Is John Perkins telling the truth?

Have you read John Perkins’ Confessions of an Economic Hit Man? What do you think about his self-declared crime as an economic hit man in Indonesia back in the 1970s?

My first impression is that Perkins’ book is poor in details. In chapters 3-9 of the book -- where he tells a story of an orchestrated effort of the developed world to make Indonesia bankrupt -- he does not name any places he visited in Indonesia, except a hotel where he stayed in Jakarta, the Wisma of PLN’s headquarter where he lived in Bandung, and a golf course in Bandung. He mentions one Indonesian name only, Rasmon, the son of the Wisma’s warden.

The only substantive detail he offers, if there is any, is this: He inflated the forecast of electrical demand so much so that Indonesia would have to borrow a huge sum of money from the rich countries and, therefore would eventually be forced into bankruptcy.

Interviewed by Amy Goodman, for example, Perkins says:

And an interesting aspect of that whole thing was at that time I was part of a team of 11, and the other 10 men on that team had no idea that we were doing the economic hit man thing. They were engineers. They were designing transmission lines, fuel systems to bring the fuel into the power plants. They were designing the power plants, big power plants, distribution lines. They were engineers. I was the one that made the forecast. I was the one that said that the electrical demand was going to grow at 17% a year for 20 years, which is unheard of, but I was -- that was my job, was to inflate these numbers as much as I possibly could. I mean, that's a huge number when you compound it annually. And they were just going along. You know, for them it was great. They get to design this huge, amazing system, an engineer's dream.

You should have been surprised. Perkins’ forecast does not make sense. A growth of seventeen percent per year for twenty years is way much higher than the growth of electrical consumption in any Asian countries, let alone compared to that of developed world.

What has actually happened in the 1970s and 1980s is even more startling. Electrical consumption in Indonesia has indeed been growing very fast, more than fifteen percent per year on average. Electricity production has been growing from about three million MWhs in early 1970s to 113 million MWhs in 2003. Since late 1970s, electrification ratio (the ratio of the number of people connected to electricity to the total population) has been rising from 7% to the current ratio of 53%. In late 1970s only 4% villages connected to electricity; now 82% of them does.¹

Amazingly, even after endlessly building power plants in the 1970s and 1980s, many parts of Indonesia now suffer from severe electricity crises. Even Jakartans experience blackout from time to time.

Perkins must have felt relieved by now. His self declared crime -- inflating the forecast of electrical demand to force Indonesia into bankruptcy -- has turned into an important engine of Indonesia’s economic growth since the early 1970s.

Come to think of it, Perkins should have told his readers that his forecast has unintentionally helped fostering Indonesia’s economic growth. Or perhaps he could just throw chapter 3-9 of his book away into a garbage bin.

Books, Energy Economics, Indonesia ¹See, for example, "Statistik Ketenagalistrikan dan Energi, DJLPE, 2003" (Table 8, 17 and 23). It is used to be available online at the DJLPE's website.