My minimum minimorum on exiting Iraq!

I was never in favor of the invasion of Iraq but, once it occurred, I pleaded for a scheme that would put its oil revenues directly into the pockets of all the Iraqis, and thereby set an example that could help to empower the democracy in all the other countries that are cursed with the centralization of their oil revenues… the mother of all oil curses. Unfortunately, the supposed builders of democracy forgot to bring with them to Iraq such a fundamental building block.

Now, when exiting Iraq, as a minimum minimorum, we should at least aspire that the next Saddam Hussein, whenever he will appear, should not find it easier to be the next Saddam Hussein… much the same like the next Bush, whenever he will appear, should not find it easier to be the next Bush.

http://www.policyinnovations.org/ideas/commentary/data/000083

Discrimination based on the financial profiling and risk-based pricing

Risk-based pricing actually requires creating the misinformation that allows for making borrowers who should get lower rates agree to pay the higher rates that cover the losses of those that should not have been given credit… at least not at these high impossible rates.

Risk based pricing, which is similar to placing persons that after some doubtful genetic test are presumed to be especially exposed to an illness in a separate insurance pool, could be causing much of the growing social inequality that is currently attributed by some to globalization. Risk profiling, for a discriminatory purpose, is prohibited in most spheres of our social relations, except in lending where it is very much cheered, by most.

John, Paul and Peter, because of FICO have to pay high interest. John, though he might have been able to do so at lower rates, is not able to service the debt and loses. Paul, utterly responsible, services it, barely, and Peter who is in this group because no ones no why meets the payments with ease. Question: Any winners?

John should for a starter not have been given the credit, at least not at the high rate, and both Paul and Peter, having been able to service the debt at high rates evidenced de facto they merited lower rates. Answer: No winners! Except of course those who are not to be named!

How libertarians can shut up about the financial information cartels that chain the markets to neo-non-transparent-regulations, I have never understood.

How developed countries’ progressives can shut up about the discrimination implicit in risk based pricing and that could be introducing more inequality in the societies than what they sometimes attribute to globalization, I have never understood.

Vulture funds

I might not like it too much if a vulture-fund-manager invited any of my daughters out to celebrate a killing in Zambia debt but, having said that, neither am I so sure that the world would be a better place without the vulture funds.

That some can find opportunities in buying uncollectible loans and squeeze fortunes out of them when others have decided to clean up their books, is just part of the circle of life, and part of the same market mechanism which signals how much, or how little, the loans are worth, since the price of a loan indicates the expectations of collecting on an outstanding loan and not the expectations of collecting on a “pardoned” loan. Yes, the vulture funds are into an ugly business, cleaning up among corpses, but, by their sheer presence, they might perhaps even help to reduce the number of infections and consequent deaths.

Most, or perhaps all of the scholar papers on restructuring or condoning of sovereign debt, state as the explicit purpose of the whole exercise, that of enabling the countries to regain access to the international capital markets again, something which reads like the torturer waking up his fainted victim in order to start all over again.

In this respect, if you need to pick on one, you might also choose to do so at that moment of the circle of life when the new born debt-overhang-ridden country gets thrown out to start defending itself again from the many dogs-of-finance roaming out there, and often guided by the same old lousy government that previously messed it up.

There is so much written about freeing up the countries in order for them to access the markets while comparatively so little about how they should go about to avoid repeating the same mistakes, and so perhaps I should also frown when it is a regular investment banker, or a good hearted MFI banker, or even just an over-illusioned activist who knocks on my door and asks for my daughter.

A tax on intellectual property.

The dollar bills and whose value the United States is responsible for, bear the abbreviated motto "In God We Trust", "In God we trust". A more complete version would be "In God we trust that politicians do not circulate more dollars than the economy can support or, if they do, the United State's taxpayers have the willingness and ability to pay with taxes what it takes ". The above is the same for all other countries.

Now, and even if the private sector bears most of the initial losses of the financial crisis, it will end up being extraordinarily costly for the treasuries as well and, without a doubt, in many cases will exceed their current capacity. In this sense, some of the costs will have to be paid with more taxes or, in their absence, they will be paid with inflation, the tax on the poor.

Society has spent decades without analyzing taxation that adjusts to the new global realities and that interferes as little as possible with the recovery of the economy, so it may be timely to start reflecting on the subject. Any new tax proposal must also be legitimated on the basis of justice and rationality. In this sense I am circulating some ideas for your discussion and the following is one of them.

The tax on profits derived from monopolies created by intellectual properties.

Most or perhaps all intellectual property rights are granted to whoever runs the last part of a relay run with ingenuity, creativity and tenacious efforts by generations of human beings. The former runners allow the latter to cross the finish line victoriously and lift a finished idea, even if not necessarily started.

The particularity of this relay is that whoever expects to be running as the last reliever cannot be completely sure of it. Sometimes running the last part or any part can be easy; other times it can take a lot of team effort and cost millions. Society, in order to stimulate ingenuity, creativity and the effort required of all, in order to help the world progress, has decided to award the trophy of an intellectual property right to only the runner who crosses the finish line.

The problematic part of this social agreement is that all intellectual property rights create a right to a monopoly and that since it is exercised with little or no regulation, restriction or supervision, it means that it can be subject to over-exploitation.

Since every intellectual property right granted imposes on society the obligation to defend such right, in many ways, which costs a lot, the question that also remains to be answered is whether it would not have been better to use those resources for other purposes, for example finance others to run the relay.

I do not find logic or justice in charging a company that has been granted a monopoly of an intellectual property right, for something to which previous generations have contributed and in whose defense society must invest resources, the same tax rate on earnings that applies to a company that competes in the market without any kind of protection.

Therefore, I have proposed to study that the profits generated by the exploitation of an intellectual property right pay an additional tax on profits, of for example 20%. Those proceeds can go to reimburse society for the costs of defending intellectual properties and to help fund other runners in those relays of humanity to develop essential goods that can serve us all.

Translated from an OpEd in El Universal, Caracas