Wednesday, April 21, 2010

IMF calls for tax on financial institutions

The International Monetary Fund (IMF) has recommend that financial institutions pay taxes that would be placed into a fund in order to bail them out in the event of crisis. The UK Chancellor (Financce Minister), Alastair Darling, has welcomed the proposals.

It doesn't appear to be a Tobin Tax - a tax on international monetary transactions - although this form of taxation has been gathering some momentum including some support in the City.

This blog has also discussed the Tobin Tax before, with the idea that it might be a useful way for the IMF to raise funds to bail out financial institutions during crises. This would be different from the view of organisations like Attac (Association pour une Taxe Tobin pour l'Aide aux Citoyens) in that the funds raised would not be used for development purposes but rather for financial stability.

I would also prefer such a use - partly since greater financial stability would, in itself, help development, as well as the impact of crises in developed countries. I would be cautious about any moral hazard issues though - will financial institutions behaviour become more risky if they feel they are more likely to be bailed out? But at the moment, Governments already baoil out their financial institutions, so this may not have any impact.

In addition a with a few additional rules, moral hasard risks could be minimised - for example if proven wrong-doing/rule-breaking were met with genuine risk of prison and large-scale stripping of personal assets through large fines for individuals - even as their organisation is rescued.


Tuesday, April 20, 2010

Every little hinders (productivity in the Lesotho civil service)

At the entrance to my building in the Ministry of Finance and Development Planning in Lesotho, we have two sets of double doors - four doors in total. One set is always closed. Only one of the doors in the other set is ever open, as in the picture below*.

Like so many things, I regard this as inefficient and regularly get frustrated when having to allow slow-moving or groups of slow-moving individuals through the door.

The other door can easily be opened - and occasionally I do do it. But, it seems I am not allowed to open it. One security guard - if he sees me walking to the door - actually moves to block it so I can't open it. If/when I have to wait for 30 seconds for some people to walk through, I plan on telling him he owes me R1 for the time I have just lost when I would otherwise have been doing work**.

Having one door open makes life slightly more difficult - you know, one of those little annoying things that needn't be like that - why not change these things? In addition, it slows people down, making its own small contribution to lack of productivity in the civil service.

I am trying to work out why on earth this rule exists. My first thought is for security. Maybe, I thought, the security guard wants to see every face to make sure no one who shouldn't get into the building. But that doesn't make sense - firstly, hundreds (or more) people work in the building and no one security guard could remember every face and, even if they could, the security guard there regularly changes. Secondly, anyone can have legitimate business in the building - for example, paying taxes.

What other reasons might there be for this apparently strange rule?


* You can see me taking the photo in the reflection.
** No, I've not attempted to make an accurate calculation.

Loadsa beautiful data!

The World Bank is making loads of data that previously was either difficult to get or had to be paid for. Amazing news for people like me who love numbers, data, statistics and for all students and academics who struggle to get ahold of data.

The website is at: data.worldbank.org/

(HT: Owen Abroad)

Thursday, April 15, 2010

Anyone unemployed?

Zimbabwe is still looking for a new hangman.

HERE is a story about Britain's last hangman. And HERE you can listen to an interesting interview with him.

Myself, I've always been strongly against the death penalty.

Ten interesting facts about Africa

HERE is a nice BBC article summarising research by the Pew Research Center.

I love these guys - I find their research of social issues, religion and politics fascinating. Check out their website.

Wednesday, April 14, 2010

Anti-Rape Condom


A spiked anti-rape condom could soon debut in South Africa. I approve. I think. Although I'm sure there will be a few innocent men who also get caught. I also suspect that there might be ways around it...

Monday, April 12, 2010

How to remove services and discourage entrepreneurship: A lesson from the Maseru City Council

Today, whilst walking out of the Ministry of Finance and Development Planning, I witnessed the local council (with the help of the police) clear 'hawkers' from just outside of the main gates. I strongly disapprove for several reasons:

1. These few people sell a range of things very useful for people who work in the Ministry - including fruits, lunch, cigarettes, telephone credit, even now braai'd meat and corn (delicious). They provide an excellent service in the absence of any more formal trade within the large Government complex.

Happily, these services also save time for people working there. I often buy lunch there when I don't have time to go anywhere else, and also phone credit - which I have to use regularly to make business calls (our lines don't go outside except for the privileged few, of which I am not one). This makes civil servants more productive - something not to be sniffed at, given the low productivity.

2. Not only do these services make Lesotho richer because it allows some civil servants to be more productive, but, these people are working and producing things that would not otherwise be produced in Lesotho. This makes Lesotho richer still. By preventing people from producing things, the council and police are preventing consumption and making the country poorer than it need be.

3. These 'clear-ups' only happen occasionally, but contribute towards making business (informal though it may be) more difficult in Lesotho. It is therefore discouraging young potential entrepreneurs - and starting and running a business in Lesotho is already difficult enough.

Thus, it discourages informal businesses run by the very people who may go on to become formal businesses and contribute towards growth and, which seems to be very important, the 'tax base'. It stifles economic growth and development in the long run. In addition, since many are young men, it serves to discourage innovative behaviour and even actively punishes it. Young men have plenty of more unsavoury options than braaing a bit of meat for sale.

4. This behaviour is hypocritical. Everyone buys from these people because it is convenient. The same people who ordered the 'clean-up' probably buy from them occasionally. This is hypocracy.

5. Even if it were desirable to get rid of those who choose hard work instead of doing nothing, (and they work harder than many inside the Ministry walls) the City Council has to decide how best to use its limited resources. In my opionion, there are far more urgent issues that need addressing. For example, why have I not been given the request for me to pay my council tax for people coming to take my rubbish away in such a long time - the same council vehicle and time used to clear away hard working people could have been used to deliver a bill to my house. Who on earth thought that the choice made was a good one?

A few years ago I was in Blantyre, Malawi, when it was decided to clear street-sellers from the street and force them into a market. It deprived the city of a place of a places young potential entrepreneurs could cut their teeth, potentially lowering future economic growth; it created more unemployment; it deprived people of sellers selling things close to convenient places (e.g. of work, home) and forced people to walk further - thereby reducing work or leisure time and therefore wealth; since small hawkers sell things in small amounts, it deprived poorer people of the ability to buy small quantities of things easily.

On the plus side, I now have to dodge a few fewer people on the street when I walk there enjoying my luxury lifestyle.

I'm not sure priorities are in the right places.