Friday, June 20, 2008

Environment protection and private incentives

It is usual to read comments concerning the environment conservation ,concerning the way people should behave or feel ,in such a way that the positive externality of either behavior or feelings , turns out to be an higher self consciousness when it comes to deal with the challenge of improving our understanding about environment.
Most of the key players on the issue, agree that it is crucial to keeping the pace on environment conservation ,with no further delay, specially at the level of government level policy design. However, individual efforts are also important, in fact it matter a lot to have a global community well aware of the magnitude of the threats which is upon us. Thus, world celebrities on different fields (fashion, sport, global media, movies),make a strong contribution on this regards. So, they are very welcome.
The key question though is: What are the incentives for ordinary citizens to follow such impulse?.The first and obvious one, is admiration of what those celebrities are capable of. Unfortunately, it is not enough , and it is necessary to consider more direct incentives for ordinary citizens .
Economics teach precisely that: Incentives moves people decisions, to get their highest welfare level. It is well known that there are already alternatives both for firms and individuals to use better and more friendly environment source of energy. Green bonus, is a market mechanism to induce firms a more active role to protect environment, in this case based on profit they can get for not contaminate. But is it enough?.These days, tax deductions should be applied taking into account, the kind of policy firms have toward environment protection. On the other side, Individual also needs those kind of incentives .Let consider the case of a family who want to have their house with solar energy panels. What do they get in return?.Sure lower energy bills, but do they get a tax deduction on other expenses ,because the energy they are saving means supporting environment protection?.Therefore, taxes as an incentive for growth ,should be planned to do so, considering environment as a key variable, as a fist step to get sustainable growth .-

Friday, June 06, 2008

Fiscal Policy Efficiency in Latin America (II)

Is it the State some how the enemy of well being of society?, or is it the case that the State ,has been capture by special interest groups ?.Who are these groups? Politicians?, public management staff who serve their own interest, rather than those of the one they should be serving? .These questions, are at the core of the issue of efficiency of fiscal policy.
Let give more attention to it. Fiscal policy is political by nature, it deals with Government ability to pursue the improving of welfare at society level, which is evaluated depending upon the type of preferences voters have, about checking out what the Government is doing. Some countries, evaluate that performance every four years, while others do every six years. However, it looks like such a period of time is too long to have the sense of control fiscal policy need. Therefore, the first issue to improve the efficiency of fiscal policy, deals with better and more often participation of voters, (decentralization),or better control mechanisms ,to avoid both the fiscal resources to be captured (for instance too many organism doing the same and trying to get the same objective), or the worst of the inefficiency about fiscal policy: Corruption.
A recent Corruption index 2008 survey ,done in Chile by the Freedom and Development Institute, shows that the highest level of corruption is found at the government organisms level. On top of the list are Municipalities (5,7)and public firms(6,0).Next are the Justice system, and different Ministry (5,1),closing the list are regional governments (5,0).Besides 50% of those executives included on the poll (411),thinks that corruption is higher now than last year. It follows, that fiscal policy inefficiency seems to be explained by the purpose deviation about its nature,done by those groups who capture teh State for their own interest .
A second issue to improve fiscal policy efficiency, is related to up grade the academic credential of those in charge of public management, along with a modernization of the public management practices. This means to change the political profile of public management, for a professional one. Additional progress on this matter in Chile, has not been fast enough,although the number of executives selected by political preferences has been decreasing, in favor of those based upon professional credentials.-