Odysseus and the Ropes of the Republic

By Muhamad Chatib Basri, Kompas.Id, Aug 17, 2026

The voice was so beautiful, cutting through the silence of the aqua ocean. It made the sailors look around. Searching for its source, even though disaster awaited them. Humans do not become lost because they do not know the way. Sometimes they become lost precisely because they know the way, but they still desire to draw closer.

Homer wrote about this almost 3,000 years ago: the story of Odysseus and the Sirens. Odysseus knew the danger ahead. Still he desired to hear the song. He also knew that when the voice appeared, he would not be able to trust himself. So, he plugged the ears of his oarsmen with wax. Odysseus’ body was tied to the mast. The message was, “Whatever I say, do not free me.”

When the song rang out, Odysseus struggled. Pleaded. Commanded. The oarsmen heard nothing. They kept rowing. The ship was saved not because its captain was strong. It was saved because the captain knew he could be weak. Therefore, he chose to tie himself up while the sea was still calm.

I always remember this story. Last month, millions of people around the world watched it again in Christopher Nolan’s film. At the Harvard Ministerial Forum, where I teach, that old tale is still used as a case study for serving ministers. Power, like the sea, has its own temptations.

This old tale, secretly, is a story about the role of institutions in the economy. Institutions are the ropes to the mast, the bonds a nation ties to itself while its mind is still clear. Because it knows that one day that clarity can fade. That will be when the Sirens begin to sing, printing money to finance waste, loosening the guard rails for immediate results. Odysseus tied himself up because he knew he was not an angel.

James Madison wrote, “If men were angels, no government would be necessary.” Institutions are born not because people are always wise, but because we know we might one day err or act arbitrarily.

Perhaps the best way to read Indonesia’s 81 years of independence is not by how fast we are sailing, but by how we have learned to tie ourselves to the mast. With difficulty. With repeated failures.

In 1998, people gloomily predicted that Indonesia would disintegrate; yet we remained united, and direct elections proceeded peacefully. Ten years later, amid the greatest financial crisis since the Great Depression, our economy still grew 4.6 percent.

Then came the taper tantrum of 2013. I still remember the nights when the sails turned red, the rupiah weakened, and capital flowed out. Seven months later, we exited from the Fragile Five. Then the pandemic. It was tough, but we got through it—financed by savings cultivated over years of careful budgeting.

From this, we learn that what saves an economy isn’t something dramatic. It’s often something that sounds uninteresting: institutions.

Of course, some will object. The New Order, with its fragile institutions limiting power, grew at around 7 percent a year. Then, in the Democratic Reform era, with far better institutions, it only grew at 5 percent. If institutions are that important, why is democracy progressing so much slower than the dictatorship it replaced?

I try to answer this question with a less romantic approach: 80 years of data. Economic growth data comes from the Maddison Project Database and Statistics Indonesia (BPS), and inflation data from the World Bank. I constructed an institutional quality index from five indicators from the Varieties of Democracy (V-Dem) data: limits on executive power, judicial independence, the rule of law, the quality of electoral democracy, and control of corruption. Using this index, through a series of econometric models, I tested whether stronger institutions lead to faster, more stable economic growth and more controlled inflation.

First, institutional quality is unrelated to growth rate. Admirers of the iron fist may smile at this point. But that smile won’t last long. In 1998, our economy shrank by about 13 percent, and per capita income only returned to 1997 levels around eight years later.

Second, the stronger the institutions, the more stable the economy—economists call this lower growth volatility. The relationship is strong and consistent. Sharp fluctuations—for a family—can mean a job lost without warning, prices jumping within a month, or plans to send a child to school being postponed indefinitely.

The institutional index was at its lowest point in the final years of the New Order. From 2004 to 2015, when the index improved, growth volatility declined. This conclusion persists even after accounting for oil and commodity prices, global economic shocks, and the level of prosperity are taken into account.

Third, long-term inflation was cut by more than half—from around 13 percent to below 6 percent—after central bank independence in 1999. The world was indeed experiencing low inflation at that time, but not all countries enjoyed it. We achieved this because of the post-1998 institutional reforms.

Fourth, the direction of the relationship. The quality of today’s institutions predicts tomorrow’s economic stability, not the other way around. History must admit that the 1998 reforms arose from a crisis. Therefore, I refrain from the term “cause and effect”; I prefer to call it a strong association. The rope on the mast doesn’t make a ship go faster. It keeps it from crashing into rocks.

There’s one interesting finding. I let the data find its own time for the sharpest pattern change using the Bai-Perron test. The results were in 1965 and the late 1990s. The procedure never tells the story of a regime change or a crisis, but only reads the numbers. History, it seems, leaves traces in the numbers.

The two fractures tell the same story. By 1965, the printing press had become the cashier of power. By 1998, credit flowed freely, especially to those close to power, without adequate discipline regarding its appropriateness. When the crisis struck, the structure collapsed, and the economy shrank by around 13 percent. Twice the ship came close to the rocks. Twice we paid a heavy price when institutional barriers were too weak.

Following the reforms, the story was different. The global financial crisis of 2008–2009, the taper tantrum of 2013, and the pandemic of 2020. Storms kept coming, but none brought us to a collapse like 1998. It wasn’t that seas became friendlier. What was different, perhaps, were the ropes holding the ship together. The central bank was made independent. Deficits and debt were limited by law. Banking was cleaned up.

Being tied down doesn’t mean being rigid. Odysseus’ ropes were untied after the danger had passed. When the pandemic struck, the deficit fences were loosened through established procedures, with a time limit, and then reattached. Rules may change, but integrity and governance cannot. The ropes may not make us grow faster, but they keep us from drowning.

And there’s another rope we often forget to consider: democracy. Amartya Sen points out that well-being isn’t about how many things we own, but how much we can do and become because of it. This is what he calls capability. People who are silenced, who can’t go to school or get medical treatment, aren’t just poorer. Their life choices become narrower.

That’s why the aspect of freedom is so important in development. That’s why criticism is the cheapest corrective mechanism a nation has. My study with Wihardja and Pradana (2026), using ACLED and Susenas data from 2015–2024, shows that the shrinking middle class is associated with increased demonstrations at the provincial level—even after education, income, and urbanization are taken into account.

And one striking finding is that provinces with more widespread internet access actually record fewer demonstrations. Complaints that have a channel don’t need to take to the streets. Criticism is a valve, not a threat.

I recall my conversation with Amartya Sen (Kompas, 2/12/2021): no major famine has ever occurred in a country that is free, democratic, and has a free press. Democracy may be noisy, perhaps annoying to those in power. But it is that very noise that reminds us when the ship begins to veer off course.

But all those ropes—the institutions they maintain—only last as long as they are remembered. Ironically, a nation’s memory is shorter than we think. The people of Macondo, in García Márquez’s novel, are struck by a plague of insomnia and slowly forget, first the names of objects, then their uses. They affix writing to everything. What they fear most is not forgetting names, but the day when the writing is still legible but no longer means anything. Odysseus binds himself because he knows people can be weak. The people of Macondo write names on objects because they know people can forget. Institutions are necessary because a nation can be both.

This is where my anxiety lies on this 81st birthday. The index shows the quality of our institutions has declined since 2015—the Democracy Report 2026 from V-Dem, University of Gothenburg, shows a similar trend. The knots are loosening one by one. This is where Jon Elster’s (1979) doubts come into play. He was right that in politics, it’s easier to tie others than to tie yourself. The ropes that loosen most quickly aren’t just any ropes, but the ones that bind the hands of those who control the wheel.

But isn’t economic growth still above 5 percent? True. However, institutional weakening rarely sends warnings through growth figures first. What usually moves first is trust. And trust is precisely what those ropes guard.

The Song of the Siren sounds most melodious when the sea is calm. This time we can’t say we don’t know. We do. We’ve seen that reef before.

On the morning of August 17, the flag was raised. We paused and, with choked voices, sang the national anthem Indonesia Raya. That day, we celebrated growth, development, and steps forward. But there was no ceremony for the silent things: the laws that guard, the laws that uphold, the critics that remind. After all, they are the ones who guard us when the siren’s song appears.

This country is indeed not perfect. There are still many complaints here and there. It hasn’t been able to provide for everyone. Yet, on the morning of August 17, the children still lined up. The residents still set up a simple stage in the corner of their lanes. We stood, giving time to our home. Because a home doesn’t have to be perfect to be loved.

And perhaps that is where the heroism of a nation lies: not always in victory, but in the fortitude to keep rowing even in the most difficult situations. Perhaps that’s why Bung Hatta quotes René de Clercq: “There is only one country that is my country. It grows through deeds, and those deeds are my efforts.”

Muhamad Chatib Basri is Visiting Scholar, Harvard CID; Visiting Professor in Practice, LSE (CETEx) and was Minister of Finance of the Republic of Indonesia 2013–2014.

This post is based on https://www.kompas.id/artikel/odysseus-dan-tali-republik.