans, and incentives, as well as a well-functioning financial system, helps entrepreneurs secure the necessary capital to start and grow their businesses. Providing social safety nets such as healthcare, unemployment benefits, and retirement plans can reduce the personal risk associated with entrepreneurship, encouraging more people to start their own businesses.Mariana Mazzucato argues that the state plays a crucial and often underappreciated role in fostering innovation and entrepreneurship. Mazzucato challenges the common perception that innovation is primarily driven by the private sector. She provides numerous examples where state-funded research and development (R&D) have been pivotal in technological advancements. For instance, many foundational technologies in smartphones, such as GPS, touchscreens, and the internet, originated from government-funded projects.Some notable examples of state-led innovations include both the Internet and the Global Positioning System (GPS). They were initially developed by the U.S. Department of Defense. The internet began as ARPANET, a project funded by the Advanced Research Projects Agency (ARPA), while GPS was developed for military navigation. The Human Genome Project was a large-scale, publicly funded initiative that successfully mapped the entire human genome. The project has had profound implications for medicine, biology, and genetics.Governments worldwide have played a crucial role in advancing renewable energy technologies. For instance, Germany’s Energiewende policy has significantly boosted the development and adoption of solar and wind energy. The National Institutes of Health (NIH) in the United States has funded numerous groundbreaking medical research projects, including the development of vaccines and treatments for various diseases. NASA, a government agency, has been at the forefront of space exploration, leading to numerous technological advancements. The Apollo moon landings, Mars rovers, and the Hubble Space Telescope are all products of state-led innovation. These examples illustrate how state-led initiatives have been instrumental in driving technological progress and addressing critical societal challenges.The state often takes on high-risk investments that the private sector is unwilling to fund due to uncertainty and long-term horizons. This includes funding basic research and early-stage technologies that may not have immediate commercial applications but are essential for future innovations. The government doesn’t just support existing markets but also creates new ones. Through policies, subsidies, and procurement strategies, the state can stimulate demand for new technologies and industries. This has been evident in sectors like renewable energy, where government incentives have significantly accelerated development and adoption.Mazzucato debunks the myth that the state is inherently inefficient and that the private sector is always more dynamic. She argues that the state has been a bold and valuable innovator, often laying the groundwork for private sector success. She emphasizes the importance of a collaborative ecosystem where the public and private sectors work together. This synergy is crucial for sustained innovation and economic growth. Mazzucato highlights the need to rethink the role of the state in the economy, advocating for a more balanced view that recognizes the state’s contributions to innovation and entrepreneurship.To foster entrepreneurial activity, Governments can offer grants, loans, and financial incentives to help entrepreneurs secure the capital they need to start and grow their businesses. Simplifying regulations and streamlining the process of starting and running a business can make it easier for entrepreneurs to navigate legal requirements. Governments can support research and development (R&D) and create policies that promote innovation, helping entrepreneurs bring new ideas to market. By funding educational programs and training initiatives, governments can equip aspiring entrepreneurs with the skills and knowledge they need to succeed.Governments can promote entrepreneurship through public campaigns, awards, and recognition programs that celebrate successful entrepreneurs and inspire others. Establishing laws and regulations that protect intellectual property and ensure fair competition can create a stable environment for businesses to thrive. By facilitating networking events and creating platforms for collaboration, governments can help entrepreneurs connect with potential partners, mentors, and investors.In essence, governments can act as catalysts, creating an environment where entrepreneurial ventures can flourish, much like a gardener tending to a garden to ensure that plants grow strong and healthy.Collaborations between the government and private sector can lead to the development of governance frameworks that support entrepreneurial growth while ensuring accountability and ethical conduct. Effective governance frameworks help businesses identify and manage risks, ensuring long-term sustainability. Companies with strong governance practices are more likely to attract investors, as they are perceived as more reliable and well-managed. Governments can align their policies to promote both entrepreneurship and good corporate governance. For example, regulations that encourage transparency and accountability can help new businesses build trust with investors and customers.David Larcker and Brian Tayan explain why corporate governance matters, emphasizing its crucial role in determining the success and sustainability of companies. Effective corporate governance aligns the interests of shareholders and management. Good governance practices ensure that executives act in the best interests of the shareholders, minimizing conflicts of interest and reducing the potential for self-serving behaviour by management.Corporate governance structures, such as oversight by the board of directors and robust internal controls, help mitigate various types of risks, including financial, operational, and reputational risks. Governance mechanisms ensure accountability for decision-making at all levels of the organization. This accountability helps prevent misconduct and ensures that decisions are made in the company's and its stakeholders' best interests.Good governance practices promote transparency in reporting and decision-making. Transparent financial reporting and open communication with stakeholders build trust and confidence among investors, customers, employees, and regulators. A strong governance framework helps protect and enhance the company's reputation, which is critical in maintaining investor confidence and customer loyalty.A well-functioning governance system can lead to better decision-making processes, often involving diverse perspectives and thorough evaluations of strategic options. This can improve overall company performance. Good governance can streamline processes and improve the efficiency of operations, reducing waste and optimizing resource allocation.Corporate governance ensures that companies comply with laws and regulations. This compliance reduces the risk of legal penalties, fines, and other regulatory sanctions. Governance frameworks often include codes of conduct and ethical guidelines that help companies adhere to high standards of integrity and fairness.Strong corporate governance can enhance a company's ability to attract investment by assuring investors that their capital will be managed responsibly. Companies with good governance practices often enjoy a lower cost of capital, as they are perceived as less risky by investors and lenders.Good governance supports the long-term sustainability of a company by ensuring that strategic decisions consider the interests of all stakeholders, including employees, customers, and the broader community. Strong governance structures enable companies to respond more effectively to crises and challenges, ensuring continuity and stability.The concept of good corporate governance isn’t just for private companies; it’s also crucial for governments. Just like businesses, governments need to earn and maintain the trust of their stakeholders—citizens. Good governance practices ensure that government actions are transparent and accountable, which helps build public trust. Governments manage vast amounts of public resources. Good governance ensures these resources are used efficiently and effectively, reducing waste and corruption.Effective governance helps governments manage risks, ensuring stability and predictability in policy-making and implementation. This is crucial for creating a stable environment for businesses and citizens. Good governance frameworks enable governments to respond more effectively to crises, whether they are economic, social, or environmental.Governments are expected to operate with high ethical standards. Good governance promotes integrity and ethical behaviour, which is essential for maintaining legitimacy and authority. Just like businesses, governments must comply with laws and regulations. Good governance ensures that government actions are lawful and that there is a system in place to address any breaches.A government that practices good governance is more likely to attract foreign investment and support from international organizations. Investors and donors look for stable and well-governed environments to invest their resources. Good governance creates a favourable environment for economic growth by ensuring that policies are fair, predictable, and conducive to business development.Good governance facilitates effective collaboration between the government and the private sector. This is essential for public-private partnerships, which can drive innovation and development. By aligning governance practices, both the government and private sector can work towards shared goals, such as sustainable development and social welfare. In essence, good corporate governance in government ensures that it operates efficiently, ethically, and transparently, which is crucial for the overall well-being of society and the economy.Corporate governance mechanisms include codes of conduct and ethics programs to guide corporate behaviour. Governments can adopt similar ethical standards and integrity programs to guide the behaviour of public officials and ensure that decisions are made in the public interest.Now let's answer our previous question. When an entrepreneur is elected to a public office, such as a minister or president, there are several important considerations regarding their involvement with their business. In Ministerial positions, it’s crucial to avoid any conflicts of interest. The entrepreneur should either step down from their business or place it in a blind trust to ensure they do not influence business decisions while in office. Many countries have laws requiring public officials to disclose their financial interests and recuse themselves from decisions that could affect their business. Maintaining public trust is essential. Any perceived conflict of interest can damage the official’s reputation and effectiveness.For higher offices like the presidency, the separation from business interests is even more critical. One common approach is to place their business assets in a blind trust. A blind trust is typically formed by a public official or individual who wants to avoid conflicts of interest between their private financial interests and their public duties. The trust is established by transferring the ownership and management of assets to an independent trustee. The trustee is usually an impartial third party who has no relationship with the grantor (the person who establishes the trust). The trustee has full discretion over the assets and makes decisions without input from the grantor. The person who sets up the blind trust cannot have any control or knowledge of the investments within the trust. This arrangement ensures that they cannot influence or make decisions based on their personal financial interests. The creation and operation of blind trusts are often subject to legal and ethical guidelines, especially when public officials are involved. These guidelines are designed to prevent any potential conflicts of interest.For public officials, the process of forming a blind trust typically involves: legal advice (consulting with legal advisors to ensure compliance with relevant laws and regulations), selection of trustee (choosing a reputable and qualified trustee, often from a professional trust company or law firm, who can manage the assets independently) and documentation (creating legal documents that outline the terms of the trust, including the powers and responsibilities of the trustee, and formally transferring the assets to the trust).In short, a blind trust is managed by an independent trustee, and the entrepreneur has no control over or knowledge of the assets. This helps prevent any real or perceived conflicts of interest. The entrepreneur may choose to sell their business interests entirely. This can help eliminate potential conflicts but may involve complex legal and financial considerations, especially in the case of privately held companies.Those entrepreneurs who are elected as public officer must fully disclose their financial interests and holdings, as required by law, to ensure transparency and compliance with regulations. This often includes filling out detailed financial disclosure forms. They need to comply with any laws and regulations that govern conflicts of interest for public officials. These laws can vary significantly depending on the country and the specific office held.If retaining ownership, the entrepreneur must step back from day-to-day management and decision-making. This may involve appointing a CEO or other executive team members to run the company independently. It’s crucial to establish a clear separation between their role as a public official and their business interests. This includes ensuring that their public office is not used to benefit their private business in any way.The entrepreneur must consider the public’s perception and the importance of maintaining trust. Even the appearance of a conflict of interest can undermine their credibility and the public’s confidence in their leadership. Regular and transparent communication with the public and relevant authorities about how potential conflicts of interest are being managed is essential.Entrepreneurs should seek legal counsel to navigate the complexities of managing their business interests while holding public office. Legal experts can help ensure compliance with all relevant laws and regulations. Beyond legal requirements, adhering to high ethical standards is crucial. Entrepreneur should avoid any actions that could be seen as unethical or compromising the integrity of their office. In summary, an entrepreneur elected to public office should carefully consider the ethical, legal, and practical implications of managing their business interests while serving in a public role. Whether through divestment, blind trusts, or delegation, the goal is to ensure that their official duties are performed without any undue influence from their private business interests.Susan Rose-Ackerman provides a comparative analysis of how executive power is exercised and checked in the United States, the United Kingdom, Germany, and France. Each country's unique political system influences the degree of executive authority and the methods of accountability.Rose-Ackerman underscores that transparency regarding the actions and decisions of public officials is essential for ensuring accountability and maintaining the legitimacy of governmental institutions. She argues that when public officials disclose their actions, deliberations, and decision-making processes, it allows citizens and other stakeholders to scrutinize and evaluate their performance. This openness helps prevent corruption and misconduct, as it exposes public officials to potential criticism and consequences for unethical behaviour.An informed public is better equipped to engage in democratic processes, hold government officials accountable, and make informed voting decisions. Transparency ensures that citizens have access to the information they need to assess the performance of their leaders and to participate meaningfully in public debates and policy discussions. This informed engagement is a cornerstone of a healthy democracy and is essential for the legitimacy of executive actions.Transparency serves as a safeguard against the abuse of executive power. When executive actions are subject to public scrutiny, there is less opportunity for corruption, favouritism, or other forms of misconduct. Rose-Ackerman underscores that a lack of transparency can lead to secretive decision-making, where officials may act without proper checks and balances, undermining the rule of law and democratic principles.Transparent decision-making processes can lead to better policy outcomes by allowing for broader input from various stakeholders, including experts, interest groups, and the general public. This inclusive approach can improve the quality and effectiveness of policies, as it draws on diverse perspectives and expertise. Moreover, when policies are developed transparently, they are more likely to be accepted and supported by the public, enhancing their implementation and effectiveness.Rose-Ackerman highlights that transparency is not just a practical consideration but also a legal and ethical obligation in democratic systems. Many countries have legal frameworks that require government transparency, such as freedom of information laws, open meetings laws, and other regulations that mandate the disclosure of government activities. These legal requirements reflect a commitment to upholding democratic values and protecting citizens' rights to access information.Rose-Ackerman also argues that public engagement is a critical component of a functioning system of checks and balances. We will briefly explore the role of the checks and balances on the next discussion, biidhnillah."Afterwards, Seruni stood still for a moment, feeling the energy, before opening her mouth to let the Coldplay's Viva La Vida escape,I used to rule the worldSeas would rise when I gave the wordNow in the morning, I sleep aloneSweep the streets I used to own *)
Citations & References:
- Mariana Mazzucato, The Entrepreneurial State: Debunking Public vs. Private Sector Myths, 2018, PublicAffairs
- David Larcker & Brian Tayan, Corporate Governance Matters: A Closer Look at Organizational Choices and Their Consequences, 2011, Pearson Education
- Susan Rose-Ackerman, Democracy and Executive Power: Policymaking Accountability in the US, the UK, Germany, and France, 2021, Yale University Press
*) "Viva La Vida" written by Christopher A. J. Martin, Guy Rupert Berryman, Jonathan Mark Buckland & William Champion
