INCOME DISTRIBUTION PROBLEM AND POVERTY IN INDONESIA
Introduction
The big problem facing developing countries is the disparity (inequality) the distribution of income and poverty levels. Unequal income distribution lead to inequality of income which is the beginning of the emergence of the problem of poverty. Let the matter drag on will further exacerbate the situation, and often can lead to negative consequences for social and political conditions. Problem of income inequality and poverty are not only faced by developing countries, but developed countries can not be separated from the issue. The difference lies in the proportion or size of the levels of inequality and poverty that occurred, as well as overcome the difficulty level is influenced by the total area and population of a country. The greater the poverty, the higher the level of difficulty overcome. Developed countries show the level of income inequality and poverty rates are relatively small compared to developing countries, and to overcome them is not too difficult considering the GDP and GNP they are relatively high. However, this problem is not just an internal matter of a country, but has become a problem for the international community. Various efforts have been and are being carried out by the international community, both in the form of aid and loans are basically (although still a question mark) is a systematic effort to reduce income inequality and poverty rates occur in poor countries and emerging markets. Some international agencies like the IMF and the World Bank and international financial institutions more involved in this case. Policy-making errors in the use of assistance and / or loan, it may adversely affect the social structure and economy of the country concerned. Income differences arise because of differences in the ownership of resources and production factors, especially the ownership of capital goods (capital stock). Parties (groups) who have more production factors will earn more revenue as well. According to neoclassical theory, the difference in income can be reduced through an automatic adjustment process, namely through a process of "hatching" of development down (trickle down) and then spread, giving rise to a new equilibrium. If the automated process is still not able to lower the level of income disparity is so lame, it can be done through a system of taxation and subsidies. Determination of income tax / income will reduce the income of high-income residents. Instead of subsidies would help low-income residents, as long as no one in the target allocation. Taxes have been collected
using the system much less progressive rates (the higher the income, the higher percentage rate), the government used to finance the wheels of government, subsidies and development projects. This is where the process of redistribution of income that will reduce inequality. Over the past 350 years the people of Indonesia live in colonial colonialism, never felt the justice in all areas. In the colonial period, Indonesia's economy oriented to provide raw materials for the Dutch. The agricultural sector in addition to providing rice as a staple food of Indonesia also produces spices can be expensive sold in European markets. The industrial sector does not develop, because the Dutch do not want Indonesia to compete with the industry in the Netherlands industry. As part of the international community, various attempts have been made by the Government of the Republic of Indonesia in order to improve the lives of nations to par with other countries in the world. Development policies are taken and implemented "true" is directed towards improving the welfare of society. Efforts to achieve these objectives have been carried out, including the "relationship" with international institutions like the IMF and World Bank. Based on official data released by the government, and from academic studies show that the poverty rate in Indonesia is still very high. BPS data in March 2007 showed the number 37.1683 million people are under the poverty line. This amount is mostly reside in rural areas (20.37%), but there is also poverty in urban areas (12.52%). Many economists highlight the issue, particularly on economic development policy taken by the government. There is a pro, was not a little criticism.
National income distribution system that is not pro poor become an issue for those who criticize government policy in the belief that the income distribution system largely determines how high national income was able to create the changes and improvements in national life, such as reducing poverty, unemployment and trouble- Another difficulty in the community. National income distribution is uneven, it will create wealth for society in general. Distribution system that is not pro poor will only create wealth for certain groups only, so this becomes a very important issue in addressing the high level of poverty to date.