Archive for the ‘Discussion’ Category

Vatican moving towards financial transparency

July 27, 2021

Interesting bit of news from Vatican. Within Vatican, there is Office of Administration of the Patrimony of the Apostolic (APSA) which oversees the Vatican properties. ASPA was created in 1967 and has for the first time released its annual report!

In 2020, profits were less than 51 million euros, while financial investments amounted to 1.778 billion euros; while contributions for the needs of the Roman Curia were halved from 41 to 20 million euros. Nonetheless, the figures were generally positive, considering the serious consequences of the pandemic.

For the first time since it was established in 1967, the Administration of the Patrimony of the Apostolic See – known from its Italian initials as “APSA” – has published its balance sheet. The document concerns the fiscal year of 2020. APSA’s president, Bishop Nunzio Galantino, explains that the decision to publish the budget stems from the “hope” of increasing confidence in the work of the Church, as well as the desire to transform the Dicastery, which was established by Paul VI, from a “structure that mainly offers services on demand” to a “proactive reality” in the way it administers the heritage entrusted to it. 

In an interview with Vatican Media, Bishop Galantino notes that this is not the first time that APSA has drawn up its balance sheet. “It was already done in the past,” he explained, with budgets being presented to supervisory bodies for approval. However, this is the first time the records have been made public. “It is certainly a step forward in terms of transparency,” the bishop said.

The president also noted that the decision by Pope Francis, enacted with a Motu proprio dated 28 December 2020, to transfer the funds and properties of the Secretariat of State to APSA. Bishop Galantino pointed out that decision involved not only “a transfer of material and competencies,” but the building of “a new culture that is not only administrative, which must gradually permeate” the dicastery.

The report details the work of the APSA during the months marked by the health emergency. It also provides useful information to refute false narratives about the size and value in use of the Holy See’s assets. It explains, for example, that it is thanks to the rental of prestigious properties in Paris and London that it was possible to grant a free loan to the Office of Papal Charities to obtain an historic building such as Palazzo Migliori, where the homeless are housed through the efforts of the Sant’Egidio Community.

The report is here. There is more to the story here.

How finance moves around religion is such a fascinating history.


Should Facebook (and other Social Media platforms) ban world leaders?

July 21, 2021

Courtney C. Radsch, former advocacy director at the Committee to Protect Journalists in this Proj Syndicate piece does not mince words. She says Facebook should ban more world leaders just as it has done for Trump.

Like it or not, Facebook wields tremendous power. In many countries, it is one of the few alternatives to the government-aligned outlets that dominate national media ecosystems. For users, it is often synonymous with the internet. That is why authorities have devoted so many resources to manipulating it, and why Facebook must take responsibility for stopping them.

To be sure, regulators also have a role to play. But, so far, their approach has been deeply flawed. Some – including in Florida, Texas, and Poland – have been pushing in the opposite direction, seeking to prohibit social-media platforms from removing content or accounts that are not illegal. Regulators in the US and the European Union are considering whether some elements of the internet should be treated essentially as public utilities or “common carriers.” But, overall, regulators need to focus less on content and more on platform design, advertising technology, and monopolistic power.

In the meantime, it is up to Facebook to rid itself of genocidal militaries, government propaganda that targets and manipulates populations, and leaders who block users. The algorithmic intermediation of the public sphere by private, for-profit platforms designed to maximize engagement and polarization has been anything but emancipatory. For many, it has been deadly. Governments, public officials, and political parties must face swift and severe consequences if they violate a platform’s terms of service and use it to violate people’s rights.

How market design can help solve problem of water allocation

July 21, 2021

Nice article by Paul Milgrom and Silvia Console Battilana:

Misallocation of scarce resources too often deprives users of them even as others waste their supply. Well-designed markets can overcome such problems by enabling voluntary transactions that allow existing users to retain their allotments while enabling higher-value uses.

Market design will also play a critical role in solving the problem of water allocation. Many of the world’s existing rights to fresh water – both surface water and groundwater – have already been granted and grandfathered in complex ways to cities, farmers, and industrial users. In some cases, each individual trade of these rights requires governmental approval; other jurisdictions prohibit such trading entirely.

These restrictions and historical rules have led to highly inefficient allocations. Water may be unavailable to towns that require more of it as they grow, even when those urban and residential uses are a hundred times more valuable than the rural ones they would supplant. Certain industrial firms whose rights are based on historical use may have an incentive to overuse water, even during droughts, to retain their rights to future allotments. Where trading of rights is limited or prohibited, poor price signals make it difficult even to assess which uses are most valuable. And water demand will increase and shift as climate change continues to upend historical usage patterns.

The success of the US radio spectrum auction points to a solution. Instead of revoking incumbents’ spectrum rights unilaterally, Congress redefined them in a way that made trading them possible and simple, and then allowed TV broadcasters to decide for themselves whether to continue their previous uses or decline to participate. The rights that were sold were then reconfigured to be suitable for new uses and efficient trading, while those that were unsold remained fit for existing purposes.

A similar reorganization of water rights could protect existing users not wishing to sell, while creating tradeable rights for others that would allow water to flow to its most valuable use. Any attempt to compel all current users to participate will likely be thwarted by legal and political opposition, but a fully voluntary market styled on the same principles as the one for radio spectrum could accommodate resisters while drastically improving the allocation of water rights. Moreover, policymakers could use a portion of the value freed by any reallocation to offset inequities – for example, by granting credits to rural towns or small agricultural producers so that they receive the water resources they need.

Allocating water efficiently and fairly will require innovation, collaboration, and regulation. In this and other domains, market design puts practical economic theory in the service of establishing rights and introducing effective rules and algorithms. That way, we can accommodate diverse market participants, harness new technologies, and maximize the public good.

False information regarding the sale of e-kronas

July 15, 2021

There is no e-krona yet. But rumours of its sale have already started:

On certain websites and in social media, false information is circulating claiming that the Riksbank is selling e-kronas.

The Riksbank has also been contacted by individuals describing how they have been called by companies claiming to be selling e-kronas on behalf of the Riksbank. However, it has not been decided yet whether the Riksbank will issue an e-krona and it is not possible to buy them.


The transatlantic macroeconomic divergence

July 13, 2021

Daniel Gros in Proj Synd points that the US and Europe fiscal/monetary policies differ:

So, while fiscal and monetary policy technically remain expansionary on both sides of the Atlantic, the US and the eurozone are clearly on different macroeconomic-policy tracks. Whereas the US is embracing fiscal expansion, but surreptitiously pursuing monetary tightening, the eurozone is eager to return to fiscal prudence, while maintaining monetary accommodation.

By itself, this divergence is not particularly newsworthy. Nobody is shocked to hear that different economic conditions and priorities lead to different policy approaches. But the potential longer-term effects should not be underestimated. If both economies stay on their current path, it would strengthen the US dollar, reinforce America’s tendency to run large external deficits, and make growth in Europe even more export-dependent. This is a recipe for trade tensions – and for an abrupt end to the Biden era’s transatlantic honeymoon.

The intertwining of Nation State and Modern Sport

July 12, 2021

Mukul Kesavan writes an essay in TheIndiaForum:

National feeling is not something that has been injected into sport by swaggering players, corrupt politicians, and a scheming media looking to boost ratings; it is native to modern sport, something that is built into its historical evolution.

The Perils of Paradigm Economics

July 6, 2021

Prof Andres Velasco of LSE in this Proj Synd article:

“The era of big government is over,” then-US President Bill Clinton proclaimed in 1996. But President Joe Biden’s multi-trillion-dollar  are suggesting precisely the opposite. Behind the politicians stand the policy gurus, eager to put their names on – as the fashionable phrase goes – a new “policy paradigm.”
Paradigm-peddlers have not yet settled on a single label for the post-pandemic era, but frothy ideas abound. Countries should “build back better,” but only after a “great reset.” Economic growth used to be a pretty good thing on its own; these days, it is unmentionable in polite company unless it is “inclusive, equitable, and sustainable.” (I can see why, but must all three adjectives always be strung together?)
True, the pandemic revealed plenty of social and economic weaknesses that governments should have been busy fixing a long time ago. Weak state capacities, grossly insufficient health infrastructure, threadbare social safety nets, and malfunctioning labor markets – the list is long, and it applies to most developing economies and a surprising number of rich countries, too. There is nothing like a crisis to rouse slumbering policymakers and shove aside veto players who impede change.
So, change is in the air, and in many cases it will require a more muscular (though not always larger) state. But does this – and, more importantly, should it – add up to a new paradigm?

What led American political parties to transform itself into a cult of personality in which obsequiousness trumps merit?

July 2, 2021

Prof J Bradford Delong in this ProjSynd piece:

What could possess one of America’s two main political parties to transform itself into a cult of personality in which obsequiousness trumps merit? An examination of the Communist Party of China during Mao Zedong’s Cultural Revolution suggests some striking parallels.

At the CPC’s Lu Mountain Plenary Meeting in 1958, Marshall Peng Dehuai pointed out that Mao’s judgment was flawed, and that he could no longer be trusted as primus inter pares. The only question was whether the other party grandees could move ahead without Mao’s charismatic link to the party’s gullible base.

But Mao struck first. While party officials like Peng Zhen, Luo Ruiqing, Lu Dingyi, Yang Shangkun, and Deng Xiaoping were purged, Peng Dehuai and Liu Shaoqi both turned up dead, and the rest of the grandees got with the program.

That program was the total chaos of the Cultural Revolution. Recognizing that those who had benefited from the initial purges would need to be kept insecure and toothless, Mao continued to shake things up. Chen Boda was purged, Lin Biao was eliminated, and Deng – with his reputation for bureaucratic competence – was brought back into the fold, only to be purged again after being threatened with the promotion of Wang Hongwen (backed by the rest of the “Gang of Four” and Kang Sheng) and then Hua Guofeng.

Through all this shuffling, only two personnel qualifications mattered: obsequiousness and powerlessness. If the official in question fulfilled both, he would be praised, honored, and promoted. If he lacked one or the other, he would be taken down a peg, sent to work as a pipefitter, or assassinated (the one exception was Zhou Enlai, whose unfailing sycophancy perhaps made up for the fact that he wasn’t entirely powerless).

This process could be sustained because there was always an ample number of party officials who saw the chaos as an opportunity for their own advancement. But while deferentially doing Mao’s bidding could yield career advantages, he was old, low on energy, and on his way to meeting Karl Marx in the great beyond. So, the court intrigue continued, with officials falling over each other to “work toward the Chairman,” even though nobody but Mao’s nephew and closest aide could claim to understand his incoherent grunts and scrawls.


The comparisons to the Republican Party under Trump should now be obvious. The most sycophantic and impotent Republicans are duly selected by Trump for promotion, while those with any modicum of power or self-respect are cut off at the knees. Trump knows that the latter cohort would seek to sideline him as soon as it gained power or forged its own links to the base. The purges are carried out from Mar-a-Lago, where Trump denounces his former appointees and aides as losers and RINOs (Republicans in name only).

The Achievements and Challenges of the Kerala ‘Model’

July 2, 2021

Prof Jayan Jose Thomas of IIT Delhi in this TheIndiaForum article:

The experience of Kerala ever since its formation in 1956 shows that, contrary to received wisdom, high public spending on social sectors improves people’s lives and also provides a positive thrust to economic growth.

The last thing this century needs is a cold war between US and China

June 22, 2021

Joschka Fischer, Germany’s foreign minister and vice chancellor from 1998 to 2005, in this Proj Syndicate piece:

This month’s G7 summit seemed to confirm what has long been apparent: The United States and China are entering into a cold war similar to the one between the US and the Soviet Union in the second half of the twentieth century.

The West no longer views China just as a competitor and rival but as a civilizational alternative. Once again, the conflict seems to be about mutually exclusive “systems.” Amid an escalating clash of values and competing claims to global power and leadership, a military confrontation – or at least a new arms race – seems to have become a distinct possibility.

But on closer examination, the Cold War comparison is misleading. The systemic rivalry between the US and the Soviet Union was preceded by one of the most brutal and catastrophic “hot” wars in history, and reflected the frontlines of that conflict.


The situation between the West and China today is totally different. Though the Communist Party of China calls the country “socialist” to justify its political monopoly, no one takes that label seriously. China does not define its difference from the West according to its position on private property; rather, it simply does and says whatever is necessary to maintain one-party rule. Since Deng Xiaoping’s reforms in the late 1970s, China has established a hybrid model that accommodates both markets and central planning, and both state and private ownership. The CPC alone stands at the top of this “Market-Leninist” model.

So why have a cold war at all?


Central banks as golden goose

June 18, 2021

In its monthly Bulletin, RBI econs have been writing on the State of Economy which has generated fair bit of discussion.

In the Jun-2021 edition, the researchers react to the recent RBI transfer of surplus to the government.

An aspect of the Annual Report that has raised considerable heat and dust in the media is the surplus transferred to the government. Mainly stemming from saving on balance sheet provisions and employees’ superannuation and other funds, the surplus constitutes just 0.44 per cent of GDP (which is taken as a measure of seigniorage).

“In flow terms, we can think of the central bank as the government’s golden goose. With an unimpaired balance sheet:

• The free-range goose conducting conservative monetary policy with a fair degree of independence produces golden eggs in the form of seigniorage worth 0.5 to 1 per cent of GDP;
• The battery farm goose, bred specially for intensive egg-laying, can produce golden eggs n the form of an inflation tax yielding 5 to 10 per cent of GDP;
• The force-fed goose can produce revenue of up to 25 per cent of GDP for a limited period before the inevitable demise of the goose and collapse of the economy. All three forms of central bank geese have been sighted in recent years.”

From the point of the surplus transfer alone, therefore, the Reserve Bank can be characterised as ‘free-ranging’ and conducting independent monetary policy, i.e., independent of fiscal dominance (Table 2).  


100 years of Chinese Communist Party: The Party is not forever

June 15, 2021

Chinese Communist Party or CCP completes its 100 years in July 2021.

Minxin Pei in this Proj Synd piece cautions the party:

As the Communist Party of China prepares to mark its centennial on July 1, the poor longevity record of other dictatorial parties in modern times should give its leaders cause for worry. If the CPC is not on the right track with its neo-Maoist revival, its upcoming milestone maybe its last.

How to vaccinate every country

May 25, 2021

David Malpass, President of World Bank in this Proj Synd piece:

The current approach to COVID-19 vaccination – using limited vaccine supplies to protect low-risk populations in a handful of countries while low- and middle-income economies wait indefinitely for doses – doesn’t make sense for anyone. A successful global vaccination effort must be equitable, and it must stand on three pillars.
First, countries with an adequate vaccine supply should immediately release doses to the vulnerable worldwide.
Second, we need greater transparency regarding contracts between governments, pharmaceutical companies, and organizations involved in vaccine production and delivery so that financing can be directed effectively, and countries can plan for receipt and deployment.
The third pillar is increased vaccine production. 

Trump’s Big Lies and Its Consequences

May 21, 2021

Elizabeth Drew in this Proj Synd piece:

By demonstrating craven loyalty to Donald Trump despite his lies about the 2020 election, the Republican Party is no longer simply playing for the base. By questioning the very integrity of America’s electoral system, it now represents an open threat to the US constitutional order.

How the TRIPS agreement tripped in the vaccine lane

May 13, 2021

My new Moneycontrol article on the recent US waiver of TRIPS agreement


Long Live the US Imperial Presidency?

May 13, 2021

Eric Posner in this Proj Synd article:

Over time, the office of the US presidency has grown only more powerful, despite perennial hand-wringing by commentators and the party that is out of power. Though there are a number of possible explanations for this trend, the most straightforward is that it is what the public wants.

What Shanghai’s dynamic art scene reveals about the city’s middle class

May 5, 2021

As of 2019, Shanghai had 770 art galleries, more than Tokyo, London, Rome, Brussels, and Los Angeles.

In a Brookings photo essay adapted from his new book, Cheng Li explores Shanghai’s art scene and explains how it reflects the evolving cultural dynamics and aesthetic interests of the city’s growing middle class.

Among the many forces shaping China’s domestic transformation and its role on the world stage, none may prove more significant than the rapid emergence and explosive growth of the Chinese middle class. At the center of this story in China is the city of Shanghai.

Any comprehensive study of the middle class in Shanghai must include an exploration of the cultural discourse and dynamic activity of its artistic community. Shanghai historically has been a cradle for Chinese contemporary art, and the city’s art scene has enjoyed longstanding exposure to Western culture.

This does not just stem from Shanghai’s colo­nial legacy or the interaction and influence of the throngs of foreign visitors to the city; it also relates to the large proportion of students from Shanghai who have studied Western and foreign art abroad. Artists from Shanghai were among the first group of Chinese students to study abroad in the 1980s, and most of them later returned to live and work in Shanghai.

Twisted Democracies of Latin America: Why reforms intended to enhance democracy have achieved just the opposite?

May 5, 2021

Prof Andres Velasco of LSE in this Proj Synd article discuss how democracy in Latin America is just namesake:

In many democracies, particularly in Latin America, well-meaning reforms intended to enhance democracy have achieved just the opposite, with governments that are strong on paper but weak in practice. And with each election cycle, citizen rage is brought ever-closer to the boiling point.


The decline of parties throughout the region is partly the result of well-meaning reforms. It was thought that making the electoral system more proportional would better reflect society’s increasing diversity; instead, it produced myriad tiny parties that represent no one. Introducing primaries was supposed to make parties more democratic internally; it did, but at the risk of making them vulnerable to being taken over by media-savvy celebrities. The gain in transparency that came with campaign finance reform also caused a collapse in party discipline, as party bosses lost leverage over publicity-seeking parliamentarians. Greater use of plebiscites has allowed small groups of activists to hijack the policy agenda.

The problem is not uniquely Latin American. Yale political scientists Frances McCall Rosenbluth and Ian Shapiro argue that similar “decentralizing reforms” in the United States and Europe, meant to “return power to the people,” weakened parties and led to “policies that are self-defeating for most voters.” Paradoxically, the closer to the grassroots political power moves, the more disenchanted the grassroots become.

So, Peru and Ecuador, like Brazil and Chile before them, will have leaders that are strong on paper but weak in practice. They will promise much and be able to deliver little. Soon enough, voters will grow frustrated and vow to “throw the rascals out” and replace them with someone who truly takes popular interests to heart. Scholars and activists will propose further reforms meant to empower voters. And then the cycle will repeat, enraging citizens further. It is not a pattern that will end well.

Macron reforming French elite school École Nationale d’Administration (ENA)

April 30, 2021

Interesting Proj Synd article by Ngaire Woods

On April 8, French President Emmanuel Macron announced that he will close France’s elite postgraduate school for training public leaders, the École Nationale d’Administration (ENA). Macron, himself an énarque (as graduates are known), says he wants to encourage equal opportunity and national excellence, and respond better to the challenges of COVID-19. But eliminating ENA will likely represent only a negligible step toward this goal. 

Ironically, ENA was established in 1945 by General Charles de Gaulle to break up the French elite and overturn a system of patronage and spoils that had produced a corrupt and inefficient public administration. Admission to the school was thus subject to competitive examination, with those winning places offered a salary for their studies.

Similarly, the United Kingdom’s Northcote-Trevelyan reforms a century earlier – which drew on Sir Charles Trevelyan’s experience rooting out corruption in Britain’s Indian civil service, as well as on the example of imperial China – sought to introduce recruitment by open, competitive examination, and make promotion merit-based. Subsequently, almost all countries – from the United States, Japan, and China to Ghana and Nigeria – have sought to embed meritocracy in their public administration, many by using examinations.

We have a different problem today:

The problem today is that the examination system no longer serves to identify talent and equalize opportunity, but instead has fueled a growing market in expensive private preparatory education that benefits wealthier students. So, whereas 29% of ENA students in the 1950s came from working-class backgrounds, by 2003, it was only 9%.


Britain’s successful COVID-19 vaccine rollout has highlighted the benefits of keeping government in the driver’s seat, bolstered by private-sector leaders willing to help pro bono. This arrangement combines the best of the public sector – people’s trust in institutions that are vaccinating people – with the advantages of a venture-capital approach to assessing risk and allocating resources.

Three weeks after Macron’s announcement, it is now clear that he is not abolishing ENA but rather reducing its annual intake (from 80 students to 40) and renaming it. But the challenge for France is to build a public administration ambitious enough to attract people of purpose and talent, but also open enough to recruit from a much wider cross-section of society. Tinkering with ENA will not achieve this.

RBI trying to improve governance of private banks, but RBI’s own Governing Central Board remains empty

April 29, 2021

RBI released further norms to improve governance in Private and foreign banks, which is welcome.

However, RBI’s own governance is bit of a problem.

RBI also announced that Mr Ajay Seth, Secretary, Department of Economic Affairs, has been nominated on RBI Central Board as a replacement for Tarun Bajaj.

Curious, one glanced at RBI’s Central Board and saw just 11 of the 21 positions are occupied:

Names and addresses of the Central Board of Directors of the Reserve Bank of India (as seen on 29 Apr 2021)
1. Shri Shaktikanta Das
@7. Shri Natarajan Chandrasekaran
2. Shri Mahesh Kumar Jain
Deputy Governor
@8. Shri Satish Kashinath Marathe
3. Dr. M. D. Patra
Deputy Governor
@9. Shri Swaminathan Gurumurthy
4. Shri M. Rajeshwar Rao
Deputy Governor
#10. Shri Debasish Panda
*5. Ms. Revathy Iyer #11. Shri Ajay Seth
*6. Prof. Sachin Chaturvedi

This number is again closer to the eventful night of 8 November 2016.

One understands it is tough time for these positions to be filled. But these vacancies are known well in advance. AT the time of its annual report in Aug-2020, the Board had 15 members. Since then following have retired from the Board:

  • Prasanna Kumar Mohanty
  • Dilip S. Shanghvi
  • Ashok Gulati
  • Manish Sabharwal

RBI informs when a new member is appointed. Likewise, RBI should inform which member’s tenure is over. So that we know this position needs to be filled.

The central bank needs guidance to run the economy in such tough times and needs more helping hands. Instead we see the opposite. Another Deputy Governor (B.P. Kanungo) retired and no appointment was done. Though, the position of the two government nominees on the RBI Board seldom remains vacant..


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